It took hours this weekend for tornadoes to cut a path of destruction in Kentucky, Arkansas, Missouri and Tennessee.
It will take much longer for survivors to pick up the pieces of their lives and start again — and that’s where the rest of the country can help with charitable contributions.
In Kentucky alone, Governor Andy Beshear, a Democrat, said Monday the confirmed death toll from the so-called “quad-state tornado” stood at 64 on Monday, according to the Associated Press.
He was bracing for the grim number to climb. “But we’re digging out. We are tough. We’re going to grieve and then we’re going to rebuild,” Beshear said in a Sunday interview on “Face the Nation.”
The combined death toll in Illinois, Tennessee, Arkansas and Missouri was at least an additional 14 people, the Associated Press said of the tornadoes that tore through late Friday and early Saturday.
“These are communities that are going to need sustained, multi-year financial support to get back on their feet,” said Regine Webster, vice president of the Center for Disaster Philanthropy, an organization that advises philanthropies on contributions in the wake of disasters.
Four years after Hurricane Harvey rampaged through Houston, Webster said there are still people who haven’t been fully relocated. That’s a major metropolis with all kinds of media outlets to catch public attention, in contrast to many areas in the path of the recent tornadoes that might not stay in focus as the world keeps moving.
80% of philanthropic contributions end within two months of a disaster, research from Webster’s organization shows.
Here are some suggestions on where to give for the short-term aid and long-term recovery.
Team Western Kentucky Tornado Relief Fund
This is a relief fund created by Beshear’s office and it’s already raised more than $2.3 million, Beshear said, according to Fox 5 Atlanta. The fund is collecting money for funeral expenses and rebuilding efforts, according to local reporting by WFPL.org.
American Red Cross
The organization says it’s providing disaster relief in Kentucky and the various other regions where the tornadoes touched down. “People lost loved ones, their homes, everything is just gone for them. We’re moving as quickly as we can to get much needed disaster relief and blood products to area hospitals in these communities that are unrecognizable now,” said Steve Cunanan, regional executive of the Kentucky Red Cross. Here’s where to find the local Red Cross chapter.
United Way
The United Way is another national organization with local chapters than can make an on-the-ground impact. The organization’s Kentucky United Way says it is working with local partners and communities to “support immediate needs and long-term recovery for impacted communities.”
Feeding America
At Feeding America, Kentucky’s Heartland — a member of the national Feeding America network of food banks — the organization works with more than 200 pantries, soup kitchens and anti-hunger programs in 42 Kentucky counties.
That includes Graves County, where the city of Mayfield is located. The city’s downtown was “completely devastated,” Beshear said this weekend.
Toys for Tots
The timing of the tornadoes striking two weeks before Christmas has heightened the impact for many. Suddenly, many families will have so much more to worry about than holiday shopping. For some displaced families, a little bit of holiday joy from a donated present might go a long way. Toys for Tots is organization people can consider.
There are several toy drive campaigns in the area of the tornadoes, including Bowling Green, Ky. Here’s a site to find local Toys for Tots programs.
Local foundations with local knowledge
People who want to give money now need to consider that when national public attention wanes, the local need will still be there, said Webster at the Center for Disaster Philanthropy. One way to make donation dollars really count for the long term is by donating to the organizations already in place in these communities long before the tornadoes, Webster said.
It’s difficult for people halfway across the country to have the local knowledge, but Webster said they can donate to local community foundations that do possess that critical understanding when they determine which organizations deserve their contributions.
The uncertainty of the past couple of years has made it a challenging time for pub operators like JD Wetherspoon (LSE: JDW). The company’s share price slid more than 5% in today’s trading, at the time of writing this today. Over the past year, the shares are down 21%. The JD Wetherspoon share price is now less than half where it was at the end of 2019, before the pandemic.
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I remain a fan of how Wetherspoon runs its business. The company has a proven formula. Although it attracts critics, it has proven to be highly successful. Keen pricing, conveniently sited locations, and an engaged workforce have helped Wetherspoon build a popular, resilient business. In 2019, the company reported earnings per share of 71p. If it could get back to that level, the prospective price-to-earnings ratio at the current JD Wetherspoon share price would be slightly less than 12. That looks cheap to me.
The company has managed to turn its popularity with customers into an economically lucrative model. Economies of scale allow it to secure good pricing from suppliers. Many pubgoers are regulars. Increasing their loyalty through initiatives such as the Wetherspoon News magazine allows the company to encourage repeat custom.
Wetherspoon bear case
Pubs are still reeling from previous lockdowns. A number of Wetherspoons’ patrons are old and feel nervous about going into a crowded pub. That was already putting a dampener on the company’s recovery even before the latest threat of more restrictions. In a statement today, the pub chain warned that its first half may be lossmaking or only marginally profitable. The company pointed out that uncertainty and government policy shifts “make predictions for sales and profits hazardous”.
The company waved off concerns about possible supply chain problems and staff shortages. But even that apparently good news could turn out to be another risk. Products like beer have a shelf life. If pubs are forced to close for long, the company may end up having to throw away stock. That will hurt profits. The company has already tapped the market in a rights issue to improve liquidity during the pandemic, diluting shareholders. There is a risk that could happen again if a reduction in trading hurts liquidity.
Recovery prospects for the JD Wetherspoon share price
I remain persuaded by the JD Wetherspoon strategy and its track record of business success. Nonetheless, the bear case is starting to look more compelling to me than it did before. If further lockdowns come, the pub company may end up taking years to recover. There is a risk that demand will never fully recover as some patrons will not return to pubs. Meanwhile, liquidity could shrink.
The battered JD Wetherspoon share price already factors in many of the risks, in my view. So positive news next year could see the share price move up again. But I don’t think we’ll see the 2019 share price again in 2022. There is simply too much uncertainty about prospects for the hospitality sector.
I do think buying now and being willing to hold for years in anticipation of recovery could end up being a lucrative strategy for my portfolio. I’d happily consider doing that.
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Christopher Ruane has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Business insurance can help protect personal trainers and other fitness instructors from client claims of bodily injury, property damage or professional mistakes.
Here’s what you need to know about personal trainer insurance and how to find the right coverage, as well as some of the best options to consider as you compare providers.
What is personal trainer insurance?
Personal trainer insurance can refer to several types of policies that protect you from lawsuits, financial losses and damage that occur as a result of business operations.
Whether you’re a freelance trainer, you train in multiple gyms or you teach virtual classes, the right business insurance will help mitigate the common risks you face as a personal trainer or fitness instructor, such as:
Client injury or property damage as a result of a workout or training session.
Accusations that you made mistakes or were negligent in your training.
Defective workout equipment that injures a client or damages their property.
Getting into a car accident while driving to a training session.
Theft of or damage to your workout equipment.
What types of insurance do personal trainers need?
At a minimum, personal trainers should have general liability insurance and professional liability insurance. Two well-known personal trainer certification organizations — the American College of Sports Medicine, or ACSM, and the National Academy of Sports Medicine, or NASM — both recommend that their members purchase these two types of policies.
Some clients or gyms may ask that you provide proof of liability insurance before they agree to work with you. Your contract may require that you show a certificate of insurance, or COI, as part of the agreement.
ACSM and NASM also recommend that you get your own personal trainer insurance even if you have some coverage from an employer. An employer’s policy may only provide limited coverage, and it’s unlikely that you’ll be covered for any services you provide independently.
General liability insurance for personal trainers
General liability insurance typically covers legal and settlement costs associated with claims of third-party bodily injury, third-party property damage and personal and advertising injury.
For example, if your client trips over a barbell on the floor during a training session and breaks their arm, your general liability policy would cover any resulting medical, legal or settlement costs. Similarly, if you’re demonstrating an exercise for a client and you drop a weight, smashing their laptop in the process, your policy would cover the costs to replace the computer.
Professional liability insurance for personal trainers
Professional liability insurance, sometimes referred to as errors and omissions insurance, usually protects you from claims of professional negligence, errors or oversights and breach of contract. This type of insurance covers legal and settlement costs associated with these claims.
If, for instance, you teach an exercise class and an attendee later claims that it was too rigorous and they’ve torn a muscle, your professional liability policy would cover you in the case of a lawsuit from that attendee.
Or, you might be training a professional athlete to help them prepare for a national competition. The athlete does not perform as well as they would have liked and claims that your poor training has lost them potential sponsorship deals. Your professional liability insurance would cover any resulting lawsuit and settlement costs.
Additional insurance options for personal trainers
Depending on the size of your business and the specific risks you face, additional insurance coverage may be beneficial. The chart below shows some of the types of insurance that may be applicable for personal trainers and fitness instructors — and what these policies typically cover.
Type of insurance
What it covers
Business property or buildings that are damaged by certain accidents, weather events or other hazards. If you rent a space for training, your landlord may require you to have this policy.
If a water pipe bursts in your training space and damages the floor, your business property insurance would cover the cost to replace it.
Claims of physical injury or property damage as a result of a defective or flawed product, such as exercise equipment.
If you bring a punching bag with you to a training session, and a defect in the product causes your client to injure their ankle, they could file a lawsuit against you.
Your product liability insurance policy would cover any medical fees, as well as legal and settlement costs.
Medical expenses of employees that are injured or get sick while at work. Most U.S. states require employers to have workers’ comp for their employees.
If one of your trainers trips over a yoga ball, leading to a knee injury, their medical expenses would be covered under your workers’ compensation policy.
Vehicles that you use for business purposes, such as driving to meet clients for training sessions.
Covers accident-related expenses resulting from injuries, death or property damage.
If you’re leaving a client’s house and back your car into their garage, your commercial auto insurance policy would pay to repair the garage door.
Financial losses caused by data breaches, hacking, ransomware and other cyberattacks.
If hackers release the credit card numbers of all your clients, and one of the clients sues your business, your cybersecurity insurance would cover legal fees and settlement costs.
Personal trainers that teach virtual classes might find this type of policy particularly useful. You may also be able to add data breach coverage to your general liability policy.
Many insurance providers also offer several types of insurance bundled into a business owner’s policy, or BOP. BOPs typically combine general liability insurance and commercial property insurance and sometimes include business interruption insurance.
How much does personal trainer insurance cost?
Personal trainers can get professional and general liability from the insurer Next starting at $132 per year, according to the NASM website. Insure Fitness Group, on the other hand, offers bundled coverage for $179 per year.
Ultimately, the cost of your personal trainer insurance will vary based on factors such as:
Coverage limits.
Number of policies.
Business location.
Type of training your offer.
Professional certifications you have.
Number of employees you have.
Previous history of claims.
In general, the more risks your business faces — and the more coverage you need — the higher your premiums will be. For example, a personal trainer who works from home will likely have lower business insurance costs than one who rents space in a gym and has an employee.
Best options for personal trainer insurance
Big-name companies, like Nationwide and Progressive, can connect you with a provider that offers personal trainer insurance, or you can work with industry-specific providers, such as Insure Fitness Group. Certain fitness organizations also partner with insurance companies to offer customized policies for their members.
Here are some of the best personal trainer insurance providers:
Next Insurance
If you want to get a customized policy quickly, Next Insurance may be a good option.
Next offers specialized personal trainer insurance that typically includes coverage for general liability, professional liability, commercial auto, workers’ compensation and commercial property. Next prices their standard bundles at three levels, Basic, Pro and Pro Plus, based on the coverage limits you need.
With Next, you can get a quote and manage your entire insurance policy online, as well as add additional insureds and get certificates of insurance for no extra cost.
NASM also partners with Next to provide general liability and professional liability coverage starting at $11 per month.
Insure Fitness Group
If you’re looking for industry expertise, networking or additional resources, Insure Fitness Group may be a suitable provider for you.
Insure Fitness Group provides business insurance exclusively to personal trainers and other fitness professionals. The company’s customized personal training policy includes coverage for general liability, professional liability, products liability, rental damage and stolen equipment.
The cost of Insure Fitness Group’s policy is $179 per year and only $25 per year for personal trainer students.
Like Next, Insure Fitness Group allows you to generate a quote, purchase your policy and manage your coverage online. Insure Fitness Group also offers its members discounts, exclusive content and other industry-specific perks.
ACE Liability Insurance
If you have (or are training to receive) a certification from the American Council on Exercise, you can participate in the exclusive ACE liability insurance program.
This program offers discounted rates on liability insurance policies to ACE-certified professionals through a partnership with Philadelphia Insurance Companies. When you get a quote or manage your policy, however, you’ll be doing so through the PHLY system and not through ACE.
ACE liability insurance provides coverage for general and professional liability, sexual abuse liability, products liability, medical payments and damages to premises. According to the ACE website, a one-year premium for this coverage starts at $172 and a two-year premium starts at $294.
If you already have an ACE certification, it might be worth comparing a quote of their discounted rate to other quotes you receive.
How to get personal trainer insurance
As you start shopping for business insurance, keep these three steps in mind:
1. Determine what type of policies and how much coverage you need
Think about how your business operates on a daily basis. Evaluating your risks can help you decide which types of personal training insurance you need and whether you should consider additional policies on top of general liability and professional liability coverage.
2. Get multiple quotes
Once you’re ready to start looking at different insurance policies, you can work with a broker, use an online marketplace or contact insurance providers directly. Unless you have more complex insurance needs — say, you’re running a gym with multiple trainers — you may prefer either of the latter options. Using a marketplace or getting quotes from providers directly can be more hands-on and faster than working with a broker.
3. Compare providers and purchase a policy
NerdWallet recommends getting quotes from multiple insurance providers before making a decision. As you compare your options, consider:
How much the policy costs.
What coverage is included.
What kind of customer service the provider offers.
Reviews and complaints about the provider.
If you need to add an additional insured or generate a certificate of insurance, it will be helpful to understand how that process works with your provider ahead of time so that you can complete those tasks quickly after buying your policy.
What’s the best fit for your business?
Answer a few questions and we’ll match you with an insurance partner who can help you secure quotes.
Renewable energy is the future. There’s no two ways around it. While electric cars may be making all the headlines, there is another technology that I think is far more viable. Prime Minister Boris Johnson has announced his hopes that the UK would become the ‘Qatar of hydrogen’.
But what is hydrogen? How is it different and what are its benefits?
Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.
But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.
Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…
We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.
Hydrogen is the simplest atom in existence and it is very, very abundant. However, it is also highly reactive, meaning it usually combines with other elements to form compounds. This is how we get water (hydrogen and oxygen). That reactivity gives it great energy potential, if it can be separated from whatever it’s bound to.
Hydrogen has an advantage over the lithium-ion batteries used to power electric cars. It is far more energy dense, so it can power heavy machinery or industrial manufacturing.
People can also transport it easily without the hydrogen losing energy in the process, unlike electricity sent over long-distance cables.
Renewable energy conversion
Right now, ITM Power (LSE: ITM) is my top pick in this field. The company builds the modular hydrogen electrolysis machines which separate hydrogen from water. The machines are attached to existing renewable infrastructure, producing green hydrogen.
Green hydrogen is any hydrogen produced by a method which does not release carbon dioxide, standing in stark contrast to blue or grey hydrogen, which are both made by reforming methane gas and release CO2 as a by-product.
ITM has a lot of debt right now but has recently raised £250m to fund construction of two new factories and is poised to meet growing demand.
My main worry with ITM is that it has struggled to turn a profit for several years and still isn’t forecast to do so for at least another three. However, I believe that this is because demand for hydrogen has historically been low — fact which is currently changing.
Higher efficiency
Another hydrogen-based company on my radar is AFC Energy(LSE: AFC). This company manufactures the fuel cells needed to turn hydrogen fuel into electricity. What makes AFC special is their patented alkaline fuel cells which are able to run on lower purity hydrogen with the same efficiency.
On the financial side, unfortunately, AFC suffers from many of the same setbacks as ITM power. High debt, low revenue, and it has yet to turn a profit.
But AFC is growing. It increased revenues in 2021 and expects further growth through 2022. On top of that any company that uses its alkaline fuel cells will be able to use cheaper, lower grade hydrogen, giving AFC a competitive advantage.
Conclusion
Hydrogen power still remains untested at a commercial scale and I consider it a riskier investment compared to more established fuel companies.
But the market has a clear desire for hydrogen.
JCB just signed a multibillion-pound deal with Fortescue Future Industries (a subsidiary of Fortescue Metals Group) to import green hydrogen all the way from Australia.
What I’m betting on is that other firms around the world need access to a low carbon fuel. I fully expect ITM and AFC to have some growing pains, but to ultimately come out on top. This is why I’m adding them both to my portfolio.
It was released in November 2020, and make no mistake:
It’s happening.
The UK Government’s 10-point plan for a new “Green Industrial Revolution.”
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James Reynolds has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
This article provides information for educational purposes. NerdWallet does not offer advisory or brokerage services, nor does it recommend specific investments, including stocks, securities or cryptocurrencies.
Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions.
This week’s episode starts with a discussion about overcoming uncertainty in our present moment.
Then we pivot to this week’s money question from Luca. Here it is:
“Hi Wallet Nerds,
I have used NerdWallet for quite some time and recently discovered your podcast, and am a very big fan. I have a few questions I would like to ask of the show.
I’m 16 and, as you can tell by me emailing you, a personal finance nerd. I want to know if there’s anything I can do now to help my financial future. I have a job, IRA, checking/savings accounts, and am an authorized user on my parent’s credit card. Is there anything else I can do?
Because I am a personal finance nerd, I also like looking into various accounts. I am not very satisfied with my current bank and want to switch. Are there any cons to having multiple accounts? What about closing old accounts? I feel confident in my ability to manage them and keep track of my money.
Thank you very much!
Sincerely,
Check out this episode on any of these platforms:
Before you build a budget
Track all your spending at a glance to understand your trends and spot opportunities to save money.
Our take
Uncertainty seems like it’s here to stay. Whether you’re navigating a new COVID-19 variant, inflation or a climate change-related disaster, take steps to build your financial resilience and prepare for what you might encounter next. When it comes to managing your finances, take steps to shore up your savings and trim expenses where you can.
And you can also work to counter some of the current challenges. If you’re planning to travel to see your family over the holidays, you can build resilience into your flight or road trip. If you’re taking a flight, brush up on your airline’s change and cancellation policies. And if you’re driving, think about driving more slowly and using cruise control to save on gas.
To start building wealth early and set up your financial future, focus on your retirement savings. The longer your time horizon, the more time you’ll have for your money to grow. Also know what you want out of your money so you have goals to build toward. Additionally, if you’re in the market for a new bank account, take the time to shop around.
Our tips
Know how to direct your money: Whether you’re just getting started or are a seasoned veteran, a budget and defined financial goals can guide your money management.
Start investing: The sooner you start, the longer you’ll have to build wealth.
Shop around: Take the time to compare your options with financial products.
More about managing your finances on NerdWallet:
Episode transcript
Liz Weston: Welcome to the NerdWallet Smart Money podcast where we answer your personal finance questions and help you feel a little smarter about what you do with your money. I’m Liz Weston.
Sean Pyles: And I’m Sean Pyles. To send the Nerds your money questions, call or text us on the nerd hotline at 901-730-6373, that’s 901-730-NERD, or email us at [email protected]. And to get new episodes delivered to your devices every Monday, be sure to subscribe. And if you like what you hear, leave us a review and tell a friend.
Liz: This episode, Sean and I answer a listener’s question about how to build wealth early. One tip: It’s never too early to start saving for retirement. But to start off this week’s show and our This Week in Your Money segment, Sean and I are talking about how to manage uncertainty.
Sean: Because it does seem like uncertainty is the only thing that is certain nowadays. With yet another COVID variant in the news, supply chain issues dragging on and inflation bouncing around different parts of the economy, Liz and I thought that now might be a good time to talk about how folks can weather uncertainty. And for me, the counter to uncertainty comes down to one of my favorite words, which is resilience.
And this is actually an idea that I got from my partner, who’s an architect. In the world of architecture, the conversation around building design has shifted from sustainability to resilience. And that’s in particular with climate change. And I think that this is applicable to our personal finance too. The idea is that you should always assume that there’s going to be some sort of disaster that will come and try to design longevity and ease of repair into your personal finance.
Liz: When we talked to Michelle Singletary from the Washington Post, she talked about living her life as if she were in a perpetual recession. So this is kind of the same idea that you want to focus on how you’re saving money, what you’re signing up for in terms of debt, how flexible you are in your finances.
Sean: And also focus on what particular crises you may face. When it does come to climate change, realize that in the Pacific Northwest, we might be getting ice storms or fires or who-knows-what next because as we’ve had all sorts of calamities come our way. In the realm of personal finance, realize that you might have an unexpected car expense pop up, which happened to me the past week, happened to my partner the week before that. So there’s always going to be something.
But one of the best ways to shore up your resilience is to focus on savings. And there are a few ways you can do that. One that seems pretty straightforward is to try to free up cash where you have more money to save by trimming expenses or paying off high-interest debt. Those are things that we talk about a good amount. Also think about talking with an investment advisor about whether your portfolio is well-balanced. That can help you be more resilient when it comes to your own investments.
Liz: We also like Roth IRAs here at NerdWallet. And there’s two reasons for that. One is that you’re building up tax-free money for retirement, which is always great, but also you can always take out your contributions. People get confused on this, but any amount that you put in, if you put in $5,000, you can always take out $5,000, no taxes, no penalties, anytime. Like the day after you put it in, you can yank it out. You won’t have to worry about the IRS.
Sean: Exactly. I also want to talk about how to focus on your resilience beyond money. I think it’s really important to shore up your relationships with your friends and your family because they can provide really important emotional support that can help you in a pinch if you need someone to talk with or even if you do need a little bit of cash to get through whatever emergency does pop up.
Liz: We talk about money a lot and we forget the bigger picture of the family relationships, friend relationships, and also your job. This is something to keep in mind that right now the worker is king. We probably have more leverage than we’ve had at least in my memory. You always want to try to be one of the top performers at your work if you possibly can. It doesn’t mean you can’t be fired and it doesn’t mean you can’t be laid off, but you’re lessening the chances.
Think about that. If you’re not in a good fit with your current career, now would be a great time to be looking around. If you are in a good fit, now is a great time to really invest in trying to be indispensable at your job. Keep in mind, you can be the best coal shoveler on the Titanic and you’re still going to go down with the ship. So it also depends on what industry that you’re in. In general, these are things you should be thinking about and thinking about where you going to be in five years. I know that’s always hard. You look at where you are today, could you have predicted that five years ago, Sean?
Sean: Even looking at what the world could be in five years, it’s hard to imagine. I felt last month for the first time that we were in a place where maybe I can begin to plan out six months in advance because the world seemed a little bit more stable, but then here we are, and things are up in the air again. So I try to strike a middle ground between doing what I can to make sure my future is going the way I hope it will, saving for retirement, continuing to save in my various other accounts, but also realizing that you need to have a certain amount of flexibility, again, that resilience to be able to adapt to whatever may come your way next.
Liz: One of the things I like to keep under control is debt. I’m not one of those people that thinks that debt is always bad, but I do think limiting it can be very helpful to letting you sleep at night and also your resilience if something goes wrong. You don’t have to worry about trying to make huge debt payments when your job gets ended or something else big happens. So we talk about the 50/30/20 budget all the time. If you can fit a loan payment into that 50% mark, and the 50% is the must-have expenses like shelter and transportation and food and utilities, insurance, minimum loan payments. If you can fit that minimum loan payment in there, maybe you can afford it, but even then, maybe be just a little bit careful about adding debt.
Sean: And unfortunately, for many Americans, we’re about to have a new debt that is actually an old debt in the form of our student loans. Many of us, myself included, are dreading this, of course, but the more we can prepare for it right now, go through your budget, realize what it’s going to mean to have these several hundred dollars likely, at least in my case, taken out of my budget each month, that will help me make sure that I do have the amount properly allocated within my 50%. And I might have to move around some other things. I’m probably going to have to cut some subscriptions and other discretionary expenses that I’ve been enjoying over the past almost two years at this point, but that will make it so that when I do have to resume my payments, I’m not in shock. I’ll be able to weather it.
Liz: And if you have federal student loans, you probably have income-driven options. So if you’re going to be struggling with the payments when they come back, you can look into that to lower the payments. If you have good credit and private student loans, you might be able to refinance those to a lower rate. Now’s the time to do it, before those payments hit.
Sean: I’ve been getting an email at least once or twice a week from the federal government and my servicer reminding me, oh, make sure that your autopay is set up properly. And I will have to change that because I changed my bank. And these are small things that we’re going to be nagged about constantly until payments do resume and I’m just putting it on my to-do list at the bottom. I’ll take care of it over the holidays. Eventually I’ll do it, but it’s good to get those things taken care of so you aren’t left blindsided by the payment that you have to make.
Liz: Put it on your calendar so that you deal with it.
Sean: We should also talk about a couple other things that are going on in this particular moment with the omicron variant right now. We don’t totally know how it’s going to play out. If you’re traveling for the holidays, it might be wise to know your airline’s change and cancellation policies if you do end up having to change your plan at the last minute. You don’t want to be left paying for a ticket that you’re not actually able to use if you don’t want to take that flight.
Liz: For a while there, it seemed like you could change anything at any time. The change fees got waived and now the airline policies can differ quite a bit. Obviously if you’ve already booked, there’s not much that you can do about it, but there are credit cards, those premium travel cards that have some travel insurance built into them. So always check that out if something changes. It does seem like the home tests are more available than they used to be. We test before we leave and then we also test when we get there just to make sure, because we have older family members to make sure that we’re not putting them at risk.
Sean: And [President Joe] Biden did announce last week that folks who have private insurance will be able to get the cost of tests reimbursed. So that’s going to be a little bit of a hassle I’m sure because dealing with insurance is never fun or easy.
Liz: So true.
Sean: But that way you can just recoup some of the costs. I also wanted to talk about how to save on gas because if you’re like me, you’ll be spending a lot on gas over the coming holidays.
There are a few tips that you can do. One is to slow acceleration, use cruise control and brake lightly. A NerdWallet expert found that this could boost your fuel economy by 37% if you do those three things. So that’s pretty significant. Another one that I always try to remind myself of is to slow down. According to a study from the car shopping website Edmunds, slowing down from 75 to 65 miles per hour can increase fuel economy up to 14%.
Liz: And obviously it’s safer and all those good things. It’s just so hard to do.
Sean: I know. I have a lead foot and a long drive ahead of me for the holidays. So I always want to try to get in like 10 more miles in that hour that I’m driving, but I also have a car that requires premium gas. So I don’t really want to be paying for that. Especially as I’m driving into California from Oregon, it’s going to be quite expensive.
Liz: That’s going to be some real sticker shock. I haven’t seen a gallon under $5 for a while. So, yeah, of course . . .
Sean: So you’re in LA?
Liz: I’m in LA and I have a Bolt.
Sean: Oh, I’m jealous.
Liz: I know, I know.
Sean: At least I’ll be splitting the cost with my partner.
Liz: Yeah.
Sean: I hope he knows that. If not he will when he listens to this. Another final tip I want to throw out is just to follow science. We know the news is changing quickly, but we’ve had pretty good tools at our disposal to keep ourselves and others safe for a while now. And that’s things like getting vaccinated, getting your booster shot, getting a good mask, preferably an N95 or something like that. And if and when you can, social distance.
Liz: I think we’re going to be dealing with this for quite a while. All right, well, I think we covered that. Let’s get onto this week’s money question.
Sean: This episode’s money question comes from Luca. Here it is:
“Hi Wallet Nerds,
I have used NerdWallet for quite some time and recently discovered your podcast, and am a very big fan. I have a few questions I would like to ask of the show.
I’m 16 and, as you can tell by me emailing you, a personal finance nerd. I want to know if there’s anything I can do now to help my financial future. I have a job, IRA, checking/savings accounts, and am an authorized user on my parent’s credit card. Is there anything else I can do?
Because I am a personal finance nerd, I also like looking into various accounts. I am not very satisfied with my current bank and want to switch. Are there any cons to having multiple accounts? What about closing old accounts? I feel confident in my ability to manage them and keep track of my money.
Thank you very much!
Sincerely,
Liz: I love Luca. Luca is our kind of nerd. Getting an early start with investing is always good, but getting started as a teenager, that is huge. Those extra years could more than double the amount that Luca can put aside for retirement. This is awesome. Anyway, to help us answer Luca’s question on this episode of the podcast, we’re joined by one of our own personal finance Nerds, Kim Palmer.
Sean: Welcome back to the podcast, Kim.
Kim Palmer: Thank you so much for having me.
Sean: Our listener, who is the youngest that we’ve ever heard from, is looking for some advice about how to jumpstart their financial future. What do you think?
Kim: First I think we have to acknowledge that they’re off to such a strong start because so many people aren’t even thinking about money yet. I think it’s really great that they’re already so far ahead. There’s one area actually that they didn’t mention, and that is spending. I think it might make sense to take a deeper dive into how they’re currently spending money. One thing I’ve noticed is that once you get in the habit of saving and of spending less than you’re earning, it’s easier to maintain. What a perfect time to start that habit when you’re a teenager.
One tool we love at NerdWallet is the 50/30/20 budget. And that basically allots your take-home income into three different categories. You have 50% going toward needs, you have 30% going towards wants, and 20% going towards any debt payments and savings. Now, as a teenager, everything might not apply to you there. For example, you don’t probably have rent right now or a mortgage, but I still think it’s a useful tool just to start thinking about where your money is going.
Sean: I also think our listener should appreciate the really unique opportunity they have by starting building wealth so young. There’s the saying that youth is wasted on the young and for so many so is their time horizon for saving for retirement and investing? But I think that Luca might be an exception to this. And as you kind of nodded to, Kim, because they’re starting so young, they don’t have as many financial obligations. Like they probably don’t have student loans or a car payment or a rent, so they can maybe fudge the 50/30/20 to make it so that they can save a lot more right now.
Kim: I think that is a great idea. When it comes to investing, you do have to be 18 to actually go ahead and open and up a brokerage account, but it can definitely be something that you do along with your parents. And, as Liz mentioned, when you do start investing early, you have a head start. You have so much more time to grow your money. One thing I like to do with my kids is go through a company like Stockpile and buy fractional shares of really big companies that you’re already familiar with. For example, with my kids, they can take $25 and buy Netflix or Disney and see how the stock fluctuates. And I think it can just be a way to kind of get your head around what investing feels like, see if you like it.
Liz: Yeah, because one of the problems with getting started with investing is that sometimes the buy-in is really high. Like shares of companies that kids know and recognize might be $100 or more and that’s not easy to get started with. Or, if they’re looking at mutual funds, they can have an even higher minimum investment. So these fractional shares are a good way to get an early start.
Sean: But they will have to be 18 to open one of these accounts. How can they get around that? Is it that they’ll open one with their parents? And are there also any other limitations that Luca should look out for because they are still under 18?
Kim: There is definitely a limitation in that you have to be 18 to open some of these accounts, but the easiest way around it is if you do have the help of your parent, then they can do it for you or you can do it jointly. Liz, do you think I’m missing anything else you should be thinking about?
Liz: You’ve got to consider financial aid. If you think that you’re going to need financial aid to go to college, then you don’t want to have this money in the child’s name. Or you can do kind of a workaround, which is to open a Roth IRA. Now, there are contribution limits to those, but Roth IRA and other retirement money is not counted in financial aid formulas. So that’s a way to get around that concern that your holdings could interfere with how much financial aid you get.
Sean: One thing I keep thinking about is how lucky Luca is to have parents that have encouraged their kid to start building a solid financial foundation really early on. Adding them as an authorized user on the credit card, for example, will give Luca an early start on building good credit. Kim and Liz, I’m wondering if you can share any other tips that you have as parents for how parents out there can help their kids get started like Luca’s parents did.
Liz: Well, I think it’s like most things with parenting is that you start talking about it early and often. So it’s not a subject that’s being brought up at the last possible minute. When you take your child shopping, you can talk about the cost of things and how you decide what to buy and what not to buy. With our daughter, as soon as she was recognizing that money bought things, which was very early, like 3 years old I want to say, that’s when we started her with an allowance. And that’s very early, but we had some good experiences with it. That’s something to consider.
Sean: Right. And she seemed ready, right?
Liz: Oh yeah. Well, we’ve talked about this before. She was ready to save, she was ready to spend. She didn’t understand the sharing part. Why should she have to share her money? Then as she got older and she got jobs and started her own little business, we would match her earnings with Roth IRA contributions.
Sean: Oh, that’s cool.
Kim: That is very cool. My parents did the exact same thing and I really think it helped me. I think it helped me learn how to save.
One thing I’ve noticed with my kids is that from a very early age, like toddlerhood, they start asking for things and they have no qualms about spending your money. The good thing about that is that it gives me a chance and parents a chance to say no and to explain the whole idea of scarcity. We can’t have everything we want. That’s really the basis of learning how to budget right there.
As they get older, it morphs into a more complex conversation. For example, with my 12-year-old, we can have a more nuanced discussion about saving and putting money aside so you can afford something bigger. And I think as the kids get older, you can start having those more nuanced conversations, but it really starts I think around age 2.
Liz: Luca is also wondering about switching banks. Kim, what do you think they should know when they’re shopping around?
Kim: It’s a really good question to look into switching banks. A lot of people are afraid to switch banks and they just go with the flow of their current bank even though they’re not happy. I really encourage this line of thought to look at if another bank could serve your needs better. What you want to do when you start thinking about opening a new bank is first, see what would be a good fit. That starts with some online research. Where can we make sure we’re paying as few fees as possible? Where can we earn the highest APY? Where can we get the most for our money?
Once you do that comparison and you choose a good fit with your new bank, you just go ahead and you transfer any money that you have into the new account. You close your old one. And it’s really not as complicated as I think a lot of people worry that it is.
Sean: Or as a lot of banks might want you to think it is to switch banks like that. I did this in the past year. I had had a goal for a while to go from the big national bank I’ve been using since high school to a local credit union in the Pacific Northwest and it took me a while to actually muster up the energy to do it and it took me five minutes. It was shockingly easy.
Liz: Yeah. I think it’s more complicated when you have more bills to pay, especially if you’re autopaying through your bank account. So you may need to keep your old account open for a while for those to clear. But if you’re somebody like Luca, who’s just starting out, you can choose whatever bank you’d like. And an online bank might be a good fit because they tend not to have minimums and a lot of fees. You can start with a small amount and build from there.
Sean: But again, they’ll probably have to have their parents help to open any sort of account like this.
Liz: Luca is obviously in pretty good shape today and is already saving for their future. Kim, what else should Luca consider going forward?
Kim: Well, I think it really all goes back to getting in the habit of saving money. I think some of the habits that they’re establishing now really will last possibly their whole life. Of course, as a teenager, you might not have the same priorities that you will have in your 20s or 30s or beyond. So I think when you’re focused on saving and you have that savings cushion, it helps you have that flexibility. So wherever you turn, whatever priorities emerge over the next decade or two decades, if you have that savings habit, I think that gives you such a strong backbone to rely on.
Liz: Yes. Absolutely. And I love the fact that you talked about the importance of saving while you’re young because a lot of people just keep putting it off thinking, “well, in the future, I’ll have more money. It’ll be easier in the future.” It is never easier in the future. Start now. Do it now and you’ll have a lot more flexibility down on the road.
Sean: Well, Kim, thank you so much for talking with us.
Kim: Of course. Thanks for having me.
Sean: And with that, let’s get on to our takeaway tips. Liz, do you want to kick us off?
Liz: I would be delighted. First, know how to direct your money, whether you’re just getting started or are a seasoned veteran, a budget and defined financial goals can guide your money management.
Sean: Next up, start investing. The sooner you start, the longer you’ll have to build wealth.
Liz: Finally, shop around. Take the time to compare your options with financial products.
Sean: And that is all we have for this episode. Do you have a money question of your own? Turn to the Nerds and call or text us on the Nerd hotline at 901-730-6373. That’s 901-730-NERD. You can also email us at [email protected], and visit nerdwallet.com/podcast for more info on this episode. And remember to subscribe, rate, and review us wherever you’re getting this podcast.
Liz: And here’s our brief disclaimer thoughtfully crafted by NerdWallet’s legal team. Your questions are answered by knowledgeable and talented finance writers, but we are not financial or investment advisors. This Nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.
Sean: And with that said, until next time, turn to the Nerds.
Podcast guest Kim Palmer owned a fractional share of Netflix at the time of this recording.
Penny stocks can often grow into larger established stocks and generate impressive returns. Before that point, they possess greater risks with their low market capitalisation and lack of information in some instances.
With that in mind, one penny stock I believe could be a good buy for my portfolio in 2022 and beyond is Foxtons Group(LSE:FOXT). Here’s why.
Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.
But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.
Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…
We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.
Foxtons is an estate agency originally founded in 1981 in Notting Hill, London. It has grown to be London’s leading estate agency with multiple branches throughout the city and it’s website receives approximately 10m visits a year.
Penny stocks trade for less than £1. As I write, Foxtons shares are trading for 40p. A year ago, the shares were trading for 48p, which is a drop of 16% across a 12-month period. It is also worth noting that the Foxtons share price has returned to its pre-pandemic level, which was 90p just before the market crash in 2020.
Why I like Foxtons
Firstly, Foxtons has a strong competitive advantage due its profile and brand recognition. The London property market is very saturated so establishing itself as the leading estate agent in the city is a remarkable achievement in my eyes. It also continues to grow and open new branches throughout the city to capitalise on the current booming market.
Right now, the housing market is booming and Foxtons is benefiting. The government’s stamp duty holiday aided this boost. Foxtons is also shrewd as it understands that buying and selling houses can be profitable, but it is also cyclical. The boom may not last for long or may disappear and re-emerge. To combat this, it also has a burgeoning lettings division. Buying property in London is tough due to high prices, therefore lettings are on the rise. Foxtons can take a slice of rent from lettings properties it manages, which is a guaranteed form of revenue.
Foxtons also recently completed an acquisition of smaller competitor, Douglas and Gordon. This will also help boost its revenue. I like when a company acquires a competitor to enhance their profile and offering. This is a statement of intent when it comes to boosting growth and performance, especially for a penny stock with less financial clout.
Speaking of performance, at the end of October, Foxtons released an update for the nine months ended 30 September. These results were positive. Group revenue increased 50% compared to 2020 levels and 24% compared to 2019 pre-pandemic levels, which is impressive. Each of its segments — lettings, sales, and mortgage brokering services — saw increased performance compared to 2020 and 2019 levels.
Penny stocks have risks too
Foxtons is still a relatively small business and the property market is a huge machine with many cogs. A larger competitor with more financial muscle could eat away at its market share if it wanted to do so. Furthermore, the housing market is cyclical as mentioned. Any downturn or negative news could affect performance.
Overall I feel Foxtons would be a good addition to my portfolio in 2022 and I would add the shares to my portfolio at current levels. It possesses a good competitive advantage, has made the most of the recent boom, and is taking steps to grow even more. I would buy the shares and hold them for a long time.
Jabran Khan has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Ready to book a flight to Central America? We don’t blame you. Between the beaches of Belize and rainforests of Costa Rica, there’s plenty to explore. Southwest Airlines can take you there. If you’re ready to start planning, here is a complete guide to Southwest flights to Central America.
Where does Southwest fly in Central America?
In addition to offering routes all over the U.S., Mexico and the Caribbean, Southwest Airlines also travels multiple routes to these three international destinations in Central America:
Belize City, Belize.
Liberia, Costa Rica.
San Jose, Costa Rica.
Travel to some of these cities was put on pause temporarily due to COVID-19, but as of now, all three destinations are back on the menu. That said, there may still be ongoing pandemic-era travel restrictions in place. Check to see if you’ll be required to quarantine or provide proof of vaccination upon arrival in any of these destinations.
Where do Southwest’s Central America flights connect?
Don’t expect a plethora of direct flights to any of Southwest’s Central American destinations. Most flights will originate from or connect through Houston-Hobby, Baltimore-Washington or Denver international airports before heading south. Some offer daily connections, while others depart only once or twice a week.
So if you want a direct flight, or just to know where you’ll be connecting, plan to connect in:
Houston or Denver if traveling to Belize City.
Baltimore-Washington, Denver or Houston when heading to Liberia, Costa Rica.
Houston or Baltimore-Washington when flying to San Jose, Costa Rica.
How to travel to Central America with Rapid Rewards points
You can use your collection of Southwest Rapid Rewards points to book award travel to these destinations.
Southwest doesn’t have an award chart. Instead, the number of points needed to redeem an award flight is tied to the fare price in cash. Destination, travel times, season and demand all determine how much a ticket will cost in points. Generally speaking, the more expensive the flight is with cash, the more points you’ll need to book it. To find the best deal, just use Southwest’s Low Fare Calendar to look at prices for entire months at a time.
To figure out if you’re getting a good deal on your points booking, keep in mind that NerdWallet determined that the average value of a Rapid Rewards point is 1.4 cents each. A quick math equation — (Cost in dollars / Cost in points) x 100 — will give you the average value of the points needed to book. If this value is above the NerdWallet average, you might consider saving those points for a better booking in the future.
Even when booking a flight with points, you’ll be on the hook for taxes and fees, which vary by destination. For instance, you can expect to pay around $22 for each one-way flight from the U.S. to Central America and around $52-$64 for the return trip.
With Southwest, you have three fare options to choose from when booking with points or cash:
Wanna Get Away.
Business Select.
Each fare comes with the benefits you expect when flying Southwest — two bags free, no-fee changes and a refundable ticket — but other benefits differ from fare to fare:
Wanna Get Away is the least expensive fare, but the amount you pay for your ticket is not fully refundable, just reusable on a future booking within 12 months. If you’re paying with cash instead of points, you’ll earn 6x Rapid Rewards points for every dollar you spend on your fare.
Anytime offers free same-day changes and standby, plus you’ll get 10x points on your base fare.
Business Select gets you the same perks as Anytime, 12x Rapid Rewards points on your base fare, and priority boarding and security access.
How to earn Rapid Rewards points
It doesn’t have to take long to earn enough points to cover the cost of a round-trip ticket.
You can earn Rapid Rewards points by flying with the airline, of course, but that’s not always the fastest way. Earn even more by booking rental cars and hotel rooms through Southwest’s partners, or by shopping and dining at participating partner locations.
But the most efficient way to a full points piggy bank is to sign up for a Southwest Airlines credit card. There are three available:
Earn 40,000 bonus points after spending $1,000 on purchases in the first 3 months your account is open.
2x points on every dollar spent on Southwest, rental car and hotel partner purchases.
1x points on everything else.
3,000 points on your account anniversary.
Earn 40,000 bonus points after spending $1,000 on purchases in the first 3 months your account is open.
3x points on every dollar spent on Southwest.
2x on rental car and hotel partner purchases plus internet, cable, phone and streaming.
1x points on everything else.
6,000 points on your account anniversary.
Earn 40,000 bonus points after spending $1,000 on purchases in the first 3 months your account is open.
3x points on every dollar spent on Southwest.
2x on rental car and hotel partner purchases and commuting (including rideshare).
1x point on everything else.
7,500 points on your account anniversary.
An annual $75 travel credit.
The bottom line
Whether it’s relaxation, adventure or culture you’re after, this area of the world has it, and you can book Southwest flights to Central America with cash or points to get you there.
How to maximize your rewards
You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2021, including those best for:
Inflation is at a 40-year high, and Americans don’t expect any pocketbook relief in the next year with one notable exception: housing prices.
Americans think inflation will hover at 6% a year from now, according to the November New York Fed Survey of Consumer Expectations published Monday. That’s just 0.8 percentage points below the current annual rate of inflation according to the latest Consumer Price Index report.
But when it comes to home prices a year from now, Americans lowered their expectations.
Last month they forecast that median homes prices would be 5% higher than they are now by November 2022. While in October they said median home prices would be 5.6% higher in a year. Before the pandemic, consumers forecast more modest housing price growth, 3%, in the year ahead, according to New York Fed data.
“The decrease was driven by respondents without a college degree and was largest for those who live in the ‘South’ and ‘Northeast’ Census regions,” a statement on the report published by the New York Fed stated.
This comes as the Federal Reserve is contemplating an interest rate hike aimed at curbing inflation. That in turn would result in higher mortgage rates which would decrease homeownership demand and increase demand for rental housing.
This view is echoed in year-ahead forecasts published by the Mortgage Bankers Association, an industry trade group.
In the first quarter of 2022, the group forecasts median existing home prices will hover around $363,900. But by the fourth quarter, it forecast median existing home prices will fall to $358,700 — a nearly 1.5% drop.
Already, there are early signs these forecasts could pan out.
The latest CoreLogic Case-Shiller 20-city price index found that year-over-year home price growth declined to 19.1% in September from 19.6% in August.
The Biden administration is set to release a plan on Monday it thinks can help “fast track” the uptake of electric-vehicle use in the U.S. by building 500,000 charging stations across the country.
The announcement is part of the $1 trillion infrastructure law Biden signed last month, which authorizes the charging stations and sets aside $5 billion for states, with a goal to build a national charging network. The law also provides an additional $2.5 billion for local grants to support charging stations in rural areas and in disadvantaged communities.
The administration has set an ambitious target of 50% of electric vehicle sale shares in the U.S. by 2030, but fast and reliable charging remains a key wrinkle.
Right now, the U.S. market share of plug-in EV sales is one-third the size of the Chinese EV market. China is one of the U.S.’s primary rivals on trade, including in the renewable-energy space as world leaders take steps to slow global warming.
The EV-charging move is also part of Biden’s goal of net-zero greenhouse gas emission by 2050, a target largely in line with other major nations.
The new EV charging strategy establishes a joint electric vehicles office between the federal Energy and Transportation departments; issues guidance and standards for states; and ensures consultations with manufacturers, state and local governments, environmental justice and civil rights groups, tribes and others.
Taylor Wimpey(LSE:TW) is a FTSE 100 stock with a juicy dividend yield that could make me a nice passive income. Should I add the shares to my portfolio? Let’s take a look.
FTSE 100 house builder
Taylor Wimpey is one of the UK’s largest house builders and has operations in Spain too. It operates through 23 regional businesses and has a nationwide presence. The company builds a range of houses from affordable housing to more luxury developments.
Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.
But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.
Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…
We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.
As I write, the Taylor Wimpey share price is 168p. At this time last year, shares were trading for 156p, which is a 7% return across a 12-month period. The FTSE 100 dividend yield average is 3%. Taylor Wimpey’s current dividend yield is close to THREE times that at 8.9%, which is enticing. Dividends are by no means guaranteed, however. They are intrinsically linked with the performance of a company and can be cancelled at any time, affecting any passive income I hope to make.
For and against investing
FOR: The current demand for new homes is huge and the government has committed to doing everything it can to boost the numbers. Low interest rates coupled with schemes to help people get on the property ladder add to the notion of a booming housing market. All this will help Taylor Wimpey in its demand for its products, and in turn performance. This performance could then lead to handsome investor returns in the form of dividends, making investors a passive income.
AGAINST: Macroeconomic pressures and the ongoing pandemic worries could dent any progress and investor returns. Rising costs could eat away at margin, linked to rising inflation. Furthermore, supply chain issues are also becoming a concern for firms like Taylor Wimpey, which needs essential materials to build homes. This could affect the bottom line and any passive income I hope to make by buying the shares.
FOR: At current levels, Taylor Wimpey shares look cheap to me. The shares sport a price-to-earnings ratio of close to 10, which is cheap for a quality company with a juicy dividend yield. Performance of late has been positive as well. A trading statement in November pointed to strong sales growth and a bright outlook ahead. Profit for FY 2021 should be achieved based on its initial guidance.
AGAINST: The house building marketplace is very competitive. Other FTSE 100 house builders that are vying for the same market share and customers include Barratt Developments and Persimmon. With such a competitive market and each firm trying to gain the advantage, performance could be affected, which would affect any investor returns.
Passive income opportunity
Right now I would happily add Taylor Wimpey shares to my holdings. At current levels, the shares look cheap to buy. The dividend yield is too juicy to ignore and this would help me make a nice passive income for my portfolio. Despite macroeconomic challenges, the market as a whole is burgeoning and demand for houses is outstripping supply at the moment. Taylor Wimpey should benefit from such favourable conditions, as will other FTSE 100 house builders.
Jabran Khan has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
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