Who invented the index fund? A brief (true) history of index funds

Pop quiz! If I asked you, “Who invented the index fund?” what would your answer be? I’ll bet most of you don’t know and don’t care. But those who do care would probably answer, “John Bogle, founder of The Vanguard Group.” And that’s what I would have answered too until a few weeks ago.

But, it turns out, this answer is false.

Yes, Bogle founded the first publicly-available index fund. And yes, Bogle is responsible for popularizing and promoting index funds as the “common sense” investment answer for the average person. For this, he deserves much praise.

But Bogle did not invent index funds. In fact, for a long time he was opposed to the very idea of them!

John Bogle did not invent index funds

Recently, while writing the investing lesson for my upcoming Audible course about the basics of financial independence, I found myself deep down a rabbit hole. What started as a simple Google search to verify that Bogle was indeed the creator of index funds led me to a “secret history” of which I’d been completely unaware.

In this article, I’ve done my best to assemble the bits and pieces I discovered while tracking down the origins of index funds. I’m sure I’ve made some mistakes here. (If you spot an error or know of additional info that should be included, drop me a line.)

Here then, is a brief history of index funds.

What are index funds? An index fund is a low-cost, low-maintenance mutual fund designed to follow the price fluctuations of a stock-market index, such as the S&P 500. They’re an excellent choice for the average investor.

The Case for an Unmanaged Investment Company

In the January 1960 issue of the Financial Analysts Journal, Edward Renshaw and Paul Feldstein published an article entitled, “The Case for an Unmanaged Investment Company.”

The case for an unmanaged investment company

Here’s how the paper began:

“The problem of choice and supervision which originally created a need for investment companies has so mushroomed these institutions that today a case can be made for creating a new investment institution, what we have chosen to call an “unmanaged investment company” — in other words a company dedicated to the task of following a representative average.”

The fundamental problem facing individual investors in 1960 was that there were too many mutual-fund companies: over 250 of them. “Given so much choice,” the authors wrote, “it does not seem likely that the inexperienced investor or the person who lacks time and information to supervise his own portfolio will be any better able to choose a better than average portfolio of investment company stocks.”

Mutual funds (or “investment companies”) were created to make things easier for average people like you and me. They provided easy diversification, simplifying the entire investment process. Individual investors no longer had to build a portfolio of stocks. They could buy mutual fund shares instead, and the mutual-fund manager would take care of everything else. So convenient!

But with 250 funds to choose from in 1960, the paradox of choice was rearing its head once more. How could the average person know which fund to buy?

When this paper was published in 1960, there were approximately 250 mutual funds for investors to choose from. Today, there are nearly 10,000.

The solution suggested in this paper was an “unmanaged investment company”, one that didn’t try to beat the market but only tried to match it. “While investing in the Dow Jones Industrial average, for instance, would mean foregoing the possibility of doing better than average,” the authors wrote, “it would also mean tha the investor would be assured of never doing significantly worse.”

The paper also pointed out that an unmanaged fund would offer other benefits, including lower costs and psychological comfort.

The authors’ conclusion will sound familiar to anyone who has ever read an article or book praising the virtues of index funds.

“The evidence presented in this paper supports the view that the average investors in investment companies would be better off if a representative market average were followed. The perplexing question that must be raised is why has the unmanaged investment company not come into being?”

The Case for Mutual Fund Management

With the benefit of hindsight, we know that Renshaw and Feldstein were prescient. They were on to something. At the time, though, their idea seemed far-fetched. Rebuttals weren’t long in coming.

The May 1960 issue of the Financial Analysts Journal included a counter-point from John B. Armstrong, “the pen-name of a man who has spent many years in the security field and in the study and analysis of mutual funds.” Armstrong’s article — entitled “The Case for Mutual Fund Management” argued vehemently against the notion of unmanaged investment companies.

The case for mutual fund management

“Market averages can be a dangerous instrument for evaluating investment management results,” Armstrong wrote.

What’s more, he said, even if we were to grant the premise of the earlier paper — which he wasn’t prepared to do — “this argument appears to be fallacious on practical grounds.” The bookkeeping and logistics for maintaining an unmanaged mutual fund would be a nightmare. The costs would be high. And besides, the technology (in 1960) to run such a fund didn’t exist.

And besides, Armstrong said, “the idea of an ‘unmanaged fund’ has been tried before, and found unsuccessful.” In the early 1930s, a type of proto-index fund was popular for a short time (accounting for 80% of all mutual fund investments in 1931!) before being abandoned as “undesirable”.

“The careful and prudent Financial Analyst, moreover, realizes full well that investing is an art — not a science,” Armstrong concluded. For this reason — and many others — individual investors should be confident to buy into managed mutual funds.

So, just who was the author of this piece? Who was John B. Armstrong? His real name was John Bogle, and he was an assistant manager for Wellington Management Company. Bogle’s article was nominated for industry awards in 1960. People loved it.

The Secret History of Index Funds

Bogle may not have liked the idea of unmanaged investment companies, but other people did. A handful of visionaries saw the promise — but they couldn’t see how to put that promise into action. In his Investment News article about the secret history of index mutual funds, Stephen Mihm describes how the dream of an unmanaged fund became reality.

In 1964, mechanical engineer John Andrew McQuown took a job with Wells Fargo heading up the “Investment Decision Making Project”, an attempt to apply scientific principles to investing. (Remember: Just four years earlier, Bogle had written that “investing is an art — not a science”.) McQuown and his team — which included a slew of folks now famous in investing circles — spent years trying to puzzle out the science of investing. But they kept reaching dead ends.

After six years of work, the team’s biggest insight was this: Not a single professional portfolio manager could consistently beat the S&P 500.

Mihm writes:

As Mr. McQuown’s team hammered out ways of tracking the index without incurring heavy fees, another University of Chicago professor, Keith Shwayder, approached the team at Wells Fargo in the hopes they could create a portfolio that tracked the entire market. This wasn’t academic: Mr. Shwayder was part of the family that owned Samsonite Luggage, and he wanted to put $6 million of the company’s pension assets in a new index fund.

This was 1971. At first, the team at Wells Fargo crafted a fund that tracked all stocks traded on the New York Stock Exchange. This proved impractical — “a nightmare,” one team member later recalled — and eventually they created a fund that simply tracked the Standard & Poor’s 500. Two other institutional index funds popped up around this time: Batterymarch Financial Management; American National Bank. These other companies helped promote the idea of sampling: holding a selection of representative stocks in a particular index rather than every single stock.

Much to the surprise and dismay of skeptics, these early index funds worked. They did what they were designed to do. Big institutional investors such as Ford, Exxon, and AT&T began shifting pension money to index funds. But despite their promise, these new funds remained inaccessible to the average investor.

In the meantime, John Bogle had become even more enmeshed in the world of active fund management.

In a Forbes article about John Bogle’s epiphany, Rick Ferri writes that during the 1960s, Bogle bought into Go-Go investing, the aggressive pursuit of outsized gains. Eventually, he was promoted to CEO of Wellington Management as he led the company’s quest to make money through active trading.

The boom years soon passed, however, and the market sank into recession. Bogle lost his power and his position. He convinced Wellington Management to form a new company — The Vanguard Group — to handle day-to-day administrative tasks for the larger firm. In the beginning, Vanguard was explicitly not allowed to get into the mutual fund game.

About this time, Bogle dug deeper into unmanaged funds. He started to question his assumptions about the value of active management.

During the fifteen years since he’d argued “the case for mutual fund management”, Bogle had been an ardent, active fund manager. But in the mid-1970s, as he started Vanguard, he was analyzing mutual fund performance, and he came to the realization that “active funds underperformed the S&P 500 index on an average pre-tax margin by 1.5 percent. He also found that this shortfall was virtually identical to the costs incurred by fund investors during that period.”

This was Bogle’s a-ha moment.

Although Vanguard wasn’t allowed to manage its own mutual fund, Bogle found a loophole. He convinced the Wellington board to allow him to create an index fund, one that would be managed by an outside group of firms. On 31 December 1975, paperwork was filed with the S.E.C. to create the Vanguard First Index Investment Trust. Eight months later, on 31 August 1976, the world’s first public index fund was launched.

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Bogle’s Folly

At the time, most investment professionals believed index funds were a foolish mistake. In fact, the First Index Investment Trust was derisively called “Bogle’s folly”. Nearly fifty years of history have proven otherwise. Warren Buffett – perhaps the world’s greatest investor – once said, “If a statue is ever erected to honor the person who has done the most for American investors, the hands-down choice should be Jack Bogle.”

In reality, Bogle’s folly was ignoring the idea of index funds — even arguing against the idea — for fifteen years. (In another article for Forbes, Rick Ferri interviewed Bogle about what he was thinking back then.)

Now, it’s perfectly possible that this “secret history” isn’t so secret, that it’s well-known among educated investors. Perhaps I’ve simply been blind to this info. It’s certainly true that I haven’t read any of Bogle’s books, so maybe he wrote about this and I simply missed it. But I don’t think so.

I do know this, however: On blogs and in the mass media, Bogle is usually touted as the “inventor” of index funds, and that simply isn’t true. That’s too bad. I think the facts — “Bogle opposed index funds, then became their greatest champion” — are more compelling than the apocryphal stories we keep parroting.

Note: I don’t doubt that I have some errors in this piece — and that I’ve left things out. If you have corrections, please let me know so that I can revise the article accordingly.

Source: getrichslowly.org

Working with Mortgage Brokers: Tips and Advice

The process of finding and buying a home can be complicated and stressful, but you don’t have to go it alone. A real estate agent can help you to find the right house; a mortgage broker can help you get the best deal. 

Everyone understands what the former does and why they need them, but many first-time buyers often overlook the services of a mortgage broker.

The question is, what is a mortgage broker, what services can they provide you with and should you work with one?

What is a Mortgage Broker?

A mortgage broker acts as an intermediary between you and the mortgage lender. The broker has your best interests at heart, working with the lender to help you secure the home loan you need at an interest rate you can afford.

Mortgage brokers are fully licensed and regulated. They know enough about mortgage companies to understand what makes them tick and help you secure the best rate from the many different lenders out there.

The broker will pull your credit report, gather documents pertaining to your income, creditworthiness, and affordability, and work as the middleman throughout. Once you find the best mortgage lender for you, the broker will help you file the loan application and work closely with the mortgage underwriters to ensure everything runs smoothly.

As a first-time homebuyer it can be very helpful to have someone like this on your team. It can feel like you’re entering the home loan process blindfolded, with little more than references and advice from friends and family to guide you. 

It’s not a hugely complicated process, but when it’s your first time, a lot of money is at stake, and you’re trying to juggle your everyday life with all these new demands, it can feel overwhelming.

How do They Get Paid?

A mortgage broker can be paid by the borrower, but more often than not they are paid by the lender. The mortgage lender pays the broker anywhere from 0.50% to 2.75% of the total mortgage amount on average. This means that on a $100,000 loan, the broker could be earning $500 to $2,750.

It can seem like a lot of money for one mortgage acquired for one buyer. However, once you consider all the work that goes into this process and the length of time it takes, as well as the fact that mortgage brokers are highly specialized individuals, it begins to look like a bargain. More importantly, you’re not the one paying the fees, so you don’t need to worry about them.

If you have any experience with affiliate companies or lead generation, it’s kind of the same thing, but on a much grander scale. Simply put, the mortgage lender needs customers and they get those customers through the broker, rewarding them with a small share of the profits in exchange.

Are Mortgage Brokers Fair?

You could be forgiven for thinking that mortgage brokers are only interested in earning money and will steer you down whatever path earns them the highest share. However, their only goal is to find the right mortgage rates for you and as long as you get a mortgage in the end, they won’t care. 

They’re getting paid either way and it doesn’t benefit them to focus on a single lender. They’ll look at all mortgage products and loan options; they’ll compare all lenders, and they’ll remain with you throughout the mortgage process. That’s all that matters, and you don’t need to worry about favoritism.

Mortgage Brokers vs Loan Officer

The main difference between a mortgage broker and a mortgage loan officer is that the former works as a middleman between you and the lender, while a loan officer works directly for the lender and is paid a salary by them.

A loan officer is also employed by just one mortgage lender, while a mortgage broker works with multiple lenders. 

Do I Need a Mortgage Broker?

The mortgage process can take a lot of time and it’s time that you might not have. If you’re busy and you’re going into this process blind, we recommend working with a mortgage broker or at least looking at ones in your area to see what sort of benefits they can provide you with.

In any case, whether you’re working directly with big banks and credit unions or going through a mortgage broker, it’s important to study the interest rates and closing costs closely. Are you getting cheaper rates but paying huge closing costs? Are you paying over the odds for your origination fee just to get a few fractions shaved off elsewhere?

A mortgage is something that may stay with you for several decades, and if you make a bad decision now, you could pay thousands or tens of thousands extra in that time. 

Always check the loan terms before you sign on the dotted line and commit to the home purchase. It’s also important to understand the house prices in your area and to have a good grasp of the current housing market. If there is any doubt that the market is about to go into freefall, you may be better off waiting for a year or two. 

Real estate is usually a sound investment that increases in value over time, but if you buy at the height just before a crash, that house may lose a lot of its value in a short space of time and take years to recover.

Finding a Mortgage Broker

We usually don’t advocate asking friends and family for advice when it comes to things like this. After all, the internet exists, and you can “ask” millions of people for their opinions at the press of a button, so why would you focus on one person?

However, when it comes to local mortgage brokers, this is one of the best tactics. You trust your friends and family to give you an honest opinion and when you don’t have a lot of reviews to read through and a lot of information to check, that opinion could be invaluable.

This works best if you have multiple people to ask. The problem is, many of them probably had a good experience and as they likely only worked with one mortgage broker, they’ll probably only gave that one recommendation to make. So, compare recommendations from different friends, see if any of them match, and pay more attention to the friends who have worked with several different mortgage brokers.

Source: pocketyourdollars.com

Bible Verses About Wealth

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When you don’t have money it can seem like the only thing that’s important.

When you do have money, keeping it and acquiring more can seem just as important, or even more so.

In this day and age it’s important for all of us to get a reminder that wealth is fleeting, and that while it can be useful, it can also be fools gold. It’s meant as a tool, and we can’t take it with us.

Today I want to look at a selection of Bible verses about wealth. The verses talk about how God has promised to provide for us, how having wealth means great responsibility for good stewardship, and why the desires for wealth can be so deceiving and easily become a false idol in our lives.

Bible Verses About Wealth

Bible Verses About Wealth

Bible Verses About Wealth

God has told us that he will meet all of our needs.  He will meet our needs, but we need to be careful of allowing money and wealth to become our master and our central focus, either by having too much, or too little.

We need to be good stewards of what He’s given us, and to use what he has given us for His glory.

1 Philippians 4:19 And my God will meet all your needs according to his glorious riches in Christ Jesus.

Matthew 6:26 Look at the birds of the air; they do not sow or reap or store away in barns, and yet your heavenly Father feeds them. Are you not much more valuable than they?

Proverbs 23:5 Cast but a glance at riches, and they are gone, for they will surely sprout wings and fly off to the sky like an eagle.

Luke 16:13 No servant can serve two masters, for either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve God and money.

1 Timothy 6:10 For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs.

Proverbs 22:7 The rich rule over the poor, and the borrower is servant to the lender.

Luke 16:10-12 Whoever can be trusted with very little can also be trusted with much, and whoever is dishonest with very little will also be dishonest with much. So if you have not been trustworthy in handling worldly wealth, who will trust you with true riches?  And if you have not been trustworthy with someone else’s property, who will give you property of your own?

Proverbs 28:20 A faithful man will abound with blessings, but whoever hastens to be rich will not go unpunished.

Deuteronomy 8:18 But remember the LORD your God, for it is he who gives you the ability to produce wealth, and so confirms his covenant, which he swore to your ancestors, as it is today.

Proverbs 28:19 Whoever works his land will have plenty of bread, but he who follows worthless pursuits will have plenty of poverty.

Matthew 6:33 But seek first the kingdom of God and his righteousness, and all these things will be added to you.

Matthew 6:19-21 Do not lay up for yourselves treasures on earth, where moth and rust destroy and where thieves break in and steal, but lay up for yourselves treasures in heaven, where neither moth nor rust destroys and where thieves do not break in and steal. For where your treasure is, there your heart will be also.

Bible Verses About True Wealth In Christ

While we’re not told that being wealthy is wrong necessarily, but we are warned against allowing our money and things become idols in our lives.

Instead of allowing money to become the central focus of our lives, we need to look to Christ to fulfill all our desires.

John 3:16 For God so loved the world that he gave his one and only Son, that whoever believes in him shall not perish but have eternal life.

Ephesians 1:17-21 I keep asking that the God of our Lord Jesus Christ, the glorious Father, may give you the Spirit of wisdom and revelation, so that you may know him better. I pray that the eyes of your heart may be enlightened in order that you may know the hope to which he has called you, the riches of his glorious inheritance in his holy people,and his incomparably great power for us who believe. That power is the same as the mighty strength he exerted when he raised Christ from the dead and seated him at his right hand in the heavenly realms, far above all rule and authority, power and dominion, and every name that is invoked, not only in the present age but also in the one to come.

Colossians 2:6-7 Therefore as you have received Christ Jesus the Lord, so walk in Him, having been firmly rooted and now being built up in Him and established in your faith, just as you were instructed, and overflowing with gratitude.

Romans 5:8 But God demonstrates His own love toward us, in that while we were yet sinners, Christ died for us.

Ephesians 2:8-9 For by grace you have been saved through faith; and that not of yourselves, it is the gift of God; not as a result of works, so that no one may boast.

Have your own verses about biblical financial principles that you believe shed light on the truth about how God views our relationship to money and to Him?

More Bible Verses About Money & Related Topics

Bible Verses About Wealth

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Source: biblemoneymatters.com

Northwestern Mutual Receives Seventh Consecutive Perfect Score on Human Rights Campaign’s Corporate Equality Index

Northwestern Mutual Receives Seventh Consecutive Perfect Score on Human Rights Campaign’s Corporate Equality Index

MILWAUKEE, Jan. 28, 2021 /PRNewswire/ — Northwestern Mutual announced today the company earned a perfect score of 100 for the seventh consecutive year in the 2021 Corporate Equality Index (CEI) survey—a national benchmarking survey administered by the Human Rights Campaign Foundation—which reports on corporate policies and practices related to LGBTQ workplace equality. Northwestern Mutual is among 767 major U.S. companies that participated in this year’s survey that earned top scores this year.

Northwestern Mutual. (PRNewsFoto/Northwestern Mutual)

“As we continue our diversity and inclusion journey, we’re pleased to once again achieve a perfect score on the Corporate Equality Index,” said Amy Hanneman, vice president of diversity and inclusion, Northwestern Mutual. “We encourage our employees to bring their whole selves to work, as it is both our similarities and unique differences that enable us to better serve our colleagues, clients and communities, and we’re committed to continuous progress in this space.”

Northwestern Mutual’s perfect score earns the company the designation of a Best Place to Work for LGBTQ Equality. This year’s report rated over 1,100 businesses on detailed criteria falling under four main pillars: non-discrimination policies across business entities; equitable benefits for LGBTQ workers and their families; supporting an inclusive culture; and corporate social responsibility.

Key findings in the 2020 CEI include:

  • Seventy-eight percent of CEI participants documented that they provide inclusive benefits for same- and different-sex spouses and partners.
  • Ninety-two percent of CEI-rated employers offer a robust set of practices (at least three efforts) to support organizational LGBTQ diversity competency.
  • Ninety-two percent of CEI-rated businesses met the standard of demonstrating at least three efforts of public commitment to the LGBTQ community.
  • Ninety-one percent of all CEI-rated businesses offer transgender-inclusive health insurance coverage.

About Northwestern Mutual
Northwestern Mutual has been helping people and businesses achieve financial security for more than 160 years. Through a holistic planning approach, Northwestern Mutual combines the expertise of its financial professionals with a personalized digital experience and industry-leading products to help its clients plan for what’s most important. With $290.3 billion in total assets, $29.9 billion in revenues, and $1.9 trillion worth of life insurance protection in force, Northwestern Mutual delivers financial security to more than 4.6 million people with life, disability income and long-term care insurance, annuities, and brokerage and advisory services. The company manages more than $161 billion of investments owned by its clients and held or managed through its wealth management and investment services businesses. Northwestern Mutual ranks 102 on the 2020 FORTUNE 500 and is recognized by FORTUNE® as one of the “World’s Most Admired” life insurance companies in 2020.

Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company (NM)(life and disability insurance, annuities, and life insurance with long-term care benefits) and its subsidiaries in Milwaukee, WI. Subsidiaries include Northwestern Mutual Investment Services, LLC (investment brokerage services), broker-dealer, registered investment adviser, member FINRA and SIPC; the Northwestern Mutual Wealth Management Company® (investment advisory and trust services), a federal savings bank; and Northwestern Long Term Care Insurance Company.

SOURCE Northwestern Mutual

For further information: William Polk, 800-323-7033, mediarelations@northwesternmutual.com

Source: news.northwesternmutual.com

Northwestern Mutual Named One of FORTUNE Magazine’s World’s Most Admired Companies

Northwestern Mutual Named One of FORTUNE Magazine’s World’s Most Admired Companies

Company honored for the 38th year with top ranking in the financial soundness, long-term investment value, people management, and use of corporate assets categories

MILWAUKEE, Feb. 1, 2021 /PRNewswire/ — Northwestern Mutual, a leading financial security company, announced today it has been named one of the World’s Most Admired Companies in its industry according to FORTUNE’s annual survey for the 38th year. Since 1983, top executives and directors from eligible companies, as well as financial analysts, have determined the companies with the strongest reputations within and across industries.

Northwestern Mutual. (PRNewsFoto/Northwestern Mutual)

Northwestern Mutual secured the number one ranking for the financial soundness, long-term investment value, people management, and use of corporate assets categories. The company also ranked highly in the quality of products/services, social responsibility, and quality of management categories.

“Northwestern Mutual is proud of our exceptional financial strength – which ensured we were prepared to navigate the uncertainties of 2020,” said John Schlifske, Northwestern Mutual chairman, president and CEO. “Our company and advisors have remained focused on our clients to help them become more financially secure – with the confidence that Northwestern Mutual will continue to grow and thrive in the years ahead. We’re proud to once again be named one of the most admired companies in our industry by FORTUNE, which was made possible because of  the hard work of our employees and advisors nationwide.”

To determine the best-regarded companies in more than 50 industries, FORTUNE asked executives, directors, and analysts to rate enterprises in their own industry on nine criteria, from investment value and quality of management and products to social responsibility and ability to attract talent.

About Northwestern Mutual
Northwestern Mutual has been helping people and businesses achieve financial security for more than 160 years. Through a holistic planning approach, Northwestern Mutual combines the expertise of its financial professionals with a personalized digital experience and industry-leading products to help its clients plan for what’s most important. With $290.3 billion in total assets, $29.9 billion in revenues, and $1.9 trillion worth of life insurance protection in force, Northwestern Mutual delivers financial security to more than 4.6 million people with life, disability income and long-term care insurance, annuities, and brokerage and advisory services. The company manages more than $161 billion of investments owned by its clients and held or managed through its wealth management and investment services businesses. Northwestern Mutual ranks 102 on the 2020 FORTUNE 500 and is recognized by FORTUNE® as one of the “World’s Most Admired” life insurance companies in 2021.

Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company (NM)(life and disability insurance, annuities, and life insurance with long-term care benefits) and its subsidiaries in Milwaukee, WI. Subsidiaries include Northwestern Mutual Investment Services, LLC (investment brokerage services), broker-dealer, registered investment adviser, member FINRA and SIPC; the Northwestern Mutual Wealth Management Company® (investment advisory and trust services), a federal savings bank; and Northwestern Long Term Care Insurance Company.

SOURCE Northwestern Mutual

For further information: Meghan Greco, 1-800-323-7033, mediarelations@northwesternmutual.com

Source: news.northwesternmutual.com

Why I Hit Unsubscribe Whenever I See This Word in an Email

Cringe Word

Cringe Word

This morning, I was going through my email inbox and I read a message containing a marketing word that makes me cringe.

It makes me cringe so bad that for the last year, I’ve been unsubscribing from 90% of the email lists I’m on when I see this word.

It’s not a big deal in the grand scheme of things.

But when I see this word, I instinctively think “here we go again” and smash the unsubscribe button with cat-like reflexes.

So what’s the word that goes over like a burp in church?

“Ninja.”

Is it a knee-jerk reaction? Perhaps.

I know someone whose cringe phrase is “magic button.” Hey, we all have our pet peeves.

So why the nauseous reaction when I see that word?

Here’s the semi-short answer:

A few years back, I watched a sales video from a well-known marketer and he described his techniques as “ninja tactics.”

It was the first time I heard the word “ninja” in a context that didn’t involve covert mercenaries wearing black, pizza-loving turtles or Kawasaki motorcycles.

I actually thought it was cool. Perfect for sales copy.

But that all changed in the ensuing months when my inbox because flooded with messages from various marketers in all fields touting their ninja tactics.

The emails all looked eerily similar. It’s like they were all using the same email marketing template.

When I see that word in an email, I know I’m in that marketer’s sales funnel. And at this point, I think we all know how the funnel works, right?

You get some friendly emails initially to warm you up, and then BAM, here come the sales offers.

Don’t get me wrong; it’s fine for these folks to make money. As an Incomist, I want to make money too. We all do, right?

But in 2020, no one wants to be “sold.”

If you’re in someone’s marketing funnel, they better have earned it.

So what’s the email marketing lesson?

Most people receive 96 business emails every day. That means the email you send today will be sitting in your subscriber’s inbox with 95 other messages.

How are you going to keep that subscriber from hitting the unsubscribe button?

It’s simple:

If you’re selling to your email list, earn their trust. Earn the right to market to them.

Don’t come in hot with ninja tactics and magic buttons.

We all expect that the email newsletters we subscribe to will eventually send a sales offer.

We all accept that trade-off when we hit the subscribe button.

But, as an email marketer, that doesn’t mean you can treat your subscribers like a cheap date.

Show some respect and take them out to dinner and a movie first; figuratively speaking, of course.

In other words, nurture your subscribers.

Be authentic, not “salesy.”

Provide value. Immense value.

Simply put, be real and genuinely try to help your subscribers.

Aim for that moment when your email subscriber finishes reading and says: “Wow, that was cool. Usually, you have to pay for that kind of information.”

And whatever you do, don’t say “ninja.”

What’s Your Cringe Word?

Do you have a cringe word? What makes you want to receive emails from someone? Let me know by commenting below.

And if you liked this article, please consider sharing it so that others can benefit from it too. Thanks!

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Source: incomist.com

Best Debt Consolidation Loans of 2021

Life can feel overwhelming when you’re saddled with loads of debt from different creditors. Maybe you carry multiple credit card balances on top of having a high-interest personal loan.

Or maybe you have a loan with an adjustable-rate and your payments are starting to rise each month, making your budget more and more uncomfortable.

In these situations, it may be wise to look at a debt consolidation loan. For some people, it’s a smart choice that gets your debts organized while potentially lowering your monthly payments. Ready to learn more? Let’s get started.

Best Debt Consolidation Loan Lenders of 2021

We’ve compiled a list of the best debt consolidation loans online, along with their basic eligibility requirements. Research each one carefully to see which one can help you with your debt consolidation.

Different lenders are ideal for different borrowers. Review these options and take a look at which ones best suit your needs as well as your credit profile. Once you have your own shortlist, you can get prequalified to compare loan options and find the best offer.

DebtConsolidation.com

Since 2012, DebtConsolidation.com has worked with borrowers to find the best debt consolidation service for their unique situation. If you are not really sure where to get started with your debt repayment process, then this is a good place to start.

The company offers many resources, tools, and relief programs on how to get out of debt quickly. Wherever you are at on your debt repayment journey, they may be able to help.

After you provide some information about your debts, the website will present the best way forward. You may be matched to debt consolidation loans, debt settlement companies, or credit counseling depending on your individual situation.

You can easily compare several different options through this service which is a great way to start your debt repayment journey off right!

It is completely free to use their services. However, when you are matched to a partner, the partner may charge fees for their services. Always make sure to understand the exact terms of your debt consolidation loan before moving forward with any company.

Marcus by Goldman Sachs

If you’re looking for an online-only lender, then Marcus by Goldman Sachs may be the right choice for you. Marcus offers personal loans that can be used for debt consolidation.

If you have a credit score of 660 or higher, you may qualify for a personal loan between $3,500 and $40,000. The APR range is between 6.99% and 28.99%.

One of the best things about taking out a loan through Marcus is how transparent the bank is. There are no hidden fees and that includes late fees, which is pretty rare among other lenders.

Plus, the bank gives you the option to choose your own payment due date. After making 12 months of consecutive payments, you can defer one monthly payment if you want.

The only real downside is that you’ll need good to excellent credit to qualify. And Marcus won’t let you apply with a co-signer.

Read our full review of Marcus

Avant

Avant is designed for borrowers with average credit or better and offers a number of perks for debt consolidation loans.

You can get help with your debt management by getting free access to resources, plus you receive regular updates on your VantageScore to track your credit repair process.

In fact, the average borrower using the funds for debt consolidation sees a 12-point increase within the first six months. So who can get a loan through Avant?

Most borrowers have a credit score between 600 and 700. While you don’t need to meet a minimum income threshold, most customers earn between $40,000 and $100,000 each year.

One of the great things about borrowing with them is that once you are approved and agree to your loan terms, you can get funding in as little as a day. This is a great benefit if you have a number of due dates coming up and want to get started paying off your current creditors as soon as possible.

Their loan terms range anywhere between two and five years, so you can choose to either pay off your debt aggressively or take the slow and steady route.

Read our full review of Avant

Payoff

If you have fair to good credit, you may be eligible for a debt consolidation loan from Payoff. The company offers debt consolidation loans with competitive rates and flexible repayment terms. Payoff focuses on helping borrowers pay down their high-interest credit card debt.

Payoff does this by providing debt consolidation loans between $5,000 and $35,000. The APR range is between 5.99% and 24.99%, depending on your credit score. The repayment terms will be between two and five years.

One of the advantages of taking out a debt consolidation loan through Payoff is the additional support they provide. Payoff doesn’t just want to help you repay your debt; they want to help you build a solid financial future.

The lender will provide financial recommendations, tools, and resources to help you stay on track. This will help you meet your short-term goals and build positive long-term financial habits.

Read our full review of PayOff

Upstart

Upstart’s target borrower is a younger person with less established credit. So maybe you don’t have a problem with bad credit, but you have a problem with no credit. When you apply for an Upstart loan, more emphasis is placed on your academic history than your credit history.

Upstart will review your college, your major, your job, and even your grades to help make you a loan offer. The minimum credit score is 620. Most borrowers are between 22 and 35 years old, but there are no technical age restrictions.

However, one requirement is that you must be a college graduate, which obviously limits the applicant pool. And while loan amounts range up to $25,000, you only have one term option: three years.

Upstart doesn’t offer the most flexibility with its debt consolidation loans. However, they have competitive rates and a unique approval model that may help some borrowers who want a loan.

Read our full review of Upstart

PersonalLoans.com

PersonalLoans.com directly helps individuals with low credit scores so this is a great place to come if you’re still in the credit repair process.

However, there are a few restrictions: you cannot have had a late payment of more than 60 days on your credit report, a recent bankruptcy, or a recent charge-off. But if you meet these basic guidelines, PersonalLoans.com may be a good option for you.

PersonalLoans.com is unique in that it’s a loan broker, not an actual lender. Through the application, you’ll get offers from traditional installment lenders, bank lenders, and even peer-to-peer lenders.

Your actual loan agreement that you choose is signed between you and the lender, not PersonalLoans.com. This provides a convenient way to compare rates and terms through just a single application process.

Read our full review of PersonalLoans.com

LendingClub

LendingClub is a peer-to-peer lender. That means rather than having your debt consolidation loan funded directly by the lender, your loan application is posted for individual investors to fund.

Additionally, your interest rate and terms are determined by your credit profile. The minimum credit score is just a 600, but the average borrowers is higher.

LendingClub boasts competitive rates; in fact, its website claims that the average debt consolidation borrower lowers their interest rate by 30%. You can use the website’s personal loan calculator to determine how much you could actually save by consolidating your debt.

There’s also a large-cap on loans, all the way up to $40,000. That’s on the higher end for many online lenders, especially those open to individuals with lower credit.

Read our full review of LendingClub

Upgrade

Upgrade appeals to all different types of borrowers. When assessing a new borrower, the lender considers various factors, including their credit score, free cash flow, and debt-to-income ratio.

The company offers personal loans that can be used for many different purposes, including debt consolidation. Upgrade will even make payments directly to your lender for added convenience.

If you have a minimum credit score of 600, you may qualify for a personal loan between $1,000 and $50,000. When you apply, the lender will do a soft pull on your credit so it won’t affect your credit score.

Upgrade is one of the best options for borrowers with poor credit and borrowers with a high debt-to-income ratio. And the lender offers a hardship program, so if you fall on difficult times financially, you may receive a temporary deduction on your monthly payments.

Read our full review of Upgrade

Discover

Discover offers personal loans for borrowers with good to excellent credit. You can use a personal loan from Discover to consolidate your existing high-interest credit card debt.

If you qualify, you’ll receive a personal loan between $2,500 and $35,000. The APR range is 6.99% to 24.99%. And the bank never charges any origination fees.

You must have a minimum credit score of 660 to qualify, so Discover isn’t a good option for borrowers with bad credit. And unfortunately, Discover doesn’t give borrowers the option to apply with a co-signer.

Read our full review of Discover

OneMain

With an A+ rating from the Better Business Bureau, OneMain is a lender committed to customer satisfaction. While they offer debt consolidation loans up to $25,000, you can also get a loan for as little as $1,500.

This is one of the lowest loan minimums we’ve seen, which is perfect if you have just a small amount of debt you’d like to consolidate because of exorbitant or adjustable interest rates.

In addition to applying online, you can also elect to meet with a financial adviser at a OneMain branch location.

In fact, part of the application process entails meeting with someone either at a branch or remote location to ensure you understand all of your loan options. This is a great step that most online lenders lack, allowing you to really take the time to weigh your options and decide which is best for you.

Read our full review of OneMain

Best Debt Settlement Companies of 2021

Taking out a debt consolidation loan is just one option when you want to lower your monthly payments. Another way to go is enrolling in a debt settlement program. Rather than paying off your lender in full, a debt settlement company can help negotiate an amount to repay so that the debt is considered settled.

In the meantime, you agree to freeze your credit cards and deposit cash each month into an account that will eventually be used to pay off the settlement.

However, the downside is that to make this strategy work, you must stop making payments on your owed amounts, which will cause them to go into default. That means your credit score will take a nosedive. But, the goal is to pay less than what you owe.

If you have enough debt that it seems impossible for you to ever repay, debt settlement might be a better option than filing for bankruptcy. Below are Crediful’s top two picks for debt settlement companies. You can find the full list here.

Accredited Debt Relief

Accredited regularly works with major banks and lenders to help clients negotiate settlements. These include Bank of America, Wells Fargo, Chase, Capital One, Discover, and other financial institutions of all sizes, both large and small.

They’ll even work with retailers if you have store cards with major balances. While results vary from person to person, they offer examples of clients saving anywhere between 50% and 80% on their amounts owed.

Read our full review of Accredited Debt Relief

National Debt Relief

National Debt Relief has an A+ rating with the Better Business Bureau and prides itself on trying to help those who truly have financial hardships in their lives.

One benefit of working with this company is that your funds are held in an FDIC-insured account that is opened in your name.

That means you have full control over the account and don’t run the risk of being scammed out of your money — you can rest assured that National is a reputable company.

Plus, the team is fully versed in consumer and financial law so you can trust that your interests are being served to the fullest legal extent possible.

Read our full review of National Debt Relief

What is debt consolidation?

Debt consolidation allows you to pull all of your smaller existing debts into one new debt that you pay each month. When you take out a debt consolidation loan, you receive funds to pay off all of your existing debt, like your credit card balances and high-interest loans.

You then make a single monthly payment to your lender, rather than making multiple payments each month. Keep in mind that this is different from debt settlement in that you’re not negotiating a new amount owed. Instead, you keep the same amount of debt but pay it off in a different way.

Depending on your personal situation, debt consolidation loans come with both pros and cons. It’s important to weigh both sides carefully before deciding if a debt consolidation loan is right for you.

Let’s delve into the details so that you can get closer to making a decision.

credit cards

Advantages of Debt Consolidation Loans

There are a number of advantages and disadvantages associated with debt consolidation loans. We’ll go over all of them so you can weigh your options.

Lower Your Monthly Payments

The biggest benefit of a debt consolidation loan is the ability to lower your combined monthly payments. Because interest rates on credit cards are so high, it’s possible that you can find a lower interest rate on a debt consolidation loan instead, which means lower payments.

However, your actual interest rate depends on several factors, especially your credit score. It’s important to compare interest rates and the total cost of the debt consolidation loan to your current payments to make sure you don’t end up paying more over time. The goal is to save you money.

Improve Your Credit Score

Another advantage of taking out a debt consolidation loan is that it can actually help increase your credit score. While your amount of debt stays the same, installment loans are viewed more favorably than credit card debt.

So if the majority of your debt comes from maxed-out credit cards, you could potentially see a rise in your credit score because your credit utilization on each card has gone down.

A debt consolidation loan streamlines your monthly payments. Rather than being inundated with multiple due dates each month, you simply have one to remember. This also contributes to building a healthy credit score because it lowers your chance of having a late payment.

Disadvantages of Debt Consolidation Loans

In some cases, debt consolidation loans might not be a great idea. We talked about the total cost of the loan, which needs to be reviewed holistically, not just as a monthly payment. This is true for several reasons.

Origination Fees

First, most lenders charge some sort of fee when you take out a new loan. The most common is an origination fee, typically charged as a percentage of the total loan amount.

So if you have a loan amount of $10,000 and there is a 4% origination fee, you’ll only actually receive $9,600. Next, compare interest rates and loan terms.

Even if the monthly payments look good on paper, you may be paying a lot more over an extended payment period. You can use the APR to compare interest rates and fees, but you also need to consider how much you’ll spend on interest over the entire loan term.

Changing Your Spending Habits

Finally, it doesn’t necessarily fix the root problem of your debt.

This isn’t something you need to worry about if your debt results from a one-time incident, such as an expensive medical procedure or temporary job loss. But if you habitually spend more than you earn and are still incurring new debt, then debt consolidation loans will not help you in the long run.

If this sounds like you, try to figure out how you can curb your spending to stop accruing more debt. You can even talk to a debt counselor to help create a sound management plan for your finances.

See also: Debt Consolidation Loans for Bad Credit

Source: crediful.com

How to Invest in Gold as a Beginner

Gold is one of the oldest investment strategies there is and continues to be relevant even today. Gold tends to move in the opposite direction as the stock market, so it can be a worthwhile asset in the event of a market downturn.

gold on table

When you imagine investing in gold, you may picture people hiding gold bars underneath their bed. This is an option, but it’s probably not the smartest investment strategy. And there are actually many ways you can invest in gold, even as a beginner.

Why invest in gold?

Before we get into how to invest in gold, it can help to understand why gold is still a sound investment in 2021. The biggest reason is that gold is considered to be an inflation hedge.

An inflation hedge is an investment that protects the purchasing power of currency from rising costs due to inflation. An inflation hedge either maintains or increases its value over a long period of time.

For instance, the dollar bill is not an inflation hedge because its value decreases over time. In comparison, an ounce of gold can still purchase roughly the same amount of goods as it could 200 years ago.

You don’t want to have all of your assets tied up in gold. But for investors that are looking for ways to protect themselves from inflation, buying gold isn’t a bad choice. And gold can help you diversify your portfolio outside of the stock market.

Pros and Cons of Investing in Gold

There are many advantages to investing in gold, but there are downsides to consider as well. If you’re on the fence about whether or not buying gold is the right strategy for you, here are a few pros and cons to think about first.

Pros

  • Gold has intrinsic value
  • It can serve as a hedge against inflation
  • A good way to diversify your portfolio
  • Buying gold can provide a feeling of security
  • It’s fairly easy to buy and sell gold coins
  • There are multiple ways to get started investing in gold

Cons

  • It can be hard to know if you’re getting a good deal
  • Storing gold can be expensive
  • Dealers can charge a number of hidden fees
  • Gold doesn’t pay interest or dividends

5 Ways to Invest in Gold

Now that you understand why gold is a good investment, you may be wondering how to get started. Well, it’s actually easier than ever to invest in gold because there are so many options available.

However, this can cause many new investors to feel overwhelmed and unsure of how best to start. If you’re new to investing in gold, here are five solid options you can consider.

1. Physical gold

The most straightforward way to invest in gold is by purchasing physical gold, either online or in-person. You can buy gold bars, coins, or bullions from gold dealers.

There are advantages to going this route, and the biggest is that it’s a tangible asset that you own. Having a tangible asset can provide many people with a sense of security, and more control over their investment.

However, if you purchase gold coins or bars, you’re going to have to choose carefully when it comes to the company you work with. Some dealers will mark up the price of gold heavily, so it can be hard to know if you’re getting the best deal.

And if you purchase physical gold, you’ll need to have a way to store it, so you’ll likely end up paying storage costs. Plus, gold is not a liquid asset, so you may have a hard time selling it down the road.

2. Gold mining stocks

One of the biggest issues many people have with investing in gold is that there’s no growth potential. Sure, gold retains its value, but it’s not going to earn you any money, which is the entire point of investing.

If this issue has been holding you back from buying gold, then you might consider gold mining stocks. Instead of purchasing physical gold, you’ll purchase stocks of companies engaged in mining precious metals.

There are many gold mining stocks that consistently outperformed the market during the fallout of COVID-19. For instance, Goldcorp, Franco Nevada Corp., and Kirkland Lake Gold Ltd. are all good options you can consider.

However, you aren’t really investing in gold; you’re investing in that business. And that always comes with inherent risks. If you choose to go this route, you’ll need to pay close attention to what’s going on with that company.

3. Gold exchange-traded funds (ETFs)

Gold ETFs are a great option for anyone that wants to invest in gold without having to pay for storage costs. An ETF holds gold bullions at a storage facility and allows investors to buy shares of the fund.

Gold ETFs are a great option for beginners because you can invest in the asset without having to physically manage it yourself. You can purchase gold ETFs through a regular brokerage firm.

4. Gold certificates

Gold certificates are another way to invest in the asset without having to physically purchase it and store it yourself. Essentially, you buy a note issued by a company that owns and sells gold. The note isn’t issued for any specific type of gold, but the company verifies that it has the assets to back the note.

Gold certificates are not a bad option for beginners, but you’ll need to choose the company wisely. Otherwise, it could be easy to fall prey to scam artists. If you’re not sure about going this route, then gold ETFs may be a better option for you.

5. Gold mutual funds

And finally, if you’re interested in the idea of owning stock in companies that deal with gold, you might consider investing in a gold mutual fund. A mutual fund allows you to own a portfolio of gold mining companies, as opposed to just investing in one company.

A gold mutual fund is a great way to diversify your portfolio, though the fees may be higher. If you’re considering this option, you’ll want to find a broker that you trust who can advise you.

What’s the Best Gold Investment Strategy for Beginners?

If you’re new to investing in gold, then you may be wondering what the best option is. The truth is, there are no perfect investment strategies, so you’re going to have to evaluate the risks and rewards of each one.

Consider what your goals are and why you want to invest in gold. If your only strategy is to protect yourself against inflation, then buying physical gold may be the right choice for you. Whereas, if you want an income-producing asset, then gold stocks or mutual funds may be a better choice.

Just keep in mind that gold should only be one part of your total investment strategy. Ideally, it will be less than 10% of your total portfolio. That way, you’ll diversify your assets without putting too much at risk.

Bottom Line

By now, you understand what the benefits and downsides are to investing in gold, as well as your options for getting started. If you want to move forward and begin investing in gold, it’s best to start small and slowly increase your assets over time.

Make sure you do your homework when it comes to the company you choose to work with. When you talk to potential companies, try to get a sense of how transparent they are and forthcoming about the fees they charge. It’s also a good idea to check their ratings and reviews so you can see what kind of experience other customers have had.

But if you take your time and invest wisely, you could protect yourself from future market downturns.

Source: crediful.com

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