Money Management

Interest rates are the highest they’ve been since 2007. Discover three smart ways to invest $1,000 in 2024. 

In 2023, I made the questionable decision to stick retirement money in a regular brokerage account. A mistake, in hindsight, and one that could cost me thousands in the long run. To avoid making another costly mistake, I’ve been thinking about a better way to invest.

This year has been a rocky one. According to Fed data, rates are the highest they’ve been since 2007, and the S&P 500 has yet to recover to all-time highs. In times like these, it’s important to consider investment opportunities both timely and timeless. Here are three to ponder for 2024.

1. Invest $1,000 in an IRA

My biggest regret this year is buying stocks through a regular brokerage account. Most brokers let you invest money for retirement in IRAs, which give special tax advantages. If I could turn back the clock, I’d buy stocks through my Robinhood IRA, likely saving me from needing to pay $11,000 in capital gains taxes after retirement.

The choice of whether to invest in an IRA comes down to whether you want to use that money for retirement. If so, it’s worth doing. You get tax breaks, plus all the perks of investing in the stock market. It’s such a good deal, you’re limited to investing $7,000 in your IRA in 2024.

The downside of investing in an IRA is you’re penalized for withdrawing money early, with some exceptions. An IRA is an evergreen place to invest $1,000 for retirement — the tax advantages remain constant, no matter how much rates change.

2. Invest $1,000 in an emergency fund

Finance gurus Suze Orman and Dave Ramsey are advocating for the emergency fund more strongly than ever before. They’re onto something — according to a SafeSecure survey, 63% of employees can’t cover a $500 emergency expense.

An emergency fund is a safe, profitable place to invest in your financial security. You can keep yours in a high-yield savings account and earn interest on your money. A typical recommendation is to save three to six months’ worth of expenses (or income). At that point, you can weather a lot of financial uncertainty without taking on debt.

It works by providing you with an alternative to taking out loans to pay for emergency fees like insurance deductibles, and if you were to lose your job, you could pay bills from it. It’s better than borrowing money because you pay zero interest on withdrawals. Right now, an emergency fund is a smart place to invest $1,000. Think of it as a loan to future you. You lose a little now to save later, when it could be more difficult.

3. Invest $1,000 in a CD

This year, the Federal Reserve has raised interest rates, continuing a trend that began in 2022, with huge ripple effects on financial accounts. The highest-yielding accounts now offer up to 5% or higher yields instead of 0.50% yields. In other words, there’s a lot more money to be made.

CD rates have also gone way up, and they’re better than savings accounts in one key way: they let you lock in high interest rates. Should the Fed lower rates to pre-pandemic levels, savings account rates will probably follow…but CDs will keep raking in historically high interest until they reach term. If you stuck $1,000 in a 5-year CD with a 5% APY today, but rates drop by mid-next year, you’d still be guaranteed that 5% on the remaining four-plus years of your CD term.

The downside of a CD is similar to the downside of an IRA: you get penalized for removing money early. It’s best suited for an investor with a low risk tolerance, diversified portfolio, and the power to leave a $1,000 investment alone for six months to five years.

How to choose where to invest $1,000

If my mom invested in the same places as me, she’d have a panic attack. She tolerates less risk than I do, so she chooses stabler investments. She also has a shorter time horizon than I do; it’s important to her that stocks don’t lose 50% of their value 10 years from now. That matters.

I, on the other hand, can afford to wait decades for the stock market to rebound. I can invest in volatile stocks and buy Bitcoin stress free. My priority is earning high returns over long periods of time, and knowing that makes it easy to choose where to invest in 2024.

I’ll be investing my $1,000 in an IRA. What are your priorities? The smartest way to invest $1,000 in 2024 is likely the one that suits your personal risk tolerance and time horizon.

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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.Cole Tretheway has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.

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If you haven’t tried price comparison apps, you could be missing out on good deals. Read on to see why these apps are a must-have. 

When I was growing up, my dad was always on the hunt for a deal. He could sniff one out from the car, as my mom would say, but was never satisfied when he found one. To be absolutely sure that he had, in fact, a good deal, he would go to other stores and check the price on the same item. It’s no wonder I write about personal finances — my dad basically hammered it into me.

These days, my dad doesn’t have to do all that work, though he still does to some extent. That’s because price comparison apps have made it easy to compare prices across multiple retailers, as well as clue you in on the best cash back offers. They can replace the deal-hunting excursion and save you a ton of time on your holiday shopping.

If you haven’t downloaded price comparison apps yet, here are four reasons they’re a must-have.

1. They’re free to use

You can’t beat free. Most price comparison apps charge merchants a small finder’s fee, keeping the app free for you. That said, some of these apps — like BuyVia — are loaded with ads and can make the user experience grueling at times. But for the cost of five seconds, you can get powerful price comparisons.

2. They can scan barcodes

The Amazon app, BuyVia, ShopSavvy, and Price.com all have barcode scanners built into them. This comes in handy if you spot a deal in a brick-and-mortar store and want to compare it to deals online. Some of these apps will also let you compare prices at local stores, saving you time from having to go to those stores yourself.

3. They track prices

Perhaps my favorite feature of these apps is the price tracking. Basically, you can tell these apps what you’re willing to pay for a product and they will notify you when the price has dropped to that amount. This is perfect if you miss a Black Friday or holiday deal, as you can set your threshold at the same reduced price and wait.

Some of these apps will even let you research a product’s price history. ShopSavvy does this well, but for Amazon products look no further than camelcamelcamel. Though it’s not an app, this website lets you dig deeper into Amazon products, look at their price histories, and set alerts. I’m using it right now for my Christmas shopping and, so far, it’s already saved me over $100 on a new pair of Beats headphones.

4. They find cash back and coupons

Another great feature is that these apps apply cash back offers when you use them to find or purchase products. The cash back is applied automatically and, depending on the app, you can usually cash it out for gift cards, debit cards, electronic transfers to your checking account, or a transfer to PayPal.

Price.com is excellent for this. Not only does it apply cash back offers for online purchases, but it even lets you earn cash back for in-store purchases, too. You just add a credit card to your account, activate the cash back offer, then use your enrolled card in store to earn the cash back. It’s just another way to save money on already-low prices.

Together these apps can save you time and money

When working in tandem, price comparison apps can stop you from buying something at full price or missing out on cash back offers. Of course, no single app can keep tabs on every merchant and retailer, which is why I use two or three to broaden my search. All in all, they’re a good way to replace the deal-hunting excursions of former times, helping you save time and money.

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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.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool has positions in and recommends Amazon and PayPal. The Motley Fool recommends the following options: short December 2023 $67.50 puts on PayPal. The Motley Fool has a disclosure policy.

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On the face of it, donating a car can seem like a good way to help a charity you care about. Find out why car donation isn’t always so straightforward. 

If you’ve got an old car you want to get rid of, donating it to charity may seem like a good option. In theory, it could be a great way to help a worthy cause and cut out some of the hassle of selling. Not only that, but some sites say you can get a tax break on your car donation too.

Unfortunately, the reality is not so simple. For example, some people might get a tax break in some scenarios, but it won’t work for everybody. Similarly, there are plenty of legitimate charities that will take car donations, but there are also some fraudsters out there. Here are some of the biggest car donation myths and how you can deal with them.

Myth 1: All car donation charities are legitimate

You may have heard or seen advertisements — or even received cold calls — from so-called car donation charities. Sadly, a number of them are not as charitable as they pretend to be. Nonprofit Point’s blog has some horror stories of organizations that took people’s donations and did very little good. For example, it discusses a company called Fund Raising Partners that raised $1.6 million through vehicle donations in 2015 and only gave 1.7% of it to charity.

What you can do: If, like me, you already have a couple of charities and causes that you know and trust, try contacting them to see if they will take a vehicle donation. Many of them will.

If you’re donating your car to an organization you aren’t familiar with, do a bit of digging first. Here are a few ways you can check it out:

See if it is registered as a 501(c)(3) — a charitable organization — with the IRS: In addition to showing the group is legitimate, this also matters if you plan to claim a tax deduction. You can use the IRS search tool to find tax exempt organizations.Check reviews and ratings on charity background sites: These three are all worth a look:CharityWatch.orgCharityNavigator.orgGive.orgSearch the charity online and see if there are any reports of fraud: Put in the name of the charity and the word “scam” or “fraud” to see what comes up.

Myth 2: All the money will go to charity

In most situations, when a car is donated to charity, it will often be auctioned off or sold for parts rather than used by the organization. Many charities use third parties to do this, as they are not experts in handling used cars, and those third parties will take a cut. The issue is that in some cases, the charity might get less than 20% of the proceeds of the sale. If your car sold for $1,000, the charity would get less than $200 in that scenario.

What you can do: Find out exactly what percentage will go to the charity involved. The best programs give at least 70% to the charity. You might also sell the car yourself and donate the proceeds.

Myth 3: You’ll always be able to claim a tax deduction

You can only claim a tax deduction on a donated car if you itemize your deductions. Around 90% of Americans take the standard deduction, which is a set amount that depends on your filing status. If you’re one of them, you wouldn’t get tax benefits from donating a car.

Even if you itemize, you’ll need to jump through some hoops in terms of paperwork. A lot depends on how the charity uses the car, how much it got by selling your car, and what the fair market value of the car is.

Finally, according to the IRS, if you donate your car to a for-profit company which then gives a percentage to the charity, that donation may not be tax deductible, period. There’s a difference between a company that acts as an agent and one that’s an independent entity where the charity has no control over its activities. If there’s a for-profit company involved, make sure they are acting as an agent.

What you can do: Work out whether your itemized deductions will be higher than your standard deduction. That means calculating how much you could deduct for the following categories: donations to qualified charity, state and local taxes, certain medical costs, property taxes, and home mortgage interest. There are limits or rules for each category, and you’ll need to be able to support your claims with receipts or bank statements.

The standard deductions are high enough that in many cases, it doesn’t make sense to itemize just so that you can claim the tax deduction on your car donation. For most people standard deductions in 2024 are as follows:

Married couples filing jointly: $29,200Single taxpayers and married individuals filing separately: $14,600Heads of households: $21,900

Myth 4: You don’t need to do any paperwork

Few things in life happen without a bit of red tape, and car donation is no different. If your name is still on the title for the car, you could be liable if the car gets a ticket or is used for something illegal.

What you can do: Make sure you sign your car’s title over to the charity and check out your state’s requirements for the record of the sale. In some states, you’ll need to remove the license plate before you donate the car.

Get a receipt from the charity. If you plan to claim a tax deduction on the donation, you will need to file a 1098-C for vehicles worth over $500. You may also need to file form 8283. Check with the IRS or a certified tax adviser to make sure you get all the necessary papers.

Consider selling the car yourself and donating the money

The sad truth is that donating a car is not as simple as the adverts make it sound. Indeed, if you have the time, it may make more sense to put yourself in the driver’s seat and sell the car yourself. You might be able to raise more money for your selected charity, meaning a bigger boost to their bank account balance.

There are pros and cons to both routes, particularly as selling an old car can be time consuming. However, if you cut out the middleman, you could also split the proceeds between a couple of different charities. You might even put a portion into a savings account or toward the cost of a new car and donate the rest.

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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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Homes are expensive now. Will that change in 2024? Read on to find out. 

It’s been a really tough year for prospective home buyers. First, mortgages, like most other loans, have been expensive to sign. There’s also been a glaring shortage of available homes on the market, which has made it harder for buyers to find a suitable place for them.

And then there are home prices. You’d think higher mortgage rates would’ve driven buyers out of the market, thereby leading to a drop in home prices. But that’s not the case.

In October, the median existing home sale price was $391,800, according to the National Association of Realtors. That’s a 3.4% uptick from a year prior. October also represented the fourth consecutive month of annual home price gains.

If you’re trying to buy a home, you may be wondering what’s in store for 2024. But unfortunately, home prices might remain stubbornly high next year for one big reason.

A really frustrating holding pattern

Whenever there’s more demand for a given commodity than there is supply, its price tends to rise. That’s what’s been happening in the context of the housing market.

The market has lacked inventory on a national scale since the start of the year. And a big reason boils down to mortgage rates.

In 2020 and 2021, mortgage lenders dropped their rates, and buyer demand soared. Existing homeowners also rushed to refinance their mortgages to take advantage of those lower rates.

But because rates have climbed so substantially since then, the typical homeowner with a mortgage isn’t exactly rushing to move. Most people with a 3% mortgage don’t want to swap it for a mortgage in the 7% range. And they can’t afford to, either.

So basically, we’re stuck in a holding pattern. If mortgage rates remain high, people aren’t going to want to move. If people don’t list their homes, inventory will remain stagnant. And if inventory doesn’t pick up, home prices are unlikely to come down.

Now, mortgage rates might fall to some degree in 2024. But they’re unlikely to drop a lot anytime soon. Because of that, buyers may, unfortunately, be in for a continued streak of high housing prices in the new year.

Will you be able to afford a home in 2024?

Since home prices are likely to remain high in the new year, you’ll need to crunch your numbers carefully to see if you can afford to buy. And you should try to stick to the rule of not spending more than 30% of your take-home pay on housing.

That 30%, by the way, should include not just your monthly mortgage payments, but also, property taxes, homeowners insurance, and other predictable housing expenses, like HOA fees. Going beyond that 30% threshold could put you at risk of falling behind on your costs.

If it’s been a struggle to find an affordable home this year, one thing you may want to do in the new year is look for a home in January or February. There may indeed be even less inventory in the winter than the rest of the year, since winter isn’t a popular time to list a home. But it’s also a pretty unpopular time to buy a home.

So if you attempt to buy during the winter, you might have less competition. And that could give you more negotiating power so you’re able to potentially get a seller to come down on price.

It may be a while until homes become more affordable. You don’t have to give up on buying in 2024 per se, but know that housing market conditions may not end up being so much different from how they are today.

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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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