Money Management

Getting some of your pay in stock isn’t necessarily a great thing. Read on to see why. [[{“value”:”

Many people’s compensation is limited to a paycheck that hits their bank account weekly, every two weeks, once a month, or at another cadence. But if you work for a public company, you may receive a combination of cash and shares of its stock as compensation.

This isn’t necessarily a bad way to get paid. When you receive a $100,000 salary, that’s all you’re getting — $100,000. When you receive $80,000 of your salary in cash and the remaining $20,000 in stock, over time, that $20,000 in shares could grow to be worth $25,000, $30,000 or more.

On the flipside, when you’re paid in stock, there’s a chance that your shares will lose value over time. So in that regard, you’re taking a risk, which is probably a pretty obvious drawback of this compensation model. But getting paid in stock has the potential to backfire on you for a less obvious reason, too.

When your portfolio is no longer well diversified

You’ll often hear that it’s important to maintain a diversified portfolio because doing so can not only lead to solid growth over time, but protect you from excessive losses. The problem with being paid in stock, though, is that if you keep accumulating shares of the same company, eventually, they might comprise a very large chunk of your portfolio.

That could lead to a huge imbalance. And it could also prove problematic if those share prices then take a dive.

Let’s say you’re issued 10 shares of Company X each month as part of your compensation. When you first start out, the 10, 20, or 30 shares you have might comprise just 3% or 4% of your brokerage account’s investment mix. But in time, as you continue to collect those shares, they might eventually account for 20%, 30%, or 50% of your portfolio.

Meanwhile, let’s say your total stock portfolio eventually grows to be worth $100,000. If you have 50%, or $50,000, of your portfolio in Company X and its share price falls by 20%, you’re suddenly looking at a portfolio value of just $90,000, or a $10,000 hit. That’s a pretty big decline. If Company X only makes up 10% of your portfolio, or $10,000, a 20% drop in its stock price would constitute a $2,000 hit to your total portfolio instead.

How to keep your portfolio nicely balanced when you’re paid in stock

If you work for a company that pays you partially in stock for many years, you might eventually accrue a large number of shares. So what you’ll need to do is figure out what percentage of a single stock is too high for your taste and make plans to unload shares accordingly.

Some people may be okay with a single stock comprising up to 20% of their portfolio. Others may be more comfortable limiting that percentage to 5% or 10%.

Once you land on the right number for you, you can start selling shares of your stock once they’ve been in your portfolio for at least a year and a day. That way, you’re looking at long-term capital gains taxes on your profits, as opposed to short-term gains, which apply to investments held for a year or less. Long-term capital gains are taxed a lot more favorably, which means you’ll pay the IRS less money on your profits.

Of course, capital gains taxes are only a problem if you’re selling shares at a profit. But ideally, that is what you’ll be doing.

Being paid partly in cash and partly in stock isn’t all that uncommon. But make sure to manage your investments accordingly under that setup so you don’t wind up with a portfolio imbalance that causes problems. And if you decide that it’s time to start unloading some of your company’s shares, time those sell-offs strategically to minimize the tax blow.

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 

Fixing the gender investing gap isn’t just about buying stocks. Find out how more women saving for retirement makes the whole world richer. [[{“value”:”

Women tend to get paid less than men. According to recent data, in the U.S., women earn about $0.83 for every $1 that men earn — another way of thinking about it is that women get paid about 17% less than men.

This gender pay gap is also causing big problems for investing, retirement savings, and building wealth. Women get only about 70% of the amount of retirement income that men get, and have only about 32% of the level of total wealth that men have.

If people — not just women, but men, too — and our companies, organizations, and governments do not take action to address the gender investing gap, everyone will be made poorer by it.

Let’s look at a few big downsides of not trying to fix the gender investing gap.

1. Women will be poorer in retirement

Women tend to live longer than men, making it even more important for women to save and invest for retirement. But all those years of working at a 17% discount compared to men add up to lower retirement savings, less money in Social Security, and other disadvantages.

According to data from the American Association of University Women (AAUW), women’s average Social Security benefits are only about 80% of what men get. The AAUW’s data also shows that the average annual income for white men ages 65 and over is $44,200. Here’s how retirement-age women’s income compares:

White women (ages 65+): $23,100 (52.3% of white men’s retirement income)Black women (ages 65+): $21,900 (49.5% of white men’s retirement income)Latina women (age 65+): $14,800 (33.5% of white men’s retirement income)

The gender pay gap shows that women’s labor is not adequately rewarded — leaving them with lower incomes in retirement. Fixing the gender investing gap can help women build wealth for more secure golden years.

2. More families will live in poverty

Women are more likely than men to live in poverty. As of 2022, more than 1 in 9 women (15.5 million women) lived in poverty in the U.S. The problems of financial insecurity are also reflected in how many lower-income women handle their banking. According to FDIC data, 15.9% of single mothers are unbanked, leaving them vulnerable to high fees and predatory loans. When people don’t have enough money to feel like it’s worth having a bank account, it’s even harder to invest for the future.

Many women who make enough money to save for retirement and invest in stocks are not at severe risk of being in poverty. But lower-income women and their families can also benefit from an increased focus on closing the gender investing gap. When companies pay women better, offer family-friendly benefits like flexible work and paid family leave, and provide better opportunities for career advancement, lower-income women (and their children) will benefit, too.

One public policy that would make life better for lower-income families would be to expand the Child Tax Credit. We already know it works: The expanded Child Tax Credit in 2021 helped nearly eliminate child poverty by increasing cash payments to families.

A stronger social safety net for families could help more women get breathing room in their budgets each month — and start to have enough money to meaningfully save and invest for the future.

3. The financial industry will be too much of a “boys’ club”

Do you ever feel like the richest people in the world are all men? You’re not wrong: The top 15 wealthiest people in the Bloomberg Billionaires Index are all male. Sometimes it seems like capitalism is a men’s game.

The truth is more complicated. If you look beyond the uppermost reaches of the billionaires, 60% of U.S. women invest in stocks, according to a Fidelity study. The financial industry needs women to be investors, and women are good at investing! Women are actually better investors than men, on average: Women tend to earn average annual investment returns that are 0.4% to 1.0% higher than men!

There’s no clear answer for why women get better investment returns than men. But it could be because women are more willing to manage risks, understand potential downsides, and avoid getting into speculative investment fads that go up in the short run, but can plummet even faster.

There are many ways to be a successful investor, and most of them don’t involve being an aggressive, obnoxious dude on social media who eggs on other dudes to make risky, self-sabotaging decisions. Some of the best money moves are made silently, behind the scenes, by patient investors who are making well-informed choices for the long term. Does that sound like any woman you know? The financial world needs more investors like this.

4. The world will miss out on great ideas, investments, and innovations

This reason to end the gender investing gap is impossible to calculate, but could be the most important of all: When women don’t have wealth, when women can’t invest, when women can’t contribute to the allocation of capital in the global economy, all of us are made poorer by it.

The gender investing gap is causing all of us — men and women — to miss out on great ideas and untapped human potential. We are missing out on all the small businesses that didn’t get started, all the cool inventions and life-changing products that didn’t get built, all the wealth that didn’t get created and shared.

Bottom line

Buying stocks is not just about saving for retirement — it’s about investing in human collaboration, creativity, and ingenuity. When investment decisions are largely controlled by less than half of the population, we’re missing out on some of humanity’s best ideas. More women investing can make all of us richer.

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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

“}]] Read More 

Not only am I a copy editor and occasional writer here, but I’m also an avid reader. Check out three tips that I got from The Ascent and acted on. [[{“value”:”

I’ve been copy editing for The Ascent for almost five years, and in that time, I’ve worked on many thousands of articles. I certainly don’t remember the specifics of a lot of them (like the tidal wave of cryptocurrency articles in 2021), but I’ve learned tons while working here.

I don’t come from a finance background, so a lot of the information I’ve edited has been new to me, just as it is to many of our readers. It’s inevitable that I would pick up some tips from the articles I read, especially when the advice is so sound that it gets repeated over and over. Here are three pieces of advice in particular that I took to heart and ended up acting on.

1. Set up a budget

I started working for The Ascent about six months after I left my full-time job, moved to a new state, and went freelance. At the time, I felt really unsure about how to handle my new financial picture. It was nerve-racking having a fluctuating paycheck and a whole different set of expenses to calculate. I knew I was making money, but I didn’t have a good grasp on how much it would end up being over an entire year and how it stacked up to my spending.

One of the earliest pieces of advice I remember seeing repeated in articles by The Ascent’s writers was to set up a budget, and I jumped on it quickly. One night, I opened up a spreadsheet, logged into my bank account, and got to work categorizing my expenses over the prior six months, as well as my monthly income over that time. It was a little tedious to do, but by the end of it, I had a much better understanding of where my money was going.

I don’t think of budgeting as a constraint; rather, it shows me how I’m using my money and what areas I can afford to adjust. And now that my budget is set up, I only have to make tweaks here and there when my expenses change, so it takes almost no time to maintain. But it’s given me a lot of peace of mind to have such a clear picture of my finances.

2. Create an emergency fund

This is another tip you’ll find again and again all over The Ascent. An emergency fund is money set aside in savings that can be accessed whenever the need arises. Common advice is to have anywhere from three to six months’ worth of necessary expenses saved up. You’ll want to have enough so you can cover any unexpected expense that pops up, like a hospital bill or major appliance repair, or to cover your regular bills in the event that you can’t work for a period of time or lose your job.

I’ve always been a saver, but I never had a purpose for my savings. Once I read this advice on The Ascent, I opened a high-yield savings account and transferred over enough money to give me a nice emergency cushion. I’ve been lucky so far and haven’t had to tap into it, which means that the amount has only grown over the years, thanks to compound interest.

3. Max out your IRAs

Yes, I’ve always been inclined to save, but I’ve also always been a little bit allergic to making moves that require big decisions, paperwork, and speaking to people on the phone. It took me several years into my career to finally set up a 401(k) plan, and it took me many months when I switched jobs to roll over my retirement plan to my new company. It shouldn’t be a surprise, then, that I’d let my retirement accounts sit on the back burner again while I was getting my freelance feet under me.

Reading other writers’ advice on The Ascent about how important it is to fund your retirement accounts was the kick in the pants I needed. I set aside some time to figure out my options for individual retirement accounts (IRAs). After that, I made sure to set up automatic transfers into my traditional and Roth IRAs every month so that I was maxing out my contributions. (For reference, in 2024, total IRA contributions top out at $7,000, or $8,000 for those age 50 and over.)

Because I had already set up a budget (point 1!) and created an emergency fund (point 2!), I knew I was in good shape to max out my IRA contributions with the income I had. This means I’ve set golden-years me up with a better financial situation, since I’ve prioritized saving now.

Good advice can be easy to find

Each of these moves has benefited me a lot by steadying my financial picture. None of them are groundbreaking or super-secret tips, but maybe that’s what makes them so great. They’re really easy pieces of advice for anyone to follow, but they can have a huge impact.

Sure, it would be cool to work as a taste tester at a burrito joint or a lounge chair expert at a beach resort (don’t fact-check me on whether those jobs exist), but I think it’s pretty cool I’m able to get a paycheck and sound financial advice from the same place.

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 

CDs lock in your interest rate for the whole term, which could put more money in your pocket right now. Find out what you need to know. [[{“value”:”

The Federal Reserve held interest rates steady at its recent meeting on March 20, 2024, but many people expect this may not be the case for meetings later in the year. With inflation slowing down, it makes sense that the Fed might think about reducing interest rates in the next several months.

This is great news for loan borrowers, but it’s a tough break for savers, who have been enjoying interest rates hovering around 5%. Some people are probably thinking about moving their cash to a certificate of deposit (CD) before the expected rate drop, but this has drawbacks of its own. Here’s what you need to know to decide where to keep your cash.

Why move your money to a CD?

CDs are appealing right now because they offer high interest rates on your funds and they lock in your rate for the entire CD term. This could be anywhere from a few months to several years, depending on the CD you choose.

This makes it possible to earn more with a CD than you could with a savings account that has fluctuating interest rates over the same period. But there’s an obvious problem with this.

If you opt for a CD, you won’t have access to your cash until the CD term is up. Withdrawing your money early is technically possible, but you’ll likely pay an early withdrawal penalty for doing so. This is usually equal to several months of interest payments. And you have to withdraw all your cash at once; partial withdrawals aren’t an option.

To give themselves some added flexibility, many choose to employ a CD laddering system. This is where you divide your cash between several CDs of different lengths. For example, you might put $1,000 in a 1-year CD, another $1,000 in a 2-year CD, another $1,000 in a 3-year CD, and so on. Then, when the first CD term ends, you can either spend the cash or move it to another long-term CD, since those generally have the best interest rates.

But even this strategy isn’t ideal for all your cash. You want to keep your emergency fund accessible at all times because you never know when you’ll need that money. And if you know you have a planned expense coming up in the next few months, a CD probably isn’t the right fit for those funds either.

Where else can you put your cash?

A high-yield savings account is still a viable place to keep your cash, even if interest rates begin to fall. This might decrease the amount you earn in interest during the year, but you’ll still retain access to your funds at any time. Most banks let you make up to six penalty-free withdrawals per month, and some may allow for more than this.

Investing might be a better choice for the savings you don’t plan to use for the foreseeable future. You open yourself up to the risk of loss when investing, but you could also gain significantly more than you could with even the best CD rates.

It’s also fine to spread your money around between several sources. You might keep your emergency fund in a savings account, put some money in a CD, and invest the rest of it. Do what feels right to you. Just make sure you explore all your options before making a decision.

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 

Who doesn’t want convenient checkout and extra discounts all in one? See how you can get both on your next Sam’s Club trip. [[{“value”:”

Although I’m definitely a Costco fan, I’m actually more likely to shop at Sam’s Club. And one of the reasons why is the in-store experience. Specifically, I love the convenience of Shop & Go. After a new change, I also love its potential to help my budget.

If you haven’t used it yet (you really should), Scan & Go is a feature of the Sam’s Club app that lets me scan items as I shop, then checkout completely in the app. I haven’t had to wait in a checkout line at Sam’s Club in ages.

And it isn’t just time I’m saving — I can save money, too. The new Scan & Go Offers mean I earn extra savings on eligible items just by using Scan & Go when I shop in-store. While the current number of eligible items isn’t huge, the potential for savings is. Here’s what I mean.

Save an average of 17% on eligible items

If you look at the currently eligible items (offers used in this article end April 7, 2024), Scan & Go savings range from $1 up to $5 depending on the item.

Overall, Scan & Go savings offer an average of 17% off the full price. That’s a very respectable discount for simply using a more convenient checkout method.

The lowest discount was 10%, which is still pretty darn good considering that Sam’s Club’s regular prices are already lower than most other retailers. That makes the highest discounts — they go up to 26% — downright remarkable!

Up to $69.80 in total potential savings

If you prefer dollars and cents, the average discount is $2.81 (the average item’s regular price was $17.35). At the low end was a discount for $1 off, and the highest discount was for $5 off.

Unfortunately, the discounts aren’t limitless. Each product has its own limit on how many items you can buy with the discount. For instance, the Lysol deal can only be used once. However, the current Scan & Go offer on Energizer AAA batteries can be used up to five times.

If you maximize each offer on every item, you’d wind up with 29 products and you’ll have saved a total of $69.80. (You’ll also have a whole lot of batteries and cleaning supplies.)

Maximizing your return at Sam’s Club

In case you’re wondering, yes, your Scan & Go purchases still qualify for the extra Sam’s Cash you can earn on in-store shopping as a Plus member. You can also redeem it on purchases at the payment screen.

You can still earn your credit card rewards, too. Just add your favorite rewards card to your Sam’s Club app and select it as your payment when you check out.

If you’re already saving money at Sam’s Club and haven’t tried Scan & Go yet, it may be time to give it a try. Your wallet may thank 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.Brittney Myers has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

“}]] Read More 

Buying a house is expensive — but might be worth it. Learn why one writer is resisting the impulse to keep renting. [[{“value”:”

Common wisdom holds that you should strive to keep your predictable housing costs (be they rent or a mortgage and associated expenses) to less than 30% of your income. Unfortunately, this is impossible for many Americans — in 2022, more than half of us spent more than that, according to data collected by the Harvard Joint Center for Housing Studies.

I’m lucky these days in that my current rental situation is quite affordable for me. Plus, unlike many Americans, I haven’t experienced a rent increase since moving into my current place in 2021. As a result, I’ve been able to save a lot of money toward the purchase of a home. In my darker moments, I wonder why I should sink so much money into this when I can keep renting for cheap and avoid the significant costs of owning. That’s when I remind myself about the following differences between owning and renting.

Renting doesn’t let you build equity

I’m happy to have historically paid very little for a rental (as an adult, I’ve resided in lower cost-of-living cities). But despite sending rent money month after month, when I move out of a rental, I have nothing to show for it.

This is not inherently bad — renting isn’t throwing money away, it’s paying for a place to live and avoiding the big costs of maintenance and repairs along the way. But I’ve reached the point in my life where I’d rather pay money every month and build equity.

Home equity refers to the amount of your home that you own outright (as opposed to what your mortgage lender owns). Let’s say you take out a mortgage for $250,000, and over 10 years, the home appreciates in value to $300,000. You’ve paid $100,000 toward your principal balance and still owe $150,000. So you have $150,000 of equity in your house (the current value of $300,000 minus the remaining $150,000 mortgage).

Having equity means you can borrow against your home if you need or want to — say, in the form of a home equity loan or line of credit. And over time, you’ll own more and more of your home, which is an expensive asset. This is one of the reasons homeowners tend to be richer than renters.

Renting means not changing a living space

I’ve lived in a huge range of rental homes — from smallish apartments in complexes that were just a few years old to houses built more than a century ago. Regardless of my surroundings, as a renter, there was very little I could do to appreciably change the space — everything needed to be temporary or easily undone.

For example, I hate glass shower doors (hard to keep clean and often so poorly maintained that they no longer slide smoothly). And I have a hand-painted shower curtain that was one of my art projects from COVID-19 lockdown four years ago. Since it’s easy to take shower doors down temporarily and replace them with a curtain, I can do that in a rental. But removing a wall, upgrading kitchen cabinets, or replacing wood paneling with drywall? All a no-go for a rental home.

Renting isn’t always pet-friendly

I started thinking seriously about buying a home again after adopting my third cat in 2021. I wanted a third for a few years beforehand, but I lived in a series of rentals where I was limited to just two.

My current lease is less restrictive — but I know that if I keep renting, I’m likely to face issues finding a new rental home for the four of us in the future. But if I buy a house, I won’t have a landlord telling me I can’t expand my little family — and I can make changes to that house to make it better for my cats (such as a catio).

Renting often offers a less-stable living situation

After 35 moves, I’ve gotten really good at packing and unpacking my belongings, but these are skills I never wanted. One of the best perks of renting over buying is flexibility — it’s far easier and cheaper to break a lease than sell a home. But that flexibility goes both ways.

In most cases, I moved out of rentals because of changes in my own life, like a new job. But I’ve also moved because of unsafe living situations, as well as landlords deciding to sell a house out from under me. I hope that by buying, I can settle in and beat my old record for longest time gone without moving — just four years.

Ultimately, I am finally ready to buy — what about you?

I spent the last two years getting my finances in shape to make it possible for me to buy a house again. I’m not 100% comfortable with the increased monthly outlay of money I’m intending to take on (not to mention the huge upfront expenses of down payment and closing costs), but my distaste for renting has grown the last few years. I’m done living a nomadic life, and I no longer work in a field where that’s par for the course. So despite the extra costs, I’m house hunting.

Buying a home is a big deal for anyone, and since personal finance is, well, personal, it’s up to you to decide. There’s no shame in renting instead — you’ll save money and enjoy flexibility you won’t get if you buy a house. But consider your own wants and needs and crunch the numbers to make the right call 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.Citigroup is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

“}]] Read More