Money Management

CDs and stocks can be smart places to put your money. Read on to see how to narrow down your choice. [[{“value”:”

These days, CD rates are looking pretty attractive on the heels of the Federal Reserve’s 2022 and 2023 interest rate hikes. But the stock market has also had a strong start to 2024. In fact, the S&P 500 index, which is generally considered a measure of the stock market’s performance as a whole, is up over 8% since the start of the year.

If you have some money to spare, you may be wondering whether it pays to use it to open a CD or invest it. And the answer is, it depends on your personal timeline.

The upside of CDs

There are several benefits to opening a CD. First, the interest rate you lock in on your money is guaranteed throughout your CD’s term. With a savings account, your interest rate can fall (or rise) with market conditions.

What’s more, as long as you bank at an FDIC-insured institution and your CD deposit does not exceed $250,000 (or $500,000 for a joint account), your principal balance is protected. So even if your bank goes under, you’re guaranteed not to lose a dime.

The same can’t be said for the stock market. Stock values can rise and fall from one day to another. So if you put $5,000 into a 12-month CD, you’re guaranteed to get your $5,000 back after a year plus 12 months of accrued interest. The only way that won’t happen is if you cash out your CD early and get hit with a penalty. With stocks, a $5,000 investment might only be worth $4,000 a year later if the market takes a dive.

The upside of stocks

While stocks carry a lot more risk than CDs, the benefit is that the return they generate could be a lot higher. Many CDs today are paying in the 4% to 5% range, depending on length. But the stock market’s average annual return over the past 50 years has been 10%. So all told, with stocks, you have the potential to make a lot more money.

What’s best for you?

If you’re not sure whether to choose stocks over CDs in 2024, or vice versa, the main question to ask yourself is “What’s my timeline?” If you’re saving for a near-term goal, a CD is probably a better bet. Stock values can fluctuate a lot within a one- or two-year period.

As a general rule, it’s best to keep money out of the stock market if you expect to need it within five years. But if you’re saving for a longer-term goal, then choosing stocks over CDs could be a solid bet.

Let’s say you have $5,000 to work with, and you know you won’t need it for 10 years. If you snag a 10% return on it by buying stocks, in a decade, you’ll have turned it into almost $13,000. But if you stick to a series of CDs paying 4% (and that rate is unlikely, because interest rate cuts will likely drive CD rates down in the coming years, but we’ll go with it for now), you’ll end up with just $7,400 in 10 years.

Generally, when you’re putting money away for a short-term goal, a savings account or CD is your best bet. But when you’re thinking long-term, stocks have the potential to grow your money a lot more. So keep that guidance in mind as you decide what to do with your money in 2024.

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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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Maxing out your 401(k) can be a good thing, but there are also drawbacks to seriously consider. Read on to learn whether it’s the right fit for you. [[{“value”:”

If you want to optimize your retirement, maxing out your 401(k) may be a goal you set every year. And it’s an admirable one: It ensures that you’re putting away a solid chunk of your income into a retirement savings account where it can grow over time. But is it always a good idea?

Here’s what you should know.

It minimizes your taxable income now

One of the key benefits to maxing out your 401(k) is that it means you’ll be reducing your taxable income by putting it into your retirement brokerage account, thus reducing your tax liability. Of course, as with any retirement account, that’s because there is a trade-off: You’ll have to pay taxes on that amount when you withdraw it in retirement. So, assuming you earn more in retirement, that would be a higher percentage of your money going to taxes — and vice versa.

There can be consequences for taking out that money early

Now let’s look at the flipside of the maxing-out-your-401(k) argument: What happens if you run into trouble and need that money you already stashed away in your 401(k)? These accounts were designed to hold your money for decades and support you after your working life has ended, so there are consequences for taking early withdrawals.

For a 401(k), that means withdrawals taken before age 59 1/2 would incur a 10% tax, on top of regular income taxes. A $10,000 early withdrawal, for example, could cost you $1,000 before income taxes.

Four tips for successfully navigating the retirement savings question

Saving for retirement is important, but so is ensuring that you’re keeping up with your various expenses as a working person. To find that balance, make the following moves.

1. Figure out your ideal monthly budget

If you don’t have a working budget, now is the perfect time to make one. And remember that these are meant to be flexible, changing as you need them. So it’s best to regularly revisit your various spending habits to make sure they’re still serving you. But as a start, creating a budget will help you understand how much you can safely stash in a retirement account each month.

2. Make sure you’re accounting for emergency savings

It may be tempting to skip on the emergency fund contributions, especially if you’re new to the working world or you’re on a tight budget. But it’s the best defense against having to take money out of your retirement accounts if you get an expensive unplanned bill. Aim to save three to six months’ worth of necessary expenses, like rent, utilities, and food.

3. Set aside some of your retirement savings in a high-yield savings account

This may sound counterintuitive if you’re looking for the maximum contribution, but for those who may be worried about the consequences of pulling money out of a retirement account in a pinch, a savings account can be a useful option. This way, that money could sit in an accessible account during the year, and then at the end, you could decide to add it to an IRA and still get the tax benefits.

4. Talk to a financial advisor

If you aren’t sure where to start for handling the question of how much to save for retirement, a financial professional can help guide you. They might also be a good resource for creating a budget that also helps you pad your emergency fund.

Maxing out your 401(k) can absolutely be a solid way to invest your money. But for those who aren’t on the most solid financial ground yet, or who simply have many other goals on their plate, there may be other methods that can still lead to a secure retirement.

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Two major credit card issuers just reached a settlement that has the potential to affect consumers. Read on to learn more. [[{“value”:”

If you’ve dined at a restaurant lately, you may have noticed that it cost you more to pay by credit card than in cash. That’s because credit card companies charge merchants a fee for the convenience of accepting payments by credit card. And some merchants have adopted the practice of passing those fees onto consumers.

But even when you don’t pay a credit card processing fee, the retailers you buy things from are. And that means they may be charging you more for the products you’re buying to account for those fees.

However, Visa and Mastercard just agreed to a $30 billion settlement that has the potential to lower merchant fees. And if it’s approved, it could impact consumers.

A compromise that’s been decades in the making

Visa and Mastercard have been engaged in a decades-long antitrust case that accuses them of setting merchant fees without wiggle room. The recently agreed-upon settlement is designed to result in lower swipe fees for merchants when consumers use their credit cards. Specifically, those fees should shrink by $30 billion over a five-year period.

However, there are some caveats to call out. First, the settlement only applies to U.S.-based merchants. Secondly, the settlement has not been approved in court. And as such, it isn’t official. Even if it gets approved, there’s the potential for that ruling to be appealed.

But if the Visa and Mastercard settlement does move forward, consumers could benefit. Swipe fees commonly cost merchants 2% of a given transaction, but they can be as high as 4% depending on the card, says the National Retail Federation. The aforementioned settlement would lower those fees by least 0.04% for a minimum of three years. It would also require Visa and Mastercard to maintain the fees that were in place as of Dec. 31, 2023 for five years.

Will consumers benefit?

If the Visa and Mastercard settlement moves forward, consumers have the potential to benefit — but that’s not a given. Sure, retailers could lower their prices in conjunction with seeing their swipe fees go down. But there’s no guarantee that they will.

Similarly, retailers could stop passing those credit card processing fees onto consumers once they’re lower. But they won’t be compelled to. So while consumers have the potential to benefit from the aforementioned settlement, it’s too soon to celebrate anything just yet.

Furthermore, there’s concern that the above settlement could result in merchants imposing higher surcharges on certain rewards cards. The settlement could also result in merchants offering discounts for specific credit cards. This could be a mixed bag, in that this would benefit consumers with those preferred cards, but hurt those without them.

All told, it’s too soon to know whether the above settlement will move forward and how it will impact consumers. There’s the potential for some positive changes, but a lot of that may boil down to the steps retailers opt to take should they see their processing fees reduced.

Stay alert to credit card fees

Meanwhile, as a consumer, it pays to be vigilant about credit card fees. If you have a choice between a merchant that charges them and one that doesn’t, you may want to favor the latter. Also, if you’re going to pay a processing fee, make sure the rewards on your credit card can compensate.

Let’s say you dine at a restaurant and face a 3% surcharge for paying with a credit card. If your card gives you 3% cash back, you’ve basically broken even. If you get 4% back on restaurant purchases, you’re ahead. But if your card only offers 2% back, that’s a situation where it could pay to hit the ATM and hand over a pile of cash. In fact, it’s a good idea to carry cash with you at all times in case you end up having to make a last-minute purchase that comes with a fee for using a credit card.

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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.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Mastercard and Visa. The Motley Fool recommends the following options: long January 2025 $370 calls on Mastercard and short January 2025 $380 calls on Mastercard. The Motley Fool has a disclosure policy.

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Sam’s Club is known for low prices, but the sales can make them even better. Check out these spring deals that are a great example. [[{“value”:”

It’s not hard to find a good deal at Sam’s Club, no matter when you shop. Member’s Mark items alone could pay for your membership in savings. However, there are also a ton of great sales every month that offer even more options for deals. Here are just a few of the stand-out items on sale right now as we head into spring.

1. $90 off: KitchenAid 5.5 Quart Bowl-Lift Stand Mixer

Sure, we’re a long way from the next holiday baking season, but that’s no reason to put off that mixer upgrade you so desperately need. Not only do we have lots of spring and summer parties to prepare for — those dips won’t mix themselves! — but homemade breads and cakes know no season.

This killer deal from Sam’s Club includes the KitchenAid 5.5 Quart Bowl-Lift Stand Mixer, which sports a 500-watt motor and 11 distinct speeds (including a special half speed for folding delicate ingredients!). The bundle also offers the standard tools, as well as an extra 3-quart bowl and mini whip.

2. $80 off: Worx Cordless Chainsaw Combo Kit

It’s amazing how fast your trees and bushes can go from barren and lifeless to wild and overgrown. Not only is it untidy, but branches and debris that fall during spring storms can cause damage to your home, vehicle, or family.

You can keep everything trimmed and tidy without busting your budget with this cordless combo kit from Worx. You’ll get a 22-inch hedge trimmer, a 5-inch pruning saw, and a 10-inch chainsaw, giving you the right tool for nearly any trimming job. The bundle also includes two 20V batteries and a charging station.

3. $50 off: Shark NeverChange Air Purifier MAX

Spring flowers may be beautiful, but not everyone loves when spring is in the air — specifically, when spring pollen is in the air. While you can’t do much while you’re outside, anyone with allergies can benefit from adding an in-home air purifier.

This Shark NeverChange Air Purifier offers HEPA filtration that can purify up to 1,400 square feet per hour. Even better, it never needs to be replaced! This model also has a handy remote control and extra odor-neutralizing cartridges.

4. $35 off: Philips Sonicare 6100 or Oral-B iO Series 5

After a holiday season that includes everything from Halloween candy to Easter baskets full of chocolate, we’re probably all in need of an extra brushing. If your family is ready for some toothbrush upgrades, now’s a good time to check out Sam’s Club.

You can pick up either a two-pack of Philips Sonicare 6100 toothbrushes or a two-pack of Oral-B iO Series 5 toothbrushes at a steep discount. Bundles each include two handles, two chargers, and travel cases.

5. $4 off: Filtrete Allergen Reduction Filter

Alright, so this isn’t as impressive a discount as some of the other picks. I stand by it anyway. Changing your HVAC filter is super, duper important for the health of not just your furnace and air conditioner but also that of your family.

According to the EPA, you should change your filter at least every three months (but check it monthly). These Filtrete four-packs from Sam’s Club will get you through about a year of filter changes.

Bonus deal: Discounted gift cards

Before you hit the checkout (or, even better, make use of Scan & Go), be sure to swing by the gift card racks. No matter what time of year it is, you can find some really awesome discounted gift cards at Sam’s Club. Many of these deals can also be found online at samsclub.com.

A lot of the online deals will be for e-gift cards, though some physical cards are available as well. Deals vary by brand, but expect to pay 5% to 25% less than face value. (If you’re also a Costco member, look for similar deals in your local warehouse or online at costco.com.)

Whether you’re ready or not, spring is almost here, so it’s best to be prepared. These deals from Sam’s Club can help you get ready for the season and keep more money in your bank account.

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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.Brittney Myers has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool recommends Flow. The Motley Fool has a disclosure policy.

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Rather than giving newlyweds a gift that will sit on the shelf, this Costco gift could keep on giving. Find out what it is. [[{“value”:”

When you have friends or loved ones getting married, you’ll likely want to find the perfect gift. If they have a registry, you can always buy something off of that — but not everyone does, or the items on it may be picked over if you’re a procrastinator.

The good news is, there’s one great gift many newly married couples might love. It’s unexpected, it’s easy to buy, it’s from Costco, and it just keeps on giving. Here’s what it is.

A gifted Costco membership could be the perfect thing for a new couple

If you’re looking for an out-of-the-box gift for a couple getting married, giving them a Costco membership could be just the ticket.

There are some common jokes out there that joining a warehouse club like Costco is a sign of adulthood, or that married couples love spending their weekends at Costco and have made trying the club’s samples into a date night activity.

But, there’s a reason these jokes are funny — there’s a kernel of truth to them. Many adults shop at Costco because the store offers great deals and buying from there can be a fiscally responsible, grown-up choice. And many married couples do love going to Costco because there are great deals to be had on so many things that help you set up house.

You can provide the gift of Costco deals to the newlyweds in your life by gifting them a membership. The basic Gold Star membership costs $60 for one year so this gift won’t break the bank, and it can be purchased online at Costco.com.

If you want the couple to enjoy an upgraded Executive membership, you also have the option to spring for double the cost at $120 a year. But an Executive membership comes with added perks including 2% cash back.

Is this gift right for the newlyweds in your life?

The great thing about gifting someone a Costco membership is that the gift keeps on giving. Your friends who are getting married can use it for a year, keeping their credit card bills down by saving on gas and groceries every time they go shopping.

They can use it to buy things they may need for their new house, like appliances or furniture, and take advantage of Costco’s great prices and unparalleled return policy. They can even use it to pay for trips, as Costco Travel provides great savings on many vacation packages.

If your friends already have a Costco membership, this gift can still be a good one because they can use it to upgrade or renew their current club status.

You will, however, want to be sure that the people you’re buying it for have a Costco conveniently located to them, as buying online comes with an added surcharge that makes the deals less generous. And, if they don’t tend to be people who will buy in bulk, they don’t need many or any household items or appliances, and they won’t take advantage of travel deals, then a Costco membership may not be a great gift.

Most people, though, can find at least some saving opportunities at Costco as long as they have a club close to them, so think seriously about whether this unique gift could be the perfect thing for your newlywed friends or family members.

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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.Christy Bieber 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.

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When it comes to remodeling, I’m aiming to buy affordable light fixtures and a less expensive floor to save money. Will these techniques work for you? [[{“value”:”

I’m currently in the middle of remodeling an entire house that I basically tore down to the studs. During this project, I’ve been very careful about where to splurge vs. spend. Although I have a mortgage on my house, I’m financing the remodel myself and I don’t want to go over budget.

RELATED: The Ascent’s Complete Guide to Mortgages

If you’re remodeling as well, it may be helpful to see where I’ve decided to save so you can decide if doing the same might help you keep more money in your own bank account.

1. Flooring

When I built my house many years ago, I had site-finished hardwood floors installed. This was not inexpensive, as it meant real hardwood floors were installed in my house then sanded, stained, and sealed by hand.

While my floors were beautiful, I have since realized that this was unnecessary — and maybe not the best idea with kids and dogs, as there are now more than a few scratches in the floors. Rather than doing the same in my new remodel, I opted for a much cheaper engineered hardwood flooring (that also made a lot more sense in my home’s climate, where humidity makes real hardwood difficult).

The reality is, flooring is a big-ticket purchase since you need it for every room of your house. There are plenty of great-looking options out there including luxury vinyl flooring, engineered hardwood, and ceramic and porcelain tile that don’t cost a fortune and can look great in your home.

2. Light fixtures

Light fixtures are something you’re likely to need a lot of. And you can splurge big time, getting gorgeous chandeliers that cost thousands of dollars. But there are also plenty of almost-as-gorgeous light fixtures that cost hundreds.

Since there are so many options at just about every price point, it’s silly to buy the very expensive lights when a cheaper substitute will do. You aren’t going to be touching these or getting super up close to them since they hang from the ceiling, so they can be a good place to save.

3. Faucets

If you haven’t shopped for a faucet lately, you’ll be shocked to discover that there are many, many options that cost thousands of dollars. Some of these faucets look like works of art. But, don’t lose sight of the fact that their ultimate purpose is to provide water — and that you’re going to be grabbing them with grubby hands a lot of the time.

Rather than spending a fortune, I’m opting for high-quality, simple faucets that are priced in the hundreds. It’s very unlikely anyone will ever really notice the difference, except of course when cleaning them, since the simpler, cheaper ones are less likely to have tons of crevices that get filthy.

If you’re remodeling a home, you may also want to think about saving on these items as well. Or, if faucets or floors happen to be really important to you, think about other areas where you may be able to cut some corners. You can’t splurge on everything, so it’s helpful to come up with a list of priorities so you can allocate more funds to them.

It’s easy to start to think every single decision is going to make or break the look of your home — which is why I spent about 12 hours researching different hinge styles when I first built a house. The reality, though, is that most of these decisions are not going to matter once the whole project is done. In fact, I don’t even remember what color my hinges are anymore! So, decide consciously where to splurge versus save and then stick to it rather than busting your budget to get the perfect option in every situation.

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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.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Christy Bieber has no position in any of the stocks mentioned. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

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