Money Management

CDs come in a variety of terms. Read on for tips on picking the right one for your financial situation. [[{“value”:”

If you have money you’re not earmarking for emergencies, then you may be inclined to invest it outside of a regular savings account. And in that regard, one option you have is to open a certificate of deposit, or CD.

The tricky thing, though, is that CDs come in a variety of terms. And you may not be sure which term is best. To figure out which direction to go, think about what your investment goals entail and what sort of milestone you’re investing for.

When you’re looking at a near-term goal

Generally speaking, you want the term of your CD to match your investment window more or less. So let’s say you’re trying to buy a home. You know you won’t be in a position to make an offer on one this year, but you think that with a nice savings boost, you may be able to make an offer next year.

In that case, a 1-year CD could be a good bet. If you go longer than that, you run the risk of not having access to your money when you need it. And while you could always cash out a CD before its maturity date, doing so generally means facing a costly penalty, the amount of which depends on your bank.

At Discover, for example, you’ll face a penalty of three months’ worth of interest for cashing out a CD early if its term is less than 12 months. For a CD term of 12 months to under 48 months, the penalty for cashing out early is six months of interest.

When your goal is far off

You may be investing for a milestone that’s way in the future, such as if you have a 10-year-old you eventually want to put through college. In that situation, you may want to opt for a longer-term CD.

In a typical interest rate environment, you’ll usually score a higher APY on a longer-term CD than a shorter-term one. That happens to not be the case today, though, because banks are well aware that the Federal Reserve is likely to start cutting interest rates at some point this year.

Because of this, you’re likely to find a better CD rate on a 12-month term than, say, a 60-month term. However, if you want a guaranteed return for longer, then for a far-off milestone, a 60-month term may be a good bet.

At Discover, right now, you’ll get a 5.20% APY on a 12-month CD and a 4% APY on a 60-month CD. The 5-year CD might seem like a bad deal, but remember, you’re guaranteed that rate for 60 months.

In a year from now, the best CD rate available across all terms might be 3.50%. So in that situation, earning 4% for five whole years means you may be coming out ahead financially.

Don’t rule out a good old fashioned brokerage account

Another thing you may want to do if you’re working toward a longer-term goal is split your money between a CD and a brokerage account. That way, you can potentially get the best of both worlds.

CDs offer no risk of losing principal as long as you bank at an institution that’s FDIC insured and you limit your deposit to $250,000. When you invest in stocks and other assets in a brokerage account, you could lose money.

However, there’s the potential to earn a much higher return in a brokerage account over time than with a CD. The stock market’s average yearly return over the past five decades, for example, has been 10%. So for a far-off goal, one thing you may want to do is split your money between a 5-year CD and a portfolio of stocks.

You’ll get a guaranteed 4% return (assuming you opt for the 5-year CD referenced above) on your CD, and an unknown return on your remaining money. But that unknown return could easily be 10% or more.

All told, the right CD term could help you meet your savings and investment goals. Consider the window you’re working with, but also consider putting money into CDs as well as other assets to increase your chances of walking away with really solid returns.

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

“}]] Read More 

Looking to put money into CDs? Read on for tips on how to do so on a budget. [[{“value”:”

If you have money you’re earmarking for unplanned bills or financial emergencies, then that cash absolutely needs to be housed in a savings account. That way, you’ll have access to it at all times.

But if you have savings beyond that and you’re looking to earn more interest on your money, then it could pay to open a certificate of deposit, or CD. And now’s an especially good time to do that.

CD rates are competitive right now on the heels of the Federal Reserve’s multiple interest rate hikes. But since the central bank is expected to cut rates at some point in 2024, today’s CD rates may not be around for much longer. So if you’re looking to invest in a CD, now’s the time.

That said, you may be somewhat limited with the amount of money you can part with. And that’s okay. There are plenty of ways budget-conscious savers can capitalize on CDs today. Here are some tips to employ.

1. Find a CD with no minimum, or a low minimum

Sometimes, to snag a competitive rate on a CD, you need to be willing to part with a notable sum of money. Certain banks, for example, might impose a minimum deposit of $5,000 or more to open a CD.

If you’re on a budget, look for a bank that doesn’t impose a minimum. Barclays, for example, offers CDs with no minimum balance. If you only have a few hundred dollars to put into a CD, so be it.

Other banks may impose a minimum to open a CD, but a fairly small amount. At Quontic, you can open a CD with just $500.

2. Don’t commit to too long a term

If you’re worried about tying up a lot of money in a CD, one thing you may want to do is stick to shorter terms. Some banks let you open a CD for a term as short as three months, though offers in that range can be limited (meaning, many banks do not offer a 3-month CD).

However, it’s very common to find 6-month CDs. And those could be a good compromise if you’re worried about losing access to your money for a lengthy period of time.

3. Always ladder your CDs

As a budget-conscious investor, the last thing you want is to lose money to penalties. But unfortunately, when you cash out a CD before its maturity date, you generally risk a penalty of some sort, the exact amount of which will depend on your bank.

At Discover, for example, you’ll be penalized three months’ worth of interest for cashing out a CD early if its term is less than one year. For a CD of 12 months to under 48 months, the penalty for cashing out early is six months of interest.

A good way to avoid penalties is to ladder your CDs so you have money freeing up at various intervals during the year. Here’s what this approach might look like.

Let’s say you want to invest $3,000 in a CD. Instead of opening a single 12-month CD, what you might do is open a 3-month CD for $750, a second $750 CD for six months, a third $750 CD for nine months, and a final $750 CD for 12 months. That way, you have a portion of your money freeing up every quarter.

However, one snag you might hit is that not all banks offer 3-month CDs, and they can actually be a bit tricky to find. Also, not every bank offers a 9-month CD, though those tend to be easier to find than 3-month CDs. But it is possible to find banks offering all of these terms. Similarly, depending on your time horizon, you could look at a CD ladder using more spaced out time increments. A popular one is to open a 1-year CD, a 2-year CD, a 3-year CD, a 4-year CD, etc, so that a portion of your funds comes free once a year.

You can ultimately play around with different combinations depending on what your bank offers. And there’s nothing wrong with going outside of your current bank if you don’t see the CD terms that work best for you.

Also, remember that the CD rates you’re seeing today are unlikely to last forever. Once CD rates start to fall, you may want to consider opening a brokerage account and investing some of your money there instead to snag a higher return.

But for now, CDs are still a lucrative bet. And even if you’re on a budget, you can still benefit from them in a very big way.

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 can 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.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Maurie Backman has no position in any of the stocks mentioned. The Motley Fool recommends Barclays Plc and Discover Financial Services. The Motley Fool has a disclosure policy.

“}]] Read More 

You can’t predict how the stock market will do. But check out one move I’m making that will help me end 2024 with a bigger brokerage account balance. [[{“value”:”

I want my brokerage account balance to be a lot bigger at the end of 2024 than it was at the end of 2023.

I’m hoping that the sound investments I’ve made will help my money grow effortlessly throughout the year so I end up with a bigger balance. Of course, I can’t count on that happening, as there’s no guarantee even good investments will perform well in the short term.

There is one move I’m making this year, however, that will significantly increase my chances of ending up with more money invested by the end of 2024. Here’s what it is.

One great move to grow my investment account balance

While the stock market has good and bad years, there’s one way I know I can likely end up with a bigger brokerage account balance: I can grow the value of my account by transferring more money into it.

Obviously, the more I contribute to the account, the more money I will have in it by the end of the year. If I up my contributions by $100 a month, then I would have invested an extra $1,200 by the end of 2024.

Of course, by investing more, I’ll also have more cash available to invest in different assets. This diversification increases the chances that at least some of my investments will perform well. So, not only will my account likely grow because of my additional contributions, but it’s also more likely that I’ll earn a positive return on investments so my balance increases even more.

Investing more money into my account also helps me use dollar-cost averaging to my advantage. Dollar-cost averaging involves buying a particular investment — such as an ETF — regularly on a set schedule. With dollar-cost averaging, sometimes I’ll buy when the price of shares is down and sometimes I’ll buy when the price is high.

Since my money will stretch further when the price is low, I’ll end up buying more shares at a reduced cost. Even if my investments don’t perform the way I’d like in 2023, I’ll set myself up for more success in the future by buying more of those assets when they were on sale during a downturn.

Of course, if the stock market crashes and all of my investments plummet, dropping their value by a huge amount like 30% or 40%, then it’s possible I’ll still end the year with less money in my account than I started with — despite the fact I’m contributing a lot more cash to the account. But if this disaster doesn’t happen, even if the market doesn’t have a great year, the fact I’m adding money, increasing my diversification, and dollar-cost averaging into assets means that it is very likely my account balance will grow in 2024.

Automatic contributions can be the key to building wealth

The reality is, if you want to make sure you’re building wealth in your brokerage account, you need to make regular contributions to it. That way, even if some of your investments perform poorly over the year, then like me, you’ll likely still grow your balance by adding more money, increasing your diversification, and buying assets while they’re priced low.

To make sure I’m putting enough money into my account to give it the best chance to grow (barring a stock market crash), I’ve set up automatic transfers from my bank account to my brokerage account. And, since my goal is to make sure my brokerage account balance grows, I’ve increased those automatic contributions for the 2024 year.

Once I’ve automated the process of contributing to my account, there’s no question the money will go where it needs to. I don’t have to make sure there’s money left over at the end of the month to contribute. The funds are put into my brokerage account, and I can buy assets regularly using my dollar-cost averaging technique.

If you also want to grow your investment account balance this year, consider starting automatic contributions to your broker or increasing the amount you have invested. Even putting just a few extra dollars a month in your account can make a difference over time, especially if you invest for the long haul.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. This card features a 0% intro APR for 15 months, 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.

Read our free review

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 

Aldi has some of the best prices around. Learn which five items keep my family solidly on the Aldi train. [[{“value”:”

I’m a big fan of Aldi, mostly because of the random stuff my wife often brings home. A few months ago, she bought a $5 flower that I’ve yet to identify but has flourished on our front porch despite several nights of sub-freezing temperatures.

Resilient flowers aside, we’ve found that Aldi consistently offers the lowest price on most grocery items, which helps keep our personal finances on track. Here are five that are the best for your money.

1. Sliced Gouda cheese

Price: $1.79

If you opened my refrigerator right now, there would be an embarrassing amount of cheese in the drawers. Like, you’d probably question why a family of four could possibly need so many bags of shredded and sliced cheese.

But my kids love it, the price is cheap, and I thought our secret cheese addiction would never see the light of day. Alas, the truth always comes out in the end. But seriously, for $1.79, how could we pass up those Gouda slices?

2. Milk

Price: $2.38

You’re about to notice a pattern here — dairy-based products are cheap at Aldi. We recently bought a gallon of whole milk for just $2.38. According to the USDA, that’s $1.95 cheaper than the national average for whole milk.

Milk prices have soared over the past few years, with the average price rising from $3.03 in 2019 to the current average of $4.33. If you’re not an Aldi believer yet, surely the milk prices will be enough to convert you.

3. Butter

Price: $3.39

I have to admit, I didn’t wake up this morning planning to write about butter. It isn’t the most interesting thing I’ve written about, and it’s probably not the most exciting thing you’ve read about. But here we are.

What is exciting is saving money on butter. Our four-pack (one pound) of unsalted butter cost $3.39 on our latest Aldi run, which is more than $1 cheaper than the national average. Yes, some people gather historical data on butter prices and map it out in charts. Who knew?

4. Pistachios

Price: $3.99

In addition to my family’s cheese obsession, pistachios are another well-stocked staple in our home. These are often my go-to snack, and if we bought them anywhere other than Aldi, I’d probably need to pick up a side hustle.

I couldn’t find Federal Reserve data for historical shelled pistachio prices (what is the Fed even doing?), but a quick search on Walmart’s website found a similar bag of pistachios is $5.88 — $1.89 more than Aldi!

5. Organic, grass-fed beef

Price: $6.66 per pound

It’s no secret that beef prices have soared over the past few years, and prices vary depending on what part of the country you live in. In my state, the average cost of ground beef is $5.21 per pound.

That price almost makes one consider being vegetarian. It’s too bad that steak and burgers taste so delicious. Organic, grass-fed ground beef is typically more expensive than regular ground beef, which makes the $6.66 we recently paid for one pound of Aldi’s organic ground beef a great deal.

Fortunately for all of us, inflation has cooled recently, but the damage to household budgets has already been done. Aldi may alleviate the sticker shock on your grocery bill, at least for the items above.

But if you find better deals on butter or shockingly robust purple flowers, let me know.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. This card features a 0% intro APR for 15 months, 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.

Read our free review

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.Chris Neiger 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.

“}]] Read More 

A warehouse club membership could make financial sense. But do you need two? Read on to find out. [[{“value”:”

Saving money on groceries and household essentials is a good way to improve your financial situation. So to that end, it could pay to sign up for a membership to a warehouse club like Costco or Sam’s Club. Both chains offer groceries and household essentials in bulk, and that alone might lead to enough savings to more than cover the cost of your membership fee.

Plus, you might save a lot of money on one-off purchases at Costco or Sam’s Club. Need to replace an appliance? Either store might offer a lower price than another retailer in town.

If you’re not sure whether Costco versus Sam’s Club is right for you, you may be wondering if it pays to just sign up for both. Or maybe you’re already a member of one warehouse club and you’re curious to see how the other works.

Technically, you could make the argument that there’s value in joining two warehouse clubs at the same time. That’s because the inventory you’ll find at Costco differs from that at Sam’s Club. But for the typical consumer, two warehouse club memberships probably don’t make financial sense.

Why spend extra for two warehouse club memberships?

A basic membership at Costco costs $60 a year, while an upgraded Executive membership that gives you cash back on your purchases costs $120. At Sam’s Club, memberships are a bit cheaper — $50 a year for a basic one and $110 for a Plus membership with the cash back option.

Now, you may be able to score a better deal on a warehouse club membership — particularly with Sam’s Club — if you sign up during a promotional period. Otherwise, these are the prices you’re looking at.

Perhaps you can afford to cover a basic membership at both stores for a total of $110. And you might reap enough savings at both stores to make that $110 back during the year.

But you probably don’t need two separate memberships at once because a lot of the household and grocery staples you’ll find at Costco are also available at Sam’s Club, and vice versa. You may be looking at different brands, but if you’re not picky, it’s hard to make the case for two memberships.

Let’s say your family drinks a lot of milk and eats a lot of eggs. You’re apt to find both in bulk quantities at both stores. The same holds true for things like tissues, paper goods, and household cleaners. So all told, a single warehouse club membership will probably give you access to the bulk items you need and use regularly.

If you limit yourself to one chain only, you may lose out on savings on certain one-off purchases. It’s more than possible that Costco will one day offer $100 off the specific laptop you’ve been wanting. If you’re a Sam’s Club member only, you might see a different laptop discounted there — but not the specific one you want.

However, in that case, you could always join a second warehouse club — in this case, Costco — if the savings are substantial enough on a one-off purchase for a membership to make sense. If you know you’re only looking to buy one specific laptop and Costco’s price is $100 less than its competitors, paying $60 to join means coming out ahead $40. So that’s not a silly move at all.

See if you can buddy up with another warehouse club shopper

If you’re really not sure if you should join both Costco and Sam’s Club, one thing you may want to do is find a local friend or neighbor who’s in the same predicament. Then, sign up for one membership and have your friend sign up for the other. You can then take each other along when you do your shopping so you can both benefit from both stores during the year.

Another option? Tag along with a current member to each store and see which gives you the best impression. Then, join that club and see how it goes. If you’re not so thrilled with your membership, cancel for a membership refund and switch. But it probably doesn’t pay to shell out the money for two memberships of your own at the same time.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. This card features a 0% intro APR for 15 months, 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.

Read our free review

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.

“}]] Read More 

Paying quarterly taxes is an expensive necessity. Find out how preparing for it ahead of time can bring in extra income. [[{“value”:”

Freelancing certainly comes with its share of perks. You can set your own hours, take as much vacation time as you want, and choose which clients you want to work with. But one of the most stressful parts of being a freelancer, at least in my mind, is not always knowing when the next project is going to hit your desk.

If you’re worried about a lull in your schedule that leads to a drop in your income, take a look at one simple tip to follow that can potentially bring in hundreds of dollars a year — with no effort required on your part.

Be proactive with your quarterly taxes

Since freelancers don’t have taxes taken out of a regular paycheck like full-time employees do, they need to make quarterly tax payments throughout the year (due in January, April, June, and September). That means these individuals need to make sure they leave enough money set aside to make a fairly large payment four times a year.

If you’re confident in your saving abilities, you may not worry too much about that since you always have enough money in your checking account to cover your tax bill. Many freelancers, however, choose to set that money aside in a separate savings account so they’re not tempted to dip into it throughout the year.

And it’s the latter choice that can earn you some major cash. If you place the money for your quarterly tax payments into a high-yield savings account, you can earn interest on that money until it comes time for you to make your tax payment. Right now, many savings accounts are offering interest rates close to 20-year highs, with some topping 5%. And since your tax bill is likely to be several thousand dollars, that means you have the opportunity to earn quite a bit just by leaving the money in one of these accounts.

Earn money by doing nothing

Exactly how much money you can earn on your tax payments will, of course, depend on how much money you put into savings. But let’s look at an average example.

According to ZipRecruiter, the average freelancer’s yearly salary is $99,230. By using a self-employment tax calculator online, we can find that the total taxes this individual will owe on their salary come out to $15,182 for the year. If you’re able to set aside that amount in a savings account at the beginning of the year, and you replace what you take out after each quarterly tax payment, that $15,182 will turn into $15,958.74 by year’s end. That’s a gain of almost $777 — and all you had to do was let the money grow for you with the magic of compound interest.

Let your money do the work for you

Not everyone’s personal finances will let them set aside $15,000 right away. That’s a huge amount of money for anyone to come up with (and there’s a reason tax payments are spread out throughout the year). But if you can set aside even some money in a high-yield savings account, you’ll be able to take a little pressure off yourself by letting your money grow on its own.

It’s also worth noting that this tip may not always work as well as it does right now. Rates on savings accounts can and do fluctuate, so it’s in your best interest to take advantage of the high rates we’re seeing today.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. This card features a 0% intro APR for 15 months, 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.

Read our free review

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