Money Management

There are huge differences between investing in a CD versus in stocks. Asking yourself these questions can help you choose which is right for you. [[{“value”:”

If you have some money to spare and want to use it wisely to improve your financial future, you have a few choices for where to put it. One option is to put funds into a brokerage account and use them to invest in the stock market. Opening a certificate of deposit, or CD account is another option.

There are both pros and cons for either option, so to help you decide which is right for you, ask yourself these key questions.

1. Can I afford to risk losing the money?

Investing in the stock market carries some risk. The specifics of the investments you make and your investing timeline determine the level of risk you’re taking on — but even with relatively safe investments, there’s always a chance you could lose money.

If you invest in a certificate of deposit, you don’t have to worry about that. CDs are FDIC insured, which means you are guaranteed not to lose money on them, up to FDIC insurance limits. Now, you can face penalties if you choose to voluntarily withdraw your money from a CD before the term expires, but you’re in direct control over whether you do that so you can choose to avoid even this potential financial risk.

If you absolutely cannot afford to risk losing the money you are investing — say, because you need it for a home down payment in a few months for a house you’re under contract on — then you should not put the money into the market. A CD is a better bet.

2. When am I hoping to cash in on the investment?

The next key question to ask yourself is when you’re hoping to start accessing the invested funds and the returns that you earned.

See, if you invest in the stock market, your risk of loss is greater if you do so for the short term. That’s because even really great investments can perform poorly over a period of a few months or even a few years if there are poor economic conditions or if you timed your investment wrong. Investing for a secure retirement is a better bet, as you’ll have a longer timeline.

The S&P 500, for example, is a financial index of 500 of the largest U.S. companies. Over many years, it has consistently produced 10% average annual returns. But in some individual years, there have been big losses, as the table below shows.

If you are hoping to cash in your investment within five years or less, putting your money into the market is too risky because you could get caught in a downturn, not be able to afford to wait for recovery, and end up buying high and selling low.

CDs, on the other hand, have a wide range of different terms. It’s common to find CDs that require you to commit for as little as three months, as long as five years, or for a variety of different time periods within that range. So, if you’ll need your money soon but not immediately, you should be able to find a CD that works with your timeline.

3. What are my goals for the funds?

Finally, you should think about your goals for the money. Are you hoping to maximize returns at the price of taking on more risk? If so, then investing in the stock market is the right call. On the other hand, if keeping the money safe is a priority, a CD could be the better solution.

By asking yourself these three questions, you can decide where your money should go. It’s always best to carefully consider any investment decision, because you work hard for your money and it should work hard for you.

Alert: our top-rated cash back card now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a lengthy 0% intro APR period, a cash back rate of up to 5%, and all somehow for no annual fee! Click here to read our full review for free and apply in just 2 minutes.

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.

“}]] Read More 

Mistakes on your taxes can lead to serious financial headaches. Here’s how you can clear up errors before they come back to bite you. [[{“value”:”

You’ve finally sent off your tax return to the IRS and — too late — realize that you did something wrong. Maybe you forgot about a retirement account withdrawal you made or a side hustle from earlier in the year. Or maybe you just mixed up some digits when filling out the forms. Whatever the cause, you’ve now got a problem.

Fortunately, it’s a fixable one, but the solution may not be what you want to hear. Here’s what you need to do to get things straightened out.

Why you can’t just ignore a tax error

You might be tempted to do nothing about the error and hope the IRS doesn’t notice it either. The chances of being audited are pretty low, but it’s still not worth the risk. If the mistake caused you to underreport your income and the government catches wind of it, it could charge you additional taxes plus a penalty. And if it believes you were intentionally trying to hide some of your income, you could even face jail time.

If the mistake caused you to overreport your income or miss out on valuable tax breaks, doing nothing could cost you a part of your refund. This could be especially devastating if those tax breaks were worth thousands of dollars.

It’s much better to tackle the issue promptly before the IRS catches on to it. Here’s how to resolve it.

Filing an amended tax return

You can correct your error by filing an amended tax return. To do this, you must fill out Form 1040-X. You can do this on paper or through your tax-filing software. You may also be able to e-file your 2023 amended return if your software supports this. If not, you may have to mail it to the IRS.

On the Form 1040-X, you must enter the numbers as they appear on your 2023 tax return that you’ve already filed. Then, you must note the correct amounts and the differences between the two. You’ll also need to write in an explanation of why you need to amend your return. And you must attach any supporting documents when you submit it.

Typically, you have three years from the date you filed your original return or two years from the date you paid the taxes you owe for that year, whichever is longer, to submit your amended return. But if you want the refund you’re owed, sooner is probably better.

You will probably have to pay your tax software an additional fee in order to amend your return, and you may need to file an amended state return as well. If you have any questions about what to do, you might want to consult a tax professional who can advise you on your particular situation.

Next steps

After you’ve submitted your amended return, the IRS will review it. This usually happens faster with e-filed returns than it does with paper returns. If the amended return is approved and results in a higher refund, the government will send you the additional amount you’re owed.

If the amended return results in a tax bill, you must either pay what you owe upfront or enter into a payment agreement with the IRS. There are options that give you several months to pay and monthly installment plans. But all of these methods require you to pay interest on your bill each month.

You can keep up to date on the status of your amended return through the IRS’s website. And if you have any questions about an amended return you’ve submitted, it’s best to contact the IRS. The whole process could take a few weeks to resolve, so try to be patient. In the end, it’s worth it, especially if it puts more money back in your pocket.

Alert: our top-rated cash back card now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a lengthy 0% intro APR period, a cash back rate of up to 5%, and all somehow for no annual fee! Click here to read our full review for free and apply in just 2 minutes.

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.

“}]] Read More 

It seems to be a seller’s market. But should you list your home? Read on to find out. [[{“value”:”

Today’s housing market conditions are far from friendly to home buyers. In February, the median existing home sold for $384,500, according to the National Association of Realtors. That’s a 5.7% uptick from a year prior.

In spite of rising home prices and expensive mortgages, home buyers are still biting. Existing home sales surged 9.5% in February on a monthly basis. And in light of that, you may be thinking of putting your home on the market.

See, any time there’s a lack of housing inventory, sellers have the potential to command higher prices for their properties. And as of February, there was only a 2.9-month supply of homes on the market — well below the six-month supply that’s commonly needed to meet buyer demand in full.

But before you put your home on the market, there’s an important question you’ll need to ask yourself. And it’s one you should think about carefully before giving your answer.

Can I afford to buy a new home in today’s market?

It may be a good time to sell a home since property prices are up. But before you rush to take advantage of relatively strong buyer demand, ask yourself whether you can afford to buy a new home given today’s market conditions.

A big reason so many buyers are struggling to purchase homes is that mortgage rates are high. If you’re downsizing and can buy your next home in cash, this may not be as much of a problem for you. But if you know you’ll need to finance the purchase of your next home, then you’ll have to think about what you can afford based on today’s borrowing rates.

Another factor to consider is elevated home prices. You may be looking to upsize, and you may be in a position to command a higher price for your home than you would’ve a few years ago. But just as you might come away with a larger number, another seller might also ask for a higher price for their home. So what you gain in one regard, you lose in another.

All told, any home you buy after selling your current one should be one you can pay for with 30% or less of your take-home income. And that 30% should include recurring expenses like property taxes and homeowners insurance.

RELATED: Mortgage Calculator

Crunch those numbers carefully so you don’t get in over your head. If you buy a replacement home you can’t afford, you risk losing it — or landing in debt due to an inability to cover your non-housing bills.

Inventory could be an issue for you, too

Another snag you might hit in the course of selling your home is not being able to find a suitable replacement home. The whole reason you may be able to get more for your home today is that inventory is down, so buyers are willing to pay more for the limited properties that are available. But you might also struggle to find a new home that meets your needs within your price range.

All told, it’s a good time to be selling a home, but it’s not a good time to be buying one. And often, it’s hard to do one without the other. So think carefully about whether listing your home right now is really a good idea.

Alert: our top-rated cash back card now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a lengthy 0% intro APR period, a cash back rate of up to 5%, and all somehow for no annual fee! Click here to read our full review for free and apply in just 2 minutes.

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.

“}]] Read More 

Meal planning is a great way to cut your food spending. Learn about some key ways it can help you cut costs at the supermarket. [[{“value”:”

Most people know groceries have become more expensive. In fact, the food-at-home consumer price index was up 0.7% from December of 2023 to January of 2024, and it was 1.2% higher in January of 2024 than it was a year prior.

High grocery costs are putting a big strain on many people’s budgets. But there are options to reduce costs. Meal planning, or making a written plan of what you’ll have for each meal over the course of the week, is one of the best ways to cut your spending at the grocery store.

Here are a few different ways making a meal plan can help you keep more of your money in your savings account, rather than spending it at the checkout counter.

1. Meal planning makes it less likely you’ll need to eat out

In 2022, more than half (53.9%) of total food spending occurred at food establishments away from home. That’s a shocking statistic, and it shows that Americans as a collective group may be spending just a little too much at restaurants.

But it’s a lot easier not to eat out if you have a meal plan. Just think about it — how often have you just stopped to pick up a pizza or grabbed a sandwich at lunch because you didn’t really know what to eat and didn’t want to think about it?

If you have a meal plan, this isn’t an issue. You’ll already know what you’re having for breakfast, lunch, and dinner and will be a lot less likely to skip one of those meals you charted out for yourself and put on your calendar.

2. You can build your meals around coupons and sales

You can save significantly by making your meal plan after checking what manufacturer coupons are available and what is on sale at your local grocery store.

Say, for example, ground beef is on sale, with the grocery store taking $0.99 per pound off this week. If you plan two meals using ground beef instead of the more expensive ground pork that’s not on sale, you could save money on both of those two meals compared with if you’d just randomly decided what to eat for dinner.

3. You’re less likely to waste food if you make a meal plan

Americans throw away $444 billion worth of food every single year. In case you’re really bad at math, that’s a lot of money tossed in the trash.

But meal planning will have you buying ingredients only based on what you plan to cook over the course of the week. And you can plan meals to make sure you’re using up all that you buy. For example, if you have to buy spinach to make a pasta dish, you can plan to have a salad with it the next day for lunch to use up the rest of the package.

Fortunately, meal planning isn’t hard. You can sit down with your grocery store flyer and your computer to look up recipes, and make a list of what you want to eat. Once you get into the habit and have a nice collection of recipes you can rely on often, your life will be much easier and your credit card bills should be much smaller.

Alert: our top-rated cash back card now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a lengthy 0% intro APR period, a cash back rate of up to 5%, and all somehow for no annual fee! Click here to read our full review for free and apply in just 2 minutes.

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.

“}]] Read More 

Senior healthcare costs can be huge. One strategic move on your part could make them easier to manage. [[{“value”:”

For many people, the idea of retirement can be scary. Even if you do your best to save a bundle in an IRA or 401(k), you might still end up short on funds to cover your essential costs.

And then there’s healthcare to worry about. Health issues tend to increase with age, so it’s important to be prepared to cover that expense.

In a recent Empower survey, 44% of respondents cited healthcare costs as a major retirement worry. But there’s one account you may be able to fund today that could help ease that concern.

Are you eligible for an HSA?

You have different options when it comes to socking money away for healthcare bills. You could simply fund a regular savings account and dip in as needed. But if you’re eligible for an HSA, then it pays to contribute to one of these accounts.

HSAs offer benefits beyond what savings accounts offer. With a savings account, you might earn some interest on your money. With an HSA, you can invest funds you don’t need and grow your money into a larger sum over time.

Plus, HSA funds don’t expire. And because of that, it’s a good idea to try to fund an HSA steadily during your working years but reserve the use of that money for retirement since you’re not forced to spend down your balance annually. That way, you’ll have access to more money at a time when your healthcare costs may be highest.

Now that said, there’s a catch with HSAs — not everyone is eligible. Your health insurance plan needs to conform to different rules that change annually to be able to participate. That’s why it’s a good idea to check your eligibility every year.

In 2024, however, you’ll qualify if you have self-only coverage and a minimum deductible of $1,600, or family coverage with a minimum $3,200 deductible. Your plan must also have a MOOP (maximum out-of-pocket) of $8,050 for self-only coverage or $16,100 for family coverage.

How much can you put into an HSA?

The nice thing about HSA contributions is that they go in tax free. Incidentally, investment gains in an HSA are tax free, as are withdrawals used for healthcare expenses.

HSA contribution limits change annually. In 2024, you can contribute up to $4,150 for self-only coverage or $8,300 for family coverage. And if you’re 55 or older, you can make an additional $1,000 contribution.

Best of all, unlike a flexible spending account, you don’t have to worry about overfunding an HSA, because your money doesn’t have to be spent by a certain point. You have all of retirement to use up your HSA, so there’s little pressure involved.

As such, if you’re someone who’s already starting to stress about the idea of paying for healthcare in retirement, do your part to fund an HSA if that option is on the table for you. And if not, check your eligibility next year and each year that follows to make sure you’re not passing up the opportunity to contribute to a useful account that’s loaded with tax benefits.

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.

“}]] Read More