Money Management

Luxury goods can increase significantly in value. Find out if they’re a good investment opportunity or if you’re better off with more traditional options. 

A stainless steel Rolex Daytona currently retails for $17,950. Resellers can get over $30,000 for that same watch, because the demand makes it difficult to get at an authorized dealer. That’s a return of over 67% — something any investor would be happy with.

It’s no surprise then that people would become interested in the idea of investing in luxury goods. Hobbyists, and anyone else who sees dollar signs, often ask if they should buy watches, whiskey, handbags, or other high-end items as investments. It’s certainly possible to make money this way, but it’s not as easy as you might think.

How luxury goods fare as an investment

The Motley Fool recently released research on alternative investments. Thanks to that, and The Wealth Report by Knight Frank, there’s information on exactly how much of a return luxury goods have delivered over the last 10 years.

To evaluate these returns, I’ll compare them to the S&P 500. This index of 500 of the largest publicly traded companies has a 10-year return of 152.9%. Anyone can invest in it, as there are quite a few S&P 500 mutual funds and exchange-traded funds (ETFs).

There are many types of luxury goods, and they have 10-year returns ranging from 16% to 373%. Only three types of luxury goods outperformed the S&P 500 in terms of 10-year returns:

Rare whiskey: 373%Cars: 185%Wine: 162%

Watches also came close, with a 147% return. Everything else had a 10-year return of under 100%, including art (91%), handbags (74%), coins (59%), and jewelry (44%).

Based on those numbers, it may seem like rare whiskey is a home run. Not quite. Returns on luxury goods fluctuate, and what’s hot one year may be a dud the next. Even though whiskey was the top performer over the last 10 years, it was the worst performer over the last 12 months, with a return of just 3%. In the last year, art has done the best, with a 29% return.

The pitfalls of investing in luxury goods

We already touched on one of the problems with investing in luxury goods: It’s hard to predict what’s going to appreciate in value. You’re not just picking a type of luxury good either, but a specific item. Some watches and cars skyrocket in value; others don’t.

There’s also the issue of sourcing items. You’re probably not going to find one of those rare whiskeys at your local BevMo. The items that gain the most value are the ones that are most in demand, and they’re in demand because they’re hard to find. Also keep in mind that counterfeits are common with luxury items, so you need to be careful about what you buy.

Even if you’re able to buy a luxury item that’s a sound investment, there are other potential hurdles:

You’ll need a way to store it and keep it in pristine condition. This can be difficult, especially with goods that need to be kept within a certain temperature range, like whiskey and wine.You’ll need insurance to protect your investment. The cost will vary depending on what you’re insuring, but 1% to 2% of the value is common.You’ll need to find a buyer. That may mean going through an online platform that takes a percentage of each sale. If you ship the item, that’s an additional cost.

These are all concerns that don’t come up with stocks. With any of the top online stock brokers, you can make the investments you want in minutes. You don’t need to pay to insure anything. And when you want to sell, you can just place a sell order with your broker. These often process in seconds.

Should you invest in luxury items?

It’s possible to make money by investing in luxury goods. But it’s unlikely that you’ll make more than you would’ve by just investing in a quality investment fund, such as an S&P 500 ETF. As you saw, most luxury items don’t outperform the S&P 500. There are also additional costs involved, including storage, insurance, shipping, and sales fees.

Luxury items are better enjoyed as a hobby than as a money-making endeavor. For your investment portfolio, you’re better off sticking to investment funds or individual stocks.

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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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Sick of paying full price for products you find online? Use these four methods to find better prices fast. 

Most of us know a great deal when we see it. But, when it comes to online shopping, the “seeing it” is often the problem.

Many great internet deals go unnoticed, simply because online retailers don’t advertise them widely. While few of us have time to go down a rabbit hole for our personal finances, the beauty of the internet is that you don’t have to. With a few methods, you can make those big savings come to you. Here’s how.

1. Download browser extensions

Browser extensions are little pieces of software that can add new functionalities to your favorite web browser, like Safari or Chrome. For shopping, these functionalities can include comparing prices at checkout, applying coupon codes, and activating cash back offers. Here are three popular browser extensions:

Capital One ShoppingHoneyRakuten

The benefit of these browser extensions is that you can download them and let the software work in the background. Then, at checkout, you can refer to them to see if there’s a better deal for the same item on another website. They’re free to use, but be aware that downloading them could slow down your browser.

2. Get familiar with deal websites

Deal websites do the bargain hunting for you. They scan the web daily for the best deals and offer you a curated list of products. You can use them to discover what’s on sale today, or you could use their search bars to look for deals on specific products. A few deal sites you might want to check out include:

Deal NewsDealcatcherDaily Steals

My favorite deal website is The Krazy Koupon Lady. The website and app are simple to use, and you can narrow down deals by categories (my favorite is “Top Under $1 Deals”). While some of these deals can be found only in stores, others are online. You can even sign up for newsletters to get coupons and deals delivered to your inbox.

3. Use price comparison apps

Price comparison apps take the guesswork out of finding the lowest price by comparing deals with different merchants for the same purchase. They’re free to use, and you can use them both in stores and online. Many come with barcode scanners, which let you compare prices right from the product’s UPC, while others have powerful search functions that can check prices for specific items.

I use multiple price comparison apps, but my favorite is Price.com. Like other apps and websites, Price.com will check prices for new and used items across thousands of online merchants. But unlike other apps, which are filled with advertisements, Price.com is easy to navigate and has an intuitive interface. Its prices aren’t always accurate, but it comes pretty dang close.

4. Leave items in your shopping cart

This is the oldest trick in the book, but it works. If you don’t need to buy something now, leave it in your shopping cart. Many retailers will try to entice you to buy it by sending you promotions for a certain percentage off. These “abandoned cart promotions” could take up to a week to arrive, but if you’re patient, you might get a discount.

Although good deals can be hard to find on your own, these four methods can help you cast a wide net. When you do find one, use a credit card that earns more for online shopping, like the Bank of America® Customized Cash Rewards credit card. This cash back card earns 3% back in an eligible category of your choice, one of which is online shopping. Combine it with the great deals you find online and over time, you could save more than you think.

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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.Bank of America is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool has positions in and recommends Bank of America. The Motley Fool has a disclosure policy.

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Nobody wants a surprise tax bill. Read on to see why yours may be higher than usual when you file your 2023 return. 

It’s often (though not always) the case that the more money you earn, the more taxes you have to pay. Our tax system is set up with different tax brackets that impose a higher rate of tax as your earnings increase. (To be clear, that higher rate of tax only applies to your highest dollars of earnings.)

But it’s not just wages from a job that you have to pay taxes on. Any income you earn is something the IRS wants a piece of. And that includes the interest you earn in a savings account.

Meanwhile, savings accounts have been paying generously in 2023, with many high-yield accounts paying in the ballpark of a 5% APY this year. But while that’s a good thing from an income perspective, it may lead to a higher tax bill for 2023.

Will you owe the IRS money in early 2024?

Your 2023 tax return is due on April 15, 2024. And if you earned a lot of interest in your savings account in 2023, then during the first few months of the new year, you might have to write the IRS a bigger check than you expected.

The problem with interest income from savings is twofold. First, it’s treated as ordinary income and is subject to the highest tax rate that applies to you.

Secondly, unless you’re earning a ton of interest in your savings account, you’re probably not making estimated tax payments on that money during the year. But think about it — when you collect a paycheck from work, you have taxes taken out. And when you earn a consistent income from a side hustle, you’re supposed to pay the IRS a portion every quarter.

If you earned a decent sum of interest in your savings account this year but never paid the IRS a portion of that total, then it’s conceivable that you might have a notable tax bill on your hands in 2024.

How to minimize that tax hit

If you earned thousands of dollars in a savings account this year, then you may be looking at owing the IRS money in 2024. But you may be able to minimize that tax bill or even wipe it out completely by making some strategic moves before the end of the year.

One thing you can look at is selling investments in your brokerage account at a loss. You can use a capital loss like that to offset up to $3,000 in ordinary income. So, let’s say you take a $3,000 loss but made $3,000 in interest in 2023. Your loss could offset that interest income.

Another thing you can do is contribute more funds to an IRA, 401(k), or HSA. Doing so will shield more of your income from taxes, thereby indirectly offsetting your interest income.

With an IRA and HSA, you technically have until next year’s tax-filing deadline to finish funding your account. But you only have until Dec. 31 to finish funding your 401(k) for 2023 purposes.

Earning more interest on your money is a good thing. But it’s important to recognize that your tax bill may be higher because of it.

If you think you’ll earn a lot of interest in your savings account in 2024, one thing you may want to do is make estimated tax payments on it every quarter. You probably don’t need to do this if you’re talking about, say, $1,000 in interest. But if you’re earning 10 times that much in interest, it’s something to consider. Either way, talking to an accountant and getting their input is a good idea, especially if you have a tax professional you work with already.

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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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Reselling Taylor Swift tickets may have made more sense than attending a show. Read on to see how that might impact your taxes. 

Taylor Swift’s Eras Tour was one of the most popular concert tours of the year, with fans clamoring to go so much that they were willing to pay a serious premium to snag a ticket. The average price of a Taylor Swift ticket during the Eras Tour was $253.56, according to Pollstar. But the average price of a resold ticket was a whopping $2,183, according to resale research site TicketIQ.

If you were lucky enough to snag Taylor Swift tickets, you may have decided to forgo attending the concert and instead walk away with a giant profit. But you should be aware that that could end up causing you a bit of a tax filing headache.

The IRS gets a piece of all earnings

Whenever you earn money, whether it’s through a salaried position, a side hustle, or interest in a savings account, the IRS is entitled to a portion of it. The problem, though, is that while salaried wages typically have taxes withheld, most other types of income don’t.

For example, let’s say you’re a salaried employee who gets a paycheck two times a month. The amount of your paycheck generally represents your net pay, which is wages after taxes are removed.

By contrast, let’s say you do freelance web design work on the side. Any money you earn from that gig will represent full, untaxed earnings. From there, it’s up to you to set aside money for your tax bill and to pay the IRS as you earn.

READ MORE: Best Tax Software

Similarly, when you profit from selling concert tickets at a higher price than what you paid for them, you’re on the hook for taxes on that profit. So if you paid, say, $250 for Taylor Swift tickets but sold them for $2,250, you owe the IRS taxes on that $2,000 profit. And you’ll need to make sure to set aside a portion of that profit to fulfill that tax obligation.

How will the IRS know about your profit?

So that’s the tricky part. If you were paid cash for your tickets and there’s no paper trail, it might be difficult for the IRS to determine that those tickets were sold. It’s not as if an agent tracked your online ticket purchase and then followed you the night of the concert to make sure you actually attended yourself.

But while you might technically be able to get away with selling concert tickets at a profit without the IRS knowing, it’s against the rules and a risk you may not want to take. It’s similar to people who work side hustles and get paid in cash. Technically, it may be possible to get away with not reporting that income in its entirety. In practice, that’s illegal, and it’s frankly not smart, because the penalties for underreporting income could be substantial if the IRS finds out.

Also, if there’s a record of your ticket sale, like a Venmo transaction, then that’s something the IRS might come across during an audit. It’s true that the IRS has delayed new 1099 reporting rules that would’ve otherwise impacted Venmo account holders for 2023. But to be clear, all the IRS did was delay a rule related to the requirement on Venmo’s part to issue 1099 forms. The rules of reporting and paying taxes on income have always been the same — when you earn money, you have to pay a portion of it in taxes.

As such, if you sold Taylor Swift tickets, or any concert tickets, at a profit in 2023, talk to an accountant about figuring out your associated tax bill. And if you’re someone who earns income regularly that isn’t taxed immediately, such as from a side hustle or full-time freelance business, it’s a good idea to enlist the help of an accountant to help you set up estimated tax payments during the year.

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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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Want an extra $600 in 2024? Read on to see how to trim your costs by $50 a month. 

It’s important to have money in the bank for emergencies at all times, since you never know when your car might stop running or you might have to call a plumber on the spot to fix a leaking pipe at home. But recent data from SecureSave finds that 63% of Americans do not have the cash reserves to cover an unplanned $500 expense.

However, if you were to save $50 a month in 2024, you’d end up $600 richer by the end of the year, which could potentially put you in a better position to cope with an unplanned expense. So if you’re eager to boost your cash reserves by $50 a month, here are some moves worth trying.

1. Cut the cord with cable

If you have cable, you may be paying for hundreds of TV channels…only to actually watch one or two. The average price of a TV-only cable plan is $83.35 a month, reports CableTV.com. Meanwhile, a premium Netflix membership costs $22.99 a month. And a Hulu plan with ads is $7.99 a month. So swapping cable for a couple of popular streaming services could result in an extra $50 a month in your savings account.

2. Dump your gym membership

There’s a definitive benefit to going to the gym. Working out can keep you in good shape and even have a positive effect on your mood and outlook. But if you can’t remember the last time you went to the gym, then dumping your membership could be a really easy means of saving money. GoodRX says that the typical cost of a gym membership is $40 to $70 a month, so by canceling yours, you might end up being able to bank $50 on a monthly basis easily.

3. Do more food shopping and stop falling back on meal kits

When you maintain a busy schedule, meal kits can seem like a lifeline. But they can also, in some cases, be notably more expensive than buying groceries. According to an analysis by The Kitchn conducted a few years ago, swapping a classic Hello Fresh box for the equivalent amount of groceries results in a little more than $24 of savings. So if you cancel two boxes a month and go to the grocery store for ingredients instead, you might end up $50 richer.

These are only a few of the many steps you can take to lower your spending in 2024 and free up $50 a month. Take a deep dive into your personal spending and see where there’s room to trim unnecessary expenses. Maybe you have a habit of ordering takeout three times a week and the cost is really adding up. Or maybe you have a tendency to summon an Uber every time you’re too tired to deal with taking the subway home from work.

You don’t necessarily have to give up every single luxury you enjoy to add modestly to your savings. But it definitely pays to consider cutting back in some regards if your savings account could use a serious boost.

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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 positions in Netflix. The Motley Fool has positions in and recommends Netflix and Uber Technologies. The Motley Fool has a disclosure policy.

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Your next tax return might be tricky to file. Read on to see how to prepare. 

Filing taxes isn’t always a smooth process. But if you struggled with your tax return in 2023, Mark Steber, Chief Tax Information Officer at Jackson Hewitt, warns, “The upcoming tax-filing season will be yet another complex year.”

How come? For one thing, a lot of people saw the interest rates in their savings accounts soar this year. And as of this writing, the stock market, as measured by the S&P 500 index, is up around 15% over the past year.

As such, some people may be in for a shock when they file their tax returns and realize that the combination of higher levels of interest income and capital gains have resulted in a tax underpayment. Add in the general complications that can arise when filing a tax return, and it’s definitely a season for taxpayers to be vigilant.

If you’re worried about filing taxes this season — and owing a pile of money to the IRS — here are some steps to take now.

1. Start gathering your paperwork

Certain tax forms, like your W-2 from your employer or 1099 forms from the companies you contract with, may not arrive until early 2024. But you might have some paperwork that applies to your upcoming tax return just sitting around your office, like receipts for business equipment.

Now’s the time to create a physical or electronic folder and start the process of filing the documents you’ll need for your taxes. The sooner you get organized, the easier it should be to get your taxes done.

2. Line up tax help ahead of time

Steber cautions that 2024 “won’t be a year taxpayers should wait until April to file their tax returns or try and do it themselves.” If you’ve historically filed your own taxes, you may want to at least line up some tax help now for backup.

As the tax-filing deadline gets closer, good help can be tricky to come by, as many seasoned accountants tend to find themselves swamped. To avoid getting shut out, start reaching out to tax professionals in the coming weeks. You may not get many responses during the period of Christmas Eve to New Year’s Day, but you can at least get the ball rolling.

3. Make savvy year-end moves to lower your IRS burden

You may be worried about owing the IRS money in 2024. If so, take steps to lower your tax bill before the end of the year.

One thing you can do if you haven’t already is max out your IRA. Also, if you’re self-employed and need equipment or materials to do your job, purchase those things now so you can claim a deduction on your taxes in April.

You can also try deferring self-employment income to 2024 by waiting to invoice clients whom you worked for in December. And finally, see if it’s worth it to dump some floundering investments in your brokerage account. That could help offset any capital gains you have.

There’s no need to panic over the upcoming tax season. But you also want to be prepared. That means getting a head start on paperwork, finding someone to help file your return, and doing what you can to set yourself up with a smaller IRS bill.

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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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