Money Management

It’s important to protect the money you have in savings. Read on to learn more. [[{“value”:”

One benefit of keeping money in a savings account or certificate of deposit (CD), as opposed to the stock market, is that you can avoid the risk of losing money. When you invest in stocks, the value of your assets might rise or fall with market conditions. But if you put $20,000 into a bank account, the only way you’re going to end up with less than $20,000 is if you actively take a withdrawal.

This assumes, however, that your money is insured. Keeping insured money in the bank could put you at risk of losses. But that’s a pretty easy thing to avoid.

A risk you don’t need to take

Savings accounts and CDs tend to deliver lower returns than the stock market. But in exchange, you’re taking on less risk — provided you’re being savvy about how you save.

If you want to make sure you don’t lose money due to something like a bank failure, you need to do two things:

Bank at an FDIC-insured institutionMake sure your deposit doesn’t exceed the FDIC insurance limit

There are different steps you can take to find out if your bank is FDIC-insured. First, you could ask your bank directly. Or, you can use this tool to look up your bank and find out.

Meanwhile, the FDIC insurance limit is $250,000 per bank for single accounts (a deposit owned by one person). That limit rises to $500,000 when you have a joint account holder.

Let’s say you’re a solo account holder with $100,000 in a CD and $160,000 in a savings account at the same bank. Here, you’re $10,000 over the $250,000 limit for that bank. If the bank in question were to fail, you’d potentially be out $10,000.

But, let’s say you have $100,000 at one FDIC-insured bank and $160,000 at a different FDIC-insured bank. Here, you’re fine.

Given the vast number of FDIC-insured banks out there, there’s really no reason to ever put yourself at risk of losing money to a bank failure. If you’re in a position where your savings are growing and you’re about to exceed the $250,000 (or $500,000) mark, just move some money to another bank. It’s really that simple.

Think about how much cash you should have in savings in the first place

Keeping more than $250,000 (or $500,000) in deposits at a single bank could put you at risk of losses. But that aside, if you really have that much cash in savings, you may want to consider moving some of it into stocks.

It’s a smart idea to keep money in savings for emergency fund purposes. And if you’re saving for a near-term goal, then the bank is the best place for your money, not the stock market, since you may not have time to ride out a market downturn. But for long-term goals, keeping your money in a bank account may not serve you so well.

If you earn a 4% return in the bank on a $200,000 deposit over 20 years, you’ll grow that sum to about $438,000. But if you earn 10% on a $200,000 investment in the stock market (which is in line with the market’s long-term average), in 20 years, you’ll have about $1.35 million.

As such, it’s a good idea not to keep too much cash in the bank not just due to FDIC insurance limits, but also, because you may be able to do more with that money by investing it.

These savings accounts are FDIC insured and could earn you 11x your bank

Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts could earn you 11x the national average savings account rate. Click here to uncover the best-in-class accounts that landed a spot on our short list of the best savings accounts for 2024.

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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Some investments just don’t fit into my strategy. Read on to see why. [[{“value”:”

Investing money is something I’ve aimed to do since completing my emergency fund years ago. And these days, I tend to favor stocks as my investment of choice.

Investing in stocks can be a risky proposition. The market can be quite volatile, and through the years, I’ve seen my portfolio lose substantial value from one week to the next.

I also know, however, that stocks have a long history of rewarding investors who stick with them for decades. Over the past 50 years, the stock market has averaged an annual return of 10%. If you were to invest $10,000 today at that same return, in 50 years from now, it might be worth about $1.17 million — no joke.

To be clear, I wasn’t always comfortable investing in stocks. It took years for me to talk myself into accepting the risk that comes with them. But to this day, there are certain investments I won’t even consider adding to my portfolio. Here are three that fall into that category.

1. Crypto

As someone who owns her fair share of stocks, I’m no stranger to risk. However, to me, cryptocurrency investing is just way riskier than stock investing for the sheer reason that it hasn’t been around as long.

There are stocks in my portfolio whose issuing companies have been around for more than 100 years. Bitcoin, by contrast, was only introduced to the public in 2009.

It’s hard for me to know how much staying power crypto has. That puts it into the category of being a risk I’m unwilling to take on.

2. Art

I like a classic painting as much as the next person. The Mona Lisa? I made a point to check it out when I visited the Louvre years ago.

But while I enjoy looking at art, I refuse to actually invest in it. And the reason is that I don’t know enough about art to determine whether a given work has the potential to gain value or not.

As a general rule, I believe that I should only invest in assets I understand. I don’t understand the finances of art.

Heck, to some degree, I don’t always understand the art behind art, like those modern paintings you see fetch $1 million when all you’re looking at is a bunch of swirly lines on a canvas. So it doesn’t make sense to add art to my portfolio.

3. Real estate

I’m invested in real estate to the extent that I own REITs, or real estate investment trusts, which are publicly traded and work very much like stocks to a large degree. But I don’t own physical real estate as an investment, like rental properties, for one big reason — I know I’m not capable of doing the work.

Being a landlord is a lot more than handing out leases and collecting rent checks every month. There’s a ton of work that goes into it, and I don’t have the capacity for it.

Owning stocks, on the other hand, involves a minimal time commitment. Sure, I have to research stocks before adding them to my portfolio. And I like to check up on my stocks’ performance on an ongoing basis.

But that pales in comparison to the time I might spend overseeing a rental property. As such, physical real estate is an asset I won’t be investing in any time soon.

Choose your investments carefully

If you’re going to put your money to work by investing it, you need to be comfortable with the assets you choose. As such, you may want to limit your holdings to investments that meet these criteria:

The risk is one you’re reasonably comfortable withYou understand how they workYou have the time to maintain them

Going outside of these lines could result in you losing money. So while it’s a good idea to branch out in your portfolio to some degree, you’ll want to do so with caution to avoid getting in over your head.

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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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Life insurance needs change as you get older. See how much coverage you should have when you’re 80 years old. [[{“value”:”

If you’re shopping for life insurance at age 80, you won’t have as many options as younger adults. Insurers typically don’t offer term life insurance, which lasts for a fixed length of time, to people at that age. But you can still find whole life insurance, a permanent policy that pays out upon the policyholder’s death.

Whole life policies can be expensive. To avoid overspending on coverage, it’s a good idea to consider how much life insurance you need first.

You may not need any life insurance at 80

Most people get life insurance so they can leave money behind for their loved ones if they die. When you have family members who depend on you, life insurance is a way of ensuring they’re taken care of no matter what. At certain points in your life, a life insurance policy is a must.

For example, if you’re 40 with a spouse and two young children, you need life insurance. Otherwise, your family could be put in a difficult financial position if you were to pass away unexpectedly. Life insurance helps replace your income and ensure your family doesn’t struggle with money.

When you’re 80, you’re at a much different stage in your life. If you have children, they’re probably adults by now and not dependent on your income. They won’t need a life insurance payout to maintain their standard of living. In this case, there are a few reasons you may still want life insurance:

Funeral expenses, burial, and other end-of-life costsPaying off any debt you have at deathLeaving a financial gift behind for loved ones

You can do this through life insurance. But you can also do it through your savings and investments. If you have enough money in the bank and in your retirement accounts, you may already be self-insured. Being self-insured means you have enough to cover any costs you leave behind, including end-of-life costs, so life insurance isn’t necessary.

How much life insurance to buy as an 80-year-old

Not everyone has enough money saved to be self-insured. Even if you do, you might still want to buy life insurance just in case. It could give you peace of mind, especially if you need to dip into your savings for medical bills or other expenses later.

To calculate how much life insurance you should have, add up the estimated cost of the following:

End-of-life expensesYour outstanding debtAny extra money you want to leave for your family

End-of-life expenses can vary quite a bit. But the average cost of a funeral with a viewing, burial, and vault for the casket is $9,995, according to the National Funeral Directors Association. We’ll round that up to $10,000, although you may want to budget even more to account for inflation.

Let’s say you also have $15,000 left on your mortgage, and you’d like to leave your two children $10,000 each. That’s $10,000 in end-of-life expenses, $15,000 to pay off your mortgage, and $20,000 for your children. You’d need $45,000 in life insurance to cover those costs. Or, if you want to go the self-insured route, you could set aside $45,000 in a savings account.

Many 80-year-olds don’t need life insurance anymore. If you decide to get it, make sure to shop around with the top life insurance companies. Compare rates so you can see which company will offer the best deal on the coverage you need.

Our picks for best life insurance companies

Life insurance is essential if you have people depending on you. We’ve combed through the options and developed a best-in-class list for life insurance coverage. This guide will help you find the best life insurance companies and the right type of policy for your needs. Read our free review today.

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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You don’t have to give up coffee to save money. Keep reading to see how an unlimited drink subscription could offer hot coffee and savings. [[{“value”:”

Some personal finance professionals shame consumers for everyday purchases that bring them joy in our busy, stressful world. Takeout coffee is one purchase often discussed in these conversations. But you can spend your money on whatever you want, including a cup of joe. I’ll show you how ordering a daily cup of coffee isn’t a bad money move.

My husband works near a Panera cafe, and he’s a big coffee drinker, so we enrolled him in Sip Club, the brand’s unlimited drink subscription. For a set monthly price, subscribers can enjoy unlimited drinks and order a refill every two hours. This subscription was a good move for our personal finances. Here’s how it saved us over $650 in the last year.

How Sip Club works

Panera’s Sip Club is an unlimited beverage subscription. Members pay a monthly subscription fee, and they get access to coffee, tea, iced coffee, iced tea, fountain drinks, Charged Sips, and lemonades. Subscribers can order beverages of any size at participating cafes as often as every two hours.

Until recently, the cost of this subscription was $11.99 monthly, plus tax. However, subscribers now pay $14.99 monthly, plus tax, and those with active subscriptions will be charged the higher rate on the next billing date. A yearly subscription is available for $119.99 plus tax.

Even at the increased monthly price point, consumers who regularly drink the included beverages and work or live near a Panera can benefit financially. Panera isn’t the only place with an unlimited drink subscription, either.

Pret has an unlimited drink subscription called Club Pret. For $40 per month, subscribers can enjoy coffee, tea, cold brew, and even select espresso-based drinks like lattes and cappuccinos. Drinks can be ordered every 30 minutes. If you’re not interested in Panera’s Sip Club, you might consider other drink subscription options.

We saved $655 because of Sip Club

Throughout the last twelve months, my credit card was charged $12.83 each month, for a total cost of $153.96 for the year. Since my husband planned to stop for a large cup of coffee nearly every weekday, this seemed like a steal for us. We were right!

By subscribing to this program, we have hundreds more dollars in the bank. Menu pricing for Panera’s food and drink items vary nationwide. In our city, a large cup of coffee costs $3.39, or $3.63 after tax. If we had paid individually for the 223 cups my husband drank, the cost would have totaled $809.49.

That’s a lot of money to spend on takeout coffee. But remember, we paid only $153.96 for this subscription — around $0.69 a cup. We saved $655.53 throughout the last year. That’s about half the cost of a mortgage payment for us, so it’s a significant win for our wallets.

Look for ways to save in your everyday life

For some consumers, investing in an unlimited beverage subscription like this may be a smart money move. It may be a worthwhile option to explore, even if you only drink coffee.

With an unlimited drink subscription, you may be able to keep more money in your checking account without sacrificing your daily dose of caffeine. Taking advantage of small ways to save money in your daily life can be a win for your finances.

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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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