5 Questions: Betterment, Passive Income, and Optimal Credit

We’re doing personal finance potpourri today, answering listener’s questions about investing with Betterment, unpaid internships, 401K’s, passive income, and credit scores. 1.  What is Betterment and what’s so great about it?  Betterment is an investment tool that charges a low fee, no transaction charges, and abstracts investing.  LMM’s loves Betterment because it is a great first step to investing.  It’s easy to use and allows you to choose your level of risk with a simple sliding scale. 2.  Are unpaid internships worth it?  Jackie from Personal Finance with Jackie Walters sent this one in.  An internship is valuable even when unpaid.  You gain experience, have something to add to your resume, can cultivate good contacts for the future and sometimes an internship turns into a full time job. 3.  If an employer does not offer matching 401K funds, should you contribute the minimum to participate and the rest into a Roth IRA?  We’ve done a few Roth 401K episodes and Matt paid attention!  Unless you are getting matching, the only reason to invest in a 401K is if it would drop you down a tax bracket.  This will show you the federal brackets for 2014. 4.  Is passive income possible?  Absolutely!  There are lots of ways to earn passive income.  Being a landlord, website affiliates, investing. 5.  If you want to buy a house, should you close credit cards that you don’t use?  There is almost never a circumstance where it’s a good idea to close a credit card.  Part of your credit score is made up of the average age of accounts. The longer the age, the higher the score.  Closing an account will lower the average age.  If you have a card you don’t use often, put a small recurring automatic charge on it like a Netflix or gym membership.  This will keep your account active as some companies will close an account that has been dormant. Keep the questions coming guys! Show Notes Betterment:  Use our affiliate link to help support the site and get a few free months of fee-less investing! Mint:  LMM’s chosen budgeting tool. Learn more about your ad choices. Visit megaphone.fm/adchoices