Money Management

Want more money back on your taxes? You may have to put in some more legwork. Read on to learn more. [[{“value”:”

The 2024 tax-filing season has officially begun, and the IRS is already accepting returns for 2023. If you haven’t started to work on your taxes, now’s a good time to begin.

When filing your taxes, your goal may be to snag the largest refund you can. But one simple mistake might leave you with less money back from the IRS.

Don’t assume you shouldn’t itemize

Most taxpayers take the standard deduction on their tax returns rather than itemize deductions. But if you rush to claim the standard deduction without running the numbers, you could lose out financially.

For 2023 (the year you’re filing a tax return for this season), the standard deduction is:

$13,850 for singles and married couples filing separately$27,700 for married couples filing jointly

And in some cases, taking the standard deduction makes sense. But if you own a home, for example, it might make sense to do some number-crunching and see if you’ll end up with a larger deduction by itemizing.

Let’s say you’re a married homeowner, and you paid $17,000 in mortgage interest in 2023. Let’s say you also paid $6,000 in property taxes and $5,000 in state income taxes. The latter two expenses jointly max out at $10,000 as part of the SALT (state and local tax) deduction cap. But even so, right there, you have $27,000 in deductions.

If you also donated $1,200 to your local church last year, or a few different registered charities, suddenly, your total is $28,200. That’s $500 above the $27,700 standard deduction for married couples. So in this case, itemizing on your tax return allows you to exempt an additional $500 from taxes.

Will itemizing result in an audit?

Some people might shy away from itemizing on their tax returns because they worry that doing so will lead to an audit. But as long as you’re claiming legitimate deductions, and you have proof that they’re all valid, then there’s no reason not to itemize if it results in more tax savings.

Now that said, certain tax deductions may result in the IRS questioning your return. But that doesn’t mean they aren’t valid and that you won’t sail through an audit unscathed.

Let’s say you report an income of $60,000 for 2023, and you also claim $17,000 in mortgage interest and $6,000 in property taxes. To be fair, that looks suspicious. That’s a lot of money to be spending on housing with an income that size.

But maybe you receive financial support from a family member that allows you to pay for housing until your income increases. Maybe your income fell to $60,000 because your spouse took a career break, but you have a large emergency fund to live off of until they return to work in a year or two.

As long as you have an explanation for your tax deductions and they’re legitimate, there’s nothing wrong with claiming them. And you might as well do so if itemizing results in a higher tax break than the standard deduction has to offer you.

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Eager to save some money this month? Read on to see how some relatively small changes could go a long way. [[{“value”:”

If saving money in 2024 was one of your New Year’s resolutions, you may be eager to pad your bank account this February. But finding ways to cut corners is difficult — especially when inflation is still a lingering problem.

The good news, though, is that a few savvy moves on your part could leave you with more money in savings by the end of the month. Here are a few to look at.

1. Be mindful of heat usage

In many parts of the country, February is a cold month. And you may be inclined to pump the heat at any cost to stay warm. But a few small changes could help you spend less on utilities.

First, if you have a programmable thermostat and work outside of the home, there’s no reason to keep the heat pumping during the day when you aren’t there. Instead, drop the heat once you’re out the door and set it to come up again about an hour or so before you get home. That way, your house is nice and toasty upon your arrival, but you’re not paying to heat your space when you’re not there.

Secondly, try dropping the heat by one or two degrees at night and see what happens. You may not notice a difference when you’re under the covers, but your bill might drop a bit.

2. Join a warehouse club store

As of December, grocery store prices were still up 1.3% on an annual basis, per the Consumer Price Index. A good way to lower your grocery spending could be to join a warehouse club store like Sam’s Club or Costco. Believe it or not, you might make back your membership fee in February alone.

Let’s say you spend $60 on a basic Costco membership (that $60 gives you access for an entire year). But let’s also say you shop at the store once a week and save $20 on food and household essentials each trip due to snagging bulk discounts. All told, you’re ahead financially — and you still have the rest of the year to keep benefiting from your membership.

3. Start a club

Whether it’s eating dinner at a restaurant, seeing a movie, or buying tickets to watch a local band perform, paying for entertainment outside the house could get expensive. Cutting back there could save you money, but also leave you bored.

A good compromise? Start a club. It could be a book club, a crocheting club, a wine- or beer-tasting club, or a baking club.

Either way, find like-minded people who live locally and share your hobby, and take turns hosting a weekly gathering. It’s a good way to engage with others in a social setting without having to spend a small fortune.

Life is expensive these days, so you may be inclined to give up on saving anything this month. But a few small changes could go a long way toward improving your financial situation.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has nearly tripled the market.*

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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. The Motley Fool has a disclosure policy.

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The name taxable brokerage account suggests you’ll owe taxes on the account. But, is that necessarily the case? Read on to find out. [[{“value”:”

When you open an account at a brokerage firm that’s not given special tax treatment (as an IRA would be, for example), your account is usually called a taxable brokerage account. The name suggests that the account is going to be taxed (seems pretty obvious, right?). But it may come as a surprise that despite this poor marketing, you may actually not have to routinely pay taxes on this type of investment plan.

Here’s what you need to know about the rules.

A taxable brokerage account doesn’t mean you’ll always owe the IRS

The good news for people with taxable brokerage accounts is that you aren’t just automatically going to have to pay the IRS money — even if the assets in your account make a profit.

In fact, you only have to pay taxes if:

You sell assets within the account at a profit (that profit is referred to as a “capital gain”)You earn dividends on assets held in the accountYou are paid interest on cash in the account

In other words, you are taxed if you actually earn income over the course of the year — not just on paper, but in reality. This means, for example, that if you invest $1,000 in a stock that does really well and it turns into $10,000 but you don’t sell it, you would not pay a single dollar in taxes. You would only be taxed if and when you sell and that $10,000 becomes yours.

It’s important to know that you don’t pay taxes on gains that you haven’t realized because you haven’t actually earned the money yet. Your investments could perform badly in the future and you could lose the money, so it wouldn’t make sense to tax you on gains before you sell. Since dividends and interest are paid out and deposited into your account and become yours, though, you are taxed on that income as it comes.

You’re also subject to favorable tax rules

Even if you do owe taxes on the money in your investment account, the good news is that you may not have to pay that much. There are two reasons for that.

You can offset your capital gains (profits earned) if you have capital losses (you sold assets at a loss). So if you make $100 on one stock and lose $100 on another and you sell both during the year, your $100 losses would offset (or be subtracted from) your gains and you’d end up with no actual income to declare.There are favorable capital gains tax rates that apply if you’ve owned the assets for more than a year. Depending on your income and filing status, the long-term capital gains tax rate that applies could be as low as 0%. You can find out your capital gains tax rate to see exactly how much you’d pay in taxes. If you don’t own your assets for a year or longer, though, you’d be taxed at your ordinary tax rate, so you’ll probably want to try to avoid that and hold onto your investments.

If you did sell at a profit or earned interest or dividend income, most online tax software programs are set up to allow you to enter this information when you do your taxes. Your brokerage firm will send you the forms you need showing how much income you have to declare, and you can enter this data in the right boxes (or give the forms to your accountant to handle it if you don’t do your own taxes).

And remember, the good news is that if you do owe taxes, that’s because you made money — so it’s not the worst thing in the world to write that check to the IRS.

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When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has nearly tripled the market.*

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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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This Germany-based grocery store chain is getting serious traction among U.S. consumers. Take a look at why. [[{“value”:”

Aldi has been one of the fastest growing retailers of any kind in the United States. The German grocery store chain grew from a single location in 1976 to over 2,300 domestic stores today. The company added about 120 new stores in 2023 alone and doesn’t seem to have plans to slow down anytime soon.

In 2022 (the last full year for which finalized data is available), Aldi gained about 9.4 million new customers. Of course, one of the reasons for the growth is a wider footprint. As a personal example, a new Aldi opened in late 2023 about 10 minutes away from my house, while I previously would have needed to drive about half an hour to shop at Aldi.

There are plenty of good reasons why so many Americans have become loyal Aldi customers in recent years. Here are just a few of them.

Aldi costs less than its rivals

First and foremost, shoppers love how much further their grocery budgets can go at Aldi. Many different comparison studies have been done, and almost all have found that Aldi has generally lower prices than other popular chains — even those known for discount prices. For example, Aldi’s produce has been found to be up to 68% cheaper than Walmart’s, and it can be significantly cheaper for organic meats.

RELATED: Best Budgeting Apps

With inflation hitting grocery prices hard in recent years, being able to save money on food is more important than ever to Americans’ personal finances. And Aldi can certainly help you do it.

Aldi sells versions of popular products with safer ingredients

As a parent of two picky children, ages 8 and 5, it’s a constant struggle trying to balance foods my kids will eat with making sure they’re eating reasonably healthy products.

For example, my daughter only wants to eat Cap’n Crunch cereal for breakfast, while my son doesn’t want anything but Lucky Charms. Unfortunately, both of those are filled with dyes and other junk we don’t really want to eat. Aldi not only offers its own version of each that is completely dye-free, but they’re also significantly cheaper than the name-brand products. And most importantly, my kids can’t tell the difference in taste.

This is just one example. Aldi offers several versions of popular products without dyes and other ingredients that should generally be avoided.

Aldi products are guaranteed

A guarantee is especially important when a store sells a lot of unique products like Aldi does. Fortunately, all Aldi exclusive products have the company’s “Twice as Nice” guarantee, which essentially says that you can bring back any product you don’t like and get your money back.

Some exclusions apply, but this does make me feel more comfortable about being a bit adventurous when it comes to food shopping.

The bottom line

To be sure, there’s no such thing as a perfect grocery store, and Aldi isn’t an exception. For example, you need a quarter to use an Aldi shopping cart, and there have been times when I forget one (I understand why Aldi does it, but this is still a pain point). And Aldi doesn’t always have the same products in stock from visit to visit, at least not as reliably as some of its competitors.

Having said that, ever since an Aldi opened near my house, that’s become my go-to grocery store for many items. And as you can see, there are some excellent reasons.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has nearly tripled the market.*

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

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If you’re thinking about opening a brokerage account, you’ll need to be aware of four key facts, including the impact of fees on returns. Learn more here. [[{“value”:”

If you are opening a brokerage account, there are a few key facts you should understand first. Understanding these points can help you to be a better investor and maximize the size of your balance over time.

Here’s what you need to know.

1. Compound growth can help you build wealth if you start early

The first key thing to know is that the earlier you begin investing, the more wealth you can build virtually effortlessly. That’s because of something called compound growth. See, when you invest and earn returns, you get to reinvest that extra money.

Once your returns have been used to buy investments, your money is making money for you with no extra effort required on your part. Since you have a bigger account balance, you can earn even more going forward. Then all that extra money will be reinvested, too. And this makes a huge difference. Just check out the table below to see the impact of investing $1,000 a year for 10 years versus 20 years versus 30 years, assuming a 10% average rate of return.

As you can see, although you’ve invested only $10,000, $20,000, or $30,000 total, the amount of profit you end up with becomes very impressive over time thanks to all of your returns being reinvested. So even if you aren’t starting with a ton of money, the sooner you begin transferring some funds from your checking account to your brokerage account, the better off you’ll be.

2. Investment fees can eat away returns

It’s also really important to consider the investment fees that you’re paying as you choose which assets to buy. That’s because fees eat away at those returns over time. And when your earned returns are lower, you significantly reduce the power of that compound growth mentioned above.

Just take a look at the table below to see how different your account balance would be depending on the fees you pay if you invested $10,000 over a 20-year period and earned a 10% average annual return.

As you can see, paying high fees really impacts the money you end up with in the end. Look for low-cost ETFs that have very minimal fees to avoid losing a good portion of the money you should end up with.

3. Long-term investors do better

When you invest, you can choose to buy and sell assets frequently or to buy assets you believe in and stick to them for the long haul. One approach has been clearly proved to be better than others.

In fact, one study found that during a period where average market returns were 17.9%, those who traded the most earned just 11.4%. Among those who day trade or hold assets for a very short time in hopes of making a quick profit, anecdotal evidence suggests 95% end up losing money.

Timing the market perfectly rarely works well since we cannot predict the future. So don’t try. If you buy ETFs that track the performance of the market, you can hold onto them forever — which is famed investor Warren Buffett’s favorite holding period.

4. You can get into the market without understanding stocks by investing in ETFs

Finally, the last thing to know is that you really don’t have to know much before you start investing. You don’t have to, and probably shouldn’t, buy stock shares in individual companies without a lot of advanced knowledge. Instead, you can buy ETFs (exchange-traded funds).

ETFs act kind of like mutual funds but are traded like stocks. All of the money in the fund is pooled to buy a bunch of different investments. Usually, the fund aims to mimic the composition of some financial index, like the S&P 500 (an index of around 500 large U.S. companies). Fees are pretty low since no active management is required, and you get instant diversification when you buy them.

Most brokerage firms have screeners that make finding the right ETF easy. You can buy funds that track the entire market, the S&P 500, or subsets of the market like small or large companies. Just check with your brokerage firm’s tools to find out your options. For most beginners, tracking the market or the S&P 500 is usually the way to go.

Now you know pretty much everything required to be a successful investor — so get that brokerage account open and jump in.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has nearly tripled the market.*

They just revealed what they believe are the 10 best stocks for investors to buy right now…

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*Stock Advisor returns as of February 6, 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.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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