money

Imagine always making financial decisions that are actually in your best interests, instead of justifying any impulse. Imagine accepting your financial situation—the good and bad—without blaming yourself or giving up responsibility and control.

If you could live like that, you’d probably be happier and better off financially. That’s the premise of financial mindfulness, which combines traditional mindfulness practices with financial decision-making to help people develop a more balanced, intentional relationship with money.

Researchers have found that people with financial mindfulness experience positive financial outcomes, such as higher credit scores and more rational investment decisions.

Key Takeaways

• Financial decisions are often wrapped up in emotions—like stress, anxiety, frustration, and guilt—which can make it difficult to act rationally.
• Financial mindfulness applies traditional mindfulness practices—awareness and acceptance—to financial decision-making.
• Research has found that higher levels of financial mindfulness are associated with positive financial outcomes, such as higher credit scores.

What Is Financial Mindfulness?

A 2023 study defined financial mindfulness as “the tendency to be highly aware of one’s current objective financial state while possessing an acceptance of that state.”

Practicing financial mindfulness means having a clear understanding of your current financial situation and acknowledging that situation without judgment. This involves observing spending patterns, emotional triggers around money, and financial habits with curiosity rather than criticism.

Unlike traditional budgeting, which might focus solely on numbers, financial mindfulness encompasses the psychological and emotional aspects of our relationship with money, helping us understand the deeper motivations behind our financial choices.

In the 2023 study, Simon Blanchard, a professor at Georgetown University’s McDonough School of Business, and Emily Garbinsky, a professor at Cornell University’s SC Johnson College of Business, collected data from 2,000 consumers to understand the concept of financial mindfulness and its impact on financial outcomes.

According to their research, some of the key benefits of practicing financial mindfulness include:

• Higher credit scores as a result of better financial acceptance
• Less financial avoidance, like ignoring credit card statements
• Better ability to handle market volatility without overreacting
• More rational investment decisions, avoiding traps like the sunk cost fallacy
• Improved emotional relationship with money

Overall, the study emphasizes that financial mindfulness is about how someone interacts with their finances, regardless of how much money they have.

How to Practice Financial Mindfulness

To practice financial mindfulness, you first need to develop regular practices that foster awareness of your financial situation. This might mean weekly or monthly money check-ins, where you spend a few minutes reviewing your income, spending, assets, and liabilities.

The second component of financial mindfulness is acceptance: acknowledging your financial state without judgment. 

Taking mindful pauses before purchases allows you to evaluate whether they align with your values and long-term goals. These pauses can also help you make better-informed decisions without being swayed by emotions, positive or negative.

Additionally, practicing gratitude for current financial circumstances—while still maintaining clear awareness of areas for improvement—can help balance any extreme emotions surrounding money matters. Regular meditation or reflection on financial goals and behaviors can also help identify patterns and triggers that may be hindering your financial progress.

Blanchard offered some additional pieces of advice for anyone interested in incorporating financial mindfulness into their lives:

If you find yourself encountering strong emotions around financial decisions, consider pairing the routine of weekly or monthly financial check-ins with something enjoyable. For example, do it while treating yourself to a pastry at your favorite bakery, so there’s a positive incentive to sit down and look over your accounts.

“Notice whether you feel anxious, guilty, or pressured. Recognizing these emotions—rather than ignoring or being overwhelmed by them—can help you make decisions more calmly,” Blanchard told Investopedia. “Over time, adding small moments of emotional awareness to everyday choices fosters a healthier relationship with money and strengthens your overall financial mindfulness.”

The Bottom Line

Maintaining awareness and acceptance of your financial situation without judgment can lead to better financial outcomes and help you make sound financial decisions. Developing a more conscious relationship with money can help create sustainable financial habits that support both our economic goals and mental well-being.

Are you paying for the “moron risk premium”? Originally coined to describe major increases in bond interest during U.K. Prime Minister Liz Truss‘s “mini-budget” crisis in 2022—her government’s unpredictable, so-called “moronic” policies pushed the yields sky‐high—the phrase came back into wider use in 2025 in light of the market chaos set off by Trump administration changes to U.S. tariff policy.

The moron risk premium is the extra yield investors demand on sovereign debt because of policy missteps or unpredictable fiscal policy. Understanding this premium can help you protect your portfolio during periods of government policy-produced market chaos.

Key Takeaways

• First coined in reference to a failed fiscal policy roll-out in the U.K. in 2022, the “moron risk premium” is the extra interest demanded on bonds for bad governance.
• The term has been used to describe global markets’ reactions to the Trump administration’s unpredictable shifts in tariff policies, which lifted bond interest rates significantly.

What Is the ‘Moron Risk Premium’?

The phrase was first popularized during the British mini-budget crisis in 2022, when Prime Minister Liz Truss released a series of unfunded tax cuts that caused long-term U.K. government bond yields to soar and the British pound to plunge. As U.K. markets went into freefall, Dario Perkins of TS Lombard christened the increased yields as the “moron risk premium.”

In 2025, on the heels of the Trump administration’s tariff announcements, some market watchers noticed the extra compensation demanded for buying American assets, including Treasurys. At that point, the phrase returned. “The moron risk premium is back, on steroids,” noted Jo Michell, a professor of economics at the University of West England on Bluesky.

Thus, the “moron risk premium” is now a pointed shorthand for a government’s self-inflicted wounds to its bond markets.

Anger Over the Trump Tariffs

Many market observers grew exasperated with the quick and deep shifts in the Trump administration’s tariff policies in 2025. Soon, widespread anger was reported all over Wall St. as both the bond and stock markets careened like a speeding car without a driver.

Trump’s own supporters reacted by seeming to rival one another inventing new names for the “moron premium.” Elon Musk, a close administration advisor, called Peter Navarro, senior counselor to the president and widely seen as a major driver of the tariff policies, “truly a moron” and “dumber than a sack of bricks.” Hedge fund manager Bill Ackman took to X to warn of an “economic nuclear winter.” Meanwhile, Republican Senator Rand Paul said the tariffs could lead to the “political decimation” of the Republican Party as conservatives who had already fallen out with Trump over policy, including the National Review‘s Charles C. W. Cooke, returned to the language of the Truss era, referring to “Trump’s moronic tariffs.”

Those in a position to demand the “moron premium” might include the so-called “bond vigilantes.” While there’s some controversy about whether they exist as an intentional group, they are bond traders who sell government debt to protest poor fiscal policy.

How To Protect Yourself From ‘Morons’

Like any risk premium, the moron risk premium increases costs, in this case, those related to government borrowing, which can put a drag on stocks and long-term growth. Here are some protective measures to take:

• Diversification across geographies: Spreading risk across different markets can help mitigate the impact of a single government’s incompetence.
• Shift to safety: Consider safe, high-yielding alternatives such as money market funds or CDs.
• Keep the long term in view: Despite volatility in the short term, long-term investors can benefit from buying shares and other assets while they are “on sale.” Most should avoid timing the market, though, and you might consider dollar-cost averaging (buying a fixed dollar amount of shares in a mutual or exchange-traded fund at regular intervals), which is often very effective over the long term.

The Bottom Line

While you alone can’t prevent those you think are morons from getting elected to have power over the markets, you can protect your portfolio. The moron risk premium thus serves as more than just a catchy insult—it’s a market signal that savvy investors can use to navigate through periods of policy-induced volatility.

Reviewed by Andy Smith
Fact checked by Suzanne Kvilhaug

Mortgages provide ample opportunity for bad actors to steal, defraud, or cut corners. According to 2024 data, one out of every 123 mortgage applications had indications of fraud, and cases increased by more than 8% year over year.

Fraud can be committed by borrowers falsifying loan applications or industry professionals in more complex schemes. Identity theft also can target borrowers or homeowners.

Key Takeaways

• Common individual mortgage fraud scams are identity theft and income/asset falsification, while industry professionals may use appraisal frauds and air loans to dupe the system.
• Mortgage fraud continues to be a problem in America. According to CoreLogic’s data in 2024, one in every 123 mortgage applications shows indications of fraud.
• There are professional organizations that monitor and investigate mortgage fraud, along with the FBI.

What Is Mortgage Fraud? 

Mortgage fraud includes predatory lending practices that target certain borrowers, but it also can include deceptive practices such as providing false information. According to the Federal Bureau of Investigation (FBI), this involves any sort of “material misstatement, misrepresentation, or omission relating to the property or potential mortgage relied on by an underwriter or lender to fund, purchase, or insure a loan.”

This means mortgage fraud can be committed by both individual borrowers and industry professionals. And the sums involved are high. For example, in Sacramento, Calif., seven people were convicted in a $10 million mortgage scam in early 2019.

There are two distinct areas of mortgage fraud:. 

1. Fraud for profit: Those who commit this type of mortgage fraud often are industry insiders using their specialized knowledge or authority to commit or facilitate it. This can involve collusion by industry insiders, such as bank officers, appraisers, mortgage brokers, attorneys, loan originators, and other professionals engaged in the industry. Fraud for profit aims to misuse the mortgage lending process to steal cash and equity from lenders or homeowners. The FBI prioritizes fraud for profit cases.
2. Fraud for housing: This type of fraud is typically represented by illegal actions taken by a borrower motivated to acquire or maintain ownership of a house. The borrower may, for example, misrepresent income and asset information on a loan application or entice an appraiser to manipulate a property’s appraised value.

Important

Housing or mortgage fraud can be committed by individuals who intend to occupy a property as a primary residence or by groups of investors who defraud via rental properties or commit appraisal fraud when flipping homes.

Why Commit Mortgage Fraud? 

Fraud for housing is committed by borrowers who, often with the assistance of loan officers or other personnel, misrepresent or omit relevant details about employment and income, debt and credit, or property value and condition with the goal of obtaining or maintaining real estate ownership. Fraud for profit is committed by industry professionals who misstate, misrepresent, or omit relevant details about their personal or their clients’ employment and income, debt, and credit, or property value and condition with the goal of maximizing profits on a loan transaction.

Fraud for profit can be committed by any professional in the loan transaction chain, including the builder, real estate sales agent, loan officer, mortgage broker, credit/debt counselor, real estate appraiser, property inspector, insurance agent, title company, attorney, and escrow agent. Industry professionals also can work in concert, as a network, to defraud underwriters, lenders, and borrowers, and maximize fees and share profits on all mortgage-related services. These actions are motivated either by the desire to gain extra sales commissions or simply increase an investment position.

Common Mortgage Fraud Schemes and Scams 

Common mortgage fraud schemes include different types of property flipping, occupancy fraud, and identity theft.

Property Flipping

Property flipping is generally not illegal when associated with purchasing a house, holding/fixing it, and then reselling it for a profit. On the other hand, when a property is bought below market and immediately sold at profit with the help of a corrupt appraiser who “verifies” that the value of the property is actually double the initial purchase amount, mortgage fraud is indicated.

In the case of the same-day close property flipping scheme, the chain of title and the appraisal are often fraudulent and include three parties—the seller, the flipper, and the unsuspecting end buyer. The seller makes a contract with the flipper to purchase the property at below market value. The flipper provides the end buyer with a fraudulent title insurance commitment, showing the flipper as the owner (though that’s not the case) and an appraisal is made at the inflated price the flipper and end buyer have agreed on.

Occupancy Fraud

Occupancy fraud is a scheme used by investors to qualify for higher loan-to-value ratios and lower out-of-pocket costs on purchases, in addition to lower mortgage rates. Occupancy fraud occurs when a borrower claims that the home will be owner-occupied to obtain favorable bank status when the property will actually remain vacant. The straw buyer uses or allows someone to use their identity, credit score, and income to obtain property for another buyer who may not qualify for a mortgage (or qualify for the best rates). Straw buyers are often used by investors, either willingly or unknowingly, to cover up other forms and multiple layers of fraud.

Identity Theft and Income/Asset Falsification

The most common individual mortgage fraud scams are identity theft and income/asset falsification. Identity theft occurs when the real buyer fraudulently obtains financing using an unwilling and unaware victim’s information, including Social Security numbers, birth dates, and addresses. Identity theft for mortgage purposes may also include stolen pay stubs, bank records, tax returns, W-2s, and falsified employment verification letters. Even property ownership records can be falsified, and borrowers can obtain a fraudulent mortgage on a property that they neither own nor occupy.

Air Loan vs. Appraisal Fraud

Common industry professional mortgage fraud scams include air loan and appraisal fraud.

An air loan is obtained on a nonexistent property or for a nonexistent borrower. A group of professionals will often work together to create a fake borrower and a fake chain of title and to get a title and property insurance binder. Additionally, the fraud chain may include phone banks and mailboxes to create fake employment verifications, home addresses, and borrower telephone numbers. The air loan scam simply puts cash into the hands of the perpetrators, and no property is ever bought or sold.

Appraisal fraud often involves a real estate agent, builder, appraiser, and loan officer working together to maximize a purchase price and loan amount in order to increase their commissions. On the other hand, corrupt appraisers will often undervalue a property to ensure that a fellow investor will be able to purchase the asset.

Some forms of predatory lending activities, foreclosure rescue, and mortgage reduction scams depend heavily on the aforementioned mortgage fraud practices. Predatory lending typically involves falsifying lenders’ income figures to inaccurately reflect their ability to assume additional debt. Such activities heavily contributed to the Great Recession.

How Can You Avoid Being a Victim of Mortgage Fraud?

Do thorough research on the lenders, real estate agents, and other professionals you are working with. Be sure you are dealing with individuals or agencies that are licensed or certified. If you have questions, you can seek assistance from a HUD-certified counselor..

What Is HELOC Fraud?

HELOC fraud typically involves identity theft as a means of targeting your home equity line of credit. Once perpetrators get access to your personal information, they use it to access funds from your HELOC. You can combat this by diligently protecting passwords and other personal information and closely monitoring your account balances.

Is Straw Buying Illegal?

Using a straw buyer is a deceptive practice because it conceals the identity of the real buyer. Even if the parties involved have every intention of repaying the loan, this type of deception can open them up to criminal prosecution.

The Bottom Line

Mortgage fraud takes a lot of different forms from identity theft to falsified applications to industry insiders trying to dupe the system. One of the best ways to combat mortgage fraud is to be diligent about making sure you are working only with licensed and trusted professionals and seeking professional assistance if anything looks unusual or suspicious. CoreLogic data reports that nearly 1% of mortgage applications show some indication of fraud.

You’d be surprised how much aid is out there

Reviewed by Ebony Howard

Let’s say you don’t reach retirement with all the money that you’re supposed to have saved and end up with a low income in retirement. Though the stock market has been very successful for many, the last few decades haven’t exactly been without financial shocks.

Many households felt the effects of the 2007-2008 financial crisis and the Great Recession. People reaching retirement age thought they were set until financial markets crashed, wiping out much of their retirement funds. Many recovered, but for others, the timing was disastrous. More than a decade later, the world faced a new crisis.

The economic fallout of the pandemic and lockdown rocked the stock market, threw millions out of work, and isolated many Americans, especially older people who are more vulnerable to serious effects. While the market recovered many of its losses, not everyone was able to benefit. Here are some strategies for those who may need a little assistance in retirement.

Key Takeaways

• Older adults with lower incomes have a number of financial options available to help in retirement.
• Programs such as Medicare, Social Security, food stamps, Medicaid, and Supplemental Security Income (SSI) are available to those who qualify.
• Older people with lower incomes may be able to find help with job training, housing, tax relief, and legal services.
• Many of the programs available to older people are at the state and local level.
• Growing vegetables and cooking meals at home can help substantially lower food bills.

Understanding Low Income in Retirement

How many people get to retirement with low income? The National Council on Aging tracks economic security for older adults and found that 17 million Americans over the age of 65 live below the poverty level of $30,120 per year (2024 federal poverty level).

Millions of older adults are economically insecure as they struggle with issues such as inadequate nutrition and soaring healthcare costs.

If you (or a loved one) do not have enough money to meet basic needs, you need to know about programs that can provide retirement assistance. At the same time, when the most immediate needs have been filled, it also makes sense to stand back and think about the next steps.

Note

Order your copy of the print edition of Investopedia’s Retirement Guide for more assistance in building the best plan for your retirement.

Government Benefits and Programs

You’re probably familiar with a number of the following programs that help lower-income retirees.

Social Security

Throughout your working years, you paid into Social Security. The average retiree received $1,980.86 in monthly benefits as of February 2025.

If your spouse passed away or you’re disabled, you may qualify for benefits, too. For many, Social Security is the cornerstone of their income, but it’s not meant to be the primary income source.

Medicare

You paid into Medicare during your working years, just as you did with Social Security. You should receive Part A benefits at zero cost. Premiums for Parts B and C will vary. Part D, better known as the prescription coverage part, has a low-income subsidy called Extra Help.

Extra Help

Older people receiving Medicare Part D coverage may receive assistance from the Extra Help plan, which includes $0 premiums and $0 deductibles, as well as low-cost prescriptions. Married couples living together must have a combined worth of $31,725 or less, and single people must have $23,475 or less to qualify for this plan.

Medicaid

Medicaid, not Medicare, is where you go if you need assistance with medical costs. The program provides coverage for “children, pregnant women, parents, seniors, and individuals with disabilities,” provided you are under certain income limits. You can receive Medicare and Medicaid benefits at the same time.

Food Stamps

Older adults are eligible for the food stamp program, which is now titled the Supplemental Nutrition Assistance Program (SNAP). You must apply in the state in which you live and meet specific income and resource criteria.

Supplemental Security Income (SSI)

SSI is not Social Security. Instead, it’s a public assistance program that provides aid to the aged, blind, or disabled and is intended to meet basic needs such as food, clothing, and shelter.

Benefitscheckup.org

Benefitscheckup.org is a website sponsored by the National Council on Aging that includes information on public and private assistance programs for adults over 55, including nutrition, legal, housing, and education. Complete the short form, and the site will list any programs that may apply to you.

Eldercare Locator

The U.S. Department of Health and Human Services sponsors Eldercare, a website similar to the above. Enter your city or zip code, and the site will return local assistance programs available to you.

Commodity Supplemental Food Program

The U.S. Department of Agriculture administers the Commodity Supplemental Food Program (CSFP). Similar to food stamps, this program is available to people at least 60 years old and is administered at the state level.

Tax Relief

Older adults may be eligible for tax relief, often on property or real estate taxes, vehicle license fees, and solid waste fees. Certain income caps may apply, and each state has varying laws and eligibility requirements. You may also apply for a federal tax credit if your income falls below certain levels.

Senior Community Service Employment Program

The United States Department of Labor administers the Senior Community Service Employment Program (SCSEP), a program that provides training and part-time job placement for people age 55 and up under certain income limits. Jobs pay minimum wage but serve as a way to provide training that may lead to a better job in the future.

Housing Choice Voucher Program

The Housing Choice Voucher Program (HCVP) offers assistance for anybody living in certain properties run by local public housing agencies. Vouchers are income-based and often have a long waiting list. Your local government office has all the details. 

Other Help for Older Adults

Internet and Broadband Support

There are also a number of programs that help older adults afford Internet services if they are priced out of reach, as can be the case in rural areas, especially. Your local provider may even offer one of these plans.

Low-Cost Legal Services

Many attorneys and practices will provide legal services to older people for free or at a discounted rate.

Utilities Assistance

Many utility companies around the country provide assistance programs to older people who can’t afford to pay their utility bills. Contact your utility company and ask whether it has an assistance program. If not, the company might suggest other ways to lower your utility bills.

Living a Low-Cost Lifestyle 

Spending less isn’t just about government or private programs, and you can build in a lot of fun. You now have time to smell the roses—and even grow some—in your own garden or a community garden. You can grow vegetables, too, and those vegetables can replace some of what you buy at the supermarket.

With a little creativity, you can create four meals out of one broiler chicken, for example—plus healthy soup from the bones. Set to work polishing your cooking skills or learning some new ones because cutting back on takeout and restaurant meals can save you a lot of money.

If you live near a university, you can attend free student concerts, art shows, and lectures. Some volunteer programs include lunch for the volunteers—and they’re a good way to meet new people in your community, even if you didn’t move after you retired.

Important

Older adults are entitled to many different discounts for things such as transportation and entertainment, including many deals you might not know about.

The best exercise, if you can manage it, is walking, and all you need are adequate shoes. Look into the Silver Sneakers fitness programs, sponsored through many Medicare health plans in more than 22,000 locations. These programs allow you to work out at home or at the gym with friends and offer access to many different instructor-led fitness classes.

Controlling Your Finances

If you haven’t done so already, take control of your retirement finances. If you’re married, make sure both spouses are involved because one of you will probably have to take the primary role at some point. It’s important to discuss everything thoroughly, especially when money is tight and there isn’t much room to recover from mistakes.

This is also the time to discuss whether you plan to stay where you are or relocate to a smaller home or less expensive community. The factors to consider are too numerous to list, but try to discuss them as fully and as early in your retirement as possible.

What Happens If You Don’t Retire at 65?

If you delay retirement past age 65, you can take home more in Social Security each month, as the benefits increase the longer you put off claiming them until age 70. Continuing to work past 65 might also increase your benefits because Social Security uses your earnings and years of work to calculate what you’ll receive.

What’s a Good Monthly Income in Retirement?

What is considered a “good” monthly retirement income will vary greatly depending on the individual. Factors such as one’s savings, debt, dependents, plans for retirement (such as travel), and other factors will greatly shift how much money a person needs in retirement. A general rule is that approximately 80% of one’s pre-retirement income will be needed in retirement.

When Should I Start Collecting Social Security?

You can start collecting Social Security at age 62 if you want—but you’ll get a bigger monthly benefit if you can hold off for a few years. The maximum monthly benefit is available to you if you delay retirement until age 70, if you can. For example, if you were born in 1960 or later, full retirement age is considered to be 67. If you retire before full retirement age, you’ll get reduced benefits; retire early, at age 62, and your benefits are reduced by a full 30%. The Social Security Administration website explains how early retirement affects your benefits according to your birth date.

The Bottom Line

With a little bit of digging, older adults can find a host of targeted programs designed to assist with living expenses. Many of these programs are administered by your state or local government.

Contact the appropriate government offices for more information or go to their websites. If you need help getting online, many public libraries have extensive computer facilities and staff trained to help you learn how to use it.

Reviewed by Chip Stapleton
Fact checked by Suzanne Kvilhaug

“Present value” and “future value” are terms that are frequently used in annuity contracts. The present value of an annuity is the sum that must be invested now to guarantee a desired payment in the future, or if the annuity is already owned, it’s the amount you would get if you cashed out. The future value is the total that will be received while owning the annuity during the life of the contract.

Key Takeaways

• Present value is the sum of money needed to purchase the annuity, or if the annuity is already owned, it is the current account value reported in the statement that would be due if the contract is cashed out.
• Future value is the dollar amount that will accrue over time when that sum is invested.
• The present value, before purchasing the annuity, is the amount you must invest in order to realize the future value.

What Is an Annuity?

An annuity is an investment in the form of a contract with a life insurance company that promises regular payments for a set time period. While annuities are only issued by life insurance companies, they can also be sold by other entities such as banks and financial planners.

This type of investment is often used by those preparing for retirement or for a period of planned unemployment. Depending on the investor’s choices, an annuity may generate either fixed or variable returns.

When you purchase an annuity, the insurance company takes a lump sum of money upfront and invests it, minus the fees it charges. The investor, in return, will receive an agreed amount of money at regular intervals over a period of time.

Various Payment Options

There are a variety of arrangements that can be made. The payments can begin immediately or may be delayed to a future date when the investor is ready to retire.

Some pay until the death of the beneficiary, thus shifting the longevity risk from the beneficiary to the insurance company. Couples frequently arrange for the payments to continue through the lifetime of the surviving partner.

Important

Present value and future value depend on many individual variables.

All of these decisions affect the precise amount that the beneficiary will receive in the monthly annuity payment.

The calculation of both present and future value assumes a regular annuity with a fixed growth rate. Many online calculators determine both the present and future value of an annuity, given its interest rate, payment amount, and duration.

Present Value of an Annuity

The present value of an annuity is the current value of all the income that will be generated by that investment in the future. In more practical terms, it is the amount of money that would need to be invested today to generate a specific income down the road.

Using the interest rate, desired payment amount, and number of payments, the present value calculation discounts the value of future payments to determine the contribution necessary to achieve and maintain fixed payments for a set time period.

For example, the present-value formula would be used to determine how much to invest now if you want to guarantee annual payments of $1,000 for 10 years. To achieve a $1,000 annuity payment for 10 years with interest rates at 8%, you’d need to invest $6,710.08 today.

Another definition of the present value is to consider it the price you would pay for the annuity. If the annuity is already owned, the present value is often considered to be the account value shown on the most recent statement. This is the amount the annuity could be cashed out for.

Future Value of an Annuity

The future value of an annuity represents the total amount of money that will be accrued and paid out during the life of an annuity contract with compound interest.

Rather than planning for a guaranteed amount of income in the future by calculating how much must be invested now, this formula estimates the growth of savings, given a fixed rate of investment for a given amount of time.

The future-value calculation would be used to estimate the balance of an investment account, including interest growth, after making monthly $1,000 contributions for 10 years. In this case, assuming interest rates are 8% (which is also the growth rate), after 10 years, the future value is $182,946.04.

Are There Other Annuity Types?

While the calculation of present and future value assumes a regular annuity with a fixed growth rate, there are other annuity types:

• A variable annuity has an investment income stream that rises or falls in value periodically based on the market performance of the investments that fund the income.
• An indexed annuity is a type of insurance contract that pays an interest rate based on the performance of a market index, such as the S&P 500.

Where Else Is Present Value Used Besides Annuities?

Present value calculations are also used in valuing bonds, loans, and mortgages, and in making investment decisions by comparing cash flows that occur at different times.

Where Else Is Future Value Used Besides Annuities?

Future value calculations are also used in evaluating investment growth, understanding the potential earnings of different investment options, and determining the total cost of mortgages and other similar loans.

The Bottom Line

The formula for the present value of an annuity is:

The formula for the future value of an annuity is:

Fact checked by Pete Rathburn
Reviewed by David Kindness

GOOG vs. GOOGL: An Overview

GOOG and GOOGL are stock ticker symbols for Alphabet, Google’s parent company. The main difference between the GOOG and GOOGL stock ticker symbols is that GOOG shares (Class C) have no voting rights, while GOOGL shares (Class A) do.

The company created a new class of nonvoting stock in April 2014 and issued a Class C share for each Class A share previously held by shareholders. Anyone who held A shares at the time of the split received an equal number of C shares, but their voting power did not increase.

The stock split enabled founders Sergey Brin and Larry Page to take advantage of public-market liquidity while retaining majority control of the company.

Key Takeaways

• Alphabet, Google’s parent company, has two listed share classes that use slightly different ticker symbols.
• GOOGL shares are its Class A shares, also known as common stock, which have the typical one-share, one-vote structure.
• GOOG shares are Class C shares that confer no voting rights.
• Because of their voting rights, A shares may trade at a premium to C shares; however, in reality, the prices of the two are often quite close to one another.
• There is a third type of share, Class B shares, which are held by founders and insiders and confer 10 votes per share. Class B shares can’t be publicly traded.

GOOG

GOOG shares are the company’s Class C shares. Class C shares give stockholders an ownership stake in the company, just like Class A shares, but unlike common shares, they do not confer voting rights on shareholders. As a result, these shares tend to trade at a modest discount to Class A shares. These Class C shares should not be confused with the type of C shares issued by some mutual funds.

GOOGL

GOOGL shares are categorized as Class A shares. Class A shares are known as common shares. They give investors an ownership stake and, typically, voting rights. They are the most common type of shares.

A Summary of Alphabet’s Class Structures

• Class A: Held by a regular investor with regular voting rights (GOOGL)
• Class B: Held by the founders, with 10 times the voting power of Class A shares
• Class C: No voting rights, typically held by employees and some Class A stockholders (GOOG)

Note

Google’s parent company, Alphabet, announced a 20-for-1 stock split in February 2022. The split took effect on July 15, 2022.

GOOG vs. GOOGL: Which Is a Better Investment?

Because GOOGL shares come with voting rights, they may be considered more valuable. Shareholders with this type of stock can have a say in Google’s corporate policy, vote for the board of directors, and approve or disapprove of any major decisions.

For this reason, GOOGL shares tend to trade at a slightly higher price than GOOG shares. However, most retail investors cannot buy enough shares to significantly affect the company’s policies, making GOOG the slightly more cost-effective choice. In practice, the difference between the two share classes is usually small due to arbitrage.

How Voting Shares Are Used

Often, activist investors band together and accumulate shares to press companies into enacting shareholder-friendly initiatives that boost stock prices, such as cost-cutting, share buybacks, and special dividends.

This process can become hostile, with activists engaging in public battles to win board seats and wrest control of the company from management. After issuing nonvoting shares to retain majority control, Brin and Page need not worry about this possibility.

In 2017, S&P Dow Jones Indices announced that it would no longer add companies with multiple share classes or limited shareholder rights to its most popular indexes while grandfathering in those already included.

Are GOOGL Shares More Valuable Than GOOG Shares?

Because GOOGL shares have voting rights, and because these rights have some value, they often trade at a slight premium. In reality, GOOG and GOOGL often trade for just around the same price. Sometimes, one share class will trade at a relative premium to the other, but due to arbitrage opportunities, these spreads will often close over time.

When Was the GOOG Stock Split?

On July 15, 2022, Google conducted one of the largest stock splits in history. It was a 20-for-one split, meaning that any investor with a share of GOOG or GOOGL stock before the split had 20 shares of the stock after the split. This affected all share classes of Google stock, making the shares significantly more affordable to retail investors.

What Are Alphabet’s Class B Shares?

Alphabet has a class of B shares that are only owned by insiders, and do not trade on stock exchanges. The B shares are thus owned by Sergey Brin, Larry Page, Eric Schmidt, and a few other directors. Unlike A shares that confer one vote per share, shareholders of B shares receive 10 votes.

The Bottom Line

There’s definitely a difference between the price of the two types of Google shares that you can buy, though it is relatively small. If you feel that voting at the stockholders’ meeting is important to you, then aim for the A shares.

Learn how to turn potential financial tragedy into a temporary setback

Reviewed by Khadija Khartit
Fact checked by Vikki Velasquez

A personal financial crisis can strike at any time, whether due to job loss, medical emergencies, or economic downturns. Without preparation, these events can cause additional stress and financial instability. Below are ten effective strategies to help you prepare for and manage a financial crisis.

Key Takeaways

• Maintain an emergency fund to cover at least three to six months of expenses.
• Create a budget, track expenses, and eliminate discretionary spending to free up financial resources.
• Pay bills on time, reduce high-interest debt, and negotiate better repayment terms.
• Explore additional income streams and ensure adequate insurance coverage.
• Continuously adjust financial strategies to stay prepared.

1. Maximize Your Liquid Savings

Having readily available cash provides a safety net during financial crises. Setting aside money in high-yield savings, money market, or checking accounts can ensure you can access funds immediately.

Note that while the Federal Reserve no longer imposes requirements restricting the number of withdrawals people can make from their savings accounts, some banks and credit unions may still limit withdrawals, which can make it harder to access cash when you need it.Make sure to read the fine print on your account.

Experts usually recommend building up an emergency fund that covers at least three to six months of living expenses. To establish an emergency fund, consider saving over time—it may be easier to allocate a few hundred dollars to a savings account every month rather than saving a lump-sum all at once.

2. Create a Budget and Stick to It

Budgeting plays a key role in financial preparedness. By carefully tracking your income and expenses, you can view your financial situation and identify areas where you can cut costs. Utilize budgeting tools or spreadsheets to categorize expenses and set spending limits. Prioritize bills such as rent, utilities, groceries, and insurance. Regularly review and adjust your budget so it remains relevant.

Important

Inflation may impact cost categories differently. Price increases at the grocery store may be less than the cost increases you’d experience at your favorite restaurant.

3. Cut Unnecessary Expenses

Reducing discretionary spending frees up funds for essential needs. Analyze your monthly expenses and identify areas where you can cut back. Dining out, streaming services, subscriptions, and impulse purchases can add up quickly. Consider preparing meals at home and using coupons or cash-back programs for shopping.

4. Avoid Late Fees and Finance Charges

Late payments on bills and loans can lead to hefty fees, penalties, and damage to your credit score. Organizing your finances and setting up automatic payments helps ensure you pay your bills on time. Use phone reminders, budgeting apps, or calendar alerts to track due dates and avoid unnecessary charges. Set up auto-withdrawal payments where you can.

Contact creditors to arrange a solution if you cannot make a payment. This helps to indicate to creditors that you’re interested in paying off your debt.

Federal law allows individuals to obtain a free copy of their credit report annually from each of the three nationwide credit bureaus, Equifax, Experian, and TransUnion.

5. Take Stock of Your Non-Cash Assets

Beyond cash savings, non-cash assets can provide some relief. Conduct an inventory of gift cards, airline miles, loyalty rewards, and other assets that can offset expenses. Selling unused items—such as electronics, furniture, or collectibles—can generate quick cash.

Valuable items like jewelry or artwork may be sold or leveraged during a crisis. Therefore, you won’t have to pay additional expenses to maintain those assets.

6. Pay Down High-Interest Debt

Total U.S. household debt grew from around $8 trillion in 2004 to over $18 trillion in 2024. High-interest debt, especially credit card balances, can drain your finances quickly.

The debt avalanche method helps prioritize debts with the highest interest rates. With a debt avalanche method, you make minimum payments on all outstanding accounts and use extra money to pay the bill with the highest interest rate. If you struggle with payments, explore balance transfer options, negotiate lower interest rates, or consolidate debt through a personal loan.

7. Look for Ways to Earn Extra Cash

Explore opportunities such as freelancing, part-time work, or monetizing a hobby to boost income. Gig economy jobs like ride-sharing, delivery services, or online tutoring provide flexible income options. If your current job allows, consider negotiating for a raise, taking on overtime, or pursuing additional certifications (that your company may pay for) to increase your earnings.

8. Review and Optimize Insurance Coverage

Insurance serves as a financial safeguard against unexpected medical issues or loss. Review your health, auto, home, and life insurance policies to ensure adequate coverage and balance affordability with protection.

Increasing deductibles for all policies may reduce monthly premiums (though this means you’ll have to pay before coverage kicks in), while bundling policies can result in discounts. This also goes hand-in-hand with potentially disposing of unnecessary personal assets covered by umbrella policies. However, consider keeping coverage for potential risks such as disability or critical illness—for some, skimping on insurance could prove detrimental in the long run.

9. Keep Up With Routine Maintenance

Routine maintenance for your car and home prevents expensive repairs and prolongs the lifespan of essential assets. Regularly servicing an automobile prevents breakdowns, while maintaining your home may prevent structural issues. Additionally, try to maintain your health with annual or routine check-ups to detect medical issues early and avoid problems later down the line.

10. Plan for the Long Term

Financial crises may be temporary, but long-term planning provides lasting security. Invest in retirement accounts like a 401(k) or an individual Retirement Account (IRA), contribute to a diversified investment portfolio, and explore passive income opportunities.

Balance your emergency fund and retirement savings and maintain a consistent strategy. Although a financial setback may make it hard to contribute the recommended 15% in your 401(k), try to save at least enough to earn the employer match. For example, if an employer offers a full 3% match, you must contribute at least 3% before your employer contributes an additional 3%.

The Bottom Line

Preparing for a personal financial crisis requires discipline, planning, and proactive decision-making. Building an emergency fund, creating a budget, cutting unnecessary expenses, and securing additional income sources fortify your financial position. Paying debt, optimizing insurance, and making long-term savings and retirement strategies can also reduce unexpected financial burdens.

Statistics about people falling short of saving enough for retirement are commonplace. Many people struggle to put away a suitable amount to live on once they stop working. However, it’s typically much harder for women, who tend to shoulder more responsibilities outside of work, including raising children and caring for older family members.

Things are made worse by an advantage women typically have over men—a longer life expectancy. “Women not saving as much would be an issue even if women and men had the same life expectancies,” Melody Evans, a wealth management advisor, told TIAA in a report on closing the retirement wealth gap. “But it’s even bigger since women have longer retirements. Women should be coming to retirement with more money than men because they have to spread it over more years.”

Key Takeaways

• Women retire with 30% less retirement income than men, and they live longer on average.
• Caregiving duties force many women to work fewer hours, miss out on career opportunities, take extended leave, decline promotions, and retire earlier.
• These issues can last a woman’s entire working life, reducing earnings, which affects Social Security payments and retirement investment contributions.

Women Live Longer Yet Have Less Retirement Savings

A 2025 Nationwide study found that among female investors, more than two-thirds (67%) who have had caregiving responsibilities for children or aging parents say it has impacted their careers, with 18% saying those responsibilities have prevented them from saving for retirement. Other studies have found that women have fewer retirement accounts, contribute less to them, and think less about saving for retirement than men. All told, women have 30% less in retirement income compared to men, according to the TIAA Institute.

Despite this, women have to save for longer retirements, living about 5.4 years longer than men on average, according to Centers for Disease Control and Prevention life expectancy figures. The life expectancy for women in the U.S. was just over 80 years in 2022.

Since overall life expectancy statistics factor in people who died earlier, without reaching an advanced age, a U.S. Department of Labor statistic makes this issue clearer: Women retiring at age 67 can expect to live another 20 years—two years longer than men.

Important

Nearly a fifth of women (18%) say they don’t plan to retire, compared to 11% of men, according to a TIAA survey conducted in 2023.

Caregiving Takes Precedence Over Retirement Planning

Unpaid caregiving responsibilities continue to disproportionately fall on women in the U.S. About half of millennial women (55%) and Gen X women (47%) who support children or aging parents say they have experienced career or income disruptions due to caregiving responsibilities.

That affects retirement savings in many ways, as women work fewer hours, face more limits on their professional development, take extended leave from work, and decline or delay promotions. All of these factors can lower earnings, which in turn can reduce Social Security payments and contributions to workplace retirement savings plans.

Meanwhile, unpaid caregiving responsibilities are only expected to become a more widespread challenge as the number of older Americans is expected to grow in the coming years. According to a Wells Fargo estimate, an additional 1.7 million older adults will require care by 2032, totaling 7.1 million people.

How Women Can Buck The Trend

In the TIAA report on the retirement wealth gap, TIAA advisory consultant Kayla Stern offered tips for women to improve retirement savings:

• Use the automatic payroll deduction option to contribute to workplace retirement plans.
• Take full advantage of any employer match.
• Consider diversifying retirement nest eggs with lifetime income.
• Meet with a financial advisor once a year.

Experts recommend working with a financial advisor, many of whom are more affordable than widely believed. They can help you curtail nonessential expenses and take advantage of tax deductions and credits, such as claiming dependents on tax returns. “Women often don’t get enough help from financial advisors who can help them jump-start their retirement savings,” Stern said.

The Bottom Line

Despite their longer life expectancy, women are less prepared for retirement than men. This retirement gap stems from caregiving responsibilities that disproportionately fall to women, decreasing earnings, limiting career advancement, and reducing retirement contributions throughout a woman’s working life. Recognizing these challenges early and implementing strategic financial planning can help women chip away at the retirement savings gap.

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

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

Key Takeaways

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

What Are Private Investments?

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

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

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

Who Qualifies as an Accredited Investor?

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

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

How To Invest in Private Markets

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

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

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

The Bottom Line

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

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

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

Fact checked by Vikki Velasquez

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

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

Key Takeaways

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

How Life Insurance Works

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

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

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

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

Who Can Be a Beneficiary?

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

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

Claim Process

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

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

Statutory Time Limits

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

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

Factors That Can Affect Claim Timelines

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

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

Important

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

The Bottom Line

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