Money Management

What if you could buy stock every time you shop? See how automatic investing app Grifin can help you do just that. [[{“value”:”

One of the best ways to save for the future is to make investing automatic. There are several ways to automate your investing, such as contributing to a 401(k) with every paycheck or setting up regular automatic deposits to your IRA or brokerage account. But what if you could automatically invest not just every time you get paid, but every time you spend money?

There’s a personal finance app called Grifin that enables you to automatically invest when you shop. Grifin lets you choose to buy stocks from certain companies every time you buy products or services from those companies. This can help make buying stocks into an automatic, recurring activity that happens as part of your everyday financial life.

Let’s take a closer look at the Grifin automatic investing app and see how it stacks up as a way to help people learn about buying stocks and investing for the future.

How Grifin helps you buy stocks automatically

Grifin automatically invests in companies where you spend money. For example, if you make an online purchase from Amazon, Grifin will help you automatically buy $1 of Amazon stock. If you buy lunch at McDonald’s: $1 of McDonald’s stock. Jump in an Uber for a ride across town? You just got $1 of Uber stock with your name on it.

If you decide to use Grifin to buy stocks, you connect the app to your bank account (checking or savings) to deposit cash into your Grifin account. And you connect your debit card or credit card so Grifin can track your spending. Any time you make a purchase from one of the dozens of companies on Grifin’s list of available stocks, you’ll also make a stock purchase.

Grifin is not a brokerage account; it’s an investment advisor. But Grifin partners with a brokerage called Alpaca Securities to handle customers’ investment transactions. Alpaca Securities is a member of the Securities Investor Protection Corporation (SIPC), and your account is protected with SIPC insurance against loss up to $500,000 ($250,000 for cash).

Grifin: Pros and Cons

Investing in stocks always includes some risk, and there are some potential upsides and downsides to the Grifin app, depending on your financial goals. Let’s look at a few.

Pros

Low-cost investing: Grifin does not charge trading fees, commissions, or monthly account fees. Instead, customers pay Grifin an advisory fee equal to a portion of the interest earned on the cash in their Grifin accounts. And you don’t have to keep cash in your Grifin account; if you choose to use all your cash to buy stocks, you don’t have to pay Grifin the advisory fee.You can choose companies to invest in (or not invest in): Just because you shop at a certain store or buy from a certain brand doesn’t mean you want to own that stock. If you believe that a certain company is not a good investment or you don’t agree with the business practices of a company or industry, Grifin will allow you to exclude it from your automatic investing. You’re not “forced” to buy any stocks that you don’t want to; Grifin lets you customize your stock portfolio as you go.Dollar-cost averaging: Assuming you shop regularly at some of your favorite brands, you’re likely going to benefit from dollar-cost averaging — buying shares on a regular schedule, rather than trying to time the market.

Cons

Stock investments might not be right for your time horizon: Do you already have an emergency savings fund with three to six months of expenses in cash in the bank? If not, beware of putting too much spare cash into stocks. Stock prices can go down as well as up, even for well-established companies. If the stock market goes into a downturn and you need that money immediately, you might have to sell your stocks at a loss.Investment risk for less-savvy investors: Unless they’ve done research into various companies, beginning investors might not understand which companies’ stocks are the best to buy. Try to only buy shares of companies that you really believe in.You’re picking individual stocks: One risk of buying stocks in individual companies is that the stock prices might go down or might fail to keep up with the performance of the broader stock market indexes like the S&P 500. Most day traders lose money; unless you’re Warren Buffett or The Motley Fool Stock Advisor, you’re not likely to be good at choosing individual stocks that will make money in the long run.

Bottom line

Grifin is an intriguing way to help people learn about the stock market through automatic investing. It’s like a round-up app, but instead of a few pennies into savings, you can put $1 (or more) into stocks with every transaction. If you want to use some “fun money” to buy the stock of brands you love, then Grifin could be worth trying.

But be aware of the possible downsides. Don’t put your emergency savings into Grifin (or any stocks); you might need that money sooner than the stock market can go up. And watch out for the time-honored challenge of buying individual stocks: it’s very hard to beat the market. Many investors might be better off setting up automatic investments in diversified index funds via an IRA or other brokerage 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.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool has positions in and recommends Amazon and Uber Technologies. The Motley Fool has a disclosure policy.

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Filing your first tax return may feel like a weighty undertaking, but it doesn’t have to. Keep reading to learn how you can avoid making mistakes. [[{“value”:”

You know you’re an adult when you file your first tax return. Oh, and by the way, you’ll be doing it for the rest of your natural life. The good news is that millions of us file our returns right around the time you do, and we’ve picked up some pretty great tips along the way. Here are three of them.

1. Do not jump the gun

I cannot overemphasize this enough: Do not rush to get your tax return filed. Even if you expect a fat refund, take the time you need to gather all the documents required to file an accurate return. They may not be double-naught spies, but the IRS is really good at figuring out when a person is fibbing and will have no trouble auditing your return.

It’s not as though you’ll mean to do anything wrong. Let’s say you’re counting the days until a tax refund hits your checking account but still don’t have the W-2 or 1099 you need. You decide to estimate how much you earned just to move things along. You file your return and wait for the money to roll your way. What you may not be aware of is that the IRS receives copies of your income and compares those amounts to the return you file. If there’s a discrepancy, your return is flagged, and you’ll receive a letter explaining what’s going on.

The lesson here is that jumping the gun is more likely to slow down the entire process than to speed it up.

2. Know your filing status

Whether you’re using tax preparation software or hiring a professional tax preparer to complete your return, you’ll be asked about your tax status. It’s one simple question, and yet, it’s so important. There are five IRS filing statuses, and which one you use affects:

If you’re required to file a returnIf you should file a return to receive a refundYour standard deduction amountIf you can claim certain tax creditsThe amount of tax you need to pay

Here are the five filing statuses you’ll be asked to choose from:

Single: For taxpayers who are unmarried, divorced, or legally separated under state law.Married filing jointly: If you were married by Dec. 31, 2023, you can file a joint tax return with your spouse. When a partner dies, the remaining spouse can still file a joint return for the year they died.Married filing separately: It’s possible that you’ll owe less tax if you file separately. If that’s the case, you have the option of choosing this status.Head of household: You can file as head of household if you paid more than half the cost of keeping up a home for yourself and a qualifying person living in the home for half the year. Now, here’s where things get tricky. You’ll need to determine if the person or people living with you are considered “qualifying.” This IRS publication spells it out nicely.Qualifying widow(er) with dependent child: This status may apply if your spouse died during one of the two previous years and you have a dependent child.

It’s possible that more than one of these statuses applies to your situation. The aim is to figure out which one leaves you with the lowest tax bill.

3. Know it’s okay to ask questions

U.S. tax laws are complicated, and no one expects you to feel 100% confident the first time you file taxes. Just know that help is available when you need it. Here are several IRS resources:

You can find copies of forms, publications, and helpful hits any time of day by visiting the IRS website at www.irs.gov.You can get answers to federal tax questions 24 hours a day by calling 800-829-1040.If you need tax forms or instructions for current and prior years, they’re available by calling 800-829-3676.You can listen to recorded messages covering more than 100 tax topics by calling 800-829-4477.

Finally, just know there’s no reason to stress out each year at tax time. As long as you carefully provide accurate information, it should be a breeze.

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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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Investing your tax refund ensures you use the money wisely — and it could help you grow rich. Find out how investing this money could work for you. [[{“value”:”

As of Feb. 16, 2024, the IRS had issued 20,883,000 tax refunds totaling $66.980 billion. These refunds are for taxes overpaid in 2023. The average refund amount going to each taxpayer so far this year is $3,207.

RELATED: The Ascent’s Complete Guide to Taxes

That is a lot of money to get in a lump sum. The big question is, what should you do with it? And for many people, the best answer is to invest it. Here’s what happens if you put this money into a brokerage account where it can grow.

The benefit of investing your refund

Investing your tax refund ensures that you won’t waste the money and that the cash can go to work for you and help you grow richer over time.

Putting this money into an investment account can actually make a pretty noticeable impact on your future. The table below shows how much the average $3,207 refund could grow over time if you earn a 10% average annual return, which is the stock market’s average over the past 50 years.

It may seem hard to believe that you could end up over halfway to $100,000 just by taking this year’s return, investing it, and leaving it alone for three decades. But that’s exactly what can happen thanks to the power of compound growth. After your money is in the market and it begins earning returns, those returns can be reinvested and your funds grow exponentially.

Here’s what happens if you invest your tax refund every year

Investing this year’s refund alone could make a big impact on your net worth over time. But what if you invested your refund every year?

It’s hard to predict exactly how much your refund will be over many decades, as your income and tax policy could change. But let’s assume for the sake of simplicity that you got the exact same $3,207 average refund for the foreseeable future. The table below shows what investing that refund every year could do for you, assuming a 10% average annual return.

Investing just your annual refund could give you a net worth that puts you well on your way toward financial security.

Should you invest your tax refund?

As you can see, there are big financial benefits to putting your tax refund into an investment account. And for many people, it can be the right choice.

RELATED: Best Tax Software

However, you do want to make sure you’ve paid off high interest debt (like that on credit cards) first, because the return on investment you’ll get from saved interest on this kind of costly debt can be higher than returns you can earn by investing.

You’ll also want to be sure you have a fully funded emergency fund, because otherwise you could end up in debt or having to sell investments at a bad time if something goes wrong.

If you have expensive debt or no emergency fund, using your tax refund to fix these issues is probably a better bet. If that’s not your situation, though, funneling those funds into an investment account could just end up being the best decision you ever make.

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

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If you stress out thinking about being audited, you don’t have to worry. Look out for these red flags and chances are low the IRS will look your way. [[{“value”:”

Did you know that a computer helps determine which tax returns should be audited? After returns have been processed, they’re run through a computer that looks for red flags. Each return is assigned a score reflecting how likely it is to contain errors. The higher the score, the more likely it will be audited.

Most of what the computer finds are simple mistakes, like missing a Social Security number or signature. In fact, if you receive a letter from the IRS saying it found a mistake on your tax return, there’s a very good chance it involves an easy-to-resolve issue. But on occasion, a taxpayer will receive a letter telling them the IRS plans to take a deeper dive into their tax return. When that happens, it could be for one of these reasons.

1. You failed to report all your income

Let’s say you work several jobs and forgot to include the income from one of those gigs. You receive a letter from the IRS’s Automated Underreporter program telling you that it has compared your tax return with documents (like W-2s or 1099s) and found a discrepancy. The IRS sends along a proposed adjustment to your return, including the additional tax due and a penalty. You can either sign off on the proposed changes or dispute the findings.

The fix: Don’t forget that the IRS receives income information and compares it against your return. Take time to gather all the documents you’ll need before filing. Estimating your income can lead to an accuracy-related penalty of 20%. For example, if you’ve underpaid taxes by $1,000, the IRS can tack on another $200 as a penalty.

2. Your deductions are out of whack

Your return may be flagged for an audit if your deductions are extensive compared to your income. Say you earn $75,000 annually, but report $40,000 in charitable deductions. Claiming you donated more than half your gross salary for the year may put you on IRS radar.

The fix: If you actually donated $40,000, you should absolutely claim it. However, make sure you have the receipts to back up your claim. The same is true of any deduction.

3. It looks like you got a little creative with business deductions

One in 10 working Americans were self-employed in 2023. That comes out to over 16 million of us who can claim a business deduction on everything from our home office to paper clips and printer paper. If you live in a 1,200-square-foot apartment and claim your home office (used exclusively for business purposes) is 500 square feet, it will raise both eyebrows and red flags. If you’re just getting started and earned $25,000 last year, claiming $20,000 in deductions will also likely earn you an audit.

The fix: Remember that the IRS takes a closer look at business deductions. Claim any deduction you are eligible for, but keep the receipts — for everything.

4. Using round numbers

According to CNBC, consistently using round numbers makes the IRS think you’re estimating. By all means, if you’re making a claim for $3,000 and the actual cost was $3,000, go with it. However, if you’re swagging a guess that it was $3,000, you’re better off waiting until you have the documentation showing the precise amount.

The fix: Take your time and wait for precise amounts, even if you already have your tax preparation software in hand and want to get started. That way, if you are audited, you have nothing to worry about.

5. You’re a millionaire

Having millions of dollars in your bank account sounds pretty good, doesn’t it? However, the more money you earn, the higher the likelihood of being audited. In 2023, about 1% of taxpayers earning less than $200,000 were audited. For those earning $1 million or more, the percentage was 12.5%. The more complex a tax return is, the more likely it will trigger an audit.

The fix: Make sure you have a good team around you, from bookkeeper to CPA.

Whether you’re hoping for a refund to plump your emergency savings account or just want to put taxes to bed for the year without owing much money, the easiest way to prevent an audit is to understand which issues are most likely to raise red flags and to avoid those issues.

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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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Have a basic Costco membership? Read on to see why you may want to spring for an Executive membership sooner rather than later. [[{“value”:”

Joining Costco can be a smart personal finance decision. But within the realm of signing up for a membership, you have choices.

You can stick to a basic Costco membership for $60 per year. Or, you can upgrade to an Executive membership for $120 a year. In exchange for that higher cost, an Executive membership gives you 2% cash back on your Costco purchases, including purchases made on Costco.com.

You may have decided to limit yourself to a basic Costco membership to save money on your annual fee. But here are a few reasons to consider an upgrade to an Executive membership sooner rather than later.

1. You’re spending more at Costco than you used to

Perhaps when you first joined Costco, you’d shop there once a month to stock up on a limited assortment of household essentials. But if you’re now visiting Costco every week, and you’re buying more items there than you used to, then it could be a good idea to upgrade your membership pronto.

It only takes $3,001 in annual Costco spending for an Executive membership to make financial sense. That’s because $3,000 is your break-even point where you recoup $60 in cash back — the exact amount of your upgrade.

If you think there’s a chance you’ll spend above $3,000 at Costco this year all in, then go for the costlier membership. You could always downgrade after the fact if your spending starts to decline.

2. You’re planning to book a vacation through Costco

We just learned that $3,000 in annual Costco spending is your break-even point when considering an Executive membership upgrade. But if you’re planning to book a vacation this year through Costco Travel, then you might easily cross the $3,000 threshold with that purchase alone. So it makes sense to buy the Executive membership and get cash back for it.

Even if you book a vacation through Costco Travel costing less than $3,000, chances are, if you spend even half of that, you’ll get to upward of $3,000 in total spending this year if you also shop at the store somewhat regularly. So either way, an Executive membership could pay off.

3. You want to lock in today’s rate in case membership costs rise

The last time Costco raised the cost of its membership fees was 2017. As such, Costco is overdue for an increase. And while the company hasn’t made an official announcement about fee hikes, during Costco’s last earnings call, CFO Richard Galanti said that an increase in membership fees is “a question of when, not if.”

Given that it’s been more than six years since Costco raised membership fees, there’s a reasonably good chance a fee hike will happen in 2024. You may want to lock in your Executive membership at today’s rate while it’s still available.

Paying for an Executive membership at Costco doesn’t make sense for every person who shops there. But if these factors apply to you, then you may want to think about making that upgrade soon.

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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 Costco Wholesale and Gala. The Motley Fool has a disclosure policy.

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Choosing the right savings account doesn’t have to be overwhelming. Keep reading for a list of features to find. [[{“value”:”

A savings account is a bank account designed to help you sock away cash in a safe place. Money saved in a savings account can earn a decent rate of interest, without subjecting you to investment risks. Plus, many of today’s best savings accounts have some eye-popping APYs, a winning combination of high interest and safety that makes these a good place to store your emergency fund.

But the moment you decide you want a savings account is just one moment from realizing how many savings accounts are really out there. Let me do the math for you: It’s a lot, a lot more than you might think. And though there’s no hard-cut formula that will — voila — put the right account in front of you, there are a few tips that can help you choose. Like these five.

1. Annual percentage yield (APY)

Annual percentage yield (APY) is what the bank pays you for storing money in your savings account. In the past, APY was hardly a metric worth getting excited over. But these days, some of the top savings accounts have APYs above 5%. If your goal is to earn interest, be sure to check out high-yield savings accounts, as these will likely have the highest APYs.

2. Monthly maintenance fees

Fees — ugh.

The point of a savings account is to save money, not give your bank a portion of your hard-earned cash. Of course, sometimes the fee is justified, such as when your savings account also comes with in-person service with an expert money manager. But if you don’t want the bells and whistles, be sure you’re looking at free savings accounts.

Some savings accounts will have a fee but then also give you ways to waive the fee. For example, the account might become free if you set up direct deposit, or maintain a certain daily minimum balance, or open other accounts at a bank, like a checking account. Check the terms and conditions for these waiver requirements, as sometimes they can involve more than one.

3. Withdrawal limits

Some savings accounts have restrictions on how many times you can withdraw money per month. This was more common before 2020, when a federal banking rule called Regulation D limited certain kinds of withdrawals — like online transfers — to only six per month. Since then, the federal government has temporarily relaxed the rule, but many banks still enforce it and restrict certain monthly withdrawals to six.

4. ATM access

Some savings accounts will give you ATM access by way of an ATM or debit card. This can make it convenient when you need cash fast, as you just need to find a no-fee ATM within your bank’s network. This feature is commonly found with brick-and-mortar banks, though some online banks may offer you ATM access, too.

5. Mobile bank features

Finally, if you manage to narrow your search to a few savings accounts, and none of the above tips help you eliminate one or several, compare each account’s mobile banking features. The best savings accounts will have robust features, like the ability to track all your savings and spending (including from brokerages and credit cards) in one place. Take a look at the app’s reviews, too, to see what other users think.

You might want to look at other factors, like FDIC insurance, customer service hours, and how many free ATMs are in a given bank’s network. Choosing the right savings account can be tough, but when you start to break each account down by these features, the right decision starts to become clear.

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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