Quick! Currently, do you know how much you owe on student loans? (No, this question isn’t to frighten or embarrass you). If you mentally responded, around $25,000-$35,000, you are not alone. As of 2019, the U.S. average student loan debt is approximately $32,731. There is nothing wrong with having student loans (unless you are not paying on time). We go to college/university to further our education and invest in ourselves.
Student loans range from subsidized/unsubsidized federal loans to bank loans and other varieties of private loans. While many of you may be dealing with high-interest rate loans, others may not be dealing with any interest rate until you graduate. So the question, “Should I pay off my student loans before investing?” does not have a universal answer because there are various factors to consider when making this strategic decision.
1. Type of Loan
The type of loan is, by far, the most essential factor. The reason being is because every loan disbursed has different student loan agreements & interest rates attached. For example, take federal loans (FAFSA), there are two types of loans you can qualify for. Unsubsidized student loan interest begins as soon as the loan is disbursed. While the subsidized student loan interest is paid by the Education Department, and it won’t bill you for interest/payment until after six months of graduation (also referred to as the grace period). Bank loans often carry higher interest rates and require a cosigner if they have no credit history.
2. Loan’s Interest Rate
Once again, it boils down to the loan interest rate. Federal student loans interest rate fluctuates every year, for the academic year of 2020-21, the subsidized student loan interest rate (fixed) was 2.75%. While unsubsidized graduate student loans as of 2020-21 are 4.30%. Lastly, bank loans differ depending on the bank you received a loan from, but as of currently, the average is about 3.82% to 14.50% (fixed). It is important to check your student loan portal as interest rates fluctuate throughout the years. It is advised, you start by paying off the higher interest rate loans if you have multiple loans. Essentially you could start investing when you have student loans with interest rates below 5.8%. While you can start investing, make sure you make the required payments on time and invest the remains (after accounting any other expense). Lastly, we wanted to note that there is student loan relief during the pandemic. Find out what loan relief you may be eligible for.
3. Financial Goals
Most likely than not, your financial goals go beyond paying your student loans. So it is important to consider your financial goals. Are you planning on moving out when you graduate? Are you planning to rent/buy an apartment or house (roommates to help with bills)? Do you plan to save up money for a car or a trip? Do you want to start investing or plan for retirement? Everyone’s financial goals are different, and it is important to consider before investing.
Find yourself stuck in your decision? Seek out advice from our team! Email us at email@example.com
4. Social & Economic Factors
I can make an entirely new blogpost on how COVID-19 has affected everyone, including myself. Many individuals have gotten furloughed or terminated from their jobs. At the same time, others may be struggling to make ends meet. There are many economic factors and social factors that may be currently affecting you, from this pandemic to CA, WA, and OR wildfires to having to take care of someone who may be sick or involved in any way. I don’t mean to get philosophical, but life is truly unpredictable. Make sure you consider any factor affecting you right now or you foresee in the future.
(Disclaimer: This blogpost is written as a suggestive method. Various social factors come into play (meaning, everyone has different approaches/lifestyles). If you would like to receive a detailed plan, seek advice from a financial advisor. Thank you!)
With election season quickly approaching, many Americans are considering how they’ll cast their ballots in November. Few of us are aware of how we vote with our wallets every day.
What is “Voting with your Wallet?”
Dollar voting, or voting with your wallet, refers to making socially conscious purchases from companies that align with your values. Companies are motivated by profit. When consumers boycott or refuse to purchase from a company that employs unethical business practices, they take a stand against those ideas and can choose to support socially responsible businesses instead.
How Voting With Your Wallet Works
When money talks, companies listen. Boycotts work and are a critical piece of our American culture. The boycott of British goods in the Revolutionary era, the Montgomery Bus Boycotts during the Civil Rights Movement, or the Delano Grape boycott (and strike) for better working conditions illustrate the long history and truly American nature of dollar voting for social change. History has shown us that economic pressure is an effective tool we can utilize to shape our world for the better.
How voting with your wallet can make an impact
There are many resources for finding companies that support your values. Lists of companies that exploit prison labor, engage in animal testing, promote unsustainable practices, and more are readily available for conscious consumers. In addition, you can find lists of companies that are inclusive and sustainable when looking for new places to shop. Part of the process is doing some research on companies you frequently purchase from, ethical substitutes for common unethical brands, and companies that align with your personal values. We must also listen to the voices and demands of activists and organizers calling for our financial support or divestment from certain brands. Another thing to consider is how you use your dollar to invest in the future of our country and if your investments reflect your vote.
One way to do that is to become an ethical investor and engage in impact investing. Impact investing, which is founded on principles of social responsibility and sustainable problem solving, is the practice of investing in companies developing solutions to global challenges.
Here at Invested Interests, we have portfolios that support causes like the environment, peace, and human rights and diversity. Through responsible and conscious investing, you can ensure that your finances support your values and vision for the future.
In the past, women did not generally invest as much compared to men. A potential motive of the underrepresentation of women in finance, mainly when it comes to investing, could be linked to men dominating the finance industry early on. However, women have entered the playing field, and it is no longer a “male-dominated game.”
How do women see better return than men with their investments?
Women bring so many strengths to their investing accounts. Unlike men, women are more conservative in taking investment risks. According to BlackRock Inc survey, more than half of women (globally) say they are not willing to take any money risks compared to men (33%) ready to “play the market.” This goes to show that women are more likely to hold on to their stocks in a company and build their investment stock through time, causing long-term investment than men who tend to take the more riskier route of selling and buying stocks by “measuring the right time.” It comes to no surprise when women earn 12% higher returns than men when it comes to investing!
How are women getting more involved in their finances: investing?
Based on Rich Thinking global interviews, over three-quarters of women prefer to invest in stocks and funds that reflect their core values. Study after study shows that 70-79% of women showcase more interest in impact investing than men (~28-62%). Thus, showcasing that women are more empowered to casually invest and diversify their investment portfolio with various stocks that they are passionate about.
Like mentioned earlier, historically, finance was considered a male-dominated industry. Now, there are programs like Girls Who Invest, a nonprofit organization that empowers undergraduate college students to explore finance. Their 10-week enriched program provides tools & resources for women to learn more about careers such as portfolio management and executive leadership in the asset management industry. Programs like this encourage and motivate women from early on in college to think about a variety of finance career paths.
Social media communities. Many social media groups provide resources and communication about anything involving the investing world, including portfolio tracking and performance. Communities like Moneypenny, open doors to women who want to start investing but don’t necessarily know how to start.
Make an impact!
Women have been able make an impact in their finances through investing, and create an indent in the gender gap of the finance industry. Gender equality in the finance industry is immensely lower than other fields like medicine or law. Here is how you take initiative to help breakthrough gender inequality barriers. Impact investing. How? With Invested Interests your investment is carefully crafted to meet your values and goals. If one of your values is to invest in human rights & diversity, support companies who promote fair and equal working working conditions. Companies like Accenture, Fisher & Paykel and other companies we have partnered with. Companies that yearn the day in which women have equal rights.
Want to invest in Human Rights & Diversity ? Learn how you can make an impact!
While it may be profitable in the short term, investing in for-profit prisons means investing in an unethical and unsustainable model of modern-day slavery.
For-profit prisons are institutions designed to prey on vulnerable people; however, it is not just a myriad of local and federal policy that perpetuates the existence of private prisons. Investors are able to fund this aspect of the prison industrial complex in America through purchasing stocks from CoreCivic or GEO Group, companies that manage and maintain private prisons.
What’s wrong with private prisons?
Private prisons operate with a profit motive that incentivizes keeping costs low at the expense of the incarcerated people. There is no ethical way to run a prison while prioritizing economic efficiency. By striving for a return on investment, private prisons have to cut costs, usually to the detriment of the incarcerated people. By overcrowding prisons, these corporations can distribute the cost of maintaining the facility (lights, cleaning, outdoor work) among more people, leading to a lower cost per incarcerated person to operate the facility. Private prisons may also cut back on educational or recreational programs, quality of furnishing, quality of building materials, and more. In addition, some private prisons sell the labor of the people incarcerated there without fairly compensating them. In California, many prisoners are paid dollars a day to work as firefighters with very little chance of becoming a firefighter outside of prison due to many counties’ strict background checks. Private prisons do not serve to better society or rehabilitate incarcerated people. They exist to prey off of a social problem we as a society have let exist for too long.
Retributive justice, a narrative pushed by both Democrats and Republicans, is the idea that people need to suffer for their crimes. When a corporation is making a profit off of mass incarceration, there is no financial incentive for them to educate or care for their incarcerated populations. High recidivism rates benefit the corporation, as they know they have a product that will last.
What can we do?
Divesting from the prison industrial complex is a daunting but necessary task. Not buying stock in CoreCivic or GEO Group is the minimum we can do. We must also challenge ourselves to support companies that employ formerly incarcerated people and boycott companies that abuse prison labor to drive down their prices. When we can afford to, voting with our wallet is critical to funding the changes we want to see in our society.
For more information about how you can work with Invested Interests to divest from the prison industrial complex, check out our human rights and diversity portfolio.
I wanted to start this blogpost by introducing this blog’s writer. Behind WordPress, is Narcy Cruz! Who am I? I am a first-generation undergraduate college student (junior, to be exact) studying Business and Psychology. Aside from academia, I am a new marketing intern at Invested Interests. Growing up, I watched my parents struggle with financial instability, which led to many financial difficulties in our family. Hence, as a teenager, I researched ways to become financially stable one day. I learned about credit cards, savings accounts, filing taxes, the stock market, investing, and even opening a Roth IRA. I was keen on joining Invested Interest because, in my eyes, this was the perfect opportunity to continue learning about the variety of investing methods, but what captured my interest even more, was knowing that this company helps clients invest in the greater good.
In this blog post, I decided to outline five reasons why Generation Z should start investing in today’s economic markets.
1: Financial freedom. As I shared in my introduction, I grew up in a household where there was never financial stability nor financial freedom. My parents lived paycheck to paycheck and never were able to achieve financial wealth. Unfortunately, they won’t be able to invest as much money as they hoped because they started later in life, which leads to the second reason why you should start investing.
2: It is never too early to start investing; if anything, you will have an advantage if you start now. Starting early will not only allocate time for you to list down markets you would want to invest in, but also investing is a time game, not how much money you decide to start investing. According to MyWallst, if you begin investing 2,000 dollars now, it can turn into almost $100,000* after 40 yrs (*10% return a year). Why? The compound magic of investing, your invested money, is working 24/7 (talk about passive income!) I bet you, your savings account can’t do that!
3: Generation Z (14-21) is coming of age, and according to a Betterment Business survey, 88% of Gen Z’s are actively saving some money monthly. I understand that saving money in a savings account has no risks (aside from getting eaten by inflation) compared to investing it on the stock market. We are not suggesting that you invest all your savings but, instead, continue to have an emergency fund. Invested money grows way faster than cash in a savings account. According to Macrotrends.net, the stock market has returned around 10% annually since 1974!
Need guidance to align your investment with your values? Check out how to get started!
4: Another reason why you should start investing is to become a shareholder of a company that uses your money for the greater good. As a shareholder, you own part of the company when you purchase a stock, and this enables you a percentage of shares and assets of that company. (Ok, so what!) A company could choose to return money potentially regularly, to its shareholders. As the business you invested grows, the price of your share increases (a time game). If you ever decide to sell your shares, you will pocket any returns you invested!
5: Social investing will allow you to invest in the greater good. According to Ernst and Young’s study, Generation Z is known for being highly informed about the world’s current climate and wanting to take charge of their lives and futures. So why not start investing in social causes like human rights, diversity, and environmental problems. There are so many social causes and a variety of ways to invest your money. Invested Interests will help you customize a strategy that best suits your lifestyle.