Money Management

Life insurance can give you peace of mind. If you don’t have a policy now, read on to see if you might need one in the new year. 

Buying insurance is how you can make sure your assets (like a home or a car) are protected. But it can also be a good way to march forth into big life changes with the knowledge that while you’ll be missed if you die, the people in your life will be able to manage financially. We’re starting off a new year, and if you’ve got some major things happening this year, you might need life insurance. Here are a few instances in which you might need life insurance in 2024 — and beyond.

1. You’re getting married

If wedding bells are part of your 2024 plans, congratulations! If you’re going to be sharing finances in some form or fashion with another person, it’s worth sitting down to talk about salaries, savings, investments, and beyond. If one of you passes away, will the other be left high and dry?

It’s an extremely good idea for each of you to have a solid means of supporting yourself on your own (financial independence is crucial, especially for women). But perhaps one of you earns a higher salary than the other, or you have a lot of shared financial entanglements. Consider signing up for life insurance policies as part of your wedding preparations, so you can save some worry.

2. You’re becoming a parent

Maybe 2024 is the year you bring home a new baby. There’s so much to plan for and so many life changes ahead — you should absolutely add “get a life insurance policy” to your to-do list. A term life policy is a particular standout in this instance. You can choose a policy with a term that will see you through until your infant is a self-supporting adult and no longer dependent on you.

And even if you’re a stay-at-home parent, life insurance is still a good idea for you. Think about it — you might not earn a salary, but you still take care of a child and a home, and your family would likely struggle to manage or pay for those duties without you.

3. You’re buying a home with someone else

While it remains to be seen whether homeownership will be easier or cheaper this year than it has been the last few years, some of us are pressing ahead with buying houses anyway. If you’re buying with a friend, partner, or spouse, and both of you are making this financial commitment that you wouldn’t be able to afford alone, life insurance is a darn good idea. If you pass away, the policy’s payout will help your co-owner pay off the mortgage and remain in the home.

4. You’re starting a business

Starting a small business is a huge milestone and can change your life in a lot of ways. But while you’re writing a business plan and seeking funding, don’t forget to consider life insurance. If you’ll be running the business with another person, a life insurance payout can ensure your business partner and other stakeholders will be able to carry on without your financial contributions. It can also allow the surviving partner to purchase your share of the business.

It’s true that not everyone needs life insurance in every situation, but these scenarios are a few examples of times you actually should seek out a policy. Review our list of the best life insurance companies and see what kind of policy you can get — you may be pleasantly surprised by how affordable term life insurance can be. And the peace of mind you’ll end up gifting yourself in the process can be priceless.

Our picks for best life insurance companies

Life insurance is essential if you have people depending on you. We’ve combed through the options and developed a best-in-class list for life insurance coverage. This guide will help you find the best life insurance companies and the right type of policy for your needs. Read our free review today.

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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Almost all Americans tip when they go to a restaurant, but the amount that people are leaving for their servers may not be what you’d expect. Here’s why. 

Tipping has become a hot-button personal finance issue in recent years, as we’re prompted to leave a gratuity in a growing number of situations. This is thanks to payment apps many stores and restaurants now use to process credit card payments.

While tipping in some circumstances is controversial, most people agree that you should tip your server in a sit-down restaurant. In fact, a Pew survey found 92% of adults either always or often leave a tip when having a sit-down meal. The amount most people tip may surprise you, though.

Here’s how much people typically tip in a restaurant setting

According to Pew Research, a majority of Americans — 57% — tip 15% or less when they go to a sit-down restaurant and have an average meal.

This group of people includes the 2% of Americans who don’t leave any tip at all for waiters and waitresses. By contrast, only a quarter of Americans indicate that they tip at least 20%.

The fact that so many Americans are tipping just 15% or less on their restaurant check may come as a surprise to some people for a few key reasons.

One reason you may be surprised at a 15% tip is that when restaurants add gratuity automatically, they’ll often add 18% to the bill. With the default gratuity coming in at 18%, tipping just 15% is less than what restaurant workers would generally expect.

Plus, many of the apps that restaurants use to process payments include a default tip amount that is higher than 15%. For example, it’s common for the payment device to offer you three options, like tipping 15%, 20%, or 25%, with 20% pre-selected when the device is handed to you. Since 15% is the lowest option, if it’s an option at all, it can feel as if you’re supposed to be tipping more.

In reality, though, these apps are set up to encourage tipping at a higher percentage than the norm for Americans. And the 18% automatic gratuity is applied to recognize the extra work servers are doing and to make sure they’re paid fairly since not everyone wants to leave a big tip on a large bill. After all, if you have a $400 meal, it may seem unreasonable to tip $60 or more. Plus, it’s easy to forget that your server did the equivalent amount of work, or more, as they would have if your party had been split up at separate tables and tipped on separate checks.

How much should you tip in a restaurant?

Whether you are among the majority of Americans who tip 15% or less — or you’re in the minority who tip 20% or more and you’re surprised so many people stick with 15% — the big question is: What is the appropriate tip amount?

Ultimately, you should be dipping into your checking account to tip your server, since they depend on tips to be a part of their wage. And since 15% is what most people are leaving as a tip, the person taking care of you is not likely to be offended or surprised if you leave this amount. You can feel comfortable doing so even if the payment app you’re using prompts you to tip more, since your tip amount is in the typical range.

Of course, if the restaurant has an automatic gratuity policy requiring a tip of 18%, this wouldn’t be an option for you. You’ll have to pay what’s required. And if you received exceptional service, tipping 20% is a good way to recognize and reward your server’s efforts since they went the extra mile to make your time pleasant.

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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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Owning a home is expensive. Learn why draining your savings account in the process of buying one is a bad idea. 

It’s not the best time to buy a home, but I’m certainly not the only American who’s hoping to become a homeowner in 2024. We’re facing higher mortgage rates than we’ve seen in a few years — as of this writing, the average rate for a 30-year fixed mortgage loan is 6.61%, according to Freddie Mac. Homes themselves are more expensive, too — in November 2023, the median existing home price was $387,600 (per the National Association of Realtors). This is 4% higher than just a year prior.

If you’re getting ready to pry open your savings account and shake out a huge pile of money to buy a house, you might be tempted to sink everything you’ve got into the purchase. Let’s discuss the costs you’ll pay when you buy — and why leaving yourself broke in the process is a dangerous move.

What expenses do you face when you buy a home?

When you’re trying to get on the property ladder, your costs are wide and deep. For the actual buying process itself, your largest expense is likely to be a down payment. If you’re buying with an FHA loan or other government-backed mortgage option, you might not need to make a large down payment — with a credit score of at least 580, your down payment on an FHA loan need only be 3.5% of the home’s purchase price. If you’re buying with a conventional loan, however, it’s generally recommended to put down 20%, so you can avoid the added cost of private mortgage insurance.

You’ll also need to cover closing costs when you sign on the dotted line for your mortgage loan — this will include appraisal, application, and underwriting fees. You could also pay for a real estate attorney, property survey, and credit check fees. Closing costs often amount to around 2% to 5% of what you borrow and your mortgage lender will provide you with a breakdown of the costs.

Along the way from house hunter to homeowner, you could also be on the hook for some initial remodeling or improvements to your new home. How about a new refrigerator or stove, perhaps? Personally, it’s my plan to spend some money and time on painting my house when I get it — years of rentals with bland white walls (or worse, ugly wood paneling) has me craving real color in my life. Plus, you’ve also got to cover the cost of your actual move. Hiring movers likely won’t be cheap, but it’ll make the process much easier.

What happens if you leave yourself broke?

Simply put, nothing good. Imagine this: You’ve scrimped and saved to cover the above costs, and managed to find a home to buy that matches the amount you have saved. You made a down payment, paid those closing costs, undertook a few nice improvements to your new home sweet home, and paid a crew of burly movers to haul your belongings inside.

But not a week after you move in, you wake up to no hot water in your house. Your water heater has given up on you, and you now must cough up money to have it replaced. It’s going to cost you $1,500, which is in line with the average costs enumerated by Architectural Digest for a water heater replacement. Except, all your money went to the buying process, so you’re now looking at putting that charge on a credit card. In the grand scheme of things, $1,500 is not a huge tab to put on a credit card — it’s still not ideal, though. And what if the problem isn’t your water heater, but your roof, and your bill to replace that is $10,000?

Prioritize your emergency fund

Having an emergency fund to help you cover unplanned bills is always a great idea if you can manage it. Living without emergency savings is stressful — I’m sorry to say I know that from experience. If you’re buying a home, I recommend prioritizing your emergency savings even more heavily. It would be tremendously depressing to fight through this housing market, buy a home, and immediately take on credit card or personal loan debt to cover a home repair.

As a homeowner, your emergency fund becomes even more important. Don’t drain your savings in the process of buying a house. It’s worth waiting a little longer to buy if it means you can give yourself an even bigger cushion for a rainy day.

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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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Hope that the SEC will approve a spot Bitcoin ETF has fueled a recent crypto rally. Learn more about what the ETF is and what an approval might mean for investors. 

The crypto world has been aflutter about a potential spot Bitcoin ETF approval from the Securities and Exchange Commission (SEC) for months now. It’s been one of the main drivers in Bitcoin’s (BTC) recent rally. In contrast, fears that the SEC might not grant the anticipated approvals caused Bitcoin to drop 8% in just a few hours this morning.

So what’s all the fuss about? Read on to find out what’s got people so excited about spot Bitcoin ETFs, why the SEC has hesitated to approve any up until now, and what it means for you as an investor.

What is a Bitcoin ETF?

ETFs, also known as exchange-traded funds, are baskets of securities that trade on the stock market. That could be stocks, bonds, real estates, or commodities. Think of it like buying shares in a company that owns and manages those assets. In this case, the ETF would contain Bitcoin and investors could get exposure to the lead cryptocurrency directly from their brokerage account.

Various groups, including ARK Investment, BlackRock, and Grayscale Investments have spot ETF applications in the pipeline. The SEC has rejected previous spot Bitcoin ETF proposals on fears of fraud and market manipulation. It’s concerned there aren’t enough investor protections in crypto. However, last year, a court ruled that it was wrong and the SEC did not challenge the decision.

In recent months, it’s been in detailed discussions with various prospective ETF issuers, fueling speculation that we may soon see an approval. The SEC has until Jan. 10 to decide whether it will approve the initial applications. Several analysts believe it will happen before that. Others say the SEC might want more time, or reject the applications altogether.

The SEC approved a Bitcoin futures ETF a few years ago, but the spot ETF is a different kettle of fish. Futures are a type of derivative. If you own futures, you own a contract to buy or sell that asset at a certain price in the future. You don’t actually own the asset. A spot Bitcoin ETF would hold Bitcoin rather than contracts to buy or sell the crypto.

What a Bitcoin ETF might mean for crypto investors

If the SEC approves a spot Bitcoin ETF it would mean people could buy Bitcoin without having to use a crypto exchange or broker. It won’t solve all of crypto’s issues, but being able to access Bitcoin from the stock market could remove one big hurdle for institutional and retail investors alike. It would make it safer and easier to buy and store Bitcoin.

The high-profile collapse of several top crypto exchanges highlighted the limited protections in the crypto world and severely dented investor confidence. Crypto assets do not have the same protections as securities in a brokerage account or cash in a bank. If you leave your cryptocurrency on an exchange, you may lose everything if that exchange fails or is hacked. While crypto investors can opt to store their Bitcoin in a crypto wallet, this takes knowledge and brings its own risks.

In contrast, shares in an ETF — even a spot Bitcoin ETF — would be held in a brokerage account and covered by SIPC insurance. SIPC stands for Securities Investor Protection Corporation and covers up to $500,000 of customer assets in the event your brokerage collapses.

SIPC insurance does not protect against volatility or poor market performance. So if Bitcoin collapses completely, you would lose your investment whether you held Bitcoin in an ETF or any other form.

What steps crypto investors might take

First of all, try not to get tied up in the frenzy around a Bitcoin ETF. Speculation is rife in the cryptocurrency world, which can mean prices soar in the run up to big news events only to fall when the event actually happens. For example, Ethereum’s (ETH) price dropped after its long anticipated merge to a more sustainable mining model.

Take a step back and think about Bitcoin’s long-term potential and how it might fit into your portfolio. Make sure you understand the risks involved. If the SEC approves a Bitcoin ETF, that won’t automatically make crypto safe. The industry is still relatively new and unregulated and there are a lot of questions about how it might unfold.

For example, we don’t yet know what shape a U.S. regulatory framework will take. Some fear it could cripple this emerging industry while others believe it would give the industry stronger foundations from which to grow. A lot depends on the details, which have yet to be hammered out. But increased regulation will have an impact on crypto prices in the short term.

If you’re considering buying Bitcoin for the first time, be prepared for volatility. Crypto fluctuates much more dramatically than the stock market, which can come as a shock. I’ve seen my crypto portfolio’s value drop by around 50% in a matter of months, and it is unnerving to say the least. Make sure high-risk assets like crypto only make up a small percentage of your portfolio, and only invest money you can afford to lose.

Key takeaway

A spot Bitcoin ETF approval could change the crypto landscape, making it easier and safer to hold the granddaddy of crypto. However, don’t assume it will solve all of crypto’s issues. The volatility and regulatory challenges won’t go away just because the SEC greenlights these ETFs, assuming it does grant the expected approvals.

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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.Emma Newbery has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.

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