Money Management

Getting ready early for trick-or-treaters? Read on to see if it pays to buy your Halloween haul at Costco. 

The other day, I was buying groceries at Costco when I spotted giant bags of Halloween candy on display. At first, I was somewhat horrified given that it was still early September and my kids hadn’t even started school yet.

But then I remembered that the Pumpkin Spice Latte was already back at Starbucks despite it being 90 degrees out. So clearly, the marketing people who make these decisions no longer care about waiting until the appropriate season to peddle their wares.

Now, I didn’t pick up any Halloween candy on this particular Costco trip for one big reason. If I bring home a giant sack of assorted goodies, my kids will ransack that stash in short order. So I’d rather wait until closer to Halloween to stock up on candy.

Still, when I’m ready to buy my Halloween candy, Costco will most likely be my go-to source. Whether the same should hold true for you, however, depends on your situation.

Why Costco may not be your best bet

Let’s get one thing out of the way. Any time you buy grocery items in bulk, you’re likely to save money on a per-ounce or per-unit basis, regardless of what you’re purchasing. Candy is no exception. As such, I’m not going to compare the cost of a Costco-sized bag of candy to a smaller bag with 12 pieces. There’s just no comparison.

A 90-ounce bag of mixed chocolate miniatures that include M&Ms, Twix, and Reese’s will cost you $22.99 at Costco if you buy it online. That’s just $0.26 per ounce of candy. And you might spend even less if you buy it in-store.

Meanwhile, a five-pound variety pack of chocolates that includes some of the same ones in the Costco assortment will cost you $45.95 on Amazon. That’s $0.57 per ounce. So from a bulk pricing perspective, Costco is the clear winner (though to be fair, Amazon has many candy assortments on offer, so if you dig around the site long enough, you might find a better deal there).

But while Costco’s price for bulk candy is clearly competitive, the reality is that you probably don’t want to buy your Halloween candy there unless you’re absolutely certain you’re going to need a lot of it. If your neighborhood is filled with children and you tend to get a lot of people knocking on your door asking for candy, then sure, spring for a bulk bag from Costco. But if you tend to get just a handful of trick-or-treaters, then you’re probably better off getting your Halloween candy from a regular supermarket.

Even if you end up spending four times as much on a per-ounce basis for candy, you’re better off running up a $6 credit card tab if you don’t eat a lot of candy or simply don’t want a lot of it sitting in your kitchen, and you don’t expect to have enough trick-or-treaters to use up a bulk bag. Heck, my neighborhood gets tons of trick-or-treaters, and there are years when we don’t even manage to give away the entire Costco bag.

Thankfully, as mentioned earlier, I live with a gang of vultures who are more than happy to make that excess chocolate disappear. But you may not want to spend extra money when you really don’t have to.

Adopt a “use it or don’t buy it” strategy with Costco

No matter what grocery item I’m thinking of buying in bulk at Costco, I implement one simple rule: Use it up, or don’t buy it.

Now sure, you could argue that in many cases, I’m better off buying a bulk item from Costco, using 70% of it, and just throwing the remaining 30% away because that’ll still be cheaper than a smaller quantity at a regular supermarket. But I happen to be someone who gets bothered by food waste, so I prefer not to go that route.

Meanwhile, I can admit that I enjoy Halloween candy just as much as my kids (maybe more), so I never feel like I’m taking a big risk in buying a bulk assortment of it. Worst case, we’ll just have junk to snack on for months on end, since mass-produced candy doesn’t go bad very quickly.

But it does pay to be honest with yourself in the context of Halloween candy and any other bulk grocery item you may be tempted to scoop up at Costco. If you don’t think you’ll use it up, you may want to just pass.

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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. Maurie Backman has positions in Amazon.com. The Motley Fool has positions in and recommends Amazon.com, Costco Wholesale, and Starbucks. The Motley Fool has a disclosure policy.

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Money market accounts have a lot of great uses, but this may make the best use of their unique features. Find out more. 

Money market accounts are probably one of the most useful banking products you’ve never heard of before. Though they lack the superior PR of checking and savings accounts, money market accounts offer some of the best features of both banking behemoths.

Indeed, the top money market accounts pair the features of a great checking account, with the earning power of a high-yield savings account. And this unique combination is what makes them absolutely ideal places for your emergency fund.

An emergency fund’s best friend

Your emergency fund should contain around six months’ worth of expenses. So, even on the low end, we’re talking about $10,000-plus. If you’re in a high cost of living area, you could be looking at upwards of $30,000.

What I’m saying is, this is not a small chunk of change. And if you left it wallowing in your sad little 0.004% APY checking account, inflation would Eat. It. For. Dinner.

So, why not stick it in a high-yield savings account? You could get 4% to 5% APY, which easily stands up to inflation. Because what if you need that money in, you know, an emergency? (Not all emergencies take Mastercard, you know.)

You can find money market accounts that easily compete with the top savings accounts on APY. But they’ll also offer you what your savings account doesn’t: a debit card and checks. WIth these tools, you can access your emergency fund from any ATM at hand, making it far easier to (sometimes literally) throw cash at the problem.

How to find a money market account

Alright, so I’m biased, but a great way to start looking for your own money market account is to check out our writeup on the best money market accounts. You’ll see some pretty solid rates.

Alternatively, if you like your current checking account, check to see if the bank offers a money market account with a good APY. (That will certainly make funding your account simpler.) Folks who like their credit card issuers can also check with those banks.

Whichever route you take, make sure you check for new account bonuses. Some banks will offer you extra cash for opening a new account and meeting certain deposit or transaction requirements. These can be worth a few hundred bucks, so it’s certainly worth a little sleuthing!

Things to consider

While you’re comparing money market accounts, there’s a few features to keep in mind:

APY: If your money market account is going to be worth putting your emergency fund into, it needs a competitive interest rate. Look for something at least higher than inflation (which is around 3.2% right now).Minimums: A lot of money market accounts will have minimum balance requirements to open the account. They may also require you to maintain a certain balance to earn the best APY.Fees: Money market accounts can charge a lot of the same fees as checking accounts, including monthly service fees. Make sure you can qualify to have these fees waived.

Oh, and while the vast majority of money market accounts come with ATM-enabled debit cards and check-writing capability, a few don’t. Double check that your account offers these features.

When not to use a money market account

Money market accounts are a highly underrated financial tool that more of us should be using. But that’s not to say that a money market account is ideal for every situation. There are a few drawbacks to money markets that may make a checking or savings account a better fit in some cases.

For example, if you make a lot of withdrawals from your account, then a money market could be a poor fit. Like savings accounts, many money market accounts have monthly withdrawal limits. (The federal Regulation D limit on money market accounts was lifted during the pandemic, but individual banks can still maintain their own limits.)

And if you like to maintain multiple accounts for different savings goals, then a series of high-yield savings accounts could be more manageable than money market accounts due to the balance limits and potential for fees. Consider your needs before deciding which type of account to open.

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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.Brittney Myers has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Mastercard. The Motley Fool has a disclosure policy.

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Maxing out a 401(k) may seem like a smart financial move, but there are plenty of reasons this may not be a great idea. Read on to find out why. 

Saving for retirement is one of the most important things you can do, as you can’t live on Social Security alone. Since Social Security replaces only around 40% of pre-retirement income, you’ll need money from other accounts to help cover your needs.

A 401(k) can be a great account to contribute to, if your employer offers one and matches your contributions. An employer match is free money that should never be passed up, and you should contribute enough to get the full amount you are eligible for.

Most employers cap the amount they’ll match, though. And 401(k)s have contribution limits well above what most employers will match. In 2023, for example, those under 50 can contribute up to $22,500 to a 401(k), while individuals 50 and up can make an additional $7,500 catch-up contribution for 2023.

Chances are good you aren’t going to be able to afford to max this out. But, even if you can, you may not want to. Once you’ve contributed enough to get your full employer match, there are three good reasons you may not want to put additional investment funds into your 401(k). Here’s what they are.

1. You have more limited investment options in a 401(k)

One of the biggest reasons not to put extra money into a 401(k) is that your investment options are often limited.

Research has shown that the typical 401(k) offers anywhere from 13 to 27.5 different investment options. These investments are often mutual funds or target date funds. By contrast, if you open a retirement investment account (like an IRA) with a brokerage firm, you can generally invest in almost any asset available. You can buy mutual funds or target date funds, but also stock shares in individual companies as well. It can be far better to devise an effective investment strategy when you have a virtually unlimited number of options, versus a few dozen or fewer.

2. You may get stuck with higher fees

401(k) plans sometimes charge administration fees, which could average as high as 1.19% for smaller plans. Fees eat into your returns and can make a really big impact over time.

Let’s say that over 30 years, you invest $10,000 per year in a 401(k) with a 1.19% fee and you earn a 10% average annual return. Your total account balance will have $329,263 less in it than if you had not paid this added cost. You’d end up with around $1,315,677 instead of the $1,644,940 you could have had.

You could instead opt to open a tax-advantaged IRA with a brokerage firm that charges no fees and put money into that account after you’ve earned your full employer match. On all that extra money you keep out of your 401(k), you could avoid any administrative fees at all.

You can ask the HR department or your plan administrator what your fees are to find out if you’re taking a hit. Your 401(k) investment options may also be more expensive than the investments you could access with a brokerage firm, so be sure to check expense ratios to find out if you’ll incur even more costs.

3. You may want to diversify your accounts

Finally, the last big reason you may not want to max out a 401(k) is you may want to diversify the accounts you’re investing in, especially if you have limited funds.

For example, if you invest in a traditional 401(k), you get a tax break in the year you make contributions but have to pay taxes on withdrawals. A Roth IRA, on the other hand, allows you to take money out tax-free — although you don’t get that upfront deduction for contributions. You may want to put some money into a Roth IRA so you can get some tax breaks now and some later.

Alternatively, you may want some money in a taxable brokerage account if you expect to need access to invested funds before age 59 ½, as you generally pay a penalty for early withdrawals to access your funds in a 401(k) earlier than that age.

For all of these reasons, you should think carefully about whether to max out your 401(k), or even to contribute more above what your employer will match. You may just find you’re better off getting that match and then investing the rest of your money in a brokerage account that offers some other benefits.

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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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