Think twice before buying these things. yurakrasil / Shutterstock.com
There are certain purchases that buyers tend to regret. No, that doesn’t mean everyone: There are plenty of happy boat and hot tub owners out there, and surely more than a few people count their timeshare property as a true delight. But when faced with one of the potential purchases listed here, it’s a good idea to take a breath and think seriously about whether to buy it.
If you win a massive lottery jackpot, what should you do with the money? Here are some good options.
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Let’s face it. You aren’t likely to win the Powerball jackpot anytime soon. While it isn’t impossible to win the Powerball (after all, someone has to), you are more likely to become president of the United States or to get struck by a meteorite.
Having said that, it can be fun to dream, and there are some smaller (but still rather massive) lottery prizes that are a little further away from the impossible. So with that in mind, if you were to win a multi-million dollar lottery prize, here are some of the best things you can do with that money immediately to prevent yourself from becoming one of those cautionary tales about a lottery winner that goes broke.
There are some moves you should definitely make if you win the Powerball, as my colleague Robin Hartill, CFP, discusses. For example, hiring an attorney and planning for taxes are important steps to take.
But what should you do with the money when you get it? Here are just a few of the top choices.
One important thing to keep in mind is that if you already have several hundred million dollars, you don’t need to swing for the fences. A modest return from a safe investment can be more than sufficient.
As of this writing, some of the best online high-yield savings accounts have APYs of 4.50% or greater. If you win a $1 billion Powerball jackpot, you’d receive a little less than half as a lump-sum payment, and after taxes, you’d be looking at an actual payout of about $300 million, depending on what your state and local tax situation is.
If you put this money into high-yield savings accounts and certificates of deposit (CDs) with an average APY of 4.50%, this would produce $13.5 million in annual income.
Of course, there are some drawbacks. This would be taxable income, for starters, and there’s a solid argument to be made in favor of several other choices. Plus, savings account APYs can fluctuate over time.
If you simply want safe returns, like you’d get from savings accounts and CDs, there’s a good argument to be made that the best choice is to not take a lump-sum payout and instead elect to receive an annuity for the full amount.
With a billion-dollar jackpot, your payments from a 30-year annuity would be around $33 million per year for 30 years, and you’d only pay tax on this income every year — not on a lump-sum payout and then on your interest income.
When you have a massive sum of money, taxes become a big consideration when it comes to investments. Even with the preferential treatment of long-term capital gains and dividends, the top tax rate will take a 23.8% bite out of your money. And ordinary income (including interest) is taxed at the top 37% income tax rate for high earners.
The national average for 30-year AAA-rated municipal bonds is 4.10% as of this writing, and while this is less than you can get from high-yield savings accounts, this is tax-free income that is locked in for 30 years.
While they aren’t the most stable investment, the reality is that stocks have outperformed every other major asset class when measured over a period of several decades. You don’t need to do anything fancy — a portfolio of basic index funds can be a great way to go.
As a final thought, I’d argue that the best investment you can make with a massive windfall is to hire a professional to help.
As a Certified Financial Planner, I’m admittedly a bit biased here. However, to be perfectly honest, I’m a pretty well-versed investment professional, and I have graduate-level education in financial planning. And I’m not sure I’d be comfortable managing several hundred million dollars by myself with absolutely no outside guidance. Don’t get me wrong, it would certainly be a good problem to have, but the reality is that many ultra-high-net-worth individuals have a team of people who help them manage their finances.
A financial planner isn’t free. For a full-service planner who will make investment decisions on your behalf, you can expect to pay in the range of 0.5%-1% of the assets under management per year. But paying for a professional who has experience investing for wealthy families can be an excellent strategy, especially if you don’t know what you’re doing. In addition to investment guidance, a competent Certified Financial Planner can also help with estate and tax planning, which would become a big concern if you won the Powerball.
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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.
With minimal hassle, you can convert leftover food into something totally delicious. Aaron Freeman / Money Talks News
Everyone looks forward to Thanksgiving dinner with all the trimmings. And then, by Saturday, we’re all sick of those same foods. Gag me with a turkey sandwich, right? The key to leftovers is making them feel like a different meal with a new texture and flavor profile. Give leftover stuffing a crunchy panko crust — inside these yummy croquettes is a tender piece of turkey! Turn butter into a…
When you forget to pay your credit card bill on time, you’ll pay late fees. Find out what to do to avoid extra credit card fees like this.
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While credit cards are a helpful payment tool, they should be used with care. It’s essential to only spend what you can afford and pay your bill on time every month. Otherwise, you’ll be charged extra fees. A recent study found that U.S. consumers spent more than $14 billion on late fees in 2022.
Find out how much the average late fee is and discover what steps to take to avoid fees like this.
The Consumer Financial Protection Bureau (CFPB) conducts a biennial report on the state of the consumer credit card market. These data-packed reports provide insight into how U.S. consumers use credit cards. The CFPB recently released its 2023 report, which examines 2022 consumer credit card data.
When credit card users miss a payment or pay their credit card bills late, credit card issuers impose late fees. According to the report, in 2022, U.S. credit card users were charged $14.5 billion in late fees. This figure is significantly more than the $11.3 billion in late fees reported in 2021 and $11.9 billion reported in 2020.
While the amount of fees charged can differ by credit card issuer and credit score, the average late fee cost in 2022 for all credit card users was $32. This is up by $1 from $31 in 2021. Even if you only make one late payment a year, it wastes money. It’s in your best interest to ensure you pay your credit card bills on time to avoid paying unnecessary extra fees like this.
Paying your bills on time is also wise because payment history significantly influences your credit score. Your payment history makes up 35% of your FICO® Score. Paying your bills on time every month can help you avoid negative marks on your credit report.
When life gets busy, it can be easy to lose track of essential everyday tasks. But the good news is there are steps that you can take to eliminate forgetfulness so you’re not charged credit card late fees. Here are two options to consider if you’re worried about forgetting to pay your bill.
Through your online credit card account, you can set up automatic payments. Once you do this, your bill will be paid automatically each month with your chosen payment method, such as your checking account. If you want to avoid expensive credit card interest charges (as well as late fees), make sure you choose to pay the entire credit card bill, not just the minimum payment due. Doing this can help you avoid carrying credit card debt.
Another option is to enable payment reminder alerts through your credit card account. You can choose to get an email or text message alert reminding you that your bill due date is coming up soon. Most issuers allow you to decide how many days beforehand you get the alert. This is an excellent solution if you want to avoid automatic payments but need an extra reminder.
Check out our personal finance resources for more tips related to essential money matters.
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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.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Natasha Gabrielle has no position in any of the stocks mentioned. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.
Home sales are down — but it’s not because buyer demand is gone. Read on to learn more.
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There’s a reason so many buyers have struggled to purchase a home — prices are high at a time when mortgages are expensive to sign.
Mortgage lenders slashed their rates in 2020 as the COVID-19 pandemic fueled a broad economic crisis. But mortgage rates have risen sharply since early 2022, putting more of a strain on buyers at a time when home prices are high.
In October, the median existing home sold for $391,800. That’s a 3.4% uptick from a year prior, according to the National Association of Realtors. At the same time, home sales were down 14.6% in October compared to October of 2022. And given that slump, you’d think home prices would be following suit.
But the reason home prices are rising as sales are dropping has nothing to do with buyer demand or a lack thereof. Rather, it’s a matter of absent real estate inventory.
Many homeowners locked in affordable mortgages in 2020 or 2021. And many of those who weren’t looking to buy were able to refinance their existing mortgages to a lower rate.
The result? Right now, there are many property owners sitting on mortgages in the 3% range who don’t want to swap those loans for a rate of upward of 7%, which is where rates are trending today. Because of that, there’s been a serious lack of available homes on the real estate market. And when there aren’t homes for people to buy, sales decline. It’s that simple.
But to be clear, that decline in home sales isn’t giving buyers any sort of advantage. It’s only, if anything, become a source of frustration.
If you’re trying to buy a home, there are several humps you’ll have to get over. First, there’s the issue of affordability. Elevated home prices and mortgage rates might force you to stretch your budget, so crunch those numbers carefully to see what you can afford. You can use The Ascent’s mortgage calculator to help.
As a general rule, you really do not want your housing costs to exceed 30% of your take-home pay. And that 30% should include expenses related to housing like property taxes, homeowners insurance, and homeowners association fees, if applicable.
Next, there’s the issue of being able to find a suitable home. It’s important to know what features you can and shouldn’t compromise on when you’re looking to buy in a market that sorely lacks inventory.
Features like an updated kitchen or finished basement are something you can attain in time. If you buy a home whose kitchen has laminate countertops and lime green appliances, you can make changes as money allows. So that’s something worth compromising on.
But you can’t change the location of your home over time. So if it’s really important to be in a certain neighborhood or school district, make that a priority.
Similarly, if you’re a family of five, squeezing into a two-bedroom home may not be optimal. Some properties allow for the possibility of an addition. But if a home you’re looking at doesn’t, and it’s much smaller than what you want, then you may want to pass.
Home sales are likely to remain sluggish until housing inventory picks up. And that may not happen for a while. So the best you can do as a buyer is try to set a reasonable budget and focus on the right priorities in the course of your home search.
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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.
Discover which states embraced the Costco revolution in 2023, and which pockets of America remain untouched by bulk-buy bliss. Timon Walter / Shutterstock.com
It might seem like Costco is everywhere, but that’s not exactly true. Two states got their first stores just this year — and two others remain Costco-free. On Nov. 17, Costco opened its first store in Maine. The store is located in Scarborough, just south of Portland. Reports said hundreds of people waited outside the door just to get a first look at the retailer’s new location.
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