Learn the secrets to building seven-figure wealth straight from rich folks themselves. Ruslan Huzau / Shutterstock.com
What does it take to get rich? To find the answer, it makes sense to go to the source — millionaires themselves. Ameriprise surveyed 580 Americans ages 27-77 who have at least $1 million in investable assets and asked them how they became wealthy. Here are the answers they gave, from least to most common.
Not all the purchases you can make at Costco are on the shelf next to the rotisserie chickens. Trong Nguyen / Shutterstock.com
Costco doesn’t just sell pallets full of paper products and cereal boxes big enough for daycare centers. The popular warehouse store also sells everything from gold bars to caskets. But you might not know that your favorite bulk supplier also sells various types of insurance. You might not even think about it when you’re shopping, as it’s not exactly sitting on the shelves next to the rotisserie…
Hosting Thanksgiving? Here’s how to pull off a great meal without breaking the bank.
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For years, my husband and I have hosted Thanksgiving dinner for our family. And while we enjoy doing it, I can admit that it’s a lot of work — and also a lot of money.
In 2022, the average Thanksgiving dinner for 10 cost $64.05, according to the Farm Bureau. But my husband and I spent a lot more than that in recent years. I don’t have an exact credit card tab because I didn’t keep my grocery store receipts, but I’d estimate that we spent over $200 on last year’s feast.
This year, however, we’re hoping to keep our costs down a bit. And here’s how you can do the same.
My husband and I enjoy welcoming family into our home and never want to ask people to bring a specific item. But even though we’ve said “just bring your appetite” in the past, inevitably, family members of mine show up with extra desserts, appetizers, and so forth.
So this year, we’ve decided that instead of saying we’re good and having people show up with random foods, we intend to ask people to bring specific dishes so we don’t have to buy them. And you can do the same. Ask one guest to bring a fruit platter, have another bring a salad, and have a third pick up a couple of pies.
People don’t like to show up empty-handed. Giving them something specific to bring makes things easier on everyone.
I like to put out some appetizers before the main meal on Thanksgiving, and I’ve been known to splurge on fancy cheese and crackers. I’m not doing that this year.
The way I see it, if I’m serving a meal with eight different side dishes and then a full-blown dessert course, I don’t need fancy appetizers on top of that. So my plan is to put out some chips and dips and call it a day until we’re ready to serve the main meal. You might free up more money for your savings account by going light on appetizers, too.
My family members aren’t particularly big drinkers, so usually, a couple of bottles of wine will suffice at my Thanksgiving dinner. But if you’re someone who normally picks up a case of wine, that could easily add to your costs. You may want to consider making this year’s Thanksgiving a BYOB affair.
There’s nothing wrong with asking people to bring a bottle of their favorite beverage — whether it’s wine, sparkling cider, or even soda or juice. And if you don’t feel comfortable asking people to bring a beverage, just send a note saying that you’re skipping the booze this year. From there, people can choose to bring a bottle or not.
In the past, my husband and I have served multiple trays of each side we’ve prepared because we’re worried about popular ones running out. And without fail, year after year, we’ve found ourselves with full trays of leftover food.
This year, we’re making one tray of each side dish and hoping for the best. We’ve realized that means there may not be seconds of every single thing, but we don’t want to wind up with an excessive amount of leftovers we struggle to eat.
If you’ve been known to overcook for Thanksgiving in the past, set a limit this year. If anything, make a second dish of your most popular side, but leave it at that.
Thanksgiving dinner doesn’t have to break the bank if you’re careful with your approach. You may want to follow these tips to spend less while still pulling off a fantastic meal.
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Making consistent contributions to your investment account is a great way to build wealth. Here’s how $500 a month could eventually make you a millionaire.
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The short answer to what happens if you invest $500 a month is that you’ll almost certainly build wealth over time. In fact, if you keep investing that $500 every month for 40 years, you could become a millionaire. More than a millionaire, in fact.
Investing is about buying assets you believe will increase in value. I’ll admit, I was nervous about the idea of investing for the longest time. I thought it was best left to the pros on Wall Street, but I was wrong. In fact, there are many ways individuals can invest without setting foot on a trading floor.
That doesn’t mean buying or selling individual stocks willy-nilly. Researching and picking stocks does take time and isn’t for everybody. But there are investment strategies that don’t involve scouring the financial news. For example, you might open a brokerage account and put money into index funds, mutual funds, or ETFs to get access to a mix of assets in one fell swoop.
Whether we’re talking about $500 or $50 a month, the magic of consistent investing is that compound interest works in your favor over time. You’re essentially using your gains to generate more money. Depending on the returns you earn, the combination of time and compound interest can be powerful.
The table below shows how different average returns on a $500 a month investment might work out over the decades. It may feel like a lot to take in, but it’s a great way to see how your wealth-building might pan out. For me, there are two big takeaways:
When it comes to returns, even a couple of percentage points can make a huge difference to your portfolio over time.The longer you contribute to your portfolio and let your money work for you, the better.
This table does not factor in inflation or the fact that we’re talking about average returns. Inflation is one of the arch enemies of wealth-building, because it means your money won’t go as far. The ideal is that your investments outpace inflation, so you still come out ahead.
The good news is that returns of 8% or even 10% are achievable for long-term retail investors. Sure, there may be years when your investments perform well and others when your portfolio declines. But over 20 or 30 years, those short-term fluctuations can even themselves out.
You don’t have to take big risks to get decent returns. We touched on different types of funds at the start, so here’s a quick breakdown:
Index funds: Index funds are baskets of stocks that track a specific index, such as the S&P 500. Over the past three decades, the S&P 500 index has generated an annual compound average annual growth rate of over 10%.ETFS or exchange-traded funds: These are very similar to index funds. Many ETFs also track specific indexes, but there are differences in how they are traded and how the taxes work.Mutual funds: As the name suggests, actively managed mutual funds have a fund manager who chooses what stocks to buy.
If you’re trying to maximize your returns, pay attention to fees, also known as expense ratios. Bear in mind that mutual funds often charge higher fees to cover the cost of managing the fund. This is only worth it if the fund generates enough returns to cover that cost. In contrast, the annual fees on index funds and ETFs are often very low. For example, several of the best low-cost index funds have expense ratios of 0.02% or 0.03%.
In addition to stock market investments, you might also look to add bonds and other assets such as real estate to your portfolio. Bonds tend to generate lower returns than stocks, but are regarded as lower risk. Without getting too technical, if you buy a bond, you’re basically lending money to an organization or government and you’ll get paid interest on that debt.
The trick is to find the right mix of assets to suit your risk tolerance, and that will almost certainly change with time. You might shift to lower-risk assets as you’re nearing retirement, for example. What matters is to start with a plan that suits your circumstances today. A robo-advisor (or real-life financial advisor) might be able to help you get the balance right. Robo-advisors can also regularly review your portfolio and automatically rebalance according to your preferences and even potentially lower your tax bill.
If you’re saving that $500 a month for your retirement, see if you can boost your contributions by reducing your taxes. One common route is a company 401(k) plan. If your company has one and will match your contributions, find out how you can get involved. Not only can you get tax breaks, but the employer match will mean there’s more money working for you.
If a 401(k) isn’t an option, find out what type of IRA might suit you best. A traditional IRA could mean you lower your tax rate now as you contribute pre-tax income. With a Roth IRA, you’d pay taxes today but you’d be able to withdraw that money — plus any earnings — tax free later in life.
Sadly, this is not the place for a crash course in investing. If that’s what you’re after, check out The Motley Fool’s guide on how to invest money. For now, the biggest takeaway is that investing $500 a month can be a fantastic way to build wealth. And the sooner you get started, the better.
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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 no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Costco is one of the most popular retailers on the planet, but it’s not right for everyone. Here’s how to know if you should join in the new year.
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It’s time to make decisions about the new year. For example, what type of health insurance do you want to sign up for in 2024? Are you planning to stick with your current home and auto insurance company, or is it time to shop around for a better price? Are you paying for any subscription services that you don’t care to drag into January? You may also be trying to make minor decisions, like whether buying or renewing a Costco membership is worth the money.
There’s no one-size-fits-all answer regarding the wisdom of a Costco membership, but if your answer to most of the following questions is a “yes,” there’s a strong chance Costco is a good fit.
According to SoFi, a recent study across 20 categories of products found that the average shopper can save 25% by buying in bulk. Another study revealed that shoppers who buy in bulk through a wholesale club like Costco can slash up to 35% off their grocery bills.
If your household goes through a week’s worth of groceries like ants at a church picnic, saving up to 35% means your Costco membership will pay for itself.
If you live alone or have a small household, buying in bulk may be a waste of money. But if you have plans to purchase a large ticket item, like a refrigerator or computer, the annual cost of a Costco membership might be worth it. However, there is a big if.
It’s never safe to assume that Costco’s price on a big-ticket item beats the competition, even if it’s been “discounted” by several hundred dollars. Before making a purchase, do a quick online search for the identical item. You may just find it for less somewhere else.
Some Costco products are worth the cost of membership. For example, Kirkland Signature wine, Costco extra virgin olive oil, and Costco frozen berries are fan favorites. If you have a list of favorite products you can only buy through Costco, factor that into your decision.
If you live an hour or more away from your nearest Costco, you’re unlikely to take advantage of perks like low gasoline prices or regular trips to the pharmacy. Ask yourself if you live close enough to a Costco to fully take advantage of savings opportunities.
Here’s how much it costs new members to purchase a personal, annual Costco membership:
Gold Star membership: $60, which comes to $5 per monthExecutive Gold Star membership: $120, which works out to $10 per month
If you’re unfamiliar with what Costco has to offer, scroll through the company website to get a sense of how much you would likely spend (and save) per month. Once you balance that amount against the membership cost, you should know whether a paid membership to a warehouse club makes sense for you.
Costco fans really love Costco, but that doesn’t mean joining is right for everyone. Ultimately, only you can determine if shopping at Costco will leave you with extra money to tuck into a savings account each month.
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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.Dana George 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.
Some credit report mistakes really are a big deal. Read on to see why.
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Of the various things you could spend your time reading, your credit report is likely far from the most exciting one on your list. But while your credit report may not make for the same thrilling read as a new mystery by your favorite author, it’s important to pay attention to that report nonetheless. And if you spot an error, it’s essential that you correct it at once — even if the mistake seems minor in nature.
The Federal Trade Commission reports that 1 in 5 consumers has had an error appear on their credit report. Now, that doesn’t automatically mean that 20% of consumers have had a credit report error that reflects negatively on them. But still, it’s important to be on the lookout for errors, including seemingly minor ones, that could be bringing down your credit score. These include:
Having the same debt listed more than onceHaving incorrect personal loan or credit card balances listedHaving credit card accounts listed with the wrong credit limit
Why are these errors problematic? The reason is that all of them have the potential to drag down your credit score for different reasons. So not working to get them corrected is a problem.
If you have the same debt listed more than once on your credit report, and it’s a credit card balance, that erroneous data could result in a higher credit utilization ratio. And that could damage your credit score by making you seem overextended.
Similarly, let’s say you have an outstanding credit card balance listed as $4,500 when it’s really $4,000. You might think that’s no big deal. But actually, that extra $500 could push your credit utilization ratio into unfavorable territory.
Similarly, let’s say you have a credit card account with an $8,000 limit, but your credit report lists your limit as $6,000. That, too, could be skewing your credit utilization and wrecking your credit score needlessly.
You never want to ignore any credit report error — even one that reads like not such a big deal. Even a small error could cause a drop in your credit score. From there, you may have a harder time getting a loan or credit card. And you might also qualify for a less favorable interest rate when you are approved to borrow.
But that’s not all. You never know when what looks like a duplicate debt or open account on your credit report is actually a fraudulent account a criminal has opened in your name. So that’s not something to ignore — it’s something to investigate by contacting both the credit bureau that issued your report, as well as the bank or lending institution in question.
Credit report errors are pretty common. But don’t just let a seemingly minor one take up residence on your credit report. Instead, dig deeper. By working to correct an error, you might end up giving your credit score a nice boost while sparing your personal finances further damage as a result of fraud.
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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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