Money Management

The moves you make when you’re young have the potential to impact your future in a serious way. Read on to learn more. [[{“value”:”

Some people are lucky enough to be financially savvy in their 20s. But when you’re new to adulthood, it’s easy enough to fall victim to financial blunders that have the potential to hurt you later on. With that in mind, here are three investment mistakes you’ll really want to avoid in your 20s, as they could seriously come back to bite you during your 60s.

1. Not snagging your full employer match in your 401(k)

You may not be so motivated to contribute to your company’s 401(k) plan when you’re in your 20s. After all, at that stage of life, retirement might seem like a fantasy.

But if you don’t put in enough money to claim your full employer match, you’ll be giving up free money for your future self. And that’s not a good thing.

Remember, the money in your 401(k) usually doesn’t just sit in cash — or at least it shouldn’t. Rather, you can invest that money so it grows over time.

Let’s say you could’ve had a total of $15,000 in employer contributions added to your 401(k) by age 30, only you passed up that money instead. Over the past 50 years, the stock market has averaged an annual 10% return, which is the return you might’ve gotten in your 401(k) with those employer contributions.

Meanwhile, $15,000 invested from ages 30 to 60 at a yearly 10% return would otherwise grow into about $262,000. That could be enough to pay for several years of living expenses in retirement.

2. Not going heavy on stocks when you’re young

Some people start investing during their 20s. But it’s not unheard of for 20-somethings to shy away from stocks because they’re afraid of taking losses.

It’s true that stock values can be volatile. But if you play it too safe in your portfolio, you may not end up with enough retirement income to live comfortably.

Let’s say you invest your IRA conservatively over a 40-year period where it generates an average annual 5% return. If you contribute $200 a month over 40 years, you’ll end up with a balance of about $290,000.

Now, that’s certainly a respectable sum of money. But if you were to snag a 10% return in your portfolio instead, you’d end up with $1.06 million.

3. Tapping your portfolio for cash instead of leaving it alone

You might contribute to an IRA or 401(k) in your 20s, only to raid that account to cover an unplanned bill. But doing so could hurt you in two ways.

First, IRA or 401(k) withdrawals taken before age 59 1/2 are generally subject to a 10% early withdrawal penalty. But more so than that, again, you lose out on the opportunity to grow the sum you remove. So even if it’s just a $1,000 withdrawal, if you remove that sum at age 27 and don’t retire until 67, you’ll be short $45,000 in retirement income if you’d normally get a 10% return on your investments.

To avoid having to tap your IRA or 401(k) in a pinch, build yourself an emergency fund. Aim for a minimum of three months’ worth of essential living expenses in the bank, so you’re not forced to raid your retirement savings to cope with a bout of unemployment.

The financial moves you make in your 20s could have a strong impact on your retirement — for better or for worse. Do your best to avoid these mistakes so you don’t wind up with a world of regrets by the time your 60s roll around.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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I’ve read and edited hundreds of articles about Costco, but I still wasn’t fully prepared for my first visit. Find out five things that caught me off guard. [[{“value”:”

As it turns out, my fellow writers and editors here at The Ascent are shepherds, and I am just a sheep, following them to the Costco promised land. I managed to spend 35 years on this Earth without ever having set foot in a Costco store…until last month. I am now a proud card-carrying Costco member.

After spending years reading and editing hundreds of Costco articles, you’d think I would have been fully prepared for my first visit. But, as it turns out, the following five things still managed to surprise me.

1. Costco is BUSY

OK, so maybe that’s not much of a secret. Costco is a notoriously busy store to shop at. I’ve heard advice that it’s best to shop right as the store opens or right before closing on a weekday. But I never do my grocery shopping in the morning or the evening… I’ve always been more of a mid-afternoon, right-after-I-finish-up-work kind of shopper. So I decided to compromise and take off a little early and head out at noon. My reasoning? Most 9-to-5 professionals are still at work at that time, and kids are still in school, so how busy could it really be?

The answer: BUSY! The store was packed full of shoppers, all navigating their oversized carts down aisles that I was trying to take my time to browse and acclimate myself with for the first time. Not ideal. Next time, I think I’ll opt for a just-after-opening shopping trip, and see how much better that works out for me.

2. Your items won’t be bagged at checkout

I surely knew this one. But just as sure as I knew it, I forgot it by the time of my shopping trip. And I spared no category during my shop: clothing, food (both refrigerated and pantry staples), paper goods, cleaning supplies, you name it. So by the time I made it to checkout, my oversized cart was bursting at the seams. As I wheeled my car to the associate that began to scan my items and reorganize them in my cart, it dawned on me. All of these items would be going into the trunk of my car however I could fit them, willy-nilly, without the structure or boundaries that grocery bags provide.

Don’t let this sneak up on you, too. Be sure you have the space in your vehicle for all your Costco treasures. I highly recommend preparing your trunk or backseat in advance with reusable bags, cargo netting, or cardboard boxes to help secure your items.

3. Receipt checkers at exit can cause a bit of a backup

Costco positions associates at the exit to check and mark all receipts as customers leave the store. Because the store is so busy, there is constantly a group of shoppers entering and exiting the store at one time. Unfortunately, several shoppers leaving at once can cause a bit of a backlog at the exit, as folks wait patiently to have their receipts checked. In my experience, this took no longer than a couple minutes, but if you’re not expecting the delay, or you’re just flat out in a hurry on the day you shop, it’s something to keep in mind.

4. Pizza from the Costco food court offers great value

Costco’s food court may be most famous for its $1.50 hot dog and soda combo, but if you’re looking for a good deal and hotdogs aren’t your thing, the club’s pizza deal is equally as impressive. You can get one slice of cheese or pepperoni for $1.99. “Slice” doesn’t really do this meal justice, as the slice takes up an entire paper plate. With crust of medium thickness and plenty of sauce, melty cheese, and pepperoni, one slice is all you’ll need to fill up.

Feeding a family or headed to a party? Order an entire pizza or pizzas to go. A whole 18-inch pizza costs just $9.95. To put that in perspective, most pizza joints consider 18-inch pies to be XL or jumbo-sized pizzas. So to get one of these giants — that’s not at all lacking in taste or flavor, I might add — for under $10, is simply a steal these days.

5. My Costco TP dreams were dashed

I had big plans to start stockpiling giant packs of Costco toilet paper in my basement, you know, just in case. But alas, those dreams were dashed when, shockingly, I learned that toilet paper is actually a better deal at my regular grocery store.

Costco offers a 30-pack of Kirkland 2-ply toilet paper, 380 sheets per roll, for $19.49 in store. This means each sheet of toilet paper comes out to approximately $0.0017. My regular grocery store, on the other hand, offers a 30-pack of its store-brand toilet paper, also 2-ply, with 429 sheets per roll, for $19.99. That makes each sheet approximately $0.0015. So, while I may still stockpile some TP, it looks like I’ll be doing it from the aisles of my regular grocery store instead!

Do your homework to lessen potential surprises

Costco warehouses are huge. They offer a lot of good deals for shoppers to make the most of their personal finances, from its food court to its store shelves, pharmacy, gas stations, and tire centers. But as I learned, not everything at Costco offers the best value. Compare prices with your local grocery store, and consider using coupons and cash back apps to ensure you’re getting the best deal, no matter where you shop.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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It’s hard to drift off when you have financial worries running through your mind. Take a look at moves you can make to ease those concerns. [[{“value”:”

I left my full-time job and started freelancing in 2018. I never planned for it to last this long, but it turns out that I really enjoy it, and I’m grateful I’m able to make a living on my own schedule doing work I like.

But there are still plenty of things about freelancing that stress me out or make me nervous, and I have to make an effort to fight against them. Some nights, my mind races with worries about whether I can keep this up on my own. But whenever that voice in my head starts chirping, I fall back on a few reminders to soothe it.

1. Am I saving enough for retirement?

Since I no longer have an employer, I no longer have access to an employer-sponsored retirement plan like a 401(k). Sometimes it worries me that I’m not earning an employer match on a portion of those retirement dollars, which is a benefit many companies offer to their employees. Will I have enough cash socked away when it comes time for me to leave work?

When I start thinking this way, I remind myself that I’m fully funding my individual retirement account (IRA) and Roth IRA every year. Not only that, but I’m also setting aside money each month in a high-yield savings account. Since interest rates have been riding high the past few years, I’m even earning money on that money. And not only that, but I’m also transferring money regularly to my brokerage account.

Since I still have many years left before I retire, I have plenty of time to ride out any market swings and see that money grow. Over the past 50 years, the stock market’s average annual return has been 10%, so my long investing window means I’ll likely be in good shape down the line.

2. Am I keeping track of all my income?

As a freelancer, you might have lots of clients, which means lots of invoices, payments, and 1099s to keep track of. It can be stressful to keep an eye on everything and make sure you’re getting paid what you’re owed for the hard work you’ve done. (I can’t tell you how many times I’ve had to chase down my payment for a project weeks or months after it was completed.)

To ease my restless mind, I set up a spreadsheet early on in my freelance career to track every invoice: when I sent it, when payment was due, and when I was actually paid. I’m able to see how much I bring in every month so I can better estimate what my future income will look like, and I can keep an eye on every dollar I’ve earned.

If you’d prefer to have a little more structure in the process, you can even look into getting accounting software.

3. Am I going to keep getting work?

This might be the one that nags at me the most. There’s very little job security with freelancing; the businesses I work with have no requirement to keep sending me projects. If a particular editor I know leaves a publisher, maybe their replacement won’t use me as often. Or if someone on the team doesn’t love how I copy-edited one book, they might start offering me fewer and fewer projects. Or maybe they just have so many freelancers in their pool that I don’t get offered as much work as I used to.

Other than doing the best work I can on every project, these worries are mostly out of my control, so I’ve found that I can calm my mind a bit by taking action in other ways. I make it a point to ask for feedback from the editors I work with so they know I’m open to hearing what improvements I could make. By being proactive, I find that I can nip any issues in the bud rather than finding out about them after they’ve gone on for a while.

I’m also proactive about asking for work. When I see a lull coming up in my schedule, I reach out to the publishing companies I work for to see if they have anything for me. That keeps me top of mind when new projects are available.

I’ve also made sure to build up my emergency fund so that if I do happen to have a long dry spell, I’ll be able to keep covering all of my expenses. Having that safety net is a great source of relief.

Like counting sheep

If you have a racing mind, you know there are a million concerns that could buzz through your head when you lay it on your pillow. It’s not surprising that these three are ones I deal with regularly, but I try to drown them out with the lullaby of knowing I’m doing plenty to counteract them.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.

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CDs can be a great way to lock in a yield on your savings, but there are other factors to consider. Keep reading for expert CD advice. [[{“value”:”

Certificates of deposit, or CDs, can be a great way to lock in a guaranteed APY for a certain amount of time. However, they aren’t the best choice for your extra cash in every situation, and there are some things you should keep in mind before deciding if a CD is right for you.

As a Certified Financial Planner™ who has lots of experience with CDs, savings accounts, investing, and more, here are three important things to consider before you decide to put money into a CD in 2024.

1. Be sure to consider the drawbacks

CDs certainly have their advantages over checking and savings accounts, but they aren’t perfect.

The first, and most obvious drawback, is the early withdrawal penalty you’ll have to pay if you take money out of the account early. In most cases, a CD early withdrawal penalty is equal to a few months’ worth of interest. And it’s worth noting that you typically can’t withdraw just some of the money in a CD early. If you choose to take money from your CD before it matures, you’ll have to take it all (and pay the penalty on the full amount).

Second, while locking in a guaranteed CD interest rate can be nice, it also has its risks. For example, let’s say that you get a 5-year CD with a 4% APY, and rates proceed to spike to 5% or 6%. You’re stuck at a lower interest rate for several years.

Or let’s say that you have a 5-year CD with a 4% APY and the inflation rate jumps to 5% or even higher. Now your money is effectively losing purchasing power over time.

2. Use CDs for financial planning

Many experts advise savers to think of CDs as financial planning tools that can be used to anticipate future cash needs. And I tend to agree.

Here’s an example. If you are planning to take a family vacation one year from now and you estimate that it will cost a total of $5,000, you could open a 1-year CD to set the money aside and earn a guaranteed yield in the meantime.

If your biggest priority is growing your wealth over time, investing can be the better way to go. But CDs can be a great way to get a risk-free yield while planning for known expenses.

3. Make sure your emergency fund and retirement take priority

As a Certified Financial Planner™, I’d strongly suggest that two specific financial goals take priority over setting aside money in a CD.

The first is emergency savings. Most experts suggest that you should aim to have six months’ worth of expenses set aside in a readily accessible account (perhaps a savings account). That way, if you lose your job or have a large, unexpected expense, you won’t have to use your credit cards or tap into long-term savings.

Second is retirement savings. A good rule of thumb is to contribute at least 10% of your salary (not including any employer matching contributions) into a tax-advantaged retirement account to save and invest for your future financial security.

If both of these things are done, you can consider a CD for any additional cash you have. But only after these two critical financial needs are met.

Are CDs right for you?

Like any financial product, CDs have pros and cons that are extremely important to consider before you deposit money into one. It’s also worth noting that CD rates can vary significantly from bank to bank, so be sure to shop around with some of the best banks for CDs before you make a decision. But as long as you’re aware of the drawbacks and use CDs in the right way, they can be an excellent way to create a predictable income stream with little risk.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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