Money Management

There’s a hidden risk of keeping money in savings. Read on to see what it is. [[{“value”:”

You’ll often hear that there’s no such thing as a risk-free investment. And that’s largely true. You could buy a stable asset like a bond, only to have the issuer default on its obligation to pay you interest and return the principal you invested.

On the other hand, putting money into a savings account is generally considered to be a risk-free means of earning a profit — in this case, interest. That’s because with a savings account, your principal deposit is guaranteed as long as it doesn’t exceed $250,000 (or $500,000 if you have a joint account) and you’re banking at an institution that’s FDIC-insured.

But believe it or not, savings accounts come with one hidden risk. And the sooner you know about it, the sooner you can take steps to make sure it doesn’t hurt you financially.

When you short yourself on gains

The interest rates savings accounts are paying today are not the norm. And they’re also not nearly as high as the stock market’s average over the past 50 years, which is a 10% average annual return.

If you put a pile of money into a savings account at an FDIC-insured bank, will you risk losing that principal? Probably not. But you’re taking on another risk — not generating a high enough return to meet your long-term goals.

Let’s say you’re putting money aside for retirement and by age 30, you have $20,000. You could keep that money in a savings account over the following 35 years. By age 65, you’ll have a balance of about $79,000 if your account gives you an average annual return of 4%, which is unlikely (banks have historically paid a much lower rate of interest), but we’ll go with it since that’s what many accounts are paying today.

On the other hand, let’s say you invest that $20,000 at an average annual 10% return over the next 35 years. In that case, you’ll be looking at a total of $562,000. That’s roughly seven times more income you’d have at your disposal heading into retirement.

Don’t just think short-term

When you’re setting money aside for a short-term goal, a savings account is generally a better bet than an investment account. The stock market has the potential to swing wildly. And you may need time to ride out a downturn. So if you’re saving for a milestone or goal that’s five years away or less, keeping your money in the bank is a good bet.

But if you’re working toward a long-term goal, whether it’s retirement or something else, then you should know that limiting yourself to a savings account might leave you short of where you want to be. So while it’s true that your principal deposit may be nice and protected if you keep your money in a savings account, that doesn’t mean it’s a good idea over the long term.

Instead, figure out how much cash you need for emergency fund purposes, and keep that sum in the bank. You can even pad that figure a bit for an added cushion. But beyond that, consider investing your money rather than sticking to good old cash. Though you’ll be taking on some risk, the upside could potentially be huge.

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Planning some Costco trips this month? Check out these bargains you might encounter. [[{“value”:”

Costco is known for its generally low prices. But the nice thing about the warehouse club giant is that it offers rotating deals across a range of categories. Here are some of the best bargains you can snag this month.

1. $100 off a 13.6-inch MacBook Air

If you’ve been thinking of upgrading your laptop, and you’ve had your eye on a MacBook Air, now’s a good time to take that leap. Costco is selling a MacBook Air for $100 off its usual price.

The beauty of this machine is that it’s lightweight and easily portable. It also features 8GB of memory, up to 18 hours of battery life, and a 13.6-inch Liquid Retina.

Plus, if you buy a MacBook Air (or any laptop) at Costco, you’ll get not only free tech support, but a second-year warranty included for free. You can also return your laptop within 90 days should it not end up meeting your needs.

2. $110 off the Dyson Outsize Extra Cordless Stick Vacuum

Dyson has long been a trusted name in the vacuum-cleaning space. And now, you can snag a cordless model for $110 off the usual price — that is, if you’re a Costco member.

See, you don’t need to be a Costco member to shop on Costco.com. But some items on the site are members-only, and this is one of them. However, since the savings are substantial, it wouldn’t be a poor choice to sign up for a basic Costco membership for the express purpose of snagging this deal. You’ll pay $60 for the membership, and if that allows you to save $110, you’ll come out ahead financially.

3. $5.50 off a 12-roll count of Bounty Advanced Paper Towels

What Dyson is in the world of vacuums, Bounty is in the world of paper towels. Bounty paper towels are super absorbent and make clean-up a cinch. Now, you can snag $5.50 off of this household staple.

If you have extra storage at home and go through paper towels pretty quickly, you may want to bring home 24 rolls instead of just 12. It’s not like they’ll go bad on you.

4. $18 off TurboTax Premier 2023 Federal + E-file & State

Like it or not, now’s the time to get working on your 2023 taxes. If your tax situation is fairly straightforward — you don’t own a business, you aren’t self-employed, and you don’t intend to itemize — then filing on your own with the help of software may be more than feasible. And now, Costco is selling TurboTax’s 2023 filing software for $18 off its usual price.

The software includes five federal e-files plus a state download. The program also comes with step-by-step guidance so you can account for your investment income and other matters you have to report. There’s also a $10 credit separate from Costco’s discount you can use toward an in-product add-on you might need.

5. $200 off the ProForm Pro 9000 Smart Treadmill

If you’re still intent on keeping your New Year’s resolution to get in shape in 2024, you may need certain tools to help you along. This smart treadmill features an interactive touchscreen display that effectively gives you access to a personal coach.

Another nice feature? The touchscreen displays your workout stats so you can see how well you’re progressing.

Like the above-mentioned Dyson, though, this product is a members-only item. You may want to consider joining Costco if this is a deal you want to capitalize on. And remember, you’re not making a lifelong commitment. If you wind up unhappy with your membership after making your purchase, you can cancel it and get a refund.

These are just some of the sales Costco is running right now. Visit the store or browse online this month for even more fabulous deals.

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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.Maurie Backman 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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You might be surprised at how often cruise lines give away trips to a certain type of traveler. Read on to find out how I landed a free cruise this year. [[{“value”:”

My wife and I are taking our two children on a six-night Caribbean cruise in a few weeks, and the best part is that it was free. There’s a lot to unpack here, but the short explanation is that the last time I took a cruise with Carnival Cruise Lines, I spent some time playing in the casino, and the cruise line sent me an offer for a free cruise in order to entice me back.

Now, I don’t consider myself to be a particularly heavy gambler. But I’ll spend an hour or so playing the slot machines a few times during a cruise, and within a few weeks (or sometimes instantly), offers for casino comps start rolling in.

As you might expect, the offers you get depend on how much you play. Unless you’re a high roller, you shouldn’t anticipate getting a free suite, for example. However, there’s typically an option to pay the difference in price if you want a better room than your free offer includes. The offers also are typically better if you choose an off-peak sailing — we’re going in the middle of February, which is a relatively slow time. And, sometimes your offers come with other perks, such as a few hundred dollars in free play or free drinks. (Tip: You’ll get the best cruise deals at times of year when kids are in school.)

It isn’t totally free

In full disclosure, free cruise offers aren’t completely free. You still must pay port taxes and fees, and with most cruise lines, it’s standard to pay gratuities (either prepaid or while on board). For a six-night cruise, this typically will cost about $400-500, although it can vary significantly depending on your particular cruise itinerary, the type of room you book, and other factors.

You’ll also typically have to pay for additional guests in your room beyond two people. I’m taking my wife and two kids on the cruise we’re doing, and we had to pay a modest fare for each of the kids, plus port fees, taxes, and gratuities for each of them. Including taxes, gratuities, and the cost of taking our children, the entire bill for our six-night cruise is about $1,500. If we were to pay regular price, a trip like this would likely cost about $4,000 for four people.

I should also mention that you’re likely to spend at least some money onboard. There are plenty of free dining options, but there are specialty restaurants and bars, as well as shops, spas, photographers, shore excursions, and more. To be sure, you don’t have to buy any of this, but I’ve never been on a cruise where I didn’t spend at least a few hundred dollars on perks that were not included in my cruise fare. (In fact, my wife and I have an agreement where I’m only allowed to gamble with the same amount that I’d be comfortable with her spending on massages, shopping, etc. throughout the trip. It helps manage our spending!)

Don’t you have to lose a lot of money to get a free cruise?

Not necessarily. For one thing, getting offered a free cruise, dinner, or other perk doesn’t have anything to do with how much you lose. It has to do with how much you play.

Each cruise line uses a unique system of tracking play, and the comp algorithms are a closely guarded secret, but comps are based on your expected loss based on your level of play. In fact, in my experience you’re more likely to get freebies on board (such as a free bottle of wine) if you win, as the casino tries to entice you to keep playing.

Finally, you might be surprised at what you’re offered. The most I’ve ever lost on a cruise in the casino was far less than what the cruise would have cost had I paid full retail price. My wife will typically play in the casino with me for about an hour or so, one night of the trip, and she will get some offers for free cruises in interior cabins even though she’ll never spend more than $200 or so.

The bottom line

To be perfectly clear, you shouldn’t gamble with more money than you’re comfortable with just to get a free cruise. It’s still important to make wise personal finance decisions. Set a budget before you leave the house, bring cash and leave your credit/debit cards in your room safe, and don’t charge gambling to your room. If you lose, it’s an entertainment expense, and if you win, consider it a bonus. And I’m not encouraging you to gamble if you don’t enjoy it or aren’t comfortable doing so.

However, the bottom line is that cruise lines tend to be rather generous when it comes to freebies, especially when you compare it to what you’ll get for a similar level of play from a Las Vegas or other land-based casino. I’m taking my family on a six-night cruise in a balcony room with drinks included this month, and the best I’m typically offered from Las Vegas casinos is two or three free nights in a standard hotel room with maybe $50 in food credits, so it’s really not even close.

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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.Matthew Frankel, CFP® has no position in any of the stocks mentioned. The Motley Fool recommends Carnival Corp. The Motley Fool has a disclosure policy.

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Spring break travel costs add up quickly. Here’s the best time to book flights so you pay as little as possible. [[{“value”:”

Spring break is a little over a month away for some, and you can expect large crowds at airports if you plan to travel throughout March or April. High demand brings higher airfare prices, and for some, the personal finance hit is enough to keep them home this year.

But savvy shoppers might be able to squeeze a trip into their budget by booking their flights at the right time. A recent CheapAir.com survey reveals the Prime Booking Window that can help you save the most money possible on your spring break flights.

Don’t delay any longer

Airfare prices go through ebbs and flows, some of which can be pretty surprising. The CheapAir.com survey found that shopping too early — about 260 days before your trip — could actually result in you paying much higher prices than you need to.

From there, costs gradually decline until you reach the Prime Booking Window. This runs from about 74 days to 21 days before your trip. That makes now a great time to start hunting for spring break flights. You should note that the data reveals a slow, but steady increase in average flight cost throughout this booking window, but waiting until the lower end of this range shouldn’t hurt you too much.

However, you don’t want to wait until the last minute. Booking less than three weeks before your trip means you’ll probably pay much higher prices and you’ll have a smaller selection of flights to choose from. You may also have difficulty selecting your preferred seat if this is something that matters to you.

How to save even more on your spring break airfare

Now is a great time to start comparing airfare rates, but don’t feel as if you have to book immediately. Feel free to take a few days or a week to check prices. You may want to wait even longer if your trip isn’t until April. See if you can set up price alerts if rates fall below a certain dollar amount.

Don’t forget to delete your cookies when shopping for airfare. You may not see the cheapest rates if you do this. It’s often a simple matter of going into your browser’s settings and choosing the delete cookies option. A quick internet search can tell you how if you’ve never done it before.

Consider using credit card miles if you can. Some have blackout dates and won’t permit this during the spring break season. But if you can, you might even get free flights this way.

Being flexible with your travel dates is another huge money-saver if you can swing it. Traveling midweek — on Tuesday or Wednesday, for example — often brings the cheapest flight costs. Sunday is the most expensive day to travel, according to CheapAir.com.

Finally, consider trying different airports if you live in the vicinity of a few. Decide how far you’re willing to drive and look at all flights out of airports within that radius. Look at airports a little outside your destination as well to see if this changes how much you pay.

The tricky part is, no matter how many of these tips you follow, you’ll never know if you’ve got the cheapest flight possible. Prices can continue to fluctuate up until the day of the trip. So at the end of the day, you have to go with your gut. If you see something that fits into your budget, you might want to claim it before it’s gone.

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Homeownership isn’t necessarily what it’s cracked up to be. Read on to learn more. [[{“value”:”

These days, buying a home is no easy feat. Prices are elevated, inventory is lacking, and mortgage loans are expensive to sign. So if you’ve been struggling to buy a home, you’re in good company.

But should you be pushing yourself to save for a home? Maybe not.

Nearly 1 in 4 Americans no longer believe homeownership is a sound long-term investment, according to recent data from IPX1031. And almost one-third of Americans don’t think homeownership should still be considered part of the American Dream.

The reality is that there are benefits to owning a home. But there are significant costs to consider. And if you’re looking to buy a home largely because you think it’s a good investment or the “smart” thing to do, you may be doing your finances a disservice.

There are better ways to invest

When you own a home, its value has the potential to rise over time. So does a stock portfolio. Only with a stock portfolio, you buy your shares upfront and that’s basically it. You generally don’t have to pay fees month after month to keep your stocks in your portfolio.

On the other hand, when you own a home, it’s not just that you’re writing your mortgage lender a check every month. You’re also covering the cost of property taxes, insurance, maintenance, and repairs. So all told, even if you sell your home for a nice profit, when you tally up all you’re spending to keep that home, you may find that you’re not gaining much financially after all.

To put it another way, let’s say you buy $200,000 worth of stocks and your portfolio value eventually rises to $600,000. You’re basically gaining $400,000.

Meanwhile, you might buy a home for $200,000 whose value rises to $600,000. But in between, you might spend another $300,000 on property taxes, maintenance, and so forth. So all told, you’re not gaining as much as you potentially would with a stock portfolio.

Renting isn’t an unwise financial move

You may feel pressured to buy a home to avoid paying all that money on rent. But you should know that renting can be a savvy move.

The money you’re not spending on bills like property taxes, upkeep, and home repairs is money you can save or invest for other purposes. For example, if you’re not spending an extra $500 a month on property taxes and maintenance, you can put that money into an IRA for retirement.

Also, owning a home takes work and time. And if you don’t want to put in the work and time, there’s nothing wrong with that. You can free up those hours to spend time with family, pursue hobbies, and do other things that better your financial situation, like boost your job skills or take on a side hustle for extra money.

It’s possible, especially in the long run, to make money by owning a home. But don’t look at your home as an investment. And don’t buy a home solely because you don’t want to “throw money away” on rent.

Rather, buy a home because you want the stability and the opportunity to have a place of your own, and are willing to put in the work. And if that’s not the case, it’s perfectly okay to rent for your entire life if that’s what works best for you.

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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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