NerdWallet's Smart Money Podcast - The Best Financial Products of 2025 and Investing in Collectibles

Episode Date: January 20, 2025

Learn how to pick the best financial tools for investing, mortgages, and travel rewards to meet your personal goals. What are the best financial tools for investing, mortgages, and travel rewards in 2025? Should you invest in collectibles like designer handbags? Hosts Sean Pyles and Sara Rathner discuss top-rated financial tools for achieving your money goals and what to consider when investing in non-traditional assets. They begin with a discussion of NerdWallet’s 2025 Best-Of Awards, in which NerdWallet’s team of experienced finance writers and editors researched more than 1,000 financial products and narrowed them down to just one winner per category to make it easier for you to choose what’s best for you. Investing Nerd Sam Taube and mortgage Nerd Holden Lewis join Sean and Sara to share what they chose as the best product in their areas of expertise and why, offering tips and tricks on finding the right investment platform, understanding mortgage rates, and maximizing travel rewards. Then, investing Nerd Alana Benson joins Sean and Sara to discuss the pros and cons of investing in collectibles like designer purses, coins, or Magic: The Gathering cards. They explore how collectibles fit into a diversified portfolio, the hidden costs of holding physical assets, and when it makes sense to sell.  In their conversation, the Nerds discuss: best financial tools 2025, top travel credit cards, best mortgage lenders, Fidelity investment app, collectibles as investments, investing in designer bags, mortgage rates 2025, credit card rewards, Chase Sapphire Preferred benefits, how to choose a mortgage lender, Roth IRA rollover tips, U.S. Bank mortgage review, expense ratio explained, travel credit card insurance, long-term investing strategies, investing in purses, switching brokerage accounts, tax implications for collectibles, building a diversified portfolio, Fidelity ZERO funds, and financial tools for travel. To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [e-mail]. Like what you hear? Please leave us a review and tell a friend.

Hey, Sean, when's the last time a financial product changed your financial life? Well, last summer I used credit card points from a sign-up bonus to pay for the flights of my summer vacation. I'm not sure that was life-changing, but it did save me several hundred dollars, which was pretty sweet. Well, I'm always a fan of doing that. In this episode, we'll talk about how using the right financial tool can help you meet your money and life goals. Welcome to NerdWallet's Smart Money Podcast. I'm Sean Piles.

And I'm Sarah Rathner. This episode, I'm joined by our co-host Elizabeth Ayola to answer one of your money questions about, shall we say, misguided investing strategy? And then we help you understand what kinds of investments might be better suited for the average investor. Before we get into all of that, I have to know, Sean, where did you travel to with all those points? I went to Chicago to meet up with my twin sister for a little belated birthday celebration. We happened to be there during Pride Week, which was super fun.

And I enjoyed it all the more because I wasn't paying some $700 in flights and my sign-up bonus covered that so it felt pretty great. Well, that's awesome in Chicago is one of my favorite cities Especially in June. It is basically a beach town which people do not appreciate So I'm here to spread the gospel Chicago's great in the summertime. Yes, that is the time to go huge fan But to your question earlier the credit card that I had at the time made the vacation all the more feasible, which is why we're going to talk about why having the right financial product for you is really important and why it's so important to shop around for the right tool to help you meet your goals. And NerdWallet's best of awards for 2025 just dropped, so now is a great time to shop around for that right financial product for your needs.

Every year, NerdWallet announces the Best of awards, which is kind of like a shortcut for you to find the top financial tools across a huge range of products like travel credit cards, insurance providers, robo advisors, and more. And you can see the full list of winners at nerdwallet.com. To give you a shortcut to that shortcut, we are joined by investing nerd Sam Taub and mortgage nerd Holden Lewis to share what they chose as the best product in their areas of expertise and why. And Sarah, who writes about credit cards, will talk with us about what makes a travel credit card the best this year.

And a quick heads up that we'll talk about some NerdWallet partners in this conversation, but that does not influence how we discuss them. So, Holden, Sam, welcome back to Smart Money. Hey, it's great to be here. Good to be back. Sam, let's start with you. Let's not waste any time here. What is the best app for investing in 2025?

That would be Fidelity, and they've gotten the highest score among brokers we review for several years in a row now. A lot of people are familiar with Fidelity. I use the Fidelity app and I like that it just works. You know, it's not fussy or trying to push some new fangled features on me. What makes Fidelity the best for you? And what was the process for deciding that Fidelity is better than another similar product?

As you said, Fidelity just works. It's really streamlined and it's really easy to use for beginners, and it's great for passive, long-term investors who want to keep things simple. But that doesn't mean it skimps on features for advanced traders. Our methodology for these awards looks at a lot of different variables. Some of those, like educational resources or mutual fund selection, are really geared toward beginners and passive investors. Others, like the interest rates on margin loans and the execution quality of trades, those are geared more toward active investors and experienced day traders. Fidelity does really well across the board, which is kind of unusual. Most of the brokers we review are kind of specialized for either day traders or passive investors, but Fidelity bridges the gap in a way that very few other brokers do. like expense ratios and commissions and generally folks want to minimize those so they can maximize their return on their investments. So what can people

expect cost-wise from using Fidelity? Fidelity got a lot of credit in our ratings for its low costs, particularly for those passive long-term kind of retirement minded investors I was talking about. It charges very few account fees, no trading fees, or commissions for stocks and exchange traded funds. Something that really makes Fidelity stand out in terms of costs is this line of index funds it offers called Fidelity Zero. Most ETFs and mutual funds have an expense ratio, as you just mentioned, and for listeners who don't know that's a percentage fee that is deducted from the funds annual returns

but as their name implies Fidelity zero funds don't have expense ratios and that's pretty unusual. There's only a couple of different costs I can think of where Fidelity isn't best in class. One is options trading fees. Fidelity doesn't charge a commission on options trades, but it does charge a fee of $0.65 per contract. That's pretty typical among brokers we review, although some other brokers like Robinhood and Public have done away with this fee as well. Fidelity also charges a relatively high fee for broker assisted trades. That means if you

want to place buy or sell orders the old fashioned way, if you want to call up a human broker on the phone, that'll cost you $32.95 per trade at Fidelity, which is on the higher end. Sam, what's it like to switch from one investing platform to another? I mean, do you have tips for switchers who want to accomplish the change easily, quickly, without worrying that they'll end up doing something with disastrous tax implications? That's a really good question, Holden. And it's especially a good question if you're talking about retirement accounts. If you're rolling over an IRA from one provider to another, you want to double check that

you're rolling over the right type of IRA. If you have a Roth IRA, you want to make sure that you've opened a Roth IRA at the new provider and transferred your investments into that. If you have a traditional IRA and you're not trying to convert it into a Roth IRA, then you want to make sure that you're rolling it over into another traditional IRA at the new provider. You don't want to accidentally convert a traditional account to a Roth if you don't mean to do that because Roth conversions generate tax liability. Generally speaking, you also don't want to go Roth to traditional because then you lose the tax-free withdrawals in retirement that a Roth IRA offers and you don't get any

benefit from that. Yeah, that's some pretty solid evergreen advice for any kind of financial decision. Read over the form a couple of times to make sure that you didn't check the wrong box. Absolutely. Now, let's turn to you Holden. For folks who are looking to buy a house this year, what's the best mortgage lender of 2025 and what makes it better for borrowers in the competition? Well, first of all, if you plan to buy a house this year, good luck and I wish you well.

Prices and rates are kind of high. As far as the best mortgage lender of 2025, our algorithm shows US Bank as the best mortgage lender overall. They earned five-star ratings for three of our four objective criteria. Those three are mortgage rate transparency, variety of loan types, and customer experience. Let's break those down a little bit. So rate transparency means that you can go online and easily find out the interest rates the bank is charging. US Bank is excellent at showing rates for its many loan products. And then that brings us to another five-star strength of US Bank's variety of loan types. It offers fixed rate mortgages, adjustable rate mortgages, including for jumbo loans. It has FHA and VA mortgages.

It offers construction to permanent loans for people who want to build a custom home, renovation loans, mortgages to buy manufactured homes, even co-ops, which are kind of rare. And they even have specialty programs for doctors at the beginnings of their careers. US Bank ranks well for customer experience. The way NerdWallet measures that, this means the bank offers convenience features such as online application and multiple customer service options. It also means that there's a helpful mobile app and candid closing timeline

communications. So in other words, if you're 21 days out from closing, they actually tell you you're 21 days out and not keeping it a mystery. Holden, you mentioned that nerd wallets algorithm selected US bank. Can you explain for listeners what that means that nerd wallets algorithm shows this bank? When we grade mortgage lenders, we use objective standards. Our opinions don't enter into it. So here's an example. Can you go online and look at today's mortgage rates? Some lenders don't show rates at all. Some show generic rates that assume that you have a high credit score and you live in a certain zip code, and some will let you customize rates according to your credit score, location, loan-to-value ratio, and all that kind of stuff without digging into fine print. Each step along that continuum increases rate transparency,

and thus it raises the score. And so we have the same scoring philosophy for like how many loan types the lender offers, how many communications options it offers, and so on. Mortgages are one area where it really pays to shop around because you're borrowing a lot of money folks, like six figures worth of money in many cases, sometimes more. Are there any ways that US bank can make having a mortgage more affordable, especially as interest rates remain high?

US bank offers homebuyer assistance programs with a limited scope. They let you make a down payment as little as 3% and the bank pays the mortgage insurance. That's a certain program that they have for people who live in certain areas, like certain zip codes. And that also offers several thousand dollars in down payment and closing cost assistance. So like I said, those programs are available in limited areas. So a lot of listeners, they might not be able to get that. And other lenders offer home buyer assistance programs too. On kind of a similar note, Holden, I'm wondering if there are any criteria that are especially important to first-time home buyers who are comparing mortgage lenders. You've laid out why US Bank got the highest score overall, but how time they're looking for loan programs that allow for

a small down payments and B that are forgiving for imperfect credit scores and you know mostly we're talking credit scores under 760. The FHA and the VA fill that bill. You can get an FHA insured loan with a three and a half percent down payment and the VA requires zero down payment. Both tend to cost less than private mortgage insurance and US Bank offers FHA and VA loans. NerdWallet also gives a rating for the best lender for first-time home buyers. In that category, Rocket Mortgage won our blue ribbon. A big reason is that FHA and VA loans constitute a lot of Rocket's business.

You can apply via a mobile app and Rocket closing times are quicker than average and that's why Rocket Mortgage scored well for first-time buyers. Their origination fees are on the higher end though. I gotta say, sometimes you get what you pay for. A more full-service lender might be charging higher fees, but you might find that more satisfying. Sarah, you are up. Since you're the credit card whiz,

what's the best travel credit card of 2025 and what makes it better than the rest? We have a few winners in the travel credit cards category. So check them out if you're looking for premium cards, airline or hotel cards, or travel cards with no annual fee. Yes, they do exist. But our pick for the best all-purpose travel card is the Chase Sapphire Preferred.

I think this news will come as no surprise to anyone who's in the travel credit card space. The Chase Sapphire Preferred was my first travel credit card when I began to dabble in the points game because way back then, I want to say almost nine years ago, it was ranked among the top travel credit cards. How has this card managed to stay competitive throughout the years? For the benefits you get with the card, it actually has a pretty modest $95 annual fee. And it's funny to say $95 is modest.

That's a lot of money, let's be real. But in the travel card space, a fee of $100 kind of counts That's a lot of money. Let's be real. But in the travel card space a fee of $100 Kind of counts that way because some of the higher end cards charge $300 a year and up sometimes way up more than double that for $95 You get this generous sign up bonus $50 annual statement credit for hotel stays booked through chase and every year you have the card You also get a point bonus of 10% of your total purchases for the year you have the card, you also get a point bonus of 10% of your total purchases for the year. So you can offset that fee just by taking advantage of the many benefits that the card

offers. Sarah, I'm not a newbie to traveling, but I'm a newbie to travel rewards cards. So I have a really naive question. When you use the Chase Sapphire Preferred to rent a car, does it automatically provide insurance coverage? That's not a naive question because some level of travel protections are built into many different travel cards as a benefit. So that's absolutely something to consider when you shop around for a travel credit card.

And in the case of the Chase Sapphire Preferred, when you rent a car, it does automatically provide primary coverage for theft and collision damage. And that means that the coverage from your card will pay out first before you need to tap into your own auto insurance policy. And so you don't have to worry about your insurance rates going up if you experience a little bit of trouble with your rental car, let's just say. Holden, Sam, Sarah, thank you for sharing your insights about the best financial products of 2025. It's my pleasure. Good to be here. Listeners, if you want to see more of the best of winners, visit nerdwallet.com. And if all this talk about different financial products makes you think of a money question

that's been living rent-free in your head, we're here to help you start charging that question some rent. Maybe you want to learn more about which travel credit card is right for you, or you want to switch over to a new brokerage account, but want to learn more about which travel credit card is right for you, or you want to switch over to a new brokerage account, but want to minimize the tax implications. Whatever your money question, leave a voicemail or text us on the Nerd Hotline at 901-730-6373. That's 901-730-NERD or email us at podcastatnerdwallet.com. One more time, send your money questions to us by leaving a voicemail or texting us on the Nerd Hotline.

That's 901-730-6373 or 901-730-NERD, or you can email us too at podcast at nerdwallet.com. We're about to turn to this episode's money question, but first we have an exciting announcement. We're running another book giveaway sweepstakes ahead of our next Nerdy Book Club episode. Our next guests are Jen Smith and Jill Sirianni, authors of the new book, Buy What You Love Without Going Broke, which focuses on how to be smart about spending. To enter for a chance to win our book giveaway, send an email to podcastatnerdwallet.com with the subject, Book Sweepstakes, during the sweepstakes period. Entries must be received by 1159 p.m. Pacific time on January 24th. Include the following information, your first and last name, email address, zip code, and phone number. For more information, please

visit our official sweepstakes rules page. Next up, Elizabeth Ayola and I are tackling a listener's question about investing in collectible items and how to tell if doing that is a good idea for you. Stay with us. We're back and we are answering your real-world questions to help you make smarter decisions about your money. This episode's question comes from a listener's text message and here it goes. This is a question or topic I'd like to see on the podcast. Recently, I've been seeing things on social media about an Hermes, Kelly or Birkin or Chanel flat bag appreciating as well or better than the market. Can someone at NerdWallet do research on this topic and report the findings?

Can someone at NerdWallet do research on this topic and report the findings? Thanks. Yes, we can, listener. Okay. So for anyone who has absolutely no idea what the listener is asking about, they listed a few kinds of very expensive designer purses. Some Hermes bags sell for six figures. Yeah. As in probably more than you make in a year. To help us answer this listener's question, on this episode of the podcast, we are joined by investing nerd Alana Benson to talk with us about investing strategies and how to think about non-traditional investment strategies like buying and selling handbags. Alana, welcome to the show. Thanks for having me. Now, we've talked on the podcast about investing in stocks and mutual or index funds.

We've also talked about real estate investing and even crypto. But what about investing in other things like collectible items? What's the appeal of this? I think it's fascinating really, because you get to see the niche aspects of just about anything. And yes, it could be designer pursesses but it could also be like magic the gathering cards. It's so much more personal than investing in the stock market and people really get to tie together their personal interests with

their wealth for better or for worse. I think people get into investing in collectibles because they are maybe easier to understand than the wider financial markets and if you're already just personally interested in something it doesn't feel as daunting to dive into that world. Unlike with investing, you may feel like you have to learn about a bunch of stuff that doesn't interest you to do it. To use a little journalism phrasing, let's not bury the lead here. Let's just answer this question. Social media makes this look like fun, and you do get to put your money into things that matter to you, that are fun to you, that are enjoyable to you. You get to go shopping and call it investing, which is awesome.

But is this kind of non-traditional investing a good idea for most people? I am not a financial advisor. But I'd say for most people, you probably shouldn't bet your entire retirement on one category of any asset. If you have a closet full of designer purses, it's sort of similar to having your whole portfolio

in one stock. If something happens to those purses, like a fire or the fashion industry decides that purses are very out this season, it's sort of like if that one company goes out of business. And generally, it's never a good idea to have your whole financial portfolio tied up in one asset, no matter what that asset is. So it's kind of like that episode of Sex in the City where

Carrie can't afford her apartment because she owns $40,000 worth of designer shoes. Exactly. Obviously, designer clothing and purses are one thing, but you can also collect everything from baseball cards to coins to works of art and jewelry. These items can be very expensive, and it can be hard to collect them in a way that you're not losing your shirt here. I think something that's really good to think about is that if you have an otherwise well diversified portfolio, so think S&P 500 index funds, stuff like that, you can use a small percentage of your overall portfolio, like 5%, to explore some fun things, whether that's crypto or comic books. I'd also like to add that some people know a lot more about their niche markets

than I do, pretty much anyone, because I know nothing about it. But if you've been tracking the prices of baseball cards for 20 years and you know the ins and outs of that specific arena, that's amazing. And you're probably pretty qualified to ascertain the value of those things and that specific market. And you could say the same thing for say designer purses, but it's usually a good idea to do it in conjunction with a well diversified portfolio. One thing to think about before buying a collectible

as an investment is the cost of holding onto it. And it's very different from the potential cost you might have within a brokerage account, like expense ratios. For one thing, you need insurance to protect things like art, jewelry, or designer purses. Now let me tell y'all I once heard about a dog eating someone's Chanel bag. Yes, it was uninsured. So that is a very good point. With physical goods, there is definitely more of a concern with storage or pets in that case than with stocks or bonds. You don't have to worry about your dog eating your stocks. But some things like cards, comic books, or art, they

need to be stored in a special way. Maybe they require sleeves or climate-controlled temperatures. There's also the concern of insurance, like you brought up. Personal property insurance costs can really vary, but generally it's around $20 a year for every $1,000 of personal property coverage. If you insure $10,000 worth of items, you might pay around, I don't know, $200 each year. Let's talk about the next step of investing in collectibles,

eventually selling them so you can recoup some money on that investment. Selling off stock is relatively easy. Just log into your account, click a few buttons. But what about selling a physical object? That has to be way more complicated. I would imagine so. And again, I don't know each of these individual markets, but selling your collectibles may

come with some risk. I'd say across the board for each of these markets, one of the biggest ones is that they're often controlled by taste, not cold, hard numbers. So usually, investors make decisions to buy or sell stock because they can look at the company's fundamentals, say, is the company making money, is it growing? But with collectibles, taste can just

be a bit more nebulous than that. It's like, do I like it? Do I think it looks cool? Stuff like that. I agree. And I think for the few people who I have spoken to who collect designer purses, something that they say, don't quote me, is that they like to buy the classics because apparently those tend to be in season even when the more trendy ones aren't. So that's just a thought that came to mind. But now the really fun part, taxes! When you sell a traditional investment at a profit, you usually owe capital gains taxes. Now what happens if you sell a collectible item, Alana? You'll actually still owe capital gains taxes, meaning that you have to pay tax on the difference between what you bought it at and what you sold it at,

also known as the gain. Unfortunately, collectibles can be taxed at a maximum rate of 28%, which is even higher than the typical long-term capital gains tax rule. Ilana, let's get your overall take on this then. All of this stuff being said, if someone wanted to invest in some kind of collectible, art, jewelry, comic books, whatever,

how does that fit into an overall investment strategy? How would these kinds of investments mix in with things like stocks and funds? If you want to dive into the world of collectibles, I'd say become as much of an expert as you can. Maybe don't just buy something because you think it looks cool. Try to get a sense of the market, its resale value, and how much you'd be willing to pay for insurance. And maybe try to keep your collectible budget to be about 5% of your overall portfolio, prioritizing investing in index funds or mutual funds through an investment account first.

I couldn't agree more. And maybe this is a good time to just say that maybe avoid taking investment advice of any kind from TikTok, other socials. I can say it louder for the people at the back if you want. It's so important to do your own research or chat with a financial professional before investing in any of the things we mentioned. Absolutely.

Aside from obviously all of our socials and our podcast. Well, here we are on the podcast telling you to be very, very, very thoughtful in your decision making when it comes to this stuff. Ilana Benson, thank you so much for your help today. And may we all go out and find the perfect $150,000 designer purse to complement our entire wardrobe. Amen.

That'd be great. Thanks for having me. All right, folks. That's be great. Thanks for having me. All right, folks, that's all we have for this episode. Remember listener that we are here to answer your money questions. So turn to the nerds and call or text us your questions at 901-730-6373. That's 901-730-NERD. You can also pop us an email at podcast at nerdwallet.com and visit nerdwallet.com slash

podcast for more information on this episode. Remember you can follow the show on your favorite podcast app, including Spotify, Apple Podcasts, and iHeartRadio to automatically download new episodes. And here's our brief disclaimer. 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.

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