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Yahoo
3 days ago
- Business
- Yahoo
I Asked ChatGPT To Give Me the ‘Cheat Code' for Making the Most of My Money: Here's What It Said
If managing money feels like trying to beat a boss level with no walkthrough, you're not alone. Many people work hard but still feel stuck in the same place financially. So the idea of a 'cheat code,' like having a simple, strategic way to make money work harder, feels tempting. Read Next: Explore More: GOBankingRates asked ChatGPT to outline the most effective habits and tools that can stretch, grow and protect income over time. The goal is not to get rich overnight, but to play smarter with what you earn. So this is the cheat code for making the most of your money, according to ChatGPT. Also see seven tricks to make the most of your bank accounts. Automate Everything You Can ChatGPT put automation at the top of the list. That means setting up automatic transfers into a high-yield savings account, scheduling bill payments and directing part of each paycheck to investments. Services like Wealthfront and Betterment help users auto-invest based on risk preferences. The same goes for investing apps like Fidelity and Vanguard, which let you schedule regular deposits into index funds. Using budgeting tools can help you track spending and catch leaks before they drain your account. 'Automating your money removes emotion and inconsistency from your finances. It's the closest thing to passive self-discipline,' ChatGPT explained. Check Out: Live Below Your Means, Aggressively Living below your means isn't about being cheap; it's about being strategic. ChatGPT suggested tracking every dollar, capping lifestyle creep and viewing minimalist living as a strength. The less you spend, the faster you build a surplus. To do so, it recommended learning how to budget. 'You don't need to track pennies to win at budgeting. What matters most is having a repeatable system,' ChatGPT said. It recommended two simple methods: The 50/30/20 rule: 50% for needs, 30% for wants, 20% for savings or debt Zero-based budgeting: Assign every dollar a job. Apps like YNAB and Goodbudget can help users stick to a plan without getting overwhelmed. Invest Early — Even With Small Amounts Compound interest is the real cheat code. ChatGPT explained that investing early, even small amounts, can grow into a large sum over time. Consistency is key. Put money into broad-market exchange-traded funds (ETFs) or index funds, use tax-advantaged accounts like a Roth IRA, and always reinvest dividends. The sooner you start, the more time your money has to multiply, and history shows this approach beats trying to time the market. Starting small is often better than waiting for the 'right' time. 'Time beats timing. The earlier you invest, the more compound interest works in your favor,' according to ChatGPT. Build an Emergency Buffer One overlooked cheat code is having money set aside for surprises. Surprises happen, and an emergency fund is your financial firewall. ChatGPT recommended saving three to six months' worth of expenses in a high-yield savings account. This cash cushion keeps you from dipping into investments or racking up debt when life throws a curveball. Having this safety net reduces stress and prevents financial setbacks from turning into disasters. Learn How To Maximize Credit, Without Debt Credit isn't just about borrowing. It affects interest rates, housing applications and even job offers. 'Treat your credit score like a tool, not a trap. Use it to access better terms, not unnecessary purchases,' ChatGPT said. That includes paying bills on time, keeping utilization under 30% and regularly reviewing your free credit reports. Strategic use of cash-back cards can also put money back into your pocket, if paid off monthly. Debt with high interest, like credit cards, can quietly eat away at your wealth. If you currently have debt, ChatGPT suggested using either the avalanche method (tackle the debt with the highest interest rate first) or the snowball method (pay off the smallest balances for quick wins). Refinancing or consolidating debt can also help if your credit score allows. Don't Just Save — Earn More Strategically Cutting expenses has limits. Earning more often delivers faster growth. ChatGPT highlighted a growing trend: 'Monetizing skills online, through freelancing, content creation, or digital products, is more accessible than ever.' Instead of chasing endless gigs, ChatGPT said to focus on building high-value skills — think coding, digital marketing or sales. With these skills, you can negotiate raises or land better jobs, which is often more sustainable than juggling multiple side hustles. Platforms like Fiverr, Upwork and Teachable let users build scalable side income, turning time or knowledge into long-term assets. It's not passive at first, but it can become hands-off with the right systems. More From GOBankingRates Mark Cuban Warns of 'Red Rural Recession' -- 4 States That Could Get Hit Hard 6 Popular SUVs That Aren't Worth the Cost -- and 6 Affordable Alternatives 7 Things You'll Be Happy You Downsized in Retirement This article originally appeared on I Asked ChatGPT To Give Me the 'Cheat Code' for Making the Most of My Money: Here's What It Said Solve the daily Crossword
Forbes
4 days ago
- Business
- Forbes
The Best Brokers For Saving On Capital Gains Taxes
Y ou make money in the market but tell the IRS you're losing money. Yes, this works—for a while . Direct indexing with loss harvesting looks like a bonanza, for both providers and customers. Is it? Short answer: Yes, but. Yes, you can do nicely with this scheme, more than covering the fees charged. The two buts: (1) Before getting in, think about what's going to happen on the way out. Below I will present a cautionary tale about the resulting mess. (2) Take any vendor's projection of tax savings with a grain of salt. Providers evidently see gold here. In recent years Vanguard, BlackRock, JP Morgan Chase and Morgan, Stanley have bought their way into the business. Wealthfront, a Palo Alto, California robo-adviser, has made a great success democratizing automated loss harvesting and aims to go public in the near future. Frec, a newer San Francisco firm and something of a Wealthfront knock-off, has shaken up the business with an insanely low-cost offering. Direct indexing means owning the S&P 500 or another index not via a fund but via individual stock positions. Instead of putting $100,000 into the Vanguard S&P 500 exchange-traded fund you buy 42.4 shares of Nvidia, 13.7 shares of Microsoft, 0.33 shares of Westinghouse Air Brake Technologies and so on. Or rather, a computer does the buying. Periodically the computer plucks out losers to sell for a capital loss, replacing them temporarily with substitute stocks that behave similarly (Merck for Pfizer, perhaps). After 30 days have passed, the original position can be restored without creating a loss-killing wash sale. You sit on the winners for as long as you can. We are, of course, talking about money in taxable accounts. There is no point to direct indexing inside an IRA or 401(k). A direct indexing account typically has between 200 and 400 stocks. You don't need more than that to do a decent job of tracking an index with 500 stocks in it. Parametric Portfolio Associates was a pioneer in this business, originally offering the tax dodge to wealthy clients paying for custom portfolio management. Its direct-indexing skills (and the large footprint of Morgan Stanley, which picked up the company when it acquired Eaton Vance) explain Parametric's $400 billion of assets under management. The prevalence of fractional shares and the automation of financial advice mean that little people can now get in on the action, with as little $5,000. What kind of capital losses do you get? That will depend on the direction and the volatility of the market. Over a decade, Wealthfront reports, capital losses have averaged 2.6% to 3.3% per year for its clients, but there is a great deal of year-to-year variation. People who put money in at the beginning of 2022 got a gusher of losses in the ensuing crash, but then they would have been better off waiting for a year and doing without the tax goodie. Remember that your aim with loss harvesting is not to have losses. It's to have gains but report losses. Suppose you have a plump capital loss to put onto your tax return. How much good does that do you? This is a function of your tax bracket and your other investing activity. Capital losses can absorb any amount of capital gains and, beyond that, can be written off against up to $3,000 a year of ordinary income like salaries. Unused losses can be carried forward indefinitely but expire with the taxpayer's death. It is reasonable to expect that the tax benefits will, in the early years of a direct indexing account, more than pay for the fees, which are usually in the range of 0.1% to 0.4% a year. But at some point, perhaps after five years of a mostly bullish market, or later if stocks go sideways, you will have nothing but gain positions. Note that someone who bought in 2015 would not have derived much tax benefit from the crash of 2022 because even at its low point that year the market was twice as high as in 2015. This matter of loss exhaustion brings me to the first caveat about fancified indexing. What are you planning to do when it's time to move on? To illustrate, I will cite the case of a Forbes reader that I will identify as Mr. X. X signed up for a separately managed account with a financial advisor who was using direct-indexing software. Recently, with most of the potential losses captured, he quit the advisor and deposited the stock at a discount broker. He asked me: Now what should I do? X is sitting on an interesting pile of shares. He owns Nvidia at a $12 entry point, and should let that position ride. So, too, with gains in Taiwan Semiconductor, Broadcom and Microsoft. But he's got 140 positions that are now underwater or showing small gains. It would be nice to declutter. Some of these clunkers will be easy to dispose of. Pepsico, Nike, Pfizer—no problem. But what about PT Bank Raykat or Airports of Thailand? These American Depositary Receipts trade over the counter, which is to say, not on Nasdaq or the New York Stock Exchange. On Yahoo Finance I recently saw the airport ADR with an average daily trading volume of 993 shares and a frightful bid/ask spread of $9.52 to $12. X could sell all the cats and dogs, but would probably get hosed on the OTC shares. Apart from their sometimes larcenous bid/ask spreads, unlisted shares may not qualify for commission-free trading. Another problem: Odd lots (less than 100 shares), of which X has more than 400, are sometimes hard to trade. This junkpile cries out for all-or-none orders (you don't want a trade to turn an odd lot into an odder one). But combining that restriction with a price limit increases the chance that an order simply won't be executed. X did walk away with a fat loss carryforward, which may come in handy some day, but is likely to spend many hours cleaning up. Here's someone commenting anonymously online on direct indexing: 'I made a big mistake doing it in a Wealthfront account and when I wanted to consolidate holdings with another firm, I had to manually sell 195 securities. Stick to broad index ETFs!' I don't entirely agree with that sentiment. Direct indexing makes sense if you have plans for the end game and if you stick to large U.S. companies. I'll go this far with the Wealthfront critic: You should get your small-stock and foreign exposures via ETFs. Now let's look at the second caveat, which is to understand the value of a capital loss. Wealthfront says that, over the past decade, it has captured $3.5 billion of losses for its customers, 91% of them short-term. (These figures include earlier versions of tax-wise automated investing as well as the more recent direct indexing product.) The losses, it declares, have saved people an estimated $1 billion in taxes. Fine print: The estimate assumes that all of the short-term losses went to use, immediately, against short-term gains. This is unrealistic. Someone with a $100,000 account generating $3,000 of capital losses, and with no capital gains to report, can indeed use the $3,000 against ordinary (that is, high-taxed) income. But someone with a $1 million account generating $30,000 of capital losses is unlikely to be using all that against high-bracket income. It would require having at least $27,000 of short-term capital gains. People do not have short-term capital gains unless they engage in foolish behavior, such as investing in a hedge fund. Rational investors do, however, have long-term gains to report. They get them from employer stock, sales of homes, all-cash takeovers and unwanted capital gain distributions from mutual funds. Realistic assumptions for big-ticket investors: You will be using most of your capital losses, whether short or long, to absorb long-term gains. You may find yourself using a loss long after you harvested it. The top rate on long gains is 23.8% plus whatever your state grabs. Conclusion: Losses are valuable but not as valuable as advertised. Now here are some product reviews. Wealthfront This one is my favorite. It offers a direct-indexed S&P 500 account at a bargain-basement 0.09% annual fee, with a $5,000 minimum. Frec In a price war with Wealthfront, this outfit has the same 0.09% fee for the S&P 500 direct deal, with a $20,000 minimum. It gets a runner-up status because it's newer and smaller. It oversees $350 million to Wealthfront's $80 billion. Frec has some interesting variations on the theme, including a Sharia-compliant index portfolio at 0.35%. Fidelity Its direct-indexing product uses 250 or so stocks to mimic the Fidelity Large-Cap Index (similar but not identical to the S&P 500). The annual fee is 0.4%, with a $5,000 minimum. When the harvesting wears out you can transfer the collection of stocks to a no-fee brokerage account. Forty basis points is a lot. But using this service could make sense if you have other money at Fidelity, which oversees (in custody or management) $15 trillion. It has a powerful brokerage platform and the oldest and biggest broker-affiliated donor-advised charity fund. Exit plan: Offload your long-term winners onto the charity, which will take them, fractional shares included, with a few mouse clicks. Schwab Charles Schwab has a 0.4% direct indexing product (minimum, $100,000) and a charity fund similar to Fidelity's. Vanguard This firm invented retail-level indexing and is known for its low costs. Four years ago it spent an undisclosed sum of money (your money, if you are a Vanguard customer; it's a mutual corporation) to acquire direct indexer Just Invest Systems. So, what's on offer? I can't find an answer on the Vanguard website, which has only a vague description of direct indexing aimed at financial advisors. The company did not respond to a press inquiry. A few weeks ago former shareholders of Just Invest sued Vanguard, claiming they were double-crossed on a performance payout. Could be a while before we see a competitive offering from the indexing king. More from Forbes Forbes Is Your Broker Gouging You? Use This Guide To The Best Buys In Money Markets By William Baldwin Forbes How To Boost Your Cash Yield At Fidelity, Vanguard, Chase And Schwab By William Baldwin Forbes How To Use Gold And Other Hard Assets To Hedge Against Inflation By William Baldwin Forbes Inside Private Equity's $29 Trillion Retirement Savings Grab By Hank Tucker
Yahoo
17-07-2025
- Business
- Yahoo
An 18-Year-Old Asks Reddit For Financial Advice: 'I'd Like To Get Into Investing'
Eighteen-year-olds are in one of the best spots to make long-term investments. They don't have as many financial responsibilities as parents and can wait several years before they even have to think about selling some of their stocks. However, being young also gives them less experience. That's why an 18-year-old who's interested in investing turned to Reddit for some suggestions. "I'd like to get into investing," the recent high school graduate shared in the Personal Finance subreddit. Don't Miss: —with up to 120% bonus shares—before this Uber-style disruption hits the public markets $100k+ in investable assets? – no cost, no obligation. The 18-year-old currently has savings in a Wealthfront account, which has a 4.00% APY. Redditors offered several suggestions on how to approach investing. Start Contributing To A Retirement Account Now Many Redditors encouraged the 18-year-old to contribute to retirement accounts. If the employer offers retirement accounts, the young Redditor should aim to max out the account. However, you don't need an employer-sponsored retirement plan to get started. Anyone can create an individual retirement account, even if they are doing freelance work. These tax-advantaged accounts let you accumulate assets while reducing your tax bill. Roth IRAs make more sense for people who aren't earning high incomes. Your account contributions get taxed, but you don't pay any taxes on withdrawals, dividends, or capital gains. Traditional IRAs let you make tax-free contributions, but you get taxed on the way out. These accounts are better for people who have high incomes. Trending: Named a TIME Best Invention and Backed by 5,000+ Users, Kara's Air-to-Water Pod Cuts Plastic and Costs — Learn How To Start A Business Although investing often revolves around stocks and real estate, you can also invest in yourself and learn how to start a business. One Redditor encouraged the 18-year-old to go in that direction. The original poster currently works full-time at an HVAC company. While the industry can pay well, your earnings potential will skyrocket if you start a business instead of relying on an employer's paychecks. "Learn everything you can about not only HVAC but how to run an HVAC business! You'll do really well by the time you're 30!" one commenter suggested. Starting a business isn't only good for boosting your earnings. It also diversifies your income and reduces financial risk once you establish your business. When you own a business, you're not at the mercy of an employer potentially laying you off due to a slow economy. You have more control over your company's outcomes and can tap into new markets to increase On Index Funds Most 18-year-olds don't know much about investing. It's not taught in most schools, and you learn the most about investing by experiencing it. Instead of picking individual stocks, the Redditor can focus on an index fund that tracks an established benchmark like the S&P 500. These funds typically have low expense ratios and tend to outperform most active investors. Index funds can produce much higher returns than a savings account that offers 4.00% APY. Plus, you won't be taxed on any of your unrealized capital gains. Any qualified dividends also get taxed at better rates than the interest payments you receive from a high-yield savings account. Stocks are riskier than savings accounts, but the 18-year-old has a lot of time to wait out any corrections and volatility. Read Next: Warren Buffett once said, "If you don't find a way to make money while you sleep, you will work until you die." Image: Shutterstock UNLOCKED: 5 NEW TRADES EVERY WEEK. Click now to get top trade ideas daily, plus unlimited access to cutting-edge tools and strategies to gain an edge in the markets. Get the latest stock analysis from Benzinga? APPLE (AAPL): Free Stock Analysis Report TESLA (TSLA): Free Stock Analysis Report This article An 18-Year-Old Asks Reddit For Financial Advice: 'I'd Like To Get Into Investing' originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved. Sign in to access your portfolio
Yahoo
03-07-2025
- Business
- Yahoo
Wealthfront files for IPO
This story was originally published on Banking Dive. To receive daily news and insights, subscribe to our free daily Banking Dive newsletter. Palo Alto, California-based robo-adviser Wealthfront filed paperwork for its initial public offering last week, nearly three years after mutually abandoning a merger into Swiss bank UBS. The number of shares Wealthfront will offer, and the price range for the proposed offering, have not yet been determined. The firm follows several other fintechs on the quest to go public this year, including investment fintech eToro, neobank Chime and stablecoin issuer Circle, which all began trading in recent weeks. It's a leap that only a handful have taken since the downturn of the fintech market in 2021, and one that has thus far been successful for 2025's market entrants: eToro, Chime and Circle all debuted above their IPO price, and remain above it as of Wednesday. Circle, in particular, was trading Wednesday afternoon around $177 after debuting on the New York Stock Exchange at $69 on June 5. 'From zero to here, it's amazing,' said Chuckie Reddy, head of growth at fintech investment firm QED, on mid-2025's steady stream of fintech IPO announcements. QED is not a Wealthfront investor. 'If you go back to 2018-2019, when things are a little bit more normalized, we're probably actually seeing elevated activity from a fintech perspective. The reason for that is, number one, there were less fintech companies around that were of size, and two, there's been a little bit of pent-up demand.' The activity, Reddy said, is 'something we've been hoping for and predicting for quite some time.' 'It's really beneficial to the overall ecosystem, and it comes in a number of different ways. One is demonstrating liquidity for the fintech sector, particularly the venture capital universe of venture funded companies,' he said. In February, QED founder Nigel Morris – who also co-founded Capital One – predicted the first half of 2025 would see 'a whole generation' of fintech IPOs, or at least IPO-readiness. Despite the year's uptick from the previous three years – between 2022 and the first part of this year, just 13 fintechs filed to go public, compared to 61 in 2021 alone – Reddy doesn't feel like we're at 'some peak moment' or in IPO 'mania.' 'I would actually say that this is kind of a healthy release – issuances that may have hit the market in past years, but the market conditions and the company conditions and the timing [wasn't] right. It's less of a trend, per se, [and instead] a return to normal,' Reddy said. Wealthfront declined to comment beyond its press release, and none of the investors that had led Wealthfront's funding rounds responded to requests for comment on the firm's IPO. Sign in to access your portfolio
Yahoo
24-06-2025
- Business
- Yahoo
Wealthfront Takes First Steps Toward an IPO
You can find original article here Wealthmanagement. Subscribe to our free daily Wealthmanagement newsletter. Wealthfront is signaling to regulators that it intends to go public, according to the firm. The company announced Monday that it had confidentially submitted a draft form S-1 to the Securities and Exchange Commission, seeking an initial public offering for its stock. The form is the initial step companies take with regulators when considering going public. According to Wealthfront, the number of shares to be offered and the price range haven't been determined. Any IPO would happen after the SEC finishes its review process, depending on market conditions. Wealthfront was founded in 2008 and has become one of the industry's premier robo advisors. It has about $85 billion in assets and works with over 1 million customers. David Fortunato is the firm's 39-year-old CEO; he joined the company in 2009 as one of its first engineers, according to Barron's. Since its founding, the Palo Alto, Calif.-based firm has eschewed working with human financial advisors, contrasting with some robo advisor competitors like Betterment, with co-founder Andy Rachleff saying in 2021 that the hybrid model hadn't worked, and that Wealthfront has been 'validated in the approach that we take.' In January 2022, UBS announced plans to acquire Wealthfront in a $1.4 billion cash deal that would have added Wealthfront's (at the time) 400,000+ clients into the Swiss bank's fold. However, by September of that year, the firms mutually agreed to end the merger acquisition. Instead, UBS purchased a $69.7 million note convertible into Wealthfront shares. In 2021, Wealthfront added several funds to its customizable robo portfolios, including two cryptocurrency trusts (Greyscale's Bitcoin and Ethereum). Advisors could select from a menu of investments, including several Dimensional Fund Advisors' ETFs and Wealthfront's Risk Parity Fund (which the firm announced it would shutter late last year). Sign in to access your portfolio
