The only constant in our world is change, right?
And the financial world is no exception. No, we’re not talking about a shake-up on the executive floor of the JP Morgan building in Manhattan — but there are day-to-day changes that you might not even notice happening.
And those are the ones you’ve got to watch out for.
We spoke to one of our own in-house financial planners, Robin Hartill (you may know her as Dear Penny), who gave us a heads up on what big financial issues could be on the horizon in 2022.
And more importantly — she told us how to make sure you stay ahead of them.
Here are some of the biggest changes that are happening in the world right now and what you can do to make sure your money is safe.
1. The Housing Bubble Could Burst
Housing costs have skyrocketed since 2021 — but that’s not news to anyone. “New construction hasn’t kept up with demand, so prices have shot up really quickly — but it’s hard to know what they’ll do” says Hartill of housing price increases this year. “Because we still have such a short supply of housing”
Some suggest these crazy prices are just evidence of a pandemic-related shopping spree, which created bidding wars and sent people into contracts $50,000, $100,000 or more above the listing price.
Is it a bubble? Maybe. Fortune Magazine is just calling it “The Great Deceleration” as the rise in housing costs is slowing down. Prices aren’t going down, but they’re not going up as fast.
But here’s the thing: “Everyone needs housing” reminds Hartill. “But even if you can’t afford to invest in actual property — you can’t afford to buy your own home — you can still invest in real estate.”
Instead of putting a down payment on a home that could lose its value and have you underwater, consider other investment options. And real estate isn’t out of the question — just not in the way you might’ve originally planned.
A company called Fundrise lets you get started in the world of real estate by giving you access to a low-cost, diversified portfolio of private real estate. The best part? You don’t have to be the landlord. Fundrise does all the heavy lifting.
Fundrise’s Starter Portfolio has a minimum of only $10 and is geared toward first-time real estate investors. Your money will be invested in the company’s Flagship Fund, which already owns more than $250 million worth of real estate around the country, from apartment complexes to the red-hot housing rental market to larger last-mile e-commerce logistics centers.
Want to invest more? Fundrise offers a variety of account levels and features to fit every type of investor’s needs. Once invested, you can track your performance on Fundrise’s website and mobile app, and watch as properties are acquired, improved and operated. As tenants pay their rent, you could earn money through quarterly dividend payments, and over time, you could earn money off the potential appreciation of the property. Since 2014, Fundrise investors have earned roughly $100 million in dividends alone.
So if you want to get started in the world of real-estate investing, it takes just a few minutes to sign up and create an account with Fundrise.
2. The Big Banks Could Try to Squeeze More Money Out of You
With the rise in interest rates, Hartill says it’s great for lenders — not so much for people who need to be making money.
She hopes we’ll start seeing some higher APYs and people will earn more interest on their money in the bank, but those massive multi-national banks with brick and mortar branches every few miles in your town are trying to make up for it by taking advantage of unsuspecting customers.
That’s why Hartill suggests using an online bank instead. They don’t have the overhead involved with physical buildings, so they can afford to give you the higher APYs instead of hoarding it for themselves.
“If you’re looking to max the interest you’re earning in your bank account, an online bank would be the way to go.”
One online account is called Aspiration, and it lets you earn up to 83 times the average interest on the money in your account. 83! That’s not a typo.
Plus you can get up to 10% cash back when you use their debit card on certain purchases.
Enter your email address here to get a free Aspiration Spend and Save account. After you confirm your email, securely link your bank account so they can start helping you get extra cash. Your money is FDIC insured and they use a military-grade encryption which is nerd talk for “this is totally safe.”
3. There Could Be Big Changes in Social Security
Every year, the government makes changes to Social Security benefits. Sometimes it’s for the better, other times… not so much. Either way, you need to look out for what these changes mean for you and make sure you’re still on track for a solid retirement.
For example, social security benefits are rising 5.9% for a cost of living adjustment — the biggest one since 1982. But Hartill says the down side of that is that it’s because inflation is out of control. “Social Security quotas in general don’t keep up with inflation — and the costs that seniors face can rise faster than inflation because of medical costs and housing.”
Hartill says this underscores the importance of saving for retirement because you don’t want to be depending on Social Security benefits during your golden years.
That’s why you should be investing in your own retirement as soon as you can. “It’s important to get as much as you can out of your employer for your 401(k) match.”
Starting in your 20′s is best, but it’s never too late to start putting money into a retirement account. Especially if your employer matches each contribution — that could mean hundreds of thousands of extra dollars in your account when you retire. It’s free money!
4. Inflation Could Get Out of Control
This one isn’t a hypothetical. In 2021, inflation rose to nearly 7% — the highest it’s been in 40 years. But our paychecks didn’t rise to meet the occasion. That means last year our cost of living went way up, no matter where you live.
“Your money in your bank account isn’t keeping up with inflation, no matter how much [interest] you’re getting,” explains Hartill.
With the crazy prices we’ve seen on everything from groceries to gadgets, you should be taking advantage of every cost-cutting option available. One of the easiest bills to cut down might surprise you: Your car insurance.
Your current car insurance company is probably overcharging you. But don’t waste your time hopping around to different insurance companies looking for a better deal.
Use a website called EverQuote to see all your options at once.
EverQuote is the largest online marketplace for insurance in the US, so you’ll get the top options from more than 175 different carriers handed right to you.
Take a couple of minutes to answer some questions about yourself and your driving record. With this information, EverQuote will be able to give you the top recommendations for car insurance. In just a few minutes, you could save up to $610 a year.
5. Interest Rates Are Rising
When interest rates go up, as they are now, they can affect so many different aspects of your financial situation.
For example, credit card interest rates are already around historic highs. Hartill warns that if you’re carrying a balance, it will cost you more to pay it off as the rates continue to increase.
“Look into what you can do to get rid of that credit card debt,” she says.
A website called Fiona could help you pay off that bill as soon as tomorrow.
Here’s how it works: Fiona can match you with a low-interest loan you can use to pay off every credit card balance you have. The benefit? You’re left with just one bill to pay every month, and because the interest rate is so much lower, you can get out of debt so much faster. Plus, no credit card payment this month.
If your credit score is at least 620, Fiona can help you borrow up to $250,000 (no collateral needed) with fixed rates starting at 2.49% and terms from 6 to 144 months.
Fiona won’t make you stand in line or call a bank. And if you’re worried you won’t qualify, it’s free to check online. It takes just two minutes, and it could save you thousands of dollars. Totally worth it.
All that credit card debt — and the anxiety that comes with it — could be gone by tomorrow.
6. The Stock Market Could Make a Correction
The stock market can be unpredictable — but for the most part, it’s a long-term investment that will likely pay off, so long as you don’t need the money in the next few years (like for your emergency fund or a downpayment, says Hartill).
“In any given year, the stock market has a 75% chance of giving you positive returns. In 10 years, it’s a 90% chance. And over 20 years, never once has the stock market lost anyone money” explains Hartill.
Not once! If you can afford to let your money stay put over a long period of time — and invest across the stock market, not just in one or two companies, Hartill tells us — the stock market is a very reliable generator of wealth, she says.
Investing in the stock market can be overwhelming or feel out of reach for non-millionaires, but with an app called Stash, it doesn’t have to be. It lets you be a part of something that’s normally exclusive to the richest of the rich — on Stash you can buy pieces of other companies for as little as $1.
That’s right — you can invest in pieces of well-known companies, such as Amazon, Google, Apple and more for as little as $1. The best part? If these companies profit, so can you. Some companies even send you a check every quarter for your share of the profits, called dividends.1 It takes two minutes to sign up, and it’s totally secure. With Stash, all your investments are protected by the Securities Investor Protection Corporation (SIPC) — that’s industry talk for, “Your money’s safe.”2
Plus, when you use the link above, Stash will give you a $5 sign-up bonus once you deposit $5 into your account.*
1Not all stocks pay out dividends, and there is no guarantee that dividends will be paid each year.
2To note, SIPC coverage does not insure against the potential loss of market value.
For Securities priced over $1,000, purchase of fractional shares starts at $0.05.
*Offer is subject to Promotion Terms and Conditions. To be eligible to participate in this Promotion and receive the bonus, you must successfully open an individual brokerage account in good standing, link a funding account to your Invest account AND deposit $5.00 into your Invest account.
Paid non-client endorsement. See Apple App Store and Google Play reviews. View important disclosures.
Investment advisory services offered by Stash Investments LLC, an SEC registered investment adviser. This material has been distributed for informational and educational purposes only, and is not intended as investment, legal, accounting, or tax advice. Investing involves risk.
*Past performance is not indicative of future results. The publicly filed offering circulars of the issuers sponsored by Rise Companies Corp., not all of which may be currently qualified by the Securities and Exchange Commission, may be found at www.fundrise.com/oc.