Thursday, December 19, 2019

Trends in Personal Finance: 2019

I recently attended a webinar about 2019 trends in personal finance sponsored by Next Gen Personal Finance (NGPF) and presented a webinar of my own. Below are five 2019 statistics and trends that caught my attention:

¨     One third of new car loans have a loan term of seven years or longer with 1.5% of loans lasting for 8 to 9 years. The average price of a new car in 2019 was $37,000 according to Kelly Blue Book and the average new car loan was over $32,000 according to Experian. When borrowers get large auto loans and focus only on monthly car payments, the length of the loans get extended and they pay more interest over the life of the loan.

¨     Apple launched a credit card in 2019, Amazon launched a secured credit card, and Google announced plans for a checking account. Other non-banks that got into the banking space by partnering with banks and credit unions were robo-advisory firms Wealthfront and Betterment and student loan refinancing company SoFi.

¨     In 2019, index funds comprised a majority of mutual funds. Two reasons that investors choose index funds are their broad diversification and relatively low expense ratios compared to actively-managed funds. Another is, in the words of NGPF co-founder Tim Ranzetta, “it has been a phenomenal decade for investing.”

¨     In October, the brokerage firm Charles Schwab announced zero commissions on all stock trades. Other parts of their business are generating revenue. Brokerage company stock prices dropped and Schwab subsequently acquired TD Ameritrade. Other brokerage firms followed suit and also slashed their commissions.

¨     The Capital One data hack affected 106 million credit card holders and applicants and 400 billion records have been breached so far in 2019. Experts recommend freezing your credit and checking credit reports regularly.

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