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How to Get the Biggest Bang For Your Airline-Miles Buck

How to Get the Biggest Bang For Your Airline-Miles Buck

Everyone dreams of racking up great airline mileage points to see the world, but some find the process more difficult than expected. Need help navigating the fine-print confusion to get the most use out of your airline miles? Here are some tips to turn you into a travel master.

Use Miles on Flights with the Best ROI

Get the most return on investment (ROI) out of your miles by critically looking at the best purchase options. The general rule is this: if the ticket costs more than $500, you will usually get a better deal using your miles. If the ticket is less than this, it’s often better to simply pay for it. Blowing 50,000 airline points on a $200 ticket just doesn’t make sense, unless that’s the only flight you can use your miles for before they expire. Using the 50,000 points on a $2,000 flight is a much better spend. If you have more expensive tickets in the future, save your miles for these trips instead.

Points on Upgrades are Smart Buys

Another way to use miles to obtain a higher cost per point value is with upgrades. These give you a much greater dollar value for your points vs than the 1.2 – 1.4 cents per mile average. It is certainly worth utilizing this option on longer flights where the extra leg room and pampering will be more thoroughly enjoyed. Of course, it doesn’t hurt that you also bank additional miles from the trip. Just be sure to ask about any surcharges or restrictions on the revenue ticket you plan to upgrade.

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Book Very Early, or At the Last Minute

Remember, the best possible prices either go to those who book extremely early (330 days in advance on some airlines) or those who snap up empty seats at the last moment. So, if you are neither a long-term planner or a spontaneous person, you will need to adjust accordingly in either direction if you want to snatch up the best ticket deals. As you accumulate your airline miles on purchased flights, it just makes sense to find the best value per ticket.

Book Through an Agent

Airlines have trained us well to book online. This lowers the amount of employee time spent on customer calls and automates the system so it’s easier for the airline. That said, calling an agent and booking over the phone can be advantageous when trying to redeem miles. Airline representatives have access to information and authority over options that you do not, so it just makes sense to use this to your advantage. Agents can often create options that aren’t available through an online site, and can also exercise their authority to bypass restrictions that limit award availability. Yes, you may pay a surcharge—typically $20—but it’s worth it if you save several hundred dollars on a better ticket or option that you didn’t know was available.

Keep Accounts Active

Hoarding your miles for the most amazing trip to paradise won’t happen if you sit on them so long they expire. Many programs allow you to keep your account active other ways. You can gain miles and add activity to your account with purchases not even related to flying. You can often go to restaurants participating in an airline dining for miles program. You can also earn miles shopping. Over 400 online merchants—Wal-Mart, PETCO, Nike, etc.—participate in airline shopping mall programs. You can get anywhere from 1 to 12 bonus miles for each dollar spent. Also, always give car rental agencies and hotels your frequent flyer number to boost points. You can even grow you mileage account through FTD for sending flowers, or stack up additional mileage bonuses booking cruises or vacations through carrier sites. Are you already an investor with Fidelity Investment or TDAmeritrade? You can earn miles investing through these companies with some airlines. Or, if you are more comfortable investing in real estate, you can earn airline miles through certain banks when you take out a mortgage. If buying a house seems like an extreme way to gain miles, you can tone things down and simply sign up for Netflix to accrue additional points over some nightly movie entertainment. New opportunities to build up miles are out there if you’re willing to invest the research necessary to find them.

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Use Sites to Manage Your Miles

If the thought of shifting through all the fine print to discover which deals work gives you a headache, you can utilize certain sites to explore the options for you. These sites take a deep dive into your frequent flier account to help you understand the best options of your miles. GoMiles.com and AwardWallet.com will warn you if your miles are about to expire and alert you to new deals and promotions. However, don’t expect all airlines to embrace the third-party intrusion, as they feel it threatens the security of your information.

Use the Right Airlines

When it comes to redeeming points, not every airline is equal. It pays to choose airlines that are more friendly to point-redemption opportunities. The Wall Street Journal did a survey of all major carriers and found that the toughest airline to utilize your mileage points was US Airways, followed by Delta. With these companies, you have a 36% chance of actually using your miles the way you intend. Southwest was the clear winner of the survey, with a 95% chance of redeeming points, followed by JetBlue at 89%.

If You Can’t Use Miles:

1) Donate Miles

If your miles are expiring before you use them, consider donating them to others instead of losing them. For example, families have pooled airline points together to send newlyweds on their honeymoon, or parents on an anniversary vacation. The gift of travel is a great present! Who knows—they may return the favor when you need some additional miles in the future.

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If you don’t have a friend or family member to share your miles, you can also donate them to charity. For example, the Fisher House Foundation’s “Hero Miles” program has given more than 40,000 tickets to injured service members and their families, and Mercy Medical Airlift has provided almost 10,000 free flights to patients. The Make-A-Wish Foundation also needs miles to send kids on their desired adventures. These charities, as well as many others, will greatly benefit from your unused mileage points, and you can feel good giving to a worthy cause.

2) Trade Miles

While the exchange rate is fairly high, you can exchange miles for gift cards to companies such as Amazon or Starbucks. You can also trade your miles from one airline for points with a different carrier.

3) Use Miles for Hotels and Car Rentals

While the frequent, elite traveler will see much better deals than the average flier, you can spend your expiring miles for hotels and car rentals, as well as other travel needs. Again, it pays to research your best options for redeeming these miles.

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The possibilities of utilizing airlines miles are numerous and differ greatly depending on the program and carrier. However, taking a bit of time to do a deep dive into the opportunities and savings offered will help you become quite the travel-savvy flyer. After all, saving money while flying first class to your dream vacation is a great reward for a bit of extra airline mileage research and points management.

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Sarah Hansen

A corporate-sales professional turned entrepreneur

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Published on May 7, 2019

How to Invest for Retirement (The Smart and Stress-Free Way)

How to Invest for Retirement (The Smart and Stress-Free Way)

When it comes to stocks, I bet you feel like you have no idea what you’re doing.

Everyone who’s not a financial expert has been there. I’ve been there. But, time is passing and you need to be crystal clear with how you’re investing for your retirement.

Otherwise, it’s back to work until you can afford not to. So, how can you invest for retirement when you’re not a financial expert?

You take the time to learn the fundamentals well. If you do, you can grow your wealth and retire happy. The best part is that you don’t need to be a financial expert to make smart investment decisions.

Here’s how to invest for retirement the smart and stress-free way:

1. Know Clearly Why You Invest

Odds are you already know why should invest for retirement.

But, maybe you know the wrong reasons. It’s time you get clear on why you’d like to retire. Here are some questions to help you get started:

  • Will you spend more time with your family?
  • What does retirement mean to you?
  • Are you looking to launch that business you’ve been holding off for years?

Everyone wants to retire but not for the same reasons. Once you’re clear for why retirement is important for you, you’ll focus on making it happen.

Investing in the stock market allows you to take advantage of compound interest.[1] All this means is that your money earns money on top of its interest. A reason why investment in the stock market is one of the best ways to plan for retirement.

2. Figure out When to Invest

“The best time to plant a tree was 20 years ago. The second best time is now.”– Chinese Proverb

It’s true if you’d had started investing when you were 10 years old, you’d have a lot more money than you do today.

The reality is that most people don’t start investing until it’s too late. So, if you’re currently waiting for the perfect time to start an investment, it would be today. Open your calendar and block out 2 to 3 hours to choose how you’ll invest for retirement.

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A quick way to get a snapshot of where you stand is to use Personal Capital. Input all your personal information and spend some time setting your retirement goals. Once completed, you’ll know where you stand with your retirement.

Having a savings account for retirement isn’t planning for retirement. Why? Your money loses value when you factor in US inflation.[2]

3. Evaluate Your Risk Tolerance to Create the Perfect Portfolio

Investing your money well depends on your emotions.

Why?

Because when the market drops most people panic and withdraw their money. On average, the US stock market yields an annual 6% to 7% ROI (return on your investment.) But, this won’t happen if you’re worried about short-term loses.

Before you invest your next dollar, know your risk tolerance.[3] Your risk tolerance determines the number of risky and safe investments you’d have.

Regardless of your investing style, you need to view investing for retirement as a long term game. Know that some years you’ll lose money but recoup this in the long-term.

Avoid watching market-related new. Also, create a double authentication to log in your investment account. This way you’re less likely to withdraw your money.

4. Open a Reliable Retirement Account

Depending on your circumstance, you may need to open a new brokerage account. This is the account is where you’ll invest your money.

If you’re currently working for a company, odds are that they offer a 410K investing account. If so, here’s where you’ll invest most of your money. The only problem with this is that you’re limited to the stock options that are available.

You do have the option to open a separate IRA (individual retirement account.) Here are some of the best brokers:

  1. Vanguard
  2. TD Ameritrade
  3. Charles Schwab

5. Challenge Yourself to Invest Consistently

Committing to invest for retirement is hard, but continuing to do so is harder.

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Once you’ve started investment for your retirement, you run at risk from stopping. Often you’ll want to contribute less, so you’d have more money in your pocket.

That’s why it’s important that you create a budget that allows you to invest each month. If you’re working for a company, you can set a percentage for the amount you’d like to contribute each month. Most people by default contribute 1% but aim to contribute 10% to 15%.

Be the judge for how much you can afford to contribute after covering important expenses. To stay motivated, use Personal Capital to view your net worth.

A benefit to contributing money to your retirement account is not taxed. For example, if you earn $100 and invest 10%, you’d contribute $10, then get taxed on the remaining $90. As of 2019, the most you’re able to contribute towards your 401K is 19K but this can change.

6. Consider Where to Invest Your Money

The most common way to invest your money is in stocks, but it’s not the only way. Here are other ways to invest:

Robo Advisors

Robo-advisors[4] are fancy algorithms that’ll choose the best investments for you. Sites like Wealthfront make it easy for first-time investors to invest their money. You’d input information about yourself and set your risk tolerance.

Then, set your monthly contribution amount and your robo-advisor would do the rest. Robo-advisors charge a fee to manage your money, but less than regular advisors.

Bonds

Think of bonds as “IOUs” to whomever you buy them from.

Essentially, you’re lending money and charging interest. Like stocks, not all bonds are equal. Some will be riskier than others depending on their rating.

Here are the different types of bond categories:[5]

  1. Treasury bonds
  2. Government bonds
  3. Corporate bonds
  4. Foreign bonds
  5. Mortgage-backed bonds
  6. Municipal bonds

Mutual Funds

Picture a group of people dumping all their money in a jar that’s managed by a professional. This is how mutual funds work. The fund manager manages the money looking to earn capital gains (interest.)

One of the best types of mutual funds is index funds. Since these funds don’t try to beat the market and instead follow it, they need less research. Because of this they often charge the lowest fees and yield the best long-term results.

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Real Estate

Yes, buying a home is an investment when done correctly.

Imagine buying a home and using it as a rental property. After repairing it, you receive a monthly surplus check of $100 to $200.

This may not sound like a lot, but repeat this process enough times and you’d earn a large amount of passive income. That’s why real estate is one of the best investments to not only retire but become wealthy.

But, it requires a lot of money to start and you should expect losing money along the way as you learn the process.

Savings Accounts

Your money can still grow in a savings account. Nowadays most online banks offer a 2% annual return. Although the average inflation is higher your money will be available when you need it.

7. Master Disincline to Dodge Short Success

Investing for retirement is a long-term strategy. That’s why you need to master delayed gratification. All this means is delaying short-term pleasure for something bigger in the future. Research shows that those who have delayed gratification are more successful.[6]

So how can you master delayed gratification?

By building your discipline.

Think back to what retirement means to you. A clear purpose will help you avoid withdrawing your money during a market downturn. It’ll help you contribute more towards retirement when you’d want to waste it instead.

Your journey towards retirement will be long, so reward yourself along the way. Choose a reward that’s relevant and meaningful, so that you reinforce positive behavior. For example, after contributing more towards retirement, treat yourself to dinner.

8. Aggressively Invest on This One Investment

I’ve mentioned several types of investments but haven’t covered the most important one.

It sounds cliche but here’s why you’re your best investment towards retirement. The more you know, the more money you’ll be able to make. The more good habits you adopt, the more secure your retirement will be.

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More importantly, investing in yourself is an investment that no one can take away. There’s no market downturn nor tragic circumstance that’ll wipe your knowledge and experience.

But, how can you invest yourself?

Reading books, blogs, and anything that’ll help you learn new topics daily. Listen to podcasts and audiobooks on your commute to/from work.

Save money to buy courses and hire coaches. I used to believe hiring coaches was a waste of money when I could learn the subject alone.

But, coaches see your blind spots and hold you accountable. Hiring the right coach will help you achieve your goals faster than you would’ve alone.

Retire Happy with Excess Money

The key to a secure financial future doesn’t only belong to financial experts.

It’s possible for you and I. What if you were able to retire earlier than most people and weren’t a financial planner? What if you were able to focus on what you enjoy doing the most while your money was working hard for you?

I know this sounds impossible now, but the truth is you’re capable of taking charge of your retirement. I’m not a financial expert but I’ve learned how to invest my money by reading books and learning from others.

Investing your money is scary. So start small and invest a small amount of your money with a robo-advisor. Feel your money drop and rise for a month or two. Then, invest more and keep this up until you’re aggressively saving for retirement.

One day, you’ll wake up with a net worth you’re proud of – confident about your retirement. You now know a few strategies you can use to invest in your retirement. Will you take action to retire happy?

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Featured photo credit: Matthew Bennett via unsplash.com

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