“Plus-Up” Stimulus Checks Have Already Been Sent to 9 Million Americans – Will You Get One Too?

If you already received a third stimulus check, you might find an additional check from the IRS in your mailbox in the coming weeks – especially if you filed your 2020 tax return close to the May 17 deadline. The IRS is calling these extra checks “plus-up” payments, and more than 9 million Americans have already receive the supplemental payment. Over 900,000 plus-up payments were sent in just the last six weeks, and more of them will be sent in the weeks and months ahead as the IRS continues to process 2020 tax returns. The big question is: Will you get one?

The IRS is sending plus-up payments to people who received a third-round stimulus check that was based on information taken from their 2019 federal tax return or some other source, but who are eligible for a larger payment based on a 2020 return that is filed and/or processed later. This could happen, for example, if you had a new baby last year that is reported as a dependent for the first time on your 2020 return (see below for other possible reasons).

So, if you recently filed your 2020 return, you might get a plus-up payment soon. If you requested a filing extension and haven’t filed your 2020 return yet, there’s an extra incentive to get it done quickly (i.e., not waiting until October 15 to file your return). Your 2020 return must be filed and processed by the IRS before August 16, 2021, if you want to get a plus-up payment. That means you still have time to act if you got an extension – but not too much time! Plus, the sooner you file your return, the sooner you’ll get your “plus-up” payment (plus any other tax refund the IRS owes you).

How Stimulus Payments Are Calculated

Most eligible Americans have already received their third stimulus check. The “base amount” is $1,400 ($2,800 for married couples filing a joint tax return). Plus, for each dependent in your family, the IRS adds on an extra $1,400. Unlike for previous stimulus payments, the age of the dependent is irrelevant.

However, third-round stimulus checks are then “phased out” (i.e., reduced) for people with an adjusted gross income (AGI) above a certain amount. If you filed your most recent tax return as a single filer, your payment is reduced if your AGI is over $75,000. It’s completely phased-out if your AGI is $80,000 or more. For head-of-household filers, the phase-out begins when AGI reaches $112,500 and payments are reduced to zero when AGI hits $120,000. Married couples filing a joint return will see their third stimulus check drop if their AGI exceeds $150,000 and completely disappear when AGI is $160,000 or more.

The IRS looks at your 2019 or 2020 tax return to determine your filing status, AGI, and information about your dependents. If you don’t file a 2019 or 2020 return, the IRS can sometimes get the information it needs from another source. For instance, it got information from the Social Security Administration, Railroad Retirement Board, or Veterans Administration for people currently receiving benefits from one of those federal agencies (although the IRS may not have gotten all the information it needs to send a full payment). If you supplied the IRS information last year through its online Non-Filers tool or by submitting a special simplified tax return, the tax agency can use that information, too.

If your 2020 tax return isn’t filed and processed by the time it starts processing your third stimulus check, the IRS will base your payment on your 2019 return or whatever other information is available. If your 2020 return is already filed and processed, then your stimulus check will be based on that return. If, however, your 2020 return is not filed and/or processed until after the IRS sends your third stimulus check, but before August 16, that’s when the IRS will send you a plus-up payment for the difference between what your payment should have been if based on your 2020 return and the payment actually sent that was based on your 2019 return or other data.

(Note: The IRS has had tax return processing delays this year. So, even if you submitted your 2020 return before your third stimulus check was sent, your stimulus payment still might be based on your 2019 return because your 2020 return wasn’t processed in time. Returns filed electronically are generally processed faster than paper returns.)

If for some reason you don’t get a plus-up payment, you’ll still get your money if a payment based on your 2020 tax return is higher than the payment you actually received – but you’ll have to wait until next year to get it. In that case, you can claim the difference as a Recovery Rebate credit on your 2021 tax return, which you won’t file until 2022.

[Use our Third Stimulus Check Calculator to compare your payment if it’s based on your 2019 return vs. your 2020 return. Just answer three easy questions to get a customized estimate.]

Who Will Get a Supplemental “Plus-Up” Payment

Again, you’ll only get a supplemental “plus-up” payment if you received a third stimulus check based on your 2019 tax return or other information, but you would have gotten a larger check if the IRS based it on your 2020 return. So, who falls into this category? Of course, it depends on your specific circumstance. However, to give you a general idea, here are a few examples of hypothetical taxpayers who should get a plus-up payment.

You Had Less Income in 2020 Than in 2019: Kay was unemployed for much of 2020. As a result, her AGI dropped from $78,000 in 2019 to $40,000 in 2020. Kay received a $560 third stimulus check that was based on her 2019 return (she is single with no dependents). Since her 2019 AGI was above the phase-out threshold for single filers ($75,000), her payment was reduced. Kay later files her 2020 tax return, which is processed before August 16, 2021. Since Kay’s 2020 AGI is well below the applicable phase-out threshold, her third stimulus check would have been for $1,400 if it were based on her 2020 return. As a result, Kay will receive a $840 plus-up payment ($1,400 – $560 = $840).

You Had a Baby in 2020: Josh and Samantha had their first child in 2020. They’ve been married for five years, and they file a joint return each year. Their AGI was $110,000 in 2019 and $120,000 in 2020, which are both below the phase-out threshold for joint filers ($150,000). The IRS sent Josh and Samantha a $2,800 third stimulus check based on their 2019 return. They filed their 2020 tax return before the IRS sent the payment, but the return was not processed until a week after the payment was sent. That’s why the payment was based on their 2019 return. Since Josh and Samantha claimed their new bundle of joy as a dependent on their 2020 return, their stimulus check would have been for $4,200 if it were based on their 2020 return (i.e., they would have received an additional $1,400 for their baby). As a result, the IRS will send Josh and Samantha a $1,400 plus-up payment ($4,200 – $2,800 = $1,400).

You Got Married in 2020: Patty and Greg were married in 2020. They had a combined AGI of $150,000 in 2020 and have no dependents. In 2019, as separate single filers, Patty had an AGI of $72,000 and Greg had an AGI of $78,000. The IRS sent Patty a $1,400 third stimulus check based on her 2019 return. Since her 2019 AGI was below the phase-out threshold for single filers ($75,000), her payment was not reduced. The IRS sent Greg a $560 third stimulus check based on his 2019 return. Since his 2019 AGI was above the phase-out threshold for single filers, his payment was reduced. Between the two of them, they got a total of $1,960 in third stimulus check payments ($1,400 + $560 = $1,960). After receiving their stimulus checks, Patty and Greg file a joint return for the 2020 tax year that is processed before August 16, 2021. Since the AGI reported on their 2020 joint return does not exceed the phase-out threshold for joint filers ($150,000), their stimulus check would have been for $2,800 if it were based on their 2020 return (i.e., it wouldn’t have been reduced). As a result, the IRS will send Patty and Greg a $840 plus-up payment ($2,800 – $1,960 = $840).

You Used the Non-Filers Tool Last Year: Mary is single and has two dependent children. One turned 15 and the other turned 18 in 2020. Mary was not required to file a 2019 tax return, but she did use the IRS’s Non-Filers tool last year to get a first-round stimulus check. Since children over 16 did not qualify for the extra $500 payment for first-round payments, Mary only reported her youngest child to through the tool. The IRS sent Mary a $2,800 third stimulus check based on the information it received through the Non-Filers tool. Mary later files a 2020 tax return, which is processed before August 16, 2021. She used the head-of-household filing status, reported an AGI of $15,000, and claimed both of her children as dependents. For third-round stimulus checks, an additional $1,400 is added to the total payment for each dependent regardless of the dependent’s age. Since Mary’s 2020 AGI is below the phase-out threshold for head-of-household filers ($112,500), her third stimulus check would have been for $4,200 if it were based on her 2020 return. As a result, Mary will receive a $1,400 plus-up payment ($4,200 – $2,800 = $1,400).

A Federal Agency Supplied Information to the IRS: Ron is a disabled veteran who receives benefits from the Department of Veterans Affairs (VA). He is single and has one dependent child. Ron was not required to file a 2019 tax return, but the VA sent information to the IRS about Ron. The VA did not send any information about Ron’s child. Based on the information it had, the IRS sent Ron a $1,400 third stimulus check. After receiving this payment, Ron files a 2020 tax return, which is processed before August 16, 2021. Ron filed as a single person with an AGI of $18,000 and one dependent. Since Ron’s 2020 AGI does not exceed the phase-out threshold for single filers ($75,000), his third stimulus check would have been for $2,800 if it were based on his 2020 return. As a result, the IRS will send Ron a $1,400 plus-up payment ($2,800 – $1,400 = $1,400).

Source: kiplinger.com

Citi Now Allowing Product Changes to the new Citi Custom Cash Card (Preferred, Dividend, Expedia, Etc.)

(Reposting with some additional info based on the comments.)

People are now successfully product changing their Citi cards to become the new Custom Cash card. Readers in the comments report being able to product change their Expedia, Rewards+, Drivers Edge Charter, Diamond Preferred, Premier, Prestige, Preferred, AT&T, Dividend, and American Airlines AAdvantage cards to become a Custom Cash card.

Double Cash cards can not yet be product changed to Custom Cash, though you can try changing it over to a Rewards+ and from there to change it to a Custom Cash. Some people heard from reps that Double Cash will be able to be converted directly to Custom Cash beginning August 1, 2021. Citi Simplicity is a mixed bag with some having success product changing and others being told the August 1st date for doing that product change.

The big question remains whether your card number will change when you product change to the Custom Cash, which might depend on which card you are changing. This matters because, officially, whenever the card number changes it would be considered a ‘card closed’ to reset your 24/48 month clock, whereas if the card number remains the same it won’t reset the clock. You can search the comments below for data points on when the card number will change from a particular card, or you can ask the Citi rep and hope for the best. I’d guess that product changes from cobrands (e.g. AA to Custom Cash) will get a new card number, but product changes from within the ThankYou family (e.g. Preferred to Custom Cash) might keep the same number.

The Custom Cash card uses the ThankYou points system and allows points to also be cashed out at 1 cent per point. The card launched in June and initially was not accepting product changes, but today they began allowing them. When you product change to the card you won’t get the signup bonus, but some people prefer doing it anyone to avoid signing up for a new card. Reports are that the product change can even be done via chat.

Source: doctorofcredit.com

Stock Market Today: Stocks Buck Surprise Jump in Jobless Claims

The major stock indexes improved for a third consecutive session, logging mild (but pleasantly surprising) gains Thursday in the face of a disappointing jump in weekly unemployment filings.

The Labor Department reported that first-time claims for jobless benefits jumped to 419,000 for the week ended July 17 – an increase of 51,000 filings and far more than economists’ forecast for 350,000.

However, Anu Gaggar, senior global investment analyst for Commonwealth Financial Network, says the news isn’t as bad as the headline figure suggests.

“We need to filter the noise in the data points and not lose sight of the big picture, which is that the trend line continues to head lower,” she says. “There has been some distortion in data and in consensus expectations around automakers’ annual retooling shutdowns that will work its way through the system in the upcoming weeks.”

Although investors initially reacted with early selling, stocks gradually recovered over the course of the day. The Nasdaq Composite (+0.4% to 14,684), S&P 500 (+0.2% to 4,367) and Dow (up marginally to 34,823) all logged modest gains, helped by the likes of mega-caps Apple (AAPL, +1.0%) and Microsoft (MSFT, +1.7%).

The industrial average also benefited from a boost in shares of chemical giant Dow Inc. (DOW, +1.3%), which reported Street-beating earnings and sales.

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Small caps weren’t so fortunate. The Russell 2000, which had outperformed the major indexes the past two sessions, dropped 1.6% to 2,199.

Other action in the stock market today:

  • Amid the onslaught of earnings reports hitting the Street, Netgear (NTGR) was a notable loser in the wake of its results, sinking 9.5%. In its second quarter, the computer networking company generated adjusted earnings of 66 cents per share, well below what analysts were expecting. Revenue of $308.8 million also fell short of the consensus estimate. In addition, NTGR lowered its current-quarter revenue and operating margin forecasts.
  • On the flipside, foam clog maker Crocs (CROX) surged 10.0% in the wake of its second-quarter earnings results. CROX reported better-than-expected adjusted earnings of $2.23 per share on record revenue of $640.8 million. The company also raised its full-year revenue guidance, now expecting annual sales growth of 60% to 65%.
  • U.S. crude oil futures rose for a third straight day, climbing 2.3% to settle at $71.91 per barrel.
  • Gold futures edged up 0.1% to $1,805.40 an ounce.
  • The CBOE Volatility Index (VIX) dipped slid 1.2% to 17.69.
  • Bitcoin rallied for a second straight day, improving 2.2% to $32,394.24. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)
stock chart for 072221stock chart for 072221

It Will Pay to Be Picky

Although Thursday’s disappointing unemployment claims are by no means a reason to panic, they do add to the argument that stocks might be rallying on increasingly wobbly ground.

“There are over 9.2 million job openings, the highest on record by a long shot, yet many are hesitant to get back in the labor force,” says Cliff Hodge, chief investment officer for Cornerstone Wealth. “One data point isn’t a trend, and a one-off can probably be chalked up to delta variant concerns. If jobs data doesn’t inflect soon, the markets and the Fed will be put on notice.”

If data undermining the case for continued economic recovery keeps stacking up, investors might want to be a touch more discerning about their stock picks than they would be during a true go-go period for markets.

Folks focused on generating income should prioritize companies with the financial mettle to easily pay (and generously raise) their dividends.

And as for those who prefer growth, don’t stick your neck out too far. These 11 growth-at-a-reasonable-price (GARP) stocks provide both attractive growth prospects and reasonable risk profiles that will cushion any downside in a broader market selloff.

Another potential source of protection and upside potential are these 11 “safe” stocks – a collection of equities highlighted by investment research firm Value Line for both their fundamental strength and their bright forward-looking prospects. Read on as we run down this group of stable stocks expected to deliver sizable gains over the next year-plus.

Source: kiplinger.com

How Does Non-Farm Payroll (NFP) Affect the Markets?

What Is Nonfarm Payroll?

A nonfarm payroll is an economic report used to describe the number of Americans employed in the United States, excluding farm workers and select other U.S. workers, including some government employees, private household employees, and non-profit organization workers.

Known as “the jobs report” the nonfarm payroll looks at the jobs gained and lost during the previous month.

The US Nonfarm Payroll Report Explained

The NFP report studies US employment via two main surveys by the US government of private employers and government entities.

•  The U.S. Household Survey. This report breaks down the employment numbers on a demographic basis, studying the jobs rate by race, gender, education, and age.

•  The Establishment Survey. The result of this survey tracks the amount of jobs by industry as well as the number of hours worked and average hourly earnings.

The US Bureau of Labor Statistics then combines the data from those reports and issues the updated figures via the nonfarm payroll report on the first Friday of every month, and some call the week leading up to the report “NFP week.” Economists view the report as a key economic indicator of the US economy.

How Does NFP Affect the Markets?

Many investors watch the nonfarm payroll numbers very closely as a measure of market risk. Surprise numbers can create potentially large market movements in key sectors like stocks, bonds, gold, and the US dollar, depending on the monthly release numbers.

Investors create a strategy based on how they think markets will behave in the future, so they attempt to factor their projections for jobs report numbers into the price of different types of investments. Changing or unexpected numbers, however, could prompt them to change their strategy.

If the nonfarm payroll number reflects a robust employment sector, for example, that could lead to a rise in US stock market values along with a hike in the US dollar relative to other global currencies. If the nonfarm payroll points to a downward-spiraling job sector, however, with declining wages and low employment growth, that could portend a stock market downturn and the US dollar could also decline in value, as investors lose confidence in the US economy and adjust their investment portfolios accordingly.

4 Figures From the NFP Report to Pay Attention To

Investors look specifically at several figures within the jobs report:

The Unemployment Rate

The unemployment rate is central to US economic health, and it’s a factor in the Federal Reserve’s assessment of the nation’s financial health and the potential for a future recession. A rising unemployment rate could result in economic policy adjustments (like higher or lower interest rates), which could impact the financial markets, domestically and globally.

Higher-than-expected unemployment could push investors away from stocks and toward assets that they consider more safe, such as gold, potentially triggering a stock market correction.

Employment Sector Activity

The nonfarm payroll report also examines employment activity in specific business sectors, like manufacturing or the healthcare industry. Any significant rise or fall in sector employment can impact financial market investment decisions on a sector-by-sector basis.

Average Hourly Wages

Investors may look at average hourly pay as a good barometer of overall US economic health. Rising wages point to stronger consumer confidence, and to a stronger economy overall. That scenario could lead to a stronger stock market, but it may also indicate future inflation.

A weaker hourly wage figure may be taken as a negative sign by investors, leading them to reduce their stock market positions and seek shelter in the bond market, or buy gold as a hedge against a declining US economy.

Revisions in the Nonfarm Payroll Report

Nonfarm payroll figures, like any specific economic benchmarks, are dynamic in nature and change all the time. Thus, investors watch any revisions to previous nonfarm payroll assessments to potentially re-evaluate their own portfolios based on changing employment numbers.

How to Trade the Nonfarm Payroll Report

While long-term investors typically do not need to pay attention to any single jobs report, those who take a more active, trading approach may want to adjust their strategy based on new data about the economy. If you fall into the latter camp, you’ll typically want to make sure that the report is a factor that you consider, though not the only one.

You’ll want to look at other economic statistics as well as the technical and fundamental profiles of individual securities that you’re planning to buy or sell. Then, you’ll want to devise a strategy that you’ll execute based on your research, your expectations about the jobs report, and whether you believe it indicates a bull or a bear market ahead.

For example, if you expect the nonfarm payroll report to be a positive one, with robust jobs growth, you might consider adding stocks to your portfolio, as they tend to appreciate faster than other investment classes after good economic news. If you believe the nonfarm payroll report will be negative, you may consider more conservative investments like bonds or bond funds, which tend to perform better when the economy is slowing down.

Or, you might opt to take a more long-term approach, taking the opportunity to potentially get stocks at a discount and invest while the market is down.

The Takeaway

Markets do move after nonfarm payroll reports, but long-term investors don’t have to make changes to their portfolio after every new government data dump. That said, active investors may use the jobs report as one factor in creating their investment strategy.

Whatever your strategy, a great way to start executing it is via the SoFi Invest® brokerage platform. It allows you to build your own portfolio, consisting of stocks, exchange-traded funds, and other investments such as IPOs and crypto currency. You can get started with an initial investment of as little as $5.


SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).

2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.

3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.

For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or pre-qualification for any loan product offered by SoFi Lending Corp and/or its affiliates.
SOIN21127

Source: sofi.com

How Can I Correct Negative Credit Reporting From Fraud?

“John, I’ve been watching with interest the stories about Target’s data breach and how the information compromised has evolved from payment information to now include personal information. If someone uses my personal information, opens a new account in my name, and never makes payments how can I get that off my credit reports?”

This is a great question and very timely considering some fraudster is running around with payment and/or personal information belonging to at least 70,000,000 Target customers.

Thankfully the Fair Credit Reporting Act (hereafter “FCRA”) provides VERY aggressive consumer protections regarding identity theft protection and fraud.  And, every state has additional protections that

Federal Law

The FCRA has an entire section that addresses fraud and identity theft.  You have the right to the following at no cost:

One-call Fraud Alerts: You can place a fraud alert on your credit reports that will remain for 90 days.

You only have to contact one of the credit bureaus to place the alert and they have to “refer” the information to the other credit reporting agencies.

A fraud alert asks new creditors to verify that you are, in fact, the person applying for credit in your name and makes it illegal for them to extend credit in your name without your authorization.

Extended Fraud Alerts: You can extend the 90-day fraud alert to remain for 7 years. You’ll have to submit something called an “identity theft report” to the credit bureaus.

An identity theft report is any fraud affidavit or police report filed with a law enforcement agency.

This helps to separate the real victims of fraud from those who are crying fraud to get legitimate information removed from a credit report, as filing a false police report is a crime.

Placing the extended alert is another “one-call” action, as the credit bureau receiving your request has to share it with the others.

Correcting Credit Reports Containing Fraudulent Data: Despite the protections afforded under the FCRA, we all know that true name fraud happens.

And, it can result in derogatory account and collection information appearing on your credit reports.

That’s bad news because now it’s likely harming your credit scores and you’re receiving calls and letters from collection agencies.

If you have information on your credit reports that has been caused by fraud it’s not the end of the world because you have some fantastic protections under the FCRA.

Once you notify the credit bureaus that you have information on your reports caused by identify theft they have to block it from your credit reports, within 4 business days.

That’s 26 days sooner than they have to complete garden-variety credit disputes.

You’ve got to provide them with some paperwork, including the same type of identity theft report I explained above, but once it’s blocked, it’s gone.  Done and done!

State Law

Every state in the country has a law that allows victims of fraud to place a security freeze on their credit reports for free.

A security freeze (also called a “credit freeze”) prevents any new credit from being issued in your name.

The freeze essentially takes your credit reports out of circulation and no new lender can get access to it, or your credit scores.

And, no access to credit reports/scores means no underwriting of any type of loan.

Be aware, however, that while a security freeze locks any new lenders out of your credit reports and prevents true name credit fraud, it can also delay legitimate credit applications that you’ve submitted.

You’ll have to proactively “thaw” your credit reports and put them back into circulation prior to submitting credit applications or you too will not be able to open an account in your name.

In my mind this is little reason to not freeze your credit reports especially if you have already been a victim of credit fraud.

Experian has a very good explanation of security freezes, the pros and cons, and the process of placing a freeze all on their website here.

A final note, which is actually more of a warning…if you’ve read this and think you can use these procedures to have negative but accurate information removed from your credit reports under the guise of it being fraudulent, I’d suggest you think twice as you’d be committing fraud and might find yourself on the wrong side of a Federal indictment.

I’ve served as an expert witness in more than one of these cases.

John Ulzheimer is the Credit Expert at CreditSesame.com, and a credit blogger at SmartCredit.com, Mint.com, and the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. The opinions expressed in his articles are his and not of Mint.com or Intuit. You can follow John on Twitter here.

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Source: mint.intuit.com

SoFi 2021 Mid-Year Outlook: The Calm After the Storm

As we close out the first half of 2021 and embark on the second, the best way I can characterize what I see coming is the calm after the storm. Don’t get me wrong: everyday will not be calm. But compared to what we’ve been through and the strength we’ve seen in the aftermath, I’m hopeful that the rest of this year will be marked with steady economic progress, careful transitions by policymakers, and markets that can adapt to a new environment.

Calm Waters

At the start of the year, when the COVID-19 vaccine was just rolling out, it was difficult for many investors to believe in a solid, sustainable, and robust recovery. Since then, not only have many economic indicators exceeded expectations, but they’ve exhibited historic strength.

For instance, two-thirds of the jobs lost during the economic shutdown, about 14.7 million, have been added back. The unemployment rate has fallen from a peak of almost 15% during the crisis down to 5.8%. The Federal Reserve estimates that unemployment will fall to 4.7% by the end of 2021. Although we’re dealing with a stubborn number of unfilled job openings, it’s encouraging and a relief to see businesses creating jobs and planning to add even more in the second half of the year.

Unemployment and Job Openings

Sources: Clearnomics, Bureau of Labor Statistics

There is further evidence that business activity in many sectors has accelerated. The ISM Manufacturing Index is at its highest level since the early 1980s. Air travel has come back strongly as leisure travel saw a burst of activity and business travel has slowly resumed. Restaurant dining is going through a revival across the country as restrictions are fully lifted. Companies in all sectors, large and small, appear to be roaring back.

All told, US GDP is expected to have returned to its pre-pandemic level in the second quarter, which is six months ahead of the timeline we originally thought. The pent-up demand came out strong as consumers started spending on goods and services that were restricted for so long. The result has been undoubtedly positive for economic activity, but the swift rise in demand put a strain on supply chains and drove higher inflation readings, which I’ll cover in a later section.

I expect the positive economic momentum to continue through the second half of the year and into 2022. However, the year-over-year comparisons will become more difficult as the crisis periods fall further into the rearview. In order to maintain forward momentum in markets, the economy and businesses will need to generate new organic growth.

Rising Market Tides

Financial markets have been resilient during the first half of the year despite concerns such as rising rates and elevated valuations. And although broad stock indices have posted double-digit gains YTD, they feel hard-won when compared to last year’s impressive burst off the market bottom.

Surprisingly, the largest peak-to-trough decline this year has only been 4%, which is far less than the 30-year annual average peak-to-trough decline of 14.2%. While the market stumbled a time or two, it bounced back quickly to reach new highs. In fact, at the time of this writing the S&P 500 has posted 32 new all-time highs in 2021 alone.

Risk appetite continues to persevere, as demonstrated by the demand for a wide range of assets including technology stocks, cyclical sectors, small-caps, cryptocurrencies, SPACs, IPOs, and NFTs-to name a few. Tides are turning under the surface as market leadership has broadened out and rotated among sectors and styles (i.e., growth and value). While tech reigned supreme last year, cyclical sectors such as energy, industrials, real estate, materials, and financials have benefited from increased economic activity and the expectation of stronger growth ahead.

Investors remain resilient even as broad market valuations hover near record highs. The forward 12-month price-to-earnings (P/E) ratio is around 21x, compared to a 10-year average of 16.3x. The Shiller cyclically adjusted P/E ratio, at 37x, is also at its highest point in 20 years.

While some have compared the current market valuations to the dot com bubble, a key difference in this cycle is that corporate earnings are recovering just as rapidly as the economy. If all goes well in second quarter earnings season, S&P 500 earnings-per-share will exceed pre-pandemic levels. As earnings rise, valuation measures such as P/E ratios should naturally compress and start to look more reasonable. Sometimes bubbles can slowly deflate rather than burst.

S&P 500 Earnings Per Share

Sources: Clearnomics, Refinitiv

Which Direction to Steer the Ship

Markets are a forward looking indicator, meaning they trade on expectations more than events, and expectations have been moving higher for some time. While I expect economic growth to come in strong for the rest of the year, I worry that high expectations have already been reflected in the market and it will take a lot to impress investors in the second half. Measures such as Citi’s Economic Surprise Index have plummeted as lofty expectations actually came to fruition and were no longer a huge positive “surprise”. This could make it difficult for markets to find solid direction as we move through the rest of summer and await the Federal Reserve’s message in fall.

I am optimistic that markets can produce positive results in the second half as we transition away from perpetual policy support and back to focusing on the strength of company fundamentals (such as the quality of its financial statements, competitive position, valuation, and future growth potential).

Part of that fundamental story revolves around the forward progress in earnings. I believe the strong earnings momentum in large-cap cyclical sectors (energy, industrials, and materials) offers attractive opportunities through the end of the year. I also think industry groups such as travel and entertainment can continue to benefit from increased activity both here and abroad. This is not to suggest that sectors not mentioned above (such as technology or communications) are poised to post negative results, but simply that in this phase of the recovery, I view the opportunity set as having broadened out considerably to include more of the value-oriented sectors. Lastly on the domestic front, there is strong earnings momentum in small-cap stocks that bodes well for their leadership carrying forward through the third and fourth quarters.

While US stocks have done well this year, it’s important to note that the recovery is a global story and international markets may not be far behind. Regions like Europe may soon play catch-up as they recover from lockdowns and international travel resumes. Furthermore, the European Central Bank recently raised its growth and inflation forecasts, and key interest rates such as the German 10-year Bund have risen, possibly indicating stronger investor risk appetite.

Choppy Crypto Waters

As a newer asset class, some cryptocurrencies have garnered significant attention from individual and institutional investors alike, particularly due to their returns over the last year. Likewise, the swift and dramatic swings in price of those coins have also been a hot topic. As the US Dollar faces downward pressure from inflation expectations and large budget and current account deficits, interest in crypto assets is likely to remain strong. However, investors must keep in mind the potential volatility that comes along with them and ensure their risk tolerance can cope with the twists and turns.

Bitcoin and the Stock Market

Sources: Clearnomics, Bloomberg

Inflation Simmer Reaching a Boil?

Perhaps the biggest point of contention among investors this year has been the surge in inflation. After being subdued for decades, many are wrestling with the idea of higher prices and what they could mean for consumers and markets alike. The jury is also still out on whether these high inflation numbers are here to stay or will be “transitory,” as the Federal Reserve expects. So far, rising prices have been the result of three forces.

Consumer Price Index

Sources: Clearnomics, Bureau of Labor Statistics

First, as pent-up demand was released back into the economy, prices of goods and services moved quickly upward and reflected the surge in activity. But when we measure inflation, we do it on a year-over-year basis, meaning the increase in prices for Spring 2021 is compared to the depressed prices from Spring 2020, which exaggerates the data and makes them seem quite large. This is referred to as “base effect”-comparing current readings to an unusually low base.

Second, supply and demand disruptions have caused price pressures in various areas. For example, supply-chain issues that resulted from factory shutdowns have limited the availability of semiconductors, which in turn affects the prices and availability of everything from consumer electronics to cars. Another example is the mass migration to the suburbs that occurred and pushed up the prices of new and existing homes and drove strong demand in home furnishings—all of which have contributed to inflationary pressures. As economic activity picks up around the globe, commodity prices are surging as well, pushing up the costs of many consumer goods.

The first two factors – base effects and supply and demand – could very well end up being transitory as the simple passage of time may iron out the wrinkles. That said, it’s the third factor that could drive longer-term inflation: fiscal and monetary stimulus. So far, over $5 trillion has been spent or proposed on a variety of pandemic and economic stimulus measures. The Fed also continues to buy $120 billion of bonds per month, increasing its balance sheet and pumping liquidity into the system. Although there seems to be some discussion about tapering those purchases, it’s still only in the conversation phase.

Turning the Titanic

In addition to supporting maximum employment, managing inflation is a central mandate of the Federal Reserve. And just like investors, this is a problem that the Fed has not had to deal with in decades. So much so that the Fed changed its approach last year to target an average inflation rate over a longer period, rather than put too much weight on any one reading.

At the moment, Fed officials have indicated that they are happy to wait and see, although we did get a sliver of appetite for moving the rate hike cycle forward in the last meeting. I expect the Fed to be extremely cautious in making changes to its policy and to be even more cautious in how they signal their intentions to investors. Of course, this won’t stop markets from scrutinizing the Fed’s every word, but it does give us a better chance at avoiding another “taper tantrum” like the one we saw in 2013.

Federal Reserve Balance Sheet

Sources: Clearnomics, Federal Reserve

As it stands today, market expectations and Fed guidance indicate a tapering of bond purchases beginning in 2022 and a rate hike (or two) in 2023. The exact timing is uncertain and with each new release of the dot plot, I expect the chances of a sooner rate hike to increase. Specifically, if economic data, particularly labor market data, continue to show strength, I believe a rate hike would be likely in 2022.

Although that could put pressure on high growth stocks and cause wobbles in the market if and when the Fed’s narrative changes, the reality is that most investors should neither fight the Fed nor fear the Fed. If tapering and tightening begin for the right reasons–i.e., because the economy is strong and inflation is persistent–financial assets can still perform well. It’s about the speed and method of changing policy, not the change itself. Markets have risen during rate hiking cycles in the past, and they can again. I view the prospect of tighter policy as a change investors will need to digest, but one that indicates our economy is on the right path.

Conclusion

Returning to normal rarely means returning to the exact same normal. Even as the economy recovers and bounces back, it will be different than it was before. There will be different drivers of growth, new policies for markets to navigate, and transitions for businesses to make. That said, I am optimistic about the resilience of the US economy and hopeful that markets can enjoy a pleasantly calm second half.

Photo credit: iStock/atakan


Advisory services are offered through SoFi Wealth, LLC an SEC-registered Investment adviser. Information about SoFi Wealth’s advisory operations, services, and fees is set forth in SoFi Wealth’s current Form ADV Part 2 (Brochure), a copy of which is available upon request and at adviserinfo.sec.gov .

Liz Young is a Registered Representative of SoFi Securities and Investment Advisor Representative of SoFi Wealth. Her ADV 2B is available at www.sofi.com/legal/adv

Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.

SoFi can’t guarantee future financial performance, and past performance is no indication of future success.

This information isn’t financial advice. Investment decisions should be based on specific financial needs, goals and risk appetite.

Source: sofi.com

Chase Freedom 5% Cash-Back Categories This Quarter (Calendar)

Advertiser Disclosure: This post includes references to offers from our partners. We receive compensation when you click on links to those products. However, the opinions expressed here are ours alone and at no time has the editorial content been provided, reviewed, or approved by any issuer.

The Chase Freedom Flex℠ Card and its predecessor, the original Chase Freedom Credit Card, are among the most popular no-annual-fee cash-back credit cards on the market. That’s due in part to their distinctive rewards programs, which pay up to 5% cash back on select purchases.

Chase Freedom Flex vs. Chase Freedom: Key Differences

Both Chase Freedom and Chase Freedom Flex are no-annual-fee cards, but the original Freedom card offer restricts 5% cash-back earnings to a handful of favored spending categories that change each quarter. Chase also caps the amount of bonus cash back you can earn each quarter at $75 across all bonus categories, or $1,500 in total combined purchases.

Regular purchases and bonus category purchases above the quarterly spending cap earn unlimited 1% cash back. But it’s clearly in the cardholder’s financial interest to maximize bonus cash-back earnings each quarter.

The Freedom Flex card is more generous, with a permanent 5% cash-back category covering travel purchased through the Chase Ultimate Rewards travel portal and a separate 3% cash-back category covering drugstore and restaurant purchases (including CVS and Walgreens).

But Freedom Flex also has 5% bonus categories that offer serious value for cardholders able to match their spending accordingly.

That’s not as difficult as it sounds. There are plenty of ways to boost your cash-back earnings on the Chase Freedom cards’ 5% bonus cash-back categories this quarter.


Chase Freedom 5% Bonus Category Calendar (Cash-Back Calendar): 2020 and 2021

But first, let’s look at the Chase Freedom cards’ 5% rotating categories for the last half of 2020 and the first three quarters of 2021.

  • Q3 2020: Amazon.com and Whole Foods market
  • Q4 2020: Walmart and PayPal
  • Q1 2021: Warehouse clubs, Internet/cable/phone services, select streaming services
  • Q2 2021: Gas stations, home improvement stores
  • Q3 2021: Grocery stores, select streaming services

To earn a 5% cash-back bonus on up to $1,500 in combined category purchases this quarter, you must manually activate your bonus cash back. Log into your account and click “Activate” near the 5% cash-back icon.

As long as you activate by the 14th day of the quarter’s last month (that’s March 14, June 14, Sept. 14, and Dec. 14), all bonus category spending up to the quarterly category cap earns cash back retroactive to the quarter’s very first day.

Note: While the 2020 quarterly bonus categories are no longer in effect, they exemplify Chase Freedom’s 5% cash-back categories and remind us why these Chase credit cards are among the best cash-back credit cards on the market. All have appeared at various points in the past, so it’s reasonable for cardholders to expect them to return at some point in the future — perhaps later in 2021 — and continue earning bonus points.


Chase Freedom 5% Bonus Categories: Q3 2021

From July 1 through Sept. 30, 2021, Chase Freedom and Freedom Flex have two bonus cash-back categories: grocery stores and select streaming services.

Grocery Stores

This category includes most purchases made at grocery stores and supermarkets with the notable exception of Walmart and Target locations with supermarket sections.

Purchases of the following are generally excluded from bonus cash-back calculations:

  • Lottery tickets
  • Money orders
  • Gift cards
  • Other cash-like purchases made at the customer service desk

Certain other grocery store purchases may not qualify for 5% bonus cash back, including purchases from stores’ prepared foods sections, restaurants and cafes (such as Starbucks and food courts) within supermarkets, and alcohol sold separately from other grocery items.

Select Streaming Services

This category covers purchases made with select streaming content providers, including:

Some eligible providers may not be listed here. Because the streaming landscape is in constant flux, check with Chase for a complete list of eligible providers.

And to be sure you capture 5% cash back on all eligible streaming purchases, designate your Chase Freedom or Freedom Flex card as your autopay method for all eligible services through the end of September.


Historical 5% Bonus Categories for Chase Freedom and Chase Freedom Flex

Chase often recycles past bonus categories, so it’s worth taking a look back at the most recent few quarters for a hint at what could be coming down the road.

Chase Freedom 5% Bonus Categories: Q3 2020

From July 1 through Sept. 30, 2020, Chase Freedom and Freedom Flex had two bonus cash-back categories: Amazon.com and Whole Foods Market purchases.

Unlike some Chase Freedom 5% cash-back categories, this quarter’s were straightforward. All qualifying purchases made on Amazon.com and at Whole Foods Market locations (including online orders for pickup or delivery) qualified for bonus cash back.

Portions of purchases made with redeemed Ultimate Rewards points (using Chase’s Shop With Points feature) aren’t eligible for cash back.

Chase Freedom 5% Bonus Categories: Q4 2020

From Oct. 1 through Dec. 31, 2020, Chase Freedom and Freedom Flex had two bonus cash-back categories: Walmart and PayPal.

Walmart

This category covered eligible purchases made at physical Walmart stores and at Walmart.com, including purchases of perishable items like produce and seasonal items that might not be available in-store or online year-round.

Depending on how these purchases are categorized, cash-like purchases or transactions such as lottery tickets and money orders may not qualify for cash back.

Also, Walmart and Walmart.com purchases made using PayPal qualified only for 5% cash back, rather than 10% cash back (as one might assume).

PayPal

This category covered eligible PayPal purchases made using a Chase Freedom or Freedom Flex card linked to the user’s PayPal account. Because PayPal is accepted by millions of merchants worldwide, this is an unusually versatile category that should be fairly easy to fully exploit.

Chase Freedom 5% Bonus Categories: Q1 2021

From Jan. 1 through March 31, 2021, Chase Freedom and Freedom Flex had three bonus cash-back categories: warehouse clubs; Internet, cable, and phone services; and select streaming services.

Warehouse Clubs (Wholesale Clubs)

This category covered purchases at warehouse stores like Sam’s Club, BJ’s Wholesale, and Costco.

However, there’s a significant limitation for regular Costco shoppers: Costco doesn’t accept Mastercard in-store or at its fuel pumps, which means these two Mastercard products are only good for use on purchases at Costco.com.

Internet, Cable, and Phone Services

This category covered purchases made with telecommunications providers, Internet service providers, phone companies, and cable TV providers. Eligible services included:

  • Home Internet service
  • Landline telephone service
  • Cellular telephone services and data plans
  • Cable TV service
  • Flat-rate multiservice bundles provided by telecom companies, like cable-Internet and cable-Internet-landline

Purchases of telecommunications equipment, such as smartphones and modems, generally didn’t qualify for bonus cash back unless you made them directly with eligible service providers as part of a service package.

Select Streaming Services

This category covered purchases made with select streaming content providers like Hulu, Disney+, YouTube and YouTube TV, and multiple streaming music providers. The program terms included the complete listing of eligible streaming services.

Chase Freedom 5% Bonus Categories: Q2 2021

From April 1 through June 30, 2021, Chase Freedom and Freedom Flex had two bonus cash-back categories: gas stations and home improvement stores.

Gas Stations

This category covered purchases made at gas stations and travel centers, usually including:

  • Gasoline purchases made at the pump
  • Gasoline purchases made inside the store or with the attendant on duty
  • Purchases made inside convenience stores attached to gas stations, such as snacks, beverages, and automotive supplies

“Gas station purchases” generally do not include purchases made at gas stations associated with warehouse stores like Costco or superstores like Kroger.

At automotive shops or service stations with gas pumps present, purchases of auto-repair services, automotive parts, car washes, and other automotive products and services may or may not count as “gas station purchases” for cash-back purposes. It all depends on the merchant category code used by the vendor.

Home Improvement Stores

This category covered purchases at home improvement retailers like The Home Depot, Lowe’s, and Menards.

Purchases at owner-operated hardware stores, whether franchised under a national brand like Ace Hardware or completely independent, may also have qualified for the 5% bonus.

For ideas to maximize your savings while earning home improvement bonus cash, review these proven Home Depot shopping tips and tricks.


How Chase Tracks Cash Back

The Chase Freedom cards’ cash-back accounting is a bit technical, but there’s not much math involved.

Like most credit card issuers, Chase distinguishes between purchases eligible to earn cash back and cashlike transactions, which aren’t cash-back-eligible. Examples of cashlike transactions include:

  • Balance transfers
  • Cash advances, including ATM withdrawals
  • Purchases of gift cards
  • Purchases of lottery tickets, casino chips, and other gaming tokens

Cash-back-eligible purchases include most net purchases made with merchants online and in the real world. “Net purchases” means the total transaction amount (including tax, if applicable) minus any refunds, discounts, or chargebacks.

All cash-back-eligible purchases earn 1% cash back with no caps or restrictions on earning potential.

Eligible purchases in the bonus categories earn an additional 4% cash back for a total of 5% cash back — up to the $1,500 combined quarterly spending limit, after which bonus category purchases earn unlimited 1% cash back.

Chase Freedom’s credit card statements distinguish between 1% base cash back and 4% bonus cash back.


6 Tips to Earn More Cash Back With Chase Freedom

No matter what’s earning 5% this quarter, use these tips to maximize your Chase Freedom cards’ bonus cash-back earnings.

1. Set a Reminder to Activate Bonus Cash Back Each Quarter

If you forget to activate your bonus categories by the middle of the last month of the quarter, you won’t earn any bonus cash back during those three months — meaning you miss out on up to $75 in bonus cash-back earnings.

Chase sends out activation reminder emails about two weeks before the start of each quarter. Clicking the link in the email activates your bonus cash back with no sign-in required.

Otherwise, set a calendar reminder for the first day of the quarter and activate your bonus cash back then. Remember, bonus cash back is retroactive to the beginning of the quarter when you activate by the 14th of its last month.

2. Avoid Using Digital Wallets or Third-Party Payment Apps

Chase warns that transactions made using digital wallets like Apple Pay and third-party payment apps like Square and PayPal may code differently than standard transactions.

If that happens, you earn just 1% cash back, even when you buy from bonus category merchants. To be safe, don’t use these apps for bonus category purchases.

3. Set Up Autopay With Bonus Category Merchants

A week or two before the start of the quarter, set up autopay with merchants eligible for bonus cash back in the coming three months.

You can usually set up autopay with any merchant that sends you a monthly bill or charges a monthly subscription fee. That typically includes:

  • Streaming content providers
  • Telecommunications companies
  • Digital media providers
  • Grocery delivery services

If you don’t want your Freedom card to remain your default payment method after the quarter ends, set a calendar reminder to remove the card from each autopay vendor.

4. Plan Bonus Category Purchases in Advance

Chase reveals the coming quarter’s cash-back categories several weeks — and sometimes longer — before the quarter begins. As soon as you know what they are, start gaming out your bonus category spending for the next three months.

For instance, if you know home improvement store purchases will earn bonus cash back next quarter, you can move up the start date of that long-planned DIY home improvement project — or at least buy the supplies you’re sure to need when the time comes.

This strategy works best for non-urgent purchases you don’t regularly make because it’s easy to put those on the back burner. But it’s also effective for essential recurring spending, like your weekly grocery bill.

Get into the habit of grabbing your Freedom card and hitting the supermarket, say, every Saturday at 9am to max out your 5% cash-back earnings for the quarter.

5. Make Major Purchases With Eligible Merchants (If It’s Cost-Effective)

If you don’t have to spend more to do so or the effort of shopping around isn’t worth your time, reward bonus category merchants with business you could just as easily have given to other merchants.

For instance, if gas station spending earns 5% back this quarter and your car needs work, have a gas station mechanic handle the repair, not a dealership or standalone repair shop. On a $500 mechanic’s bill, you’ll earn $25 cash back — not a bad discount.

6. Always Carry Your Freedom Card With You

Finally, keep your Freedom or Freedom Flex card in your wallet at all times, even if it’s not your everyday spending card. You never know when you’ll come across an opportunity to earn bonus cash back.


Final Word

If you can maximize your Chase Freedom cash-back cards’ 5% cash-back categories quarter after quarter, you earn $300 in bonus cash back every year. That’s on top of the unlimited 1% cash back on regular purchases if you use your Chase Freedom card for everyday spending.

It does take effort to maintain a perfect cash-back record with the Chase Freedom Flex℠ Card. For starters, you must remember to activate your bonus categories each quarter.

You also have to make sure you’re actually earning bonus cash back when you think you are — something that’s less likely when you use a digital wallet or third-party payment app like PayPal.

And if you don’t usually spend much in a particular quarter’s favored categories, earning all your cash back on purchases for that quarter might not be possible.

But for many, a challenge like this is just what they need to think more intentionally about their spending. Earning 5% cash back is a victory in and of itself, but finding ways to swap unnecessary transactions for bonus category purchases you need to make anyway — that’s even better.

For a detailed overview of the Chase Freedom Flex card, check out our Chase Freedom Flex credit card review.

While you’re at it, check out our review of its sister card, the Chase Freedom Unlimited Credit Card, and of Chase’s two popular travel credit cards: the Chase Sapphire Preferred Card and the Chase Sapphire Reserve Card.

Editorial Note: The editorial content on this page is not provided by any bank, credit card issuer, airline, or hotel chain, and has not been reviewed, approved, or otherwise endorsed by any of these entities. Opinions expressed here are the author’s alone, not those of the bank, credit card issuer, airline, or hotel chain, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

Source: moneycrashers.com

Cost of Living in Thailand – How Much for Rent, Food & Entertainment

How would you like to live in a tropical paradise where a restaurant meal costs $2, a taxi ride costs $3, and a furnished apartment rents for as little as $200 per month?

For decades, the low cost of living in Thailand has made it one of the most popular destinations for anyone looking to live in a tropical climate on a budget. And while prices in this sunny “Land of Smiles” have inched up over the years, you can still live on a fraction of what you’d spend for a similar lifestyle in your home country.

But just how cheap is Thailand in 2021?

How Much Does It Cost to Live in Thailand?

Each of Thailand’s regions offers something unique to travelers and expats. From beach towns to bustling cities and cultural centers to sleepy hideaways, Thailand accommodates every lifestyle — at least as long as you like sunshine.

The overall cost of living in Thailand varies by region. But some expenses, such as cellphone bills, taxes, and visa fees, remain constant, no matter where you choose to live.

Your standard of living has the most significant impact on your cost to live in Thailand. You can choose a life of luxury for a sliver of what it costs in the United States or Europe. But if you’re willing to live like a local with a simple lifestyle, you can stretch money even further.

When comparing prices in a foreign currency, your purchasing power fluctuates with the exchange rate. Since 2018, the exchange rate has held steady in Thailand, ranging from 30 to 33 Thai baht (THB) per $1 U.S.

With the exchange rate in mind, you can compare the cost of living between your current location and Thailand. To make the comparison easier, the prices herein are converted to U.S. dollars.

Average cost-of-living figures come from Numbeo, a crowd-sourced cost-of-living database. After living in Thailand for five months, I found these averages are a good starting point, but they don’t always accurately depict how affordable each destination can be.

Since the crowd-sourced data comes primarily from expats, costs are higher than what you’d spend living like a local.

In addition to Numbeo averages, all other pricing data comes from real properties for rent on Facebook Marketplace and Airbnb.

Rent

Your expenses partially depend on how you find your rental. While accommodation-hunting on Airbnb and other booking websites is convenient, that convenience comes at a price. To find the cheapest rates, search on Facebook Marketplace or (better yet) on the ground — but don’t expect everyone to speak English.

The cost of rent in Thailand also varies dramatically from city to city — even neighborhood to neighborhood.

Bangkok and the Suburbs

As the capital and center of economic activity, Bangkok is naturally the most expensive part of the country.

Luxury apartments on Airbnb can cost more than $3,500 per month in the most desirable parts of Phrom Phong, Silom, Lumpini, and Sukhumvit, all of which make up Thailand’s financial and retail center. Penthouse apartments complete with housekeeping, a private swimming pool, and panoramic views of the big city can run $6,000 per month or more.

But there are plenty of more affordable options.

Tourists and backpackers generally rent rooms on Khaosan Road, where a decent hotel room costs $10 to $25 per night. If you’re on a shoestring budget, shared dormitories in hostels go for as little as $2 per night. Discounts for monthly rentals are also available.

In Bangkok, the average one-bedroom apartment in the city center goes for $580 per month but only costs $290 outside the city center.

One factor that influences price is the proximity to the nearest subway station. The closer it is to the subway (MRT) or Skytrain (BTS), the higher the price.

Public transport is now starting to expand into the suburbs, which can offer the best of both worlds: low rental prices with easy access to the city.

For example, the furnished studio we rented in a luxurious condominium right next to a BTS station in the suburbs costs $460 per month on Airbnb. We could have negotiated an even lower price by paying an owner directly, taking an unfurnished unit, or signing a longer contract.

It had everything we needed built into the complex, including a restaurant, mini-store, gym, infinity pool, and workspace. Since we had everything on-site, we rarely had to leave, which saved us transportation costs.

If you prefer to rent a house, you have to venture outside the city center. Neighboring Nonthaburi and Samut Prakan are technically independent cities but are really more like exurbs of Bangkok. Detached single-family houses in these regions cost as little as $200 per month.

Beach Towns Near Bangkok (Pattaya and Rayong)

A couple of hours southeast of Bangkok, the beach towns of Pattaya and Jomtien have seen aggressive growth in recent years as real estate investors continue to build high-rise condominiums in these once-sleepy fishing towns.

In fact, the 2019 Global Destination Cities Index ranked Pattaya the 15th most overnight tourist-visited city in the world. Many of those tourists have fallen in love with the sunny, relaxed lifestyle and now call Pattaya home.

Despite their popularity, the cost of living in these regions remains surprisingly low.

Pattaya is the most expensive. Its nightlife is a big draw for expats. But even there, you can find one-bedroom apartments just off the beach for less than $500 per month. And the farther you go inland, the lower the prices get.

Rayong is even cheaper, with plenty of furnished studios going for less than $200.

Chiang Mai and Chiang Rai

Chiang Mai is a small town in Northern Thailand near the border of Burma and Laos. Considered by many to be the “digital nomad capital of the world,” Chiang Mai is a hotspot for young backpackers with a thriving expat community. Its popularity is primarily due to a low cost of living, beautiful temples, and foreigner-friendly cafes, nightclubs, and hangouts.

The average rent in Chiang Mai is $430 inside the city center and $300 outside the center. That said, when I went apartment-hunting in Chiang Mai, I found prices to be even cheaper.

In the Nimmanhemin (or “Nimman”) neighborhood, prices have exploded over the past decade due to the influx of digital nomads. We walked around door-to-door asking for rates and couldn’t find any decent studio apartments under $400. But outside touristy areas, it’s not unheard of to score a furnished studio for under $125.

A less popular option is the neighboring town of Chiang Rai, home to three of the most awe-inspiring temples in Thailand. Since it’s a bit more under the radar, it can be even cheaper than Chiang Mai.

The average rent for a midrange one-bedroom apartment in the Chiang Rai city center is $240, with comparable apartments outside the city going for half that. Northeast Chiang Rai is also close to the Burmese border, which is convenient for border runs when you have to renew your visa.

In Chiang Mai, Chiang Rai, or any other touristy town in Northern Thailand, prices fluctuate with the season. During “burning season” — when farmers burn their crops and pollution levels rise — rental costs plummet as foreigners flee in search of cleaner air.

Southern Beaches and Islands (Phuket, Krabi, Songkhla)

The stunning beaches surrounding Phuket and Krabi have surged in cost over the past 20 years as luxurious resorts slowly replace cheap backpacker bungalows.

The average one-bedroom apartment goes for $470 in Krabi, with similar prices in Phuket. There are also still deals on popular islands like Koh Lanta, where you can find simple one-bedroom Airbnbs for as little as $230.

That said, rents vary radically depending on the unit’s proximity to the beach, with luxurious beachfront villas fetching upward of $2,000 per month.

In Songkhla, a less popular resort town near the southern Malaysian border, you can still find bare-bones apartments on Facebook Marketplace for as little as $100 per month. You won’t be living in luxury, but you can’t go wrong for $100, especially if you spend all your time at the beach anyway.

Gulf of Thailand (Koh Samui, Koh Pha Ngan, Koh Tao)

The Gulf of Thailand is home to three of the country’s most popular islands — Koh Samui, Koh Pha Ngan, and Koh Tao. Each island has a unique vibe. And while prices have risen over the past decade, you can still find some steals.

Koh Samui is the largest and most developed of the three islands, with the average one-bedroom apartment rent ranging from $270 to $390 per month. It’s full of resorts and known as a family vacation destination, but plenty of expats also call the island home.

Koh Pha Ngan is home to the infamous Full Moon Party, an enormous beach festival held on the southwest corner of the island every month. But Koh Pha Ngan is more than just parties.

The island’s west side offers laid-back beach towns with expat communities dedicated to yoga, mindfulness, and spirituality.

It’s hard to find anything under $200 per month in Koh Pha Ngan, which would get you a rustic bungalow. For a modern furnished apartment with air conditioning and a beach view, expect to pay upward of $1,000 monthly.

Koh Tao is the smallest and least developed of the three islands, a favorite for backpackers wanting to scuba dive on a budget. Since it’s so small, most rental prices you find online are expensive Airbnbs. If you search on the ground and negotiate directly with locals, you can find rustic bungalows for under $150 per month.

Off-the-Beaten-Path Destinations

Generally, the further you go from tourist destinations, the cheaper your cost of living. Rent for a basic one-bedroom place in a rural Thailand region like Isan can be as little as $50 per month.

Remember, the 2021 daily minimum wage in Thailand ranges from $10.03 to $10.77. You won’t get a Western standard of living on less than $11 per day, but if you learn to live like a local, you’d be shocked at how far your money stretches.

Utilities

When renting an unfurnished apartment on a long-term contract, you’re usually responsible for paying your own utility bills.

But even many furnished accommodations exclude electricity in the price. That’s because electricity is expensive compared to rental costs, especially if you’re blasting the air conditioning all day. Some rentals even include electricity for everything except air conditioning, which they meter separately.

To make matters more complex, when property owners charge for electricity in furnished apartments, they set their own rates per kilowatt-hour. The official power tariff in 2021 is $0.11 per kilowatt-hour, but depending on how much the property owner wants to profit, you could pay anywhere from $0.12 to $0.25 per kilowatt-hour.

When comparing rental options, factor in:

  • Whether they include electricity
  • How much they charge for it
  • How much you plan to use

It can get confusing, and we ended up creating a full-blown spreadsheet to keep everything straight. Just know that if you pay the property owner for electricity (versus paying the electric company directly), the monthly cost of your electricity bill could double depending on the rate they set.

Numbeo reports that the average utility bill (electricity, heating, cooling, water, and garbage) in Thailand is $68.

And choosing a cooler climate doesn’t necessarily lead to a lower air-conditioning bill. You also have to factor in pollution. Bangkok is known for its pollution, and on bad days, you won’t want dirty air circulating through your house. That means keeping the windows closed and the air on and investing in an air purifier for your home.

Similarly, during the burning season in Chiang Mai and the northern regions, the air quality reaches harmful levels, and you should keep the windows closed.

Food

Thai food is delicious and cheap. Eating out is so affordable that most Thais build their houses without a full kitchen. That means, unless you pay for a property built specifically for Westerners or tourists, you won’t cook many meals at home.

Food costs vary by location. Touristy areas like the islands and expat hangouts generally have the highest prices. But no matter where you go, there’s usually always a food cart or small family restaurant serving tasty rice and noodle dishes for $2 or less.

Rural areas can cost much less. I once visited an orphanage on the outskirts of the small town of Chiang Rai. The founder invited us to a delicious feast at a local restaurant, and our bill came out to a shocking $0.80 per person, including drinks.

When hunting for the cheapest restaurants in town, look out for general cleanliness to avoid getting sick. If it’s packed with locals, that’s a good sign the food is safe.

Thailand is also full of vendors selling fresh fruit and fruit shakes on the streets. While in Bangkok, we bought $1 coconut shakes and a bag of $0.50 mangoes every day.

Coffee lovers in Bangkok spend an average of $2.20 per cappuccino. The average chicken breast runs $1.10 per pound if you want to cook yourself. But with such cheap and delicious restaurants, it’s often hard to justify the time spent cooking.

That said, not all food in Thailand is cheap. After living in Thailand for a while, many expats start to miss Western food. And Western food in Thailand is pricey — and underwhelming.

Many Western ingredients, like cheese, are hard to come by in Thailand. That means foods like burritos, hamburgers, and pizza are both expensive and taste funny with substituted ingredients.

Transportation

Public transportation in Thailand is so cheap and convenient that owning a car is rarely necessary. Instead, most expats use motorbikes or public transit.

The average cost of a basic scooter rental varies by region, but you can usually pick one up for as little as $60 per month. You can also rent bigger motorcycles, but they cost two to five times as much, depending on the model you choose. In addition to rental fees, you have to factor in gas costs, which average $3.36 per gallon in Thailand.

When renting a motorbike, choose a model with parts made in Thailand. That way, if you crash or scratch the bike, you won’t have to pay outrageous fees to import parts from a different country. Also, record a video showing the condition of the motorbike before you rent it. Otherwise, the rental agency may try to charge you for damages you weren’t responsible for. I learned that the hard way.

You technically need an international driver’s license to ride a scooter or motorbike in Thailand. If you plan to live in the country long-term, it’s worth getting. If you’re just visiting, many tourists rent scooters without it. If the police pull you over, they give you a ticket or try to extort a bribe from you. So sticking to public transit may be best.

If scooters aren’t your forte, there are plenty of other affordable transportation options available. For example, there’s the metro system in Bangkok, moto taxis, and the famous shared red truck taxis (called “songthaews”) in other regions like Chiang Mai.

For example, when we lived in Chiang Mai, a songthaew within the city limits of Chiang Mai cost us roughly $1 per person.

Fares for Bangkok’s BTS and MRT depend on the distance you travel, ranging from $0.50 to $1.70.

If you live in a walkable neighborhood or beach town and take subways or songthaews once per day, you’re looking at $2 per day round trip, or $60 per month in transportation expenses.

On the other extreme, if you live in Bangkok and constantly take taxis across the city — which cost an average of $0.66 per mile, according to Numbeo — your transportation bill could shoot up to a couple hundred dollars.

Entertainment

There’s more to life than food, rent, and transportation. Thailand is famous for its nightlife, and that’s where a lot of people run into trouble.

Based on our experience, beers in most bars and nightclubs only cost $2 to $4. That said, expats and vacationers can quickly find themselves partying a bit too hard and spending even more than they do back home.

Some nightclubs have free entry, but we’ve paid up to a $15 cover. If you’re going out multiple nights per week — which can be tempting in a city that never sleeps — your monthly budget can quickly go off the rails.

If you prefer to entertain yourself with travel and exploration, you’re in luck. Thailand has 1,430 stunning islands, many of which you can access fairly cheaply.

For example, an 11-hour bus ride from Bangkok to Krabi costs less than $20. And if you buy in advance, direct local flights can be just as cheap.

Phone and Internet

In the past, one trade-off of living in Thailand was slow and unreliable Internet speeds. That’s no longer the case. In fact, fast Wi-Fi is one of the reasons expats and digital nomads choose to live in Thailand over other similarly affordable countries.

In Thailand, the average price for a 60-megabits-per-second or faster Internet plan is less than $20 per month.

Prices for cellphone plans vary based on:

  • Provider
  • Length of contract
  • Amount of data
  • Data speeds

Prices also depend on whether you need a data-only plan, a calling plan, or a combination of the two.

For example, with TrueMove H, you can get an unlimited data plan with a couple hundred calling minutes for less than $20 per month.

Note that many “unlimited” data plans only include a certain amount of data at maximum speed. After that, it’s throttled.

Gyms, Spas, and Self-Care

Gyms in Thailand can be surprisingly expensive.

The gym we joined in Chiang Mai cost $30 per month, three times as expensive as Planet Fitness in the U.S. Of course, our gym catered to expats, with air conditioning and well-maintained equipment. You can also find more rustic gyms for as little as $5 per month.

That said, many condos have free gyms on-site. So if it’s important to you, finding one could save you money even if it’s more expensive than another rental.

Thailand’s massage culture is world-renowned and a big part of many expats’ lives. Steeped in Buddhist traditions, Thai massage techniques have been passed down from generation to generation for centuries.

You can find massage parlors on almost every corner. While living and traveling around Thailand, most parlors we saw cost between $5 and $15 for an hour-long massage.

Cost of Health Care in Thailand

Health care in Thailand is incredibly cheap, especially coming from countries with outrageous health care costs like the U.S.

I once needed a procedure that would have cost over $25,000 in America. In Bangkok, I had it done for $1,500, including a one-night stay in a surprisingly luxurious private hospital room.

You can find hospitals with English-speaking staff in all the main tourist hubs. But if you have a complicated situation, Bangkok is the place to go.

Also, just because a hospital is more expensive or internationally recognized doesn’t necessarily mean it has the best doctor for your condition. To find a specialist, I searched for the top surgeons in Bangkok for that discipline. It turns out the best specialist in all of Asia worked out of a small private hospital — a hospital nowhere to be found on the online lists of best Bangkok hospitals for expats.

Many expats living in Thailand on a tourist visa rely on travel insurance or international health insurance for their coverage. These plans range from basic $40-per-month SafetyWing travel insurance to more comprehensive plans that cost hundreds of dollars per month. Whichever plan you choose, your premiums depend on factors like your age, the coverage you need, the country you’re from, and the insurance company you choose.

Expats with a resident visa can also buy local private insurance like Luma Health for coverage in Thailand. These plans are comparable in price to international health insurance plans, and most hospitals can bill them directly. It’s more convenient than a travel insurance policy that requires you to pay out of pocket and submit claims for reimbursement.

Lastly, if you work legally in Thailand and pay Social Security taxes, you receive free government medical insurance. If you’re used to Western standards, set your expectations appropriately. Odds are you won’t be impressed with the treatment you receive under free government insurance in a developing nation.

Thailand Visa Expenses

American tourists on short-term vacations don’t need an entry visa.

But if you plan to stay in Thailand full-time as a retiree, recurring tourist, Thai spouse, student, or business owner, you need a visa.

To keep these visas current, you must pay to renew them regularly.

For example, a single-entry education (ED) visa — which you could use to take Thai language lessons — costs $80, and you must renew it every 90 days.

The fee for a five-year retirement visa is $400. It also requires proof of an income source greater than 65,000 baht (roughly US$2,000) per month. Immigration waves the monthly income requirement if you maintain a balance of at least 800,000 baht (US$24,585) in a Thai bank account.

That said, many countries have introduced digital nomad and remote work visas in the wake of the pandemic. Thailand is in the process of creating its own remote work visa, which would eliminate much of the hassle and expense remote-working expats face.

Income Tax in Thailand

Just because you live abroad doesn’t make you exempt from income taxes. If you live in Thailand for more than 180 days (roughly six months) per year, you’re considered a resident. Residents in Thailand must pay taxes on income earned worldwide. If you are not considered a resident, you must still pay taxes on income earned in Thailand.

Thailand has progressive income tax brackets similar to those in the U.S., ranging from 0% to 35%.

Americans must also file taxes in the U.S., but you can avoid double taxation thanks to the U.S.- Thailand tax treaty, foreign earned income exclusion, and foreign tax credit.


Final Word

In addition to everyday living expenses, you also have to factor in the cost of an intercontinental move and building a healthy emergency fund.

Not only do you have to buy a plane ticket across the globe, but unless you stick to renting expensive furnished spaces, you also need to buy a bed, fridge, furniture, cookware, and decorations.

That said, even though Thailand isn’t quite as cheap as it once was, it’s still one of the best places you can live on $2,000 per month or less.

Source: moneycrashers.com

Leasing vs. Buying a Car: What’s Right for You?

So you’ve decided to get a new car. You’ve picked out everything from the color to the floor mats. But pump the brakes. Should you lease or buy? There are many factors to consider.

Check out this overview of leasing vs. buying, plus get help deciding how to save for your next set of wheels.

Owning vs. Leasing a Car

When you own a car, you purchase the vehicle outright from a dealer or private owner with cash or by financing it. You can keep it for as long as you want, and you can sell it in the future, if you wish.

When you lease a car, you do not own the vehicle. Instead, you make monthly payments to the owner for the right to use the vehicle. You must return the car at the end of your lease agreement or buy it at that time.

Initial Costs

When buying a car, the upfront costs are fairly obvious. You either need enough money to buy the car outright, or you need a big enough down payment to start financing the vehicle. Financing will also involve taxes, registration fees, and other charges.

When financing a car, it’s a good idea to look at the total cost: Multiply the monthly payment by the number of months in the loan, and then add the value of any trade-in or down payment, and the cost of taxes, fees, and add-ons.

emergency fund to cover unforeseen events? If you can answer yes to these questions, you may be in good shape to buy a vehicle.

As for leasing, you should assess whether you have enough income to cover the lease payments for the entire term. Breaking a lease can be an expensive proposition: It means paying the balance due, including any penalties and fees.

You also want to ensure that you have enough money to cover any unexpected expenses, including costs for going over your mileage limit.

Dollars & Sense of Leasing or Buying a Car

The monthly cost of leasing a vehicle is often lower than auto loan payments. But to parse it further, consider the costs of buying a new vs. used car.

In one detailed comparison of leasing a car, buying a new car, and buying a used car, over the course of six years the total costs for a used car were the lowest (the comparison did not include any repairs). Leasing was the next lowest. Buying a new car had the highest total costs.

Here’s another wrinkle if you do lease: If you decide to buy the car at the end of the contract, you’ll likely pay thousands of dollars more than if you had bought it from the get-go.

The Takeaway

The decision to lease vs. buy a car can rest on factors like total costs, annual mileage, and the urge to drive the latest model every few years.

Need help saving for a car, purchased or leased? A money-tracking app like SoFi Relay can help.

Keep tabs on your cash flow and spending habits, and get credit score updates, at no cost.

Put your finances in gear with SoFi Relay today.


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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Source: sofi.com

What Is UCITS?

Undertakings for Collective Investment in Transferable Securities (UCITS) are a category of investment funds designed to both streamline and safeguard investment transactions. UCITS are usually structured like traditional mutual funds, exchange traded funds, or a money market fund

European Union (EU) regulates UCITs, but they are widely available to non-EU investors. U.S. investors, for example, can buy shares of UCITS through U.S.-based fund managers, although local, EU-based money managers run the funds.

Collectively, they hold €18.8 trillion in assets under management, or nearly $23 trillion. Because they undergo a high level of regulatory scrutiny, many view UCITS as a relatively safe investment.

What Is a UCITS Fund?

UCITS funds are a type of mutual fund that complies with European Union regulations and holds securities from throughout the region. They emerged as part of an effort by the European Union to consolidate disparate European financial investments into one central sector, governed by the EU, with a “marketing passport,” that enables financial services firms across the EU to invest in multiple countries under a common set of rules and regulations.

The EU launched UCITS for two primary reasons:

1.   To structure a single financial services entity under the EU umbrella that allowed for the cross-sale of mutual funds across the EU, and across the globe.

2.   To better regulate investment asset transactions among all 28 EU member countries, giving investors inside and outside of the EU access to more tightly regulated investment funds.

Fundamentally, UCITS funds rules give EU regulators a powerful tool to centralize key financial services issues like types of investments allowed, asset liquidity, investment disclosures, and investor safeguards. By rolling the new rules and regulations into UCITS, EU regulators sought to make efficient and secure investment funds available to a broad swath of investors, primarily at the retail and institutional levels.

For investors, UCITS funds offer more flexibility and security. Not only are the funds widely viewed as safe and secure, but UCITS funds offer a diversified fund option to investors who might otherwise have to depend on single public companies for the bulk of their investment portfolios.

According to the European Union, UCITS comprise 75% of all European Union investments by individual investors. Data from the European Fund and Asset Management Association notes that, through 2020, UCITS funds have $11.7 trillion (in euros). That’s approximately 62% of all Euro-based investment funds. Additionally, there were about 34,000 UCIT funds at the end of 2020.

A Brief History of UCITS

The genesis of UCITS funds dates back to the mid-1980’s, with the rollout of the European Directive legislation, which set a new blueprint for financial markets across the continent. The new law introduced UCITS funds on an incremental basis and have been used as a way to regulate financial markets with regular updates and revisions over the past three decades.

In 2002, the EU issued a pair of new directives related to mutual fund sales – Directives 2001/107/EC and 2001/108/EC, which expanded the market for UCITS across the EU and loosened regulations on the sale of index funds in the region.

The fund initiative accelerated in 2009 and 2010, when the Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 clarified the use of UCITS in European investment markets, especially in coordination of all laws, regulations, and administrative oversight. The next year, te European Union reclassified UCITS w as investment funds regulated under Part 1 of the Law of 17 December 2010.

In recent years, “Alt UCITS” or alternative UCITS funds have grown in popularity, along with other types of alternative investments.

How Does a UCIT Fund Work?

Structurally, UCITS are built like mutual funds, with many of the same features, regulatory requirements, and marketing models.

Individual and institutional investors, who form a collective group of unit holders, put their money into a UCIT, which, in turn, owns investment securities (mostly stocks and bonds) and cash. For investors, the primary goal is to invest their money into the fund to capitalize on specific market conditions that favor the stocks or bonds that form the UCITS. UCTIS funds may provide one way for American investors to get more international diversification within their portfolios.

A professional money manager, or group of managers, run the fund, and they are singularly responsible for choosing the securities that make up the fund. The UCITS investor understands this agreement before investing in the fund, thus allowing the fund managers to choose investments on their behalf.

An investor may leave the fund at any point in time, and do so by liquidating their shares of the fund on the open market. American investors should know that the Internal Revenue Service may classify UCITS as passive foreign investment companies, which could trigger more onerous tax treatments, especially when compared to domestic mutual funds.

UCITS Rules and Regulations

UCITS do have some firm regulatory and operational requirements to abide by in the European Union, as follows:

•  The fund and its management team are usually based on a tax-neutral EU country (Ireland would be a good example.)

•  A UCITS operates under the laws mandated by the member state of its headquarters. After the fund is licensed in the EU state of origin, it can then be marketed to other EU states, and to investors around the world. The fund must provide proper legal notification to the state or nation where it wants to do business before being allowed to market the fund to investors.

•  A UCITS must provide proper notice to investors in the form of a Key Investor Information Document, usually located on the fund’s website. The fund must also be approved.

•  A UCITS must also provide a fund prospectus to investors (also normally found on the fund’s web site) and must file both annual and semiannual reports.

•  Any time a UCITS issues, sells, or redeems fund shares, it must make pricing notification available to investors.

The Takeaway

UCITS may be an interesting type of investment for U.S. investors looking to diversify their portfolios. As with any investment, investors must conduct thorough due diligence on the UCITS, which should include a review of fund holdings, past performance, management stability, fees, and tax consequences. Before steering money into a UCITS fund account, talk with a financial advisor well-versed in UCITS in particular, and with diversified fund investments in general.

If you’re interested in other investment opportunities, a great way to build your portfolio is by opening a SoFi Invest® brokerage account. You can open an Active Investing Account and build your own portfolio of investments including stocks, bonds, exchange-traded funds, and cryptocurrency. Or, you can opt for an automated account, which selects and monitors investments on your behalf.

Photo credit: iStock/kupicoo


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Source: sofi.com