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There’s a New Way to Invest in Tesla

By U.S. News & World Report

Tesla Inc (Nasdaq: TSLA) announced plans for a major $1.5 billion senior note bond offering on Monday, giving investors an alternative to TSLA stock, which is famously volatile. For long-term investors looking for a safer way to invest in Tesla than buying its shares, Tesla corporate bonds provide a much lower-risk alternative.

[Read: FANG Stocks: Which One Is Leading in AI?]

Corporate bonds are essentially loans that investors make to a company to help pay for the company’s expenses. In Tesla’s case, the money raised from the sale of its new senior notes will help the company pay for the costs associated with scaling up production of the Model 3, the company’s first mass-produced, affordable all-electric vehicle.

With so much of Tesla’s future dependent on the success of the Model 3, this $1.5 billion injection is vitally important to the company.

Companies like Tesla pay their bond holders interest on their investment. The interest rate of corporate bonds varies along with the risks associated with the bonds. Tesla didn’t specify the interest rate the company will pay on its new senior notes. According to credit rating agency Moody’s, the average yield on seasoned corporate bonds is about 4 percent.

While the TSLA stock price is tied directly to the market valuation of the company, which fluctuates on a daily basis, bond holders are guaranteed to receive their full principle as well as all interest owed if they hold until the bond’s maturation date. However, if a company declares bankruptcy or defaults on its debt, bond investors may not receive their entire payment. Even in the event of a bankruptcy liquidation, senior debt is given top priority over unsecured junior debt.

While no investment is 100 percent safe, bonds offer Tesla investors a way to mitigate much of the risk associated with the polarizing stock. While Tesla has tremendous potential as a company, even Wall Street experts can’t agree where TSLA stock is headed next. Of the 25 Wall Street analysts that cover Tesla stock, eight have “buy/overweight” ratings, 10 have “hold” ratings and seven have “sell/underperform” ratings. Price targets range from as high as $464 to as low as $155, according to CNN.

Unfortunately, Tesla’s new senior notes will not be available to most average American investors, at least not initially. The company said the notes “will be offered only to qualified institutional buyers,” including investment banks and hedge funds.

[Read: Why High-Yield Bonds Belong in Your Portfolio.]

Investors interested in purchasing other Tesla bonds can buy them in most brokerage accounts, typically in multiples of $1,000. Investors who intend not to hold their bond investments until maturity should understand that bond values and yields fluctuate on a daily basis, and selling bonds prior to maturity can potentially result in large losses.

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There’s a New Way to Invest in Tesla originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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