Author: AskMyFinance Editorial Team

What Is Open Enrollment?

Open enrollment is the one window each year when you can sign up for, change, or drop a health insurance plan. Miss it, and you are typically locked out until the next year — unless you qualify for a Special Enrollment Period due to a qualifying life event such as job loss, marriage, or the birth of a child.

For job-based coverage, open enrollment usually runs in the fall, with coverage starting January 1. For plans purchased through the federal or state marketplace, the window typically runs November 1 through January 15.

Step 1: Understand the Four Plan Types

Before comparing specific plans, get clear on the four main structures:

• HMO (Health Maintenance Organization): Lower premiums, but you must use in-network doctors and get referrals to see specialists. Best if you have a primary care doctor you trust and want to keep costs predictable.
• PPO (Preferred Provider Organization): More flexibility to see any doctor, in-network or out, without referrals. Higher premiums. Best if you travel often or have specialists you want to keep seeing.
• EPO (Exclusive Provider Organization): Like an HMO in network restrictions, but no referrals needed. Mid-range premiums.
• HDHP (High-Deductible Health Plan): Low premiums, high deductible. Qualifies you to open an HSA to save pre-tax dollars for medical costs. Best if you are young, healthy, and want to build long-term healthcare savings.

Step 2: Know the Key Cost Terms

The premium is just one number. You need to understand all the cost-sharing pieces before you can compare plans fairly.

• Premium: What you pay each month, whether or not you use care.
• Deductible: What you pay out of pocket before insurance kicks in. A $3,000 deductible means you pay the first $3,000 of covered costs each year.
• Copay: A flat fee you pay for a specific service, like $30 for a primary care visit.
• Coinsurance: Your share of costs after the deductible. If your plan has 20% coinsurance, you pay 20% of each bill after the deductible is met.
• Out-of-pocket maximum: The most you will ever pay in a year. After you hit this number, the plan covers 100% of covered services. This is your financial safety net.

Step 3: Calculate Your Likely Total Cost

Do not just look at the monthly premium. A plan with a $200 lower monthly premium but a $2,000 higher deductible could cost you more overall if you use healthcare regularly.

A simple framework:

1. Estimate how many doctor visits, prescriptions, and procedures you expect next year based on this year.
2. For each plan option, calculate: (monthly premium x 12) + estimated out-of-pocket costs.
3. Also note the out-of-pocket maximum — that is your worst-case scenario cost.

If you are generally healthy and rarely visit the doctor, a lower-premium, higher-deductible HDHP may come out ahead. If you have chronic conditions or expect surgery, a higher-premium plan with a low deductible and low out-of-pocket max often saves more money.

Step 4: Check That Your Doctors and Prescriptions Are Covered

Two questions to answer before you enroll:

1. Is your doctor in-network? Go to the insurer’s website and use the provider search tool. Do not assume — network status changes annually.
2. Is your prescription on the formulary? Every plan has a drug formulary, which is the list of covered medications. Look up your prescriptions on each plan’s formulary and check which tier they fall in. Higher tiers mean higher copays.

If you take a specialty medication, this step is critical. A plan with a lower premium could end up costing thousands more annually if your drug is not covered or placed in a high-cost tier.

Step 5: Consider the HSA Opportunity

If you enroll in a qualifying High-Deductible Health Plan, you can open a Health Savings Account. In 2026, you can contribute up to $4,300 as an individual or $8,550 for a family.

HSA money is triple tax-advantaged: contributions are pre-tax, growth is tax-free, and withdrawals for qualified medical expenses are tax-free. Unused funds roll over every year and can be invested. Many people use HSAs as a secondary retirement account.

If you are healthy, in a high tax bracket, and do not expect major medical expenses, an HDHP-plus-HSA combination can be one of the best financial moves you make during open enrollment.

Step 6: Do Not Ignore Dental and Vision

Most health insurance plans do not include dental or vision coverage. During open enrollment, you often have the option to add standalone dental and vision plans. If you or your family regularly uses these services, adding them is usually worth the cost.

For dental, look at the annual maximum benefit (typically $1,000 to $2,000) and whether orthodontia is covered. For vision, check whether your preferred eye doctor is in-network and what the allowance is for frames or contacts.

Common Mistakes to Avoid

• Auto-renewing without comparing: Plans change every year. Premiums go up, networks shift, and formularies change. Always review your options even if you plan to stay on your current plan.
• Choosing based on premium alone: The cheapest monthly payment is not always the cheapest plan overall.
• Skipping coverage entirely: Going uninsured is a significant financial risk. One hospitalization can cost tens of thousands of dollars.
• Missing the deadline: Open enrollment windows are firm. Put the dates in your calendar and act early.

If You Miss Open Enrollment

If you miss the window, you have limited options. You can qualify for a Special Enrollment Period if you experience a qualifying life event: losing job-based coverage, getting married, having a baby, moving to a new state, or losing Medicaid eligibility.

Medicaid and the Children’s Health Insurance Program (CHIP) have rolling enrollment — you can apply at any time if your income qualifies. Check HealthCare.gov to see if you are eligible.

Bottom Line

Choosing health insurance is one of the most consequential financial decisions you make each year. Take an hour to run the math, check your network, verify your prescriptions, and compare your out-of-pocket maximums. The right plan depends on your health, your budget, and what financial risk you can absorb — not just which plan has the lowest monthly payment.

When you make an offer on a home, the seller will typically expect you to put down earnest money. This is a deposit that shows you are serious about buying the property. It is not your down payment. It is separate — but it can count toward your down payment or closing costs at closing. Here is how it works.

What Is Earnest Money?

Earnest money is a good-faith deposit made by the buyer when a home purchase offer is accepted. It signals to the seller that you are committed to following through on the deal. Without it, you could make offers on dozens of homes at once and walk away from any of them without consequence, leaving sellers stranded.

The earnest money deposit is held in escrow by a neutral third party, usually a title company, escrow company, or real estate attorney. It sits there until the transaction closes or falls apart.

How Much Earnest Money Is Required?

There is no set legal requirement for how much earnest money you must pay. The amount is negotiated as part of the purchase offer. Common amounts range from 1 to 3 percent of the purchase price in most markets. In competitive markets, buyers sometimes offer 5 to 10 percent to stand out.

On a $350,000 home, 1 to 3 percent means $3,500 to $10,500 in earnest money. In a hot seller’s market, offering a higher earnest deposit can make your offer more attractive because it signals stronger commitment.

What Happens to Earnest Money at Closing?

If everything goes according to plan and the sale closes, the earnest money is credited toward your costs. It can be applied to your down payment, closing costs, or a combination of both. You do not lose this money at closing — it simply becomes part of your total payment.

Can You Get Earnest Money Back?

Whether you can get your earnest money back if the deal falls through depends on the contingencies in your purchase contract. Contingencies are clauses that allow you to back out of the deal and get your deposit back under specific circumstances.

Common Contingencies That Protect Your Deposit

• Financing contingency: If you cannot secure a mortgage, you can walk away and get your deposit back. This protects buyers who are waiting on final loan approval.
• Inspection contingency: If the home inspection reveals serious problems and the seller will not address them, you can exit the deal and recover your deposit.
• Appraisal contingency: If the home appraises for less than the purchase price and the parties cannot agree on a new price, you can cancel and get your money back.
• Title contingency: If there are title problems (liens, ownership disputes) that cannot be resolved, you can exit.

When You Lose Your Earnest Money

You can lose your earnest money if you back out of the deal for a reason not covered by a contingency, or if you fail to meet contract deadlines (such as the deadline to apply for a loan). If the seller can show you breached the contract, they typically keep the earnest deposit as compensation for taking the home off the market.

In some cases, the seller may also have the right to sue for additional damages beyond the earnest money. This is rare for residential transactions but worth understanding.

How Is Earnest Money Paid?

Earnest money is typically paid by personal check, cashier’s check, or wire transfer within 1 to 3 business days of the offer being accepted. The funds go to the escrow or title company, not directly to the seller. Never pay earnest money directly to a seller — it should always go to a neutral third party.

Be alert to wire fraud in real estate transactions. Criminals sometimes intercept closing communications and send fraudulent wiring instructions. Always verify wire instructions by calling the title company directly using a number you independently look up, not one from an email.

Earnest Money vs Down Payment

These are two different things that many first-time buyers confuse. Your earnest money is a deposit made when your offer is accepted, typically within days. Your down payment is the full cash contribution you make at closing, which may be weeks or months later.

The earnest money is usually applied toward the down payment at closing, so you do not pay them separately. But the amounts are different — earnest money is typically 1 to 3 percent of the price, while a down payment might be 3 to 20 percent.

Tips for Protecting Your Earnest Money

• Make sure all contingencies you need are written into the contract before signing.
• Know your deadlines for each contingency and meet them. Missing a deadline can void your protection.
• Read your contract carefully or have a real estate attorney review it.
• Do not waive contingencies unless you fully understand the risk. In competitive markets, some buyers waive inspection or appraisal contingencies — this can cost you your deposit if anything goes wrong.
• Never pay earnest money in cash or directly to a seller or real estate agent. It must go to escrow.

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Most people glance at their pay stub and focus on one number: the amount deposited into their bank account. But a pay stub contains a lot more information — some of which can save you money if you understand it. Here is what every line on a pay stub means.

Gross Pay vs Net Pay

The two most important numbers on any pay stub are gross pay and net pay.

Gross pay is the total amount you earned before any deductions. If your salary is $60,000 per year and you are paid twice a month, your gross pay per pay period is $2,500.

Net pay is what you actually receive after all taxes and deductions are subtracted. This is the amount deposited into your account. The difference between gross and net pay is often larger than people expect — typically 20 to 35 percent of gross pay goes to taxes and other deductions.

Federal Income Tax Withholding

This is the amount withheld from your paycheck for federal income taxes. The amount depends on your income, your filing status (single, married, head of household), and any allowances or additional withholding amounts you claimed on your W-4 form.

Federal withholding is not your final tax liability. At the end of the year, you file a tax return that calculates your actual taxes owed. If too much was withheld, you get a refund. If too little was withheld, you owe additional taxes.

If you consistently get large refunds, you are withholding too much — giving the government an interest-free loan. Consider updating your W-4 to reduce withholding and increase your take-home pay now.

State Income Tax Withholding

If you live in a state with an income tax, this line shows the amount withheld for state taxes. Nine states have no income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. If you live in one of these states, this line may be blank or zero.

Social Security Tax

Also labeled OASDI (Old Age, Survivors, and Disability Insurance). In 2026, employees pay 6.2 percent of wages toward Social Security, up to a maximum wage base of $176,100. Your employer pays an additional 6.2 percent on your behalf.

Once your earnings for the year exceed the wage base, Social Security tax stops being withheld for the remainder of that year. If you earn more than $176,100, you will notice Social Security withholding stops mid-year.

Medicare Tax

The standard Medicare tax rate is 1.45 percent of all wages, with no wage cap. Your employer matches this 1.45 percent. High earners pay an additional 0.9 percent surtax on wages above $200,000 (single) or $250,000 (married filing jointly). This surtax is withheld by your employer when your wages exceed $200,000, regardless of your filing status.

401(k) or Retirement Plan Contributions

If you contribute to a workplace retirement plan like a 401(k), 403(b), or 457, the contribution amount appears as a pre-tax deduction. Pre-tax means the contribution reduces your taxable income for the year. Contributing $500 per month to a 401(k) does not reduce your take-home pay by $500 — it reduces it by $500 minus the taxes you would have paid on that amount.

Roth 401(k) contributions appear separately. These are after-tax contributions — your taxable income is not reduced, but the money grows and can be withdrawn tax-free in retirement.

Health Insurance Premiums

If your employer offers health insurance and you are enrolled, your share of the premium is deducted from each paycheck. Most employer-sponsored health insurance is deducted pre-tax through a Section 125 cafeteria plan, which reduces your taxable income.

Your pay stub may show separate lines for medical, dental, and vision premiums.

HSA and FSA Contributions

Health Savings Account (HSA) and Flexible Spending Account (FSA) contributions are deducted pre-tax. These amounts reduce your taxable income for federal, state, and FICA (Social Security and Medicare) taxes — making them more valuable than 401(k) contributions on a per-dollar basis.

Life and Disability Insurance

Many employers offer life insurance and short-term or long-term disability insurance as benefits. Employer-paid life insurance up to $50,000 in coverage is tax-free. If your employer provides more than $50,000, the imputed cost of the excess coverage appears as taxable income on your pay stub, often labeled “GTL” (Group Term Life).

Year-to-Date Totals

Your pay stub should show year-to-date (YTD) totals for each category. These show the cumulative amounts since January 1 of the current year. Review these at the end of the year and make sure they match your W-2 when it arrives. Any discrepancy should be investigated with your HR department.

What to Check on Every Pay Stub

• Confirm gross pay matches your salary or hourly rate times hours worked.
• Verify all deductions you signed up for are being taken correctly.
• Check that no deductions appear that you did not authorize.
• Monitor year-to-date totals to ensure accuracy over the course of the year.
• After any benefits change (open enrollment, life event), verify the new amounts appear correctly on the following paycheck.

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Estate planning sounds like something only wealthy people need. It is not. Anyone with assets, children, or a preference about what happens when they die should have an estate plan. Without one, the state decides who gets your money, who raises your kids, and who makes medical decisions for you if you cannot. Here is what you actually need.

What Is Estate Planning?

Estate planning is the process of deciding what happens to your money, property, and responsibilities after you die or become incapacitated. It involves creating legal documents that express your wishes. Without these documents, your estate goes through a court process called probate, which can be slow, expensive, and public.

An estate plan is not just for after you die. It also covers what happens if you become seriously ill or injured and cannot make decisions for yourself.

The Four Core Estate Planning Documents

1. Will (Last Will and Testament)

A will is a legal document that states who receives your property when you die. It can also name a guardian for minor children — which is one of the most critical reasons for parents to have a will.

In your will, you name an executor: the person responsible for carrying out your wishes, managing the estate, paying debts, and distributing assets. Without a will, a court appoints an administrator (often a family member) and distributes your assets according to your state’s intestacy laws, which may not match your wishes.

A will does not avoid probate. Assets that pass through a will still go through the probate court process, which takes months to years and involves fees.

2. Revocable Living Trust

A revocable living trust holds your assets during your lifetime and distributes them after your death — without going through probate. You are typically the trustee while you are alive, meaning you maintain complete control of the assets. You name a successor trustee who takes over when you die or become incapacitated.

The main advantage of a trust is avoiding probate. Assets held in a trust transfer to beneficiaries quickly, privately, and without court involvement. The main disadvantages are cost (a trust costs more to set up than a will) and the need to “fund” the trust by retitling assets into the trust’s name.

A trust is most valuable if you own real estate, have assets in multiple states, or want to avoid the delays and public nature of probate.

3. Durable Power of Attorney

A durable power of attorney (POA) names a person to manage your financial affairs if you become incapacitated. “Durable” means it remains valid even if you become mentally or physically unable to act. Without one, your family may need to go to court to get a conservatorship to manage your finances — a slow and expensive process.

Your agent under a financial POA can pay bills, manage investments, file taxes, and handle financial transactions on your behalf. This is a document with significant power, so choose someone you trust completely.

4. Healthcare Directive (Advance Directive)

A healthcare directive has two components. First, a healthcare proxy (or healthcare power of attorney) names someone to make medical decisions for you if you cannot. Second, a living will states your wishes about specific medical treatments, such as life support, resuscitation, and organ donation.

Without a healthcare directive, medical providers may be required to take extraordinary measures to keep you alive regardless of your wishes, and your family may disagree about what you would have wanted.

Beneficiary Designations

Many assets pass outside of a will or trust through beneficiary designations. These include life insurance policies, 401(k) accounts, IRAs, and bank accounts with payable-on-death (POD) designations.

Beneficiary designations override anything written in your will. If your will says your estate goes to your children but your 401(k) still lists an ex-spouse as beneficiary, the ex-spouse gets the 401(k). Review and update beneficiary designations after every major life event: marriage, divorce, death of a beneficiary, or birth of a child.

Do You Need a Will or a Trust?

Most people need a will at minimum. A will ensures your wishes are documented, names a guardian for minor children, and provides legal direction for distributing your assets.

You should consider a trust if:

• You own real estate, especially in multiple states.
• You want to keep your affairs private (probate is public record).
• You want to provide for beneficiaries who cannot manage money themselves (children, people with disabilities).
• You have a blended family with complex inheritance wishes.
• You want to avoid the time and cost of probate for your heirs.

What Happens Without an Estate Plan?

If you die without a will (called dying “intestate”), your state’s laws determine who inherits your assets. In most states, this means your spouse and children, but the division may not match what you would have chosen. If you are unmarried and have no children, assets may go to parents or siblings rather than a partner or close friend.

If you have minor children and no will naming a guardian, a court will appoint one — and it may not be who you would have chosen.

How to Get Started

For a basic estate plan, you have two main options:

• Online legal services: Sites like Trust & Will, LegalZoom, and Fabric allow you to create a will, healthcare directive, and POA online for a few hundred dollars. This is appropriate for straightforward situations.
• Estate planning attorney: For complex situations — trusts, business ownership, blended families, large estates — hire an attorney. A basic will and healthcare directive from an attorney typically costs $300 to $500. A revocable living trust package usually costs $1,000 to $3,000.

The cost of not planning is always greater than the cost of planning. Start with a will and healthcare directive even if you do nothing else.

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A VA home loan is one of the best mortgage options available to anyone who qualifies. It is backed by the U.S. Department of Veterans Affairs and offered exclusively to eligible veterans, active-duty service members, and surviving spouses. The benefits are substantial, and most people who qualify do not fully understand what they have access to.

What Is a VA Loan?

A VA loan is a mortgage guarantee program. The Department of Veterans Affairs does not lend money directly. Instead, it guarantees a portion of the loan made by a private lender, which allows lenders to offer better terms to borrowers who qualify.

The guarantee protects the lender if you default, which is why lenders can offer VA loans with no down payment and no private mortgage insurance — benefits that are rare or unavailable in other mortgage programs.

VA Loan Eligibility Requirements

To qualify for a VA loan, you must meet service requirements set by the VA. General eligibility includes:

• Active-duty service members: Currently serving and have served at least 90 continuous days.
• Veterans: Have served at least 90 days during wartime, or 181 days during peacetime, with an honorable discharge (other discharge types may also qualify in some situations).
• National Guard and Reserve members: Served at least 6 years in the Selected Reserve or National Guard, or were called to active duty under Title 10 orders for at least 90 days.
• Surviving spouses: Unremarried surviving spouse of a veteran who died in service or from a service-connected disability. Surviving spouses who remarried after age 57 may also qualify.

To confirm eligibility, you need a Certificate of Eligibility (COE). You can get this through your lender, through the VA’s eBenefits portal, or by mailing VA Form 26-1880. Most lenders can pull your COE for you during the loan application process.

VA Loan Benefits

No Down Payment Required

This is the biggest benefit. With a VA loan, you can buy a home with zero down payment. There is no minimum down payment requirement. On a $400,000 home, this saves you $14,000 to $80,000 compared to conventional loan requirements. You can put money down if you choose, and doing so reduces your funding fee, but you are never required to.

No Private Mortgage Insurance (PMI)

Conventional loans require PMI when you put less than 20 percent down. PMI typically costs 0.5 to 1.5 percent of the loan amount per year. On a $400,000 loan, that is $2,000 to $6,000 per year added to your costs. VA loans have no PMI requirement whatsoever, even with no down payment.

Competitive Interest Rates

Because the VA guarantee reduces risk for lenders, VA loan interest rates are often lower than conventional loan rates, especially for borrowers with lower credit scores. This difference compounds significantly over a 30-year mortgage.

Flexible Credit Requirements

The VA does not set a minimum credit score. Individual lenders set their own minimums, typically 580 to 620. This is lower than most conventional loan requirements and gives veterans with imperfect credit more options.

Limits on Closing Costs

The VA limits the fees lenders can charge on VA loans. Certain fees, such as attorney fees on behalf of the lender and underwriting fees, cannot be charged to the borrower. Sellers can pay all closing costs, and the VA allows sellers to pay up to 4 percent of the loan in concessions.

No Prepayment Penalty

You can pay off a VA loan early without any penalty. If you want to make extra principal payments or refinance, there are no fees for doing so.

The VA Funding Fee

VA loans are not entirely free. The VA charges a one-time funding fee to help sustain the program. The amount depends on your down payment, whether it is your first or subsequent VA loan use, and your military category.

In 2026, the funding fee for first-time VA loan users with no down payment is 2.15 percent of the loan amount. On a $400,000 home, that is $8,600. You can roll this fee into the loan balance rather than paying it upfront.

If you have a service-connected disability rating of 10 percent or more, you are exempt from the funding fee entirely. This exemption is one of the most valuable and underutilized VA benefits.

What Can You Buy With a VA Loan?

VA loans can be used to buy single-family homes, condos in VA-approved developments, multi-unit properties (up to 4 units if you live in one), and manufactured homes on permanent foundations. The property must be your primary residence. VA loans cannot be used for investment properties, vacation homes, or raw land.

VA Loan Limits

For veterans with full VA loan entitlement (who have never used a VA loan or have fully restored entitlement), there is no loan limit. You can borrow as much as a lender will approve. If you have partial entitlement (an existing VA loan still outstanding), limits apply based on county loan limits.

How to Apply for a VA Loan

1. Obtain your Certificate of Eligibility (COE). Your lender can often do this for you in minutes.
2. Choose a VA-approved lender. Most major banks, credit unions, and mortgage companies offer VA loans.
3. Get preapproved. The lender will review your income, employment, credit score, and debt-to-income ratio.
4. Find a home and make an offer. The home will need to pass a VA appraisal, which checks both value and minimum property condition requirements.
5. Close the loan. Closings on VA loans typically take 40 to 50 days from application.

VA Loan vs FHA Loan vs Conventional Loan

• Down payment: VA 0% vs FHA 3.5% vs Conventional 3-20%
• PMI/mortgage insurance: VA none vs FHA yes (for life) vs Conventional yes until 20% equity
• Funding/upfront fee: VA 2.15% (waived if disabled) vs FHA 1.75% vs Conventional none
• Credit score minimum: VA flexible (lender sets) vs FHA 580 vs Conventional 620+
• Availability: VA eligible veterans only vs FHA anyone vs Conventional anyone

Related Articles

• FHA Loan vs Conventional Loan: Which Is Right for You?
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Related: What Is a USDA Loan? 2026.

You do not need thousands of dollars to start investing. Many people delay investing for years because they think they need a large sum to get started. That belief costs them years of compound growth. Here is how to begin investing today, regardless of how little you have.

Why Starting Small Still Works

The most powerful force in investing is time, not the amount you start with. A $50 monthly investment started at age 25 will grow far more than a $500 monthly investment started at age 40, assuming the same rate of return. Starting early and staying consistent is more important than the amount of your initial investment.

Compound growth means your returns earn returns. The longer money is invested, the faster it grows. Even small amounts benefit from this effect.

Step 1: Build a Small Emergency Fund First

Before investing, put aside $500 to $1,000 in a high-yield savings account. This is your emergency fund starter. Without it, any unexpected expense will force you to sell your investments at the wrong time to cover costs.

You do not need a full 3 to 6 month emergency fund before you start investing. A starter buffer of $500 to $1,000 is enough to begin. Build both at the same time once you have that initial cushion in place.

Step 2: Contribute to Your 401(k) Up to the Match

If your employer offers a 401(k) with a matching contribution, this is the highest priority. An employer match is a 50 to 100 percent guaranteed return on your investment instantly. No investment in the world offers a better return than free money from your employer.

Contribute at least enough to capture the full match. For example, if your employer matches 100 percent of contributions up to 3 percent of your salary, contribute at least 3 percent. Anything less leaves free money on the table.

Step 3: Open a Roth IRA

After capturing your full employer match, open a Roth IRA. You can contribute up to $7,000 per year in 2026 ($8,000 if you are 50 or older). There is no minimum contribution. You can start with $25 or $50.

A Roth IRA is funded with after-tax dollars. Your money grows tax-free, and withdrawals in retirement are tax-free. For most people who are just starting to invest and are in a lower tax bracket, a Roth IRA is the best place to put money after the employer match.

Open a Roth IRA at Fidelity, Vanguard, or Charles Schwab. All three have no account minimums and offer fractional share investing so you can start with any dollar amount.

Step 4: Choose Simple Investments

Do not overcomplicate your investment choices when you are starting small. One or two index funds is all you need. Good starting points:

• A total U.S. stock market index fund: Tracks the entire U.S. stock market, including large, mid, and small companies. Examples: Fidelity ZERO Total Market Index Fund (FZROX), Vanguard Total Stock Market ETF (VTI).
• An S&P 500 index fund: Tracks the 500 largest U.S. companies. Examples: Fidelity 500 Index Fund (FXAIX), Vanguard S&P 500 ETF (VOO).
• A target-date fund: A single fund that automatically adjusts its stock and bond mix as you get closer to retirement. If your target retirement is 2055, you would buy a 2055 target-date fund. This is the simplest choice of all.

How to Invest With $100 or Less

Fractional Shares

Most major brokerages now let you buy fractional shares. This means you can invest $10 or $25 in a stock or ETF regardless of the share price. You do not need to buy a full share. Fidelity, Schwab, and Robinhood all offer fractional shares.

Robo-Advisors

A robo-advisor is an automated investment service. You answer questions about your goals and risk tolerance, and the service builds and manages a diversified portfolio for you. Betterment and Wealthfront are two of the most popular options. Both have low minimums and charge about 0.25 percent annually. This is a good option if you want everything handled for you.

Round-Up Apps

Apps like Acorns round up your purchases to the nearest dollar and invest the spare change. If you spend $3.60 on coffee, Acorns rounds it up to $4 and invests the $0.40. This is a passive way to invest small amounts consistently. The amounts are small, but the habit is valuable, especially for people who struggle to save.

What Not to Do With a Small Amount

• Do not buy individual stocks: Picking individual stocks requires research, time, and a tolerance for concentrated risk. With a small amount, one bad pick wipes out a significant portion of your portfolio. Stick to index funds.
• Do not buy cryptocurrency: Crypto is extremely volatile. It is not an appropriate starting investment for someone with limited funds and no investing experience.
• Do not wait until you have more money: This is the most common and most costly mistake. Start with whatever you have. The habit of investing is worth more than waiting for the “right” amount.
• Do not pay high fees: Avoid any investment fund with an annual expense ratio above 0.5 percent. High fees destroy returns, especially on small accounts.

How to Increase Your Investment Over Time

The goal is to automate your investing so it happens without thought. Set up an automatic monthly transfer from your checking account to your Roth IRA. Increase the amount every time you get a raise. Direct at least half of any bonus or tax refund into your investment account.

Building an investing habit is more important than the amount. Once investing becomes automatic, increasing it becomes easy.

Related Articles

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Medicare is the federal health insurance program for people 65 and older, as well as some younger people with disabilities. Most people have heard of it, but very few understand how it actually works until they need to enroll. There are four parts, and each covers something different. Here is what you need to know.

Who Is Eligible for Medicare?

You are eligible for Medicare if you are 65 or older and either you or your spouse worked and paid Medicare taxes for at least 10 years (40 quarters). You may also qualify if you are under 65 and have a qualifying disability, end-stage renal disease, or ALS.

Most people are automatically enrolled in Medicare Parts A and B when they turn 65 if they are already receiving Social Security benefits. If you are not receiving Social Security yet, you need to sign up manually through the Social Security Administration during your initial enrollment period.

Medicare Part A: Hospital Insurance

Part A covers inpatient hospital stays, skilled nursing facility care following a hospital stay, some home health care, and hospice care. This is the part most people think of as “hospital insurance.”

For most people, Part A is free. If you or your spouse paid Medicare taxes for at least 10 years, you pay no premium. If you paid taxes for fewer years, you pay a monthly premium in 2026 of up to $505 per month.

Even with Part A, you pay a deductible for each benefit period. In 2026, the inpatient deductible is $1,632 per benefit period. A benefit period starts the day you are admitted to a hospital and ends 60 days after you leave. You can have multiple benefit periods in one year, each with its own deductible.

Medicare Part B: Medical Insurance

Part B covers outpatient services: doctor visits, preventive care, lab tests, outpatient surgery, mental health services, physical therapy, and durable medical equipment like wheelchairs.

Part B is not free. In 2026, the standard monthly premium is $185 per month. Higher-income earners pay more through a surcharge called IRMAA (Income-Related Monthly Adjustment Amount). Part B also has an annual deductible of $257 in 2026. After the deductible, Medicare typically covers 80 percent of approved costs and you pay 20 percent with no cap.

Medicare Part C: Medicare Advantage

Medicare Advantage (Part C) is an alternative way to get your Medicare coverage. Instead of using Original Medicare (Parts A and B) directly, you enroll in a private insurance plan approved by Medicare. These plans must cover everything Original Medicare covers, but many also include dental, vision, hearing, and prescription drug coverage.

Medicare Advantage plans often have lower or $0 monthly premiums because the government pays the private insurer to cover you. However, they usually have narrower networks (you must use in-network providers) and may require referrals to see specialists.

You still pay the Part B premium. The Advantage plan premium is in addition to, or sometimes offset against, that cost.

Medicare Advantage is popular because it bundles coverage into one plan and can have low out-of-pocket costs. The trade-off is network restrictions and the fact that the plan can change its terms each year.

Medicare Part D: Prescription Drug Coverage

Part D covers prescription drugs. It is offered through private insurance plans approved by Medicare. If you have Original Medicare (Parts A and B), you need to separately purchase a Part D plan. If you have Medicare Advantage, drug coverage may already be included.

Part D plans vary significantly in which drugs they cover (the formulary), what tier each drug falls in, and how much you pay. Each plan publishes its formulary, and you should check that your specific prescriptions are covered before enrolling.

Part D has a deductible (up to $590 in 2026), then cost-sharing through initial coverage, and a cap on out-of-pocket drug costs. In 2026, the out-of-pocket cap for Part D is $2,000 per year — a significant improvement from previous years.

Medigap (Medicare Supplement Insurance)

Medigap is not one of the four parts of Medicare, but it is an important piece of the puzzle. Medigap plans are private insurance policies that fill in the gaps left by Original Medicare, such as the 20 percent coinsurance under Part B and hospital deductibles.

If you have Original Medicare and a Medigap plan, your coverage can be very comprehensive with predictable costs. The trade-off is a higher monthly premium for the Medigap policy.

Medigap plans are only available with Original Medicare, not with Medicare Advantage.

When to Enroll

Your initial enrollment period is the 7-month window that includes the 3 months before your 65th birthday month, the month you turn 65, and the 3 months after. Enrolling during this window avoids late enrollment penalties.

If you miss your initial enrollment window and do not have creditable coverage through an employer, you face late enrollment penalties. The Part B penalty is 10 percent added to your premium for each full 12-month period you were eligible but did not enroll. This penalty is permanent.

If you are still working at 65 and covered by employer health insurance, you may be able to delay Medicare enrollment without penalty. The rules depend on the size of your employer.

Original Medicare vs Medicare Advantage: How to Choose

Original Medicare with a Medigap policy gives you the widest network and most predictable costs. You can see any doctor in the country who accepts Medicare. Medigap policies cost more monthly but protect you from large unexpected bills.

Medicare Advantage is better suited to people who prefer lower monthly premiums, do not travel frequently for healthcare, and are comfortable staying within a plan network. Many plans include extras like dental and vision that Original Medicare does not cover.

The best choice depends on your health, finances, and how much you value flexibility versus lower premiums.

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An annuity is a contract you buy from an insurance company. You give the company a lump sum of money, and in return, they promise to pay you income for a set period of time, or for the rest of your life. Annuities are primarily used for retirement income. They solve a specific problem: making sure you do not outlive your money.

How Annuities Work

When you buy an annuity, you enter a contract with an insurance company. You pay a premium, either a single lump sum or a series of payments. In the accumulation phase, your money grows inside the contract. In the distribution phase, the insurance company pays you income according to the terms you selected.

The income can be structured many ways: a fixed amount for a set number of years, a fixed amount for life, or a variable amount tied to investment performance. The terms you choose at purchase determine your payment amounts and how long they last.

Types of Annuities

Fixed Annuity

A fixed annuity pays a guaranteed interest rate during the accumulation phase. The rate is set for a specific period, similar to a CD. When you annuitize (convert to income), you receive predictable, fixed payments. Fixed annuities are low risk and easy to understand. The downside is that the guaranteed rate may not keep up with inflation.

Variable Annuity

A variable annuity lets you invest your premium in subaccounts that function like mutual funds. Your account value goes up and down with the market. When you annuitize, payments vary based on account performance. Variable annuities carry investment risk but offer the possibility of higher returns. They also carry higher fees than fixed annuities.

Indexed Annuity (Fixed Indexed Annuity)

An indexed annuity ties your interest to the performance of a stock market index, such as the S&P 500, but with a floor (usually 0 percent) that protects you from losses. If the index goes up, you earn interest up to a cap. If the index goes down, you earn 0 percent rather than losing money. This is a middle ground between fixed and variable.

Immediate Annuity

You pay a lump sum and income payments start within one month. Immediate annuities are common for retirees who want to convert savings into a guaranteed income stream right away. They are simple: give the insurance company money, get monthly checks for life (or for a fixed period).

Deferred Annuity

You pay into the annuity now but do not start receiving income until a future date. This gives the money time to grow. Deferred annuities can be fixed, variable, or indexed. They are used for accumulation over many years before retirement begins.

Annuity Payment Options

When you start receiving income, you choose a payout structure:

• Life only: Payments continue for as long as you live. Once you die, payments stop. This maximizes your monthly income but leaves nothing for heirs.
• Life with period certain: Payments continue for life, but if you die before a specified period (10 or 20 years), payments continue to your beneficiary for the rest of that period.
• Joint and survivor: Covers two people, typically spouses. Payments continue as long as either person is alive, usually at a reduced amount after the first person dies.
• Fixed period: Payments last for a set number of years, such as 20 years, regardless of whether you are alive. If you die early, your beneficiary receives the remaining payments.

Pros of Annuities

• Guaranteed income for life: You cannot outlive a lifetime annuity. This solves the biggest risk in retirement planning.
• Tax-deferred growth: Money inside an annuity grows without being taxed until you take withdrawals.
• No contribution limits: Unlike IRAs or 401(k)s, there is no annual limit on how much you can put into a non-qualified annuity.
• Principal protection (fixed and indexed): Your original investment is protected from market losses in fixed and indexed annuities.

Cons of Annuities

• High fees: Variable annuities in particular can have annual fees of 2 to 3 percent or more, including mortality and expense charges, administrative fees, and fund fees. These fees compound and significantly reduce your returns over time.
• Surrender charges: If you withdraw money before a specified period (often 7 to 10 years), you pay a surrender charge of up to 10 percent. Your money is locked up.
• Complexity: Annuity contracts are long and filled with terms that benefit the insurance company. The features and riders are difficult to evaluate without help.
• Inflation risk (fixed annuities): A fixed monthly payment worth $2,000 today will buy less in 20 years due to inflation.
• Commissions: Annuities are heavily sold by financial advisors who earn large commissions. This creates a conflict of interest.

When an Annuity Makes Sense

Annuities are most useful in specific situations:

• You have already maxed out your 401(k) and IRA and want another tax-deferred account.
• You are worried about outliving your savings and Social Security alone does not cover your basic expenses.
• You want a simple, guaranteed monthly check in retirement without managing investments.
• You have a pension gap — your basic living costs exceed your guaranteed income sources.

When an Annuity Does Not Make Sense

• You have not maxed out your 401(k) and Roth IRA first. Those offer better terms and lower costs.
• You are young and decades from retirement. The fees erode returns significantly over long periods.
• You need liquidity. Surrender charges make it expensive to access your money early.
• You are buying based on a salesperson’s pitch rather than a specific need. Most people are oversold annuities.

How to Evaluate an Annuity

If you are seriously considering an annuity, compare at least three products. Look at the total cost (all fees combined), the surrender charge schedule, the financial strength rating of the insurance company (A or better from AM Best), and the guaranteed payout rate. Working with a fee-only financial advisor who does not earn commissions is the safest way to evaluate whether an annuity fits your plan.

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When you buy a home, you will almost certainly need a mortgage. Two of the most common choices are an FHA loan and a conventional loan. They have different requirements, costs, and trade-offs. Understanding the difference helps you choose the one that saves you the most money given your credit score and down payment.

What Is an FHA Loan?

An FHA loan is a mortgage backed by the Federal Housing Administration, a government agency. The government guarantee means lenders take less risk, which allows them to offer the loan to borrowers with lower credit scores and smaller down payments.

FHA loans are not made directly by the government. You apply through a regular bank or mortgage lender. The FHA simply insures the loan against default.

What Is a Conventional Loan?

A conventional loan is not backed by any government agency. It is a private loan offered by banks, credit unions, and mortgage lenders. Conventional loans that meet certain size and standards limits can be sold to Fannie Mae or Freddie Mac, which is what allows lenders to offer competitive rates.

Conventional loans have stricter credit and income requirements than FHA loans, but they often end up being cheaper for borrowers who qualify.

FHA vs Conventional: Key Differences

Credit Score Requirements

FHA loans allow credit scores as low as 580 with a 3.5 percent down payment. With a score between 500 and 579, you can still get an FHA loan but need a 10 percent down payment.

Conventional loans typically require a minimum credit score of 620. To get the best rates, you generally want a score of 740 or higher. The better your score, the lower your interest rate.

Down Payment Requirements

FHA loans require a minimum down payment of 3.5 percent with a credit score of 580 or higher. On a $300,000 home, that is $10,500 down.

Conventional loans can go as low as 3 percent down for first-time buyers through certain programs, or 5 percent for most borrowers. However, to avoid private mortgage insurance (PMI), you need 20 percent down.

Mortgage Insurance

This is where FHA loans become more expensive over time. FHA loans charge two types of mortgage insurance:

• Upfront mortgage insurance premium (UFMIP): 1.75 percent of the loan amount, added to your loan balance at closing.
• Annual mortgage insurance premium (MIP): Ranges from 0.45 to 1.05 percent of the loan per year, paid monthly.

The key issue is that FHA mortgage insurance stays on the loan for the life of the loan if you put less than 10 percent down. You cannot remove it by building equity. The only way to get rid of it is to refinance into a conventional loan.

Conventional loans charge PMI if you put less than 20 percent down, but PMI cancels automatically once your equity reaches 20 percent. You can also request cancellation at 20 percent equity without refinancing.

Loan Limits

FHA loans have maximum loan limits that vary by county. In 2026, the limit in most of the country is $498,257 for a single-family home. In high-cost areas like San Francisco or New York City, the limit is higher, up to $1,209,750.

Conventional loans can go up to $806,500 in most areas in 2026 (this is called the conforming loan limit). Above this amount, you would need a jumbo loan, which has stricter requirements.

Interest Rates

FHA loans often have slightly lower interest rates than conventional loans for borrowers with lower credit scores. However, when you add mortgage insurance costs, the total monthly payment on an FHA loan is frequently higher than a conventional loan for borrowers who can qualify for both.

When an FHA Loan Makes More Sense

• Your credit score is below 620 and you cannot qualify for a conventional loan.
• You have a credit score between 620 and 680 and the FHA rate is meaningfully lower.
• You can only afford the minimum 3.5 percent down payment and would not qualify for conventional 3 percent programs.
• You plan to refinance within a few years once your credit score and equity improve.

When a Conventional Loan Makes More Sense

• Your credit score is 680 or higher.
• You can put 20 percent down and avoid mortgage insurance entirely.
• You plan to stay in the home long-term and want to eliminate PMI by building equity rather than refinancing.
• The home price exceeds FHA loan limits in your area.

Side-by-Side Comparison

• Minimum credit score: FHA 580 vs Conventional 620
• Minimum down payment: FHA 3.5% vs Conventional 3%-5%
• Mortgage insurance: FHA for life of loan vs Conventional cancels at 20% equity
• Upfront fee: FHA 1.75% of loan vs Conventional none
• 2026 loan limit (most areas): FHA $498,257 vs Conventional $806,500

The Bottom Line

If your credit score is below 620, an FHA loan is likely your only option. If your score is above 680 and you can afford the down payment requirements, a conventional loan will probably cost you less over time, especially if you plan to stay in the home long enough to build 20 percent equity.

Get quotes for both types before deciding. A good mortgage lender will run the numbers on both and show you the total cost difference over your expected holding period.

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Dollar-cost averaging means investing a fixed amount of money on a regular schedule, no matter what the market is doing. Instead of trying to pick the perfect moment to invest, you buy consistently over time. It is one of the most reliable strategies for long-term investors and removes most of the stress from investing.

How Dollar-Cost Averaging Works

The idea is simple. You decide on a fixed dollar amount, say $200 per month. You invest that $200 on the same day each month into the same investment, such as an S&P 500 index fund. You do this whether the market is up, down, or flat.

When prices are high, your $200 buys fewer shares. When prices are low, your $200 buys more shares. Over time, this averaging effect means you pay a blended price across many market conditions rather than betting everything on a single entry point.

A Simple Example

Suppose you invest $100 per month into an index fund over four months:

• Month 1: Price is $50 per share. You buy 2 shares.
• Month 2: Price drops to $25 per share. You buy 4 shares.
• Month 3: Price is $40 per share. You buy 2.5 shares.
• Month 4: Price rises to $50 per share. You buy 2 shares.

You invested $400 total and bought 10.5 shares. Your average cost per share is $38.10, even though the price started and ended at $50. The dip in Month 2 worked in your favor because you bought more shares at the lower price.

If you had invested the full $400 in Month 1 at $50 per share, you would own 8 shares. With dollar-cost averaging, you own 10.5 shares for the same amount of money.

Why Dollar-Cost Averaging Works Psychologically

Most people lose money investing because of their emotions. They buy when prices are high (because the market feels exciting) and sell when prices are low (because falling prices feel scary). This is the opposite of what you should do.

Dollar-cost averaging removes the decision from the equation. You invest automatically. You do not sit and watch the market and try to time a good entry. You do not panic sell in a downturn because you are not reacting to daily prices at all.

This makes it far easier to stick to your investment plan through bear markets, recessions, and corrections that are a normal part of the market cycle.

How to Set Up Dollar-Cost Averaging

Most brokerages let you automate recurring investments. Here is how to set it up:

1. Open a brokerage account if you do not already have one. Fidelity, Vanguard, and Schwab all offer this feature for free.
2. Choose the investment you want to buy regularly. A total market or S&P 500 index fund is a solid choice for most people.
3. Set up an automatic investment. Choose the dollar amount, the frequency (weekly, biweekly, or monthly), and the date. Link it to your bank account.
4. Let it run. Revisit once or twice a year to adjust your contribution amount as your income grows.

Many employer 401(k) plans already use dollar-cost averaging automatically. Every paycheck, a portion goes into your chosen funds. This is one reason 401(k) investors tend to build wealth steadily even without paying close attention to the market.

Dollar-Cost Averaging vs Lump-Sum Investing

If you have a large amount of money to invest, is it better to invest it all at once or spread it out over time?

Research consistently shows that lump-sum investing outperforms dollar-cost averaging in most historical scenarios. Because markets tend to rise over time, investing sooner gives you more time in the market. Studies by Vanguard found that lump-sum investing beats dollar-cost averaging about two-thirds of the time.

However, dollar-cost averaging wins in one important scenario: it prevents you from investing a lump sum at a market peak right before a significant downturn. If that timing risk keeps you from investing at all, dollar-cost averaging is clearly better.

For most people, the debate is irrelevant. You do not have a large lump sum sitting around. You invest from your paycheck each month. In that case, dollar-cost averaging is simply what you do by default.

What Investments Work Best With Dollar-Cost Averaging

Dollar-cost averaging works best with volatile investments that you plan to hold long-term. Index funds, ETFs, and diversified stock funds are ideal. The more volatile the investment, the more the averaging effect benefits you.

It is less useful for stable, low-volatility investments like money market funds or short-term bonds, where the price rarely fluctuates enough for averaging to matter.

Common Mistakes

• Stopping during downturns: This is the worst thing you can do. Downturns are when dollar-cost averaging benefits you most. Keep buying.
• Changing the investment each month: Pick a fund and stick to it. Jumping between investments undermines the strategy.
• Forgetting to increase contributions: As your income grows, increase your monthly investment amount. The number of dollars matters.
• Treating it as a short-term strategy: Dollar-cost averaging works best over years and decades, not months.

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