Monday Night Finance – Volume 101

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Safest Banks in the U.S. (+ Tips for Keeping Your Money Safe)

Just a few short months ago, we witnessed the biggest bank failure since the 2008 financial crisis when Silicon Valley Bank (or SVB) collapsed in March 2023. While most depositors in this bank were eventually made whole, there were major fears of widespread banking failures for several weeks following this failure. While FDIC insurance protects people up to the first $250,000 in deposits, many small businesses had more than that amount deposited in SVB and were worried that they could not run payroll to pay their employees. If you’re in a similar situation you may be looking for a safe bank to park your cash. In that case, you might want to check out this article by Josh Pakota  of WalletHacks.

And while no financial institution is 100% risk-free, certain national banks (brick-and-mortar and online banks) with significant assets and a lengthy operational history can be more secure than some smaller, local banks.

~Josh Pakota, WalletHacks

The article focuses on banks with significant assets, long operational histories, and FDIC insurance. Despite the difficulty in declaring a single ‘safest bank,’ the article compiles a list of reliable brick-and-mortar and online banks. These include well-known names like JPMorgan Chase and newer entities like SoFi Bank, each with unique strengths like high assets, good credit ratings, and specialized services. The article also highlights the evolving trend of online banking and the rise of neobanks, discussing their safety measures and FDIC-insured status. Even if you aren’t looking at one of these banks, the article is still worth a read; it emphasizes your role in safeguarding your assets against fraud. For a more in-depth understanding of the safest banking options in the U.S. and tips on keeping your money secure, check out the article for more information.

Fewer Self-Made Millionaires Than You Think: A Problem?

There is nothing more American than a self-made millionaire. It’s the pinnacle of the American Dream. Do you know a self-made millionaire? (Or perhaps you are one yourself?) While the media may portray these people to be quite common, a recent study highlighted that truly self-made millionaires may be more rare than you think. This intriguing topic is the focus of an insightful article by Sam Dogen (aka the Financial Samurai), which sheds light on the reality behind the wealth status of many Americans. Contrary to popular belief, the article, based on a Bank of America Private Bank Survey, reveals that a smaller percentage of wealthy individuals actually qualify as self-made.

The definition of wealth can be somewhat arbitrary, depending on factors such as personal desires, cost of living, health, and household size. However, for the most part, I believe anything above $1 million in investable assets is considered wealthy in America. With a paid-off home, $1 million in investments, and some passive income, most people can lead a comfortable life.

~Sam Dogen, The Financial Samurai

The article by Financial Samurai, dated 01/06/2024, explores the surprising reality that fewer people are self-made millionaires than commonly perceived. Based on a Bank of America Private Bank Survey, it reveals that only 27% of wealthy individuals (defined as those with $3 million or more in investable assets) consider themselves self-made, having risen from middle-class or poor backgrounds without significant inheritance. This contrasts with the common belief that the majority of wealthy individuals are self-made. The article also discusses the implications of this finding, expressing concern about the growing dissatisfaction and lack of purpose among Americans as wealth becomes more about inheritance than personal achievement. Additionally, the article delves into the wealth composition of younger investors, noting their tendency towards alternative investments like real estate and private equity. The tone of the article is reflective and somewhat critical, questioning the long-term societal effects of massive wealth transfer and the potential demotivating impact on future generations. To gain more insight into this phenomenon and its broader implications, readers are encouraged to explore the full article.

Is Your Renovation Worth The Financial Investment?

Can you write a paragraph that introduces this paragraph? Please start with “Home renovations are big business. Watch any sporting event and there will inevitably be a commercial for a home improvement store showing a family fixing up their house. It’s easy to understand why people like home improvements. Not only are you getting a nicer place to live, but you’re also potentially increasing the resale value of your house. But are home improvements a good investment? A recent article by The Money Equation looked at the potential payback of various home renovations.

Sometimes, a renovation is less about constant value improvement than it is about restoring or sustaining function. Ironically, this means that the value is preserved as opposed to declining, which in a way is a worthwhile investment by itself. 

~The Money Equation

The article discusses the practical and financial considerations involved in renovating a home. It starts by acknowledging the personal desire to live in a comfortable and appealing home, while also considering the home as a significant financial asset. The article points out the unpredictability of the housing market and how external factors, such as nearby developments, can affect property value. To maximize the return on investment from renovations, it suggests focusing on high-value areas like kitchens, driveways, bathrooms, and gardens, which are more likely to increase a home’s value than other spaces. Additionally, it highlights the importance of restorative work, not just for improving value but also for maintaining it by addressing foundational issues or improving roofing. Another key aspect is focusing on energy efficiency improvements, such as solar panels or better insulation, which not only appeal to potential buyers but also benefit the homeowner in the long term. The article’s tone is informative and practical, offering guidance for homeowners to assess the financial viability of their renovation projects. If you’re considering a home renovation, definitely check out the article before investing in your home!