You've learned to invest 15% of your household income into retirement. Now what? The ultimate goal of investing is to let your money work for you and provide you with stable, passive income.
But getting there is going to cost a pretty penny.
This month, take the time to learn the dollars and cents of investing. Of course, you knew that investing was going to mean coming up with the actual money you’re putting into the market, which always holds the possibility of being lost forever. But did you know there are going to be various fees, commissions, and taxes you’ll have to pay, too?
Let’s take a peek at an actual investment to illustrate this. The company and amounts have been changed, but they’ve been accurately scaled down to size.
Suppose that, on Aug. 13, 2015, a share of stock in Apple closed at $43.26. During the next few months, Apple issues four dividends of $0.55 per share. On Aug. 25. 2016, a share of stock in Apple closed at $51.23.
Let’s say you chose to invest $1,000 in Apple on Aug. 13, 2015 and you withdrew it on Aug. 25, 2016.
At the time of your investment, $1,000 would buy you 23.25 shares of Apple. Over the year, you would have received $51.16 in dividend payouts. When you withdrew from the company a bit over a year after your initial investment, you’d sell that stock for $1,191.09.
It seems like your gain from this stock is $242.25, broken down into $51.16 in dividends and another $191.09 from selling the stock. Simple, right?
The problem is, though, you haven’t exactly earned that much. Here’s where the costs of investments come into play.
First, the dividends would be subject to income tax. In this case, the dividends are considered qualified dividends, and would therefore be taxed at a rate of 15% by the federal government and possibly more by state and local sources. As a result, $7.67 of that dividend gain is eaten up by these taxes.
Second, you’re going to have to pay your broker for the cost of buying and selling the stock. Let’s say, hypothetically, you’ve used an online discount stock brokerage firm. The buy and the sell would each cost $9.99. That’s another $19.98 dropped from your gain – although this fee is tax deductible.
Third, the gain on the sale would be a long-term capital gain, so 15% of that gain goes to the federal government. Since your gain was $191.09, you’d be paying an additional $28.66 in taxes on the sale.
In total, your expenses for your gain add up to $56.31. Just like that, nearly 30% of your gain is gone!
Even if your investment is a loser, you’re still paying the brokerage fees and will earn less in dividends.
The moral of the story? Investing costs. You’re taxed if you gain, and you’ll get hit with brokerage fees whether you win or lose.
Some forms of investing have lower costs than others. If you invest directly with an investing house, you can bypass the investing fees and only pay the taxes on your gains. However, you’re limited to the offerings that the investing house has available, and you’ll be subject to their often inflexible minimums for investing.
You could also simply invest in a money market account or other savings option at Wasatch Peaks Credit Union. Your returns will come with fewer or no costs. Plus, your balance isn’t at risk. Yes, you might “lose” some gains by only having the cash in a savings account, but your money is earning a steady return. If you invest elsewhere, it’s possible that the costs, the fees and the taxes can easily eat up a substantial amount of whatever you gain or make an already painful loss even harder.
It’s important to note that the bigger your investment, the smaller the impact such costs have. At the $1,000 level, the investment fees in the above scenario typically eat up about 2% of your balance. If you’re investing $10,000, the fees will only eat up 0.2% of your balance, and if you invest $100,000, the fees eat up only 0.02% of your balance.
Thus, as a beginning investor, it’s crucial to know the total cost of ownership of an investment as you consider it. Even a small fee can significantly lower your total return when you’re starting out with small investments.
That’s why it’s best to take it slowly at first and continue learning about the market and stocks you’re interested in. Know exactly what you’re going to invest in – and what all of the costs of that investment are – before you put down any of your money. After working out the math, you may find you’d rather wait until you have a substantial amount saved up for investing, as these fees don’t make such a big dent when the gains are larger.
So, before you make that first investment, learn the costs and be sure it’s worth the price!
Did you get hit with any surprise costs on your first investment? Share your experience with us!
Credit score is one of the most important factors of mortgage rates and many other important elements of a home loan, but many people have several misconceptions about the basics of credit score. At Wasatch Peaks Credit Union, our financial advisors are here to help clear up any confusion you may have in any element of the mortgage loan process.
We’ve found that much of our clients’ confusion often relates back to a simple lack of knowledge about credit score numbers – how many scores you have, how they’re calculated and what you can do to view your current score without dinging yourself financially. Let’s look at a few of these lesser-known areas of credit scores.
The most popular form of credit score monitoring is called FICO score, introduced by a company called the Fair Isaac Corp. over 25 years ago. It uses a proprietary formula designed to predict how likely someone is to repay a debt balance. Its chief competitor is VantageScore, a metric designed by three major credit bureaus that has gained popularity in recent years – we’ll compare the two in a moment.
Even within each type, though, know that things won’t always be standardized. Each different one is frequently updating their algorithms, and different individual creditors or lenders may not be on the exact same versions. Think of it like updating your computer to a new version of Windows – some lenders might have the FICO 8, but others might have the newer FICO 9, and your score may not come out exactly the same. If you want to standardize here, you’ll have to make sure you use the same version of a credit report, not just the same brand.
FICO is used more commonly by lenders, while VantageScore is gaining ground with consumers and lenders alike. There are a few other key differences:
Many people assume that you simply can’t view your credit for free, but this is no longer true. A site like NerdWallet offers free scores online and score simulators, and there are other tools available to landlords.
To learn more about credit score, or any part of the mortgage process, speak to a financial advisor at Wasatch Peaks today.
Utah saves money with historically low interest rates!
You can save money with your Wasatch Peaks auto loan:
Getting your auto loan started is as easy as coming into any branch, applying online, or calling 801-627-8700!
Wasatch Peaks makes it easy for you by preparing your loan documents and paying off your current loan balance with another financial institution. All you have to do is sign and drive away with a lower rate on your new auto loan!
*Annual Percentage Rate (APR). On Approved Credit (OAC). This is our best rate; your rate may be different depending on credit history and underwriting criteria. Rates subject to change based on vehicle loan-to-value and term. Limited time offer.
What kind of saver is your child? One who saves happily, or with a scowl? To find out, stop by one of our branches during National Credit Union Youth Month.
Every saver is unique, but most people who save regularly developed the habit early in life. Learning to delay gratification in order to save for long-term goals is a crucial life skill, and one that Wasatch Peaks is committed to helping our youngest members develop.
That’s why we, at Wasatch Peaks Credit Union, create programs and services designed specifically for young people. With a Wasatch Peaks Credit Union MONEY MOO$E™ Kids Club account, you can start teaching your children or grandchildren (up to 12 years-old) the importance of saving for the future.
The MONEY MOO$E™ Kids Club is a savings account that is designed to help your child succeed financially from a young age and throughout life. Wasatch Peaks offers Display Prizes for kids to collect whenever they make a deposit.
MONEY MOO$E™ teaches three important financial concepts: Save, Share, and Spend. As a member of the MONEY MOO$E™ Kids Club, kids will receive:
Visit a Wasatch Peaks Credit Union branch to open a MONEY MOO$E™ Kids Club Account today!
OGDEN, UTAH, March 15, 2017 – The 87th Annual Meeting of Wasatch Peaks Credit Union was held on Thursday, March 2nd at the Walker Cinemas in North Ogden. During the business meeting, the 2017 Board of Directors election results were announced. Nanette Combe, who has 22 years of experience working for credit unions, was elected as the newest member of the Board. Mrs. Combe graduated from Weber State University with her Bachelor of Science degree in Accounting. She joins the incumbent directors Brad Egbert, Mike Enz, and Mark Ramsey who were elected to new three-year terms on the Board of Directors. Other Board members include Bill Frye, Cindi Hellewell, Ronald Hill, Gary McDaniel, Randy Rounds, Todd Skeen, and Curtis Smout. Wasatch Peaks thanks former director, Gerald West, for his 12 years of dedicated volunteer service on the Board.
The highlight of the evening was the presentation of $10,000 from Wasatch Peaks Credit Union to local school foundations. Ogden School Foundation and Weber School Foundation were each given $5,000. Wasatch Peaks is proud to support our students, teachers, staffs, and education programs in the community.
In addition to prizes such as T-shirts, LED lanterns, and cash prizes, approximately 900 members enjoyed the showing of The Lego® Batman Movie and The Great Wall.
Thanks to all who attended and made this special night a success! As always, the board members, management, and staff of Wasatch Peaks Credit Union were delighted to show appreciation to members by hosting an event that members of all ages could enjoy.
Wasatch Peaks Credit Union is a federally chartered credit union. All those who live, work, worship, attend school in Weber, Davis, and Morgan Counties, or have immediate family who are members, are eligible for membership. Wasatch Peaks Credit Union has eight branch locations, more than 31,000 members, and $293 million in assets. For more information: visit wasatchpeaks.com or call 801-627-8700. Follow Wasatch Peaks Credit Union on Facebook, Twitter, YouTube, Instagram, and Pinterest.
Temperatures are rising, days are getting longer and kids are dying to get out of the classroom! This can only mean one thing: Summer is just around the bend. It’s time to start planning trips, summer camps, and summer jobs.
Despite the fact that school won’t end in most places for another month, it’s still a good time to start thinking about summer work. The timeframe for hiring can be as long as a month, so waiting until school is officially out isn’t a good idea. Not sure where to start? Try these four tips to jumpstart a summer job search for yourself or a young adult.
One of the best ways to hit the ground running is to disrupt the lengthy hiring process of most big employers by going after small business opportunities. Where better to get your foot in the door than with someone you already know? Asking friends and family if they need help with their businesses can be a great way to start building your experience.
Parents, too, can help out in the search. They might ask at their own workplaces about summer or seasonal positions. Commuting with a parent will give you extra quality time and cut down on transportation difficulties.
Even if you don’t have friends and family who can connect you directly to employment, it’s a good idea to let them know you’re looking. If you’ve got a friend of the family you’re especially close to, ask if they’ll serve as a reference. A good reference can really boost a short resume!
If you’re not looking for a job that will carry over into the school year, it’s a good idea to look for an industry that does most of its work during the summer months. Fortunately, such jobs are common. Many businesses are looking to hire seasonally during summer months.
If you live near a major tourist attraction, odds are good they’ll be bringing in extra hands to cover an increased service demand. The same goes for restaurants and shopping centers near those attractions. If a major festival comes anywhere near you this summer, call and ask if they need extra help. Such jobs are usually short-term and perfect for someone who has those same few weeks off.
Other businesses do booming trade during the summer. Many people take on big remodeling projects during the summer, so construction companies need more people to help clean up job sites. Lawn care services usually have more work than they can handle, and city park districts also step up their programming to serve kids while they too are out of school.
It’s tempting to do all your job searching from the computer. It’s air conditioned and you don’t even have to get out of your pajamas! While these benefits are nice, they don’t do much to showcase you to potential employers.
Think of it this way: What most employers are looking for is someone who will show up regularly and be presentable. Putting on your dress clothes and hitting the streets with a resume shows that you’re willing to leave the house and can put yourself together professionally. That’s something no online resume can convey.
Getting that first real paycheck can be an exhilarating experience. Unless you’re careful, it can also be a very short-lived one. It’s too easy to watch that hard-earned money disappear into a few fast food meals or evenings with friends.
Making a plan now, before you’ve got a dime in your hands, can be a great tool to keep you on track. Decide how much you’ll save, and what you’re saving for. What portion of your money will you save for new clothes in the fall? What will help cover college expenses? Of course, you’ll want to budget yourself a little fun money, too.
Once you’ve made the plan, Wasatch Peaks Credit Union can help you stick to it. Youth savings accounts are made just for people in your position. They offer competitive dividend rates combined with other features that make them ideal for those summer checks. Call 801.627.8700 or stop by Wasatch Peaks to find out how a youth savings account can improve your financial future.
What’s your best summer job hunting tip? Share your wisdom with us in the comments!
Wasatch Peaks Credit Union members elected four Directors to the Board in the Board of Directors election at the 87th Annual Meeting held on Thursday, March 2nd at Walker Cinemas in North Ogden. There were five candidates running for four Board seats. Brad Egbert, Mike Enz, Mark Ramsey (incumbents) and Nanette Combe (candidate) were elected to three-year terms on the Board of Directors. Wasatch Peaks thanks former director, Gerald West, for his 12 years of dedicated volunteer service on the Board.
Each of the eleven members of the Board is elected by members of Wasatch Peaks Credit Union for a three-year term. They are respected members of our community and we are proud to have them represent our Wasatch Peaks Credit Union. Here are the members of the 2017 Wasatch Peaks Credit Union Board of Directors: Mark Ramsey, Ronald Hill, Cindi Hellewell, Curtis E. Smout, Gary McDaniel, Todd Skeen, Brad Egbert, Bill Frye, Randy Rounds, Mike Enz, and Nanette Combe.
On Monday, March 6th, at the re-organizational Meeting, the Board of Directors named their officers for the coming year. Mark Ramsey was named Chairman, Ronald Hill–Vice Chairman, and Cindi Hellewell–Secretary.
We thank all of our volunteer officials for their service and leadership; they are instrumental to the continued success of Wasatch Peaks Credit Union. We would also like to thank all Wasatch Peaks members for their attendance at the 87th Annual Meeting and for participating in electing their Board of Directors for Wasatch Peaks Credit Union.
Countless blog posts have been written about credit scores and credit reports. Not one post has been written about my personal experience with credit reports. So, I’m going to share my credit story. I would love to hear your experience with credit reports & scores too!
Here are my tips for healthy credit scores:
Credit scores determine your ability to borrow money from many lenders. In my early 20’s, I applied for a car loan from a credit union. Then, I shopped for my dream car. The lender told me that I qualified to borrow $10k. That wasn’t enough to buy my dream car. I felt surprised that I didn’t qualify for more. I had heard stories of others who made less than me and qualified for so much more. I didn’t understand how credit was used to grant loans.
Years later I worked for a nonprofit and taught financial education. As I taught about credit, I understood why I hadn’t qualified for more money years before - I even felt surprised that I had qualified for $10k. Since I had no credit at the time, I had no credit score. The credit union was looking at my credit score and my income.
If you are wondering about the end of the story, here it is: Well, that experience helped me realize the value of money. I realized that ten thousand dollars was a lot of money! I actually decided not to buy car at that time. Instead, I used a free bus pass offered through my college until I graduated.
Nine years ago, we refinanced our home. The refinancing process included a credit check. The loan officer noticed that another social security number was being reported on one of my credit reports. It was an easy fix. She sent a letter stating that the social security number reported was not mine, and it was corrected.
Checking your credit report is one way to catch identity theft as early as possible. Also, mistakes on your credit report can negatively affect your credit score. Millions of Americans have mistakes on their credit report at some point in their lives. If you notice the mistake and notify the Credit Reporting Bureau of that mistake, they are required to investigate it. If you need more information on how to do this, check here. Disputes can be done online.
Ever since that time, I’ve checked our reports regularly. How often is regularly? Well, it’s not as often as I should be exercising or eating, but it is as often as I should be getting a physical check up (which I haven’t done for a while). An annual credit checkup has worked well for me. I suggest you find a time that you can remember to check it. If you aren’t preparing to get a loan, it’s easy to forget about checking your credit - just like it has been easy for me to forget about getting a physical checkup because I’ve been healthy.
By checking your credit score once a year, you can ensure accuracy so that when you do need credit, your reports will be accurate and you will be prepared. One friend told me that she checks her credit reports on her birthday so that she can remember to do it. I check my reports when I do my taxes, because they are both financially related. You can check your credit report once a year from three credit reporting companies for free through this website. (It does cost to get your FICO (Fair Isaac Corporation) score.) Each company reports different information in different ways. You don’t have to get all three reports at the same time. If you want to check one report every four months, you could do that. Decide what works best for you.
Credit Reports are not the easiest documents to read and understand. I almost needed a magnifying glass to read Transunion’s small wording on its report. I remember feeling confused and overwhelmed the first time that I read my credit reports. The reports seemed too long for someone with such little credit history, but it listed every address where I had lived. It also listed everything I had done financially.
Credit history can be long. Our mortgage loan was sold several times, and we have refinanced twice. So, all of that information is listed. Be prepared to sift through a lot of information. Check to make sure that the information is accurate. There are three different agencies that report credit information: Equifax, Experian, and Transunion. Each report is different.
There are five basic components of a credit score. If you want more information about those five components of the credit score, read this blog post from Wasatch Peaks. I promise that checking your credit reports isn’t as painful as it may sound and is vital to keeping your credit score accurate and healthy.
To further understand your Credit Report, feel free to use the financial counseling services that Wasatch Peaks offers. The counselors are certified credit report reviewers and are there to give you guidance and support, whatever your financial situation.
Have you been bitten by the business bug? It’s all very exciting, but check this list first to be sure you’re truly ready to become an entrepreneur.
Are you a small-business owner? What advice do you have for those who are just starting out? Share your wisdom in the comments!
Wasatch Peaks Credit Union is so excited to announce that we are now live with our new Peaks Money Manager™ product.
This is a data-driven money management tool that securely integrates into digital banking products and enables users to take control of their finances. Budgeting, account aggregation, auto-categorization, and debt management are just a few of the tools that this product offers.
It is easy to access – just login to your Wasatch Peaks account online and select Services, then select Peaks Money Manager.
There is also an app available for mobile devices. The apps can be found in the app stores! Follow this link to download for Androids or this link to download for Apple products. Once you download the app, it will ask for an access code. This is generated within the desktop version of Peaks Money Manager. Simply login to your account at your desktop or laptop and select Services and then Peaks Money Manager. From there go to Settings (top right-hand corner) and then select Mobile Devices and click on Generate Access Code.
This is a great way to see all of your accounts at Wasatch Peaks Credit Union as well as any other financial accounts you have elsewhere. You can look at your HSA, John Hancock Account, and many others in one place to help view your total financial picture. Download or access it on your desktop today and take control of your finances!