Money Management

With the stock market down, many Americans lost money in 2022. Find out just how much, and also why it may not matter in the end. 

Investing for retirement is one of the smartest money moves you can make. You need to put money into a 401(k) or other tax-advantaged retirement plan at a brokerage firm if you hope to enjoy any financial security as a senior because Social Security alone likely cannot support you once you leave the workforce.

Unfortunately, many people who made the right move and put money away for retirement faced a tough year last year. The stock market didn’t do well, and the average 401(k) account balance took a pretty big dip.

Here’s what happened over the course of the year, along with some advice on why it doesn’t matter much in the end.

The average American faced big retirement account losses last year

In 2022, the average balance in workplace retirement plans was $144,280 at the start of the year. By the end of the year, it had fallen to $111,210. That’s a $33,070 loss and almost a 23% decrease over the course of a single year.

This isn’t surprising, since the S&P 500 index also dropped by close to 20%. The S&P 500 is a financial index that is made up of a weighted average of the 500 largest U.S. companies. It’s a barometer for the performance of the market as a whole since it includes some of the biggest names across a wide variety of industries.

The median plan balance also declined to just $23,818 in 2022, which is the lowest it’s been in a decade, and the annual median return in 2022 was 14.7% for defined contribution plans.

Don’t be discouraged if your retirement account balance fell

If you worked hard to invest for retirement — perhaps giving up little luxuries to transfer more money out of your bank account to your brokerage accounts — it can be frustrating to see your balance decline.

But here’s the thing: While it may be a bummer, it really doesn’t matter if your investment account has a bad year because when you are investing for retirement, you aren’t investing over just one year. You should be steadily putting money into your account over many decades and leaving it there to grow.

During a multi-decade period of investing, it’s inevitable you’re going to have some bad years. The stock market cannot go up all the time (if it did, there would be a lot more millionaires and billionaires). It naturally goes through cycles. There’s a downturn, then there’s a recovery.

If you did not sell any of your retirement account assets that were down at the end of 2022, you did not actually lose any money yet in reality — you only lost it on paper. And if you have a good year this year, or next year, or in many years to come, you can make back those paper losses.

Let’s take a closer look at the details. The S&P 500 had a bad year last year, but it has had bad years before and will have good years again. Just take a look at the historical data from recent years.

Invest for the long term

As you can see, ups and downs are part of life.

The key is to stay the course so you don’t end up making your losses permanent by panic selling. If you see your balance has fallen over a year or two, just remind yourself that you have confidence in your investments over the long haul and keep looking forward. Don’t panic, don’t sell out of fear, and don’t give up on your retirement security. Just keep on investing steadily over time in sound investments and your hard work will pay off for you in the end.

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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 to boost your bank account balance? Stash your cash in a high-yield savings account. Find out how much interest you can earn with $2,500 in the bank. 

You never know when an unexpected bill will come your way. That’s why keeping money in an emergency fund can be beneficial. If you have money set aside for emergencies, you should keep it in a high-yield savings account to maximize the interest you earn.

Do you want to know how much interest you can make with $2,500 in the bank? Below, I’ll explain how much you can earn with this sum in a high-yield savings account. It may be more than you realize!

Earn more interest with a high-yield savings account

Banks that offer interest-earning savings accounts use an annual percentage yield (APY) to describe the returns one can expect if they keep their money in their savings account for one year. It’s essential to pay attention to the APY that is offered.

Many brick-and-mortar banks offer low APYs for their savings account. Your local bank may offer as little as 0.01% APY. While you will earn some money, it won’t be substantial.

However, a high-yield savings account can offer much more. Many online banks offer 4.00% APY or higher for these accounts. How much money can you make by stashing $2,500 in a high-yield savings account? Let me show you.

$2,500 in savings generates this much in interest

To determine how much interest you’ll earn, multiply your initial deposit ($2,500) by the APY. This will show you how much you’d earn if you keep it all in your bank account for one year.

For the following calculations, I used a 0.01% APY for a standard savings account and a 4.50% APY for a high-yield savings account. The bank accounts on our best high-yield savings accounts list have APYs ranging from 4.15% to 5.05% — so I settled somewhere in between.

These calculations assume a $2,500 deposit with no additional deposits made to your account:

$112.50 sounds much better than $0.25 to me. Beyond opening a bank account with a higher APY, boosting your earnings potential takes no additional work. That’s a major win!

You can earn more with compound interest

The above calculations show how much interest you can earn, keeping $2,500 in the bank for one year. But you can earn even more thanks to compound interest, which is interest that you earn on interest. You can earn more interest by keeping your money in the bank for a long time.

To better illustrate the benefit of compound interest, I’ll show you how much money you’ll make if you keep your initial $2,500 deposit in a high-yield savings account for anywhere from one to five years.

Again, the following calculations assume you make no additional contributions after the initial deposit. You can earn even more if you continue to make deposits into your account.

Here’s a breakdown of the potential earnings:

That’s $615.45 earned in five years, assuming the APY doesn’t change. It’s worth noting that APYs can change over time, so your APY likely won’t stay the same rate forever.

Take this one step to boost your savings account balance

You’re missing out on interest if you’re not keeping your money in a high-yield savings account. Make sure you’re getting rewarded for your hard work as you work to reach your savings goals. Opening a high-yield savings account is an easy way to maximize the interest you earn. Any extra money earned can make a significant difference in improving your personal finances.

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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.Natasha Gabrielle 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.

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Greenhouses can extend your growing season, saving you money on groceries. But is a Costco greenhouse the way to go? Here’s the scoop. 

Harvesting your late summer garden can be a treat, but every gardener knows that September brings colder nights, signaling the end of the growing season. At least, that’s true for those of us lacking a greenhouse.

But could Costco house your hope of a continuing harvest?

I know I’ve knocked Costco.com’s lackluster inventory in the past, but even I have to admit Costco has several tempting greenhouse options on its website. Of course, the question is, are they worth it? Let’s take a look.

A decent variety of sizes and price points

Costco’s selection of greenhouses offers a variety of sizes, from a covered elevated planter up to a 400-square-foot premium structure. As you’d expect, the prices vary along with the size, and the largest greenhouses on Costco’s website push into the five figures.

Even if you don’t go to extremes, a Costco greenhouse of any size isn’t cheap. The least expensive “greenhouse” you’ll find is still over $200, and it’s so small it barely qualifies for the title. For something large enough to walk in, expect to pay $750 to $3,000.

Now, the good thing is that many of Costco’s prices are less expensive than competitors are charging. Here are some examples:

Self-Watering Elevated Spruce Planter with Greenhouse & Bug Cover

Costco: $219.99

Home Depot: $299.00

Amazon.com: $319.99

Yardistry Greenhouse, 7.8 ft x 6.7 ft with Cedar Frame

Costco: $1,199.99 (sale price for September; regularly $1,499.99)

Home Depot: $2,199.99

Tractor Supply: $1,599.99 (sale price, regularly $1,999.99)

Palram Canopia Americana 12 ft. x 12 ft. Greenhouse Kit

Costco: $2,999.99

Home Depot: $3,502.75

Lowes: $3,769.00

Exaco Royal Victorian Glass Greenhouse 10 ft. x 15 ft.

Costco: $8,999.99

Home Depot: $10,999.00

Amazon.com: $9,907.25

The bad thing is that greenhouses are still very expensive. And that means two things. First, you need to make sure your personal finances can handle the purchase before you splurge. And second, we need to do some digging into the quality to get an idea of whether those big price tags are actually worthwhile.

Quality seems to vary a lot by model

If you look at the reviews on Costco’s website, it seems like the quality varies a lot depending on the specific greenhouse. That said, of the 11 models for sale, nine have at least four stars (out of five), and three of those have a 4.5-star rating or higher.

While good reviews aren’t a guarantee of high quality, it’s definitely a positive indicator. I’d probably also watch a few YouTube videos and read some Reddit testimonials before spending $1,500 or more on, well, anything — and I recommend you do that before you buy a Costco greenhouse, as well.

Overall, my impression from the negative reviews is that you really need to consider your space as much as your budget. For instance, if your yard gets a lot of wind, then the Palram Canopia Harmony kit might not be right for you, even if its $750 price tag seems easier to manage than the more expensive options.

It’s worth noting here, though, that every greenhouse on Costco.com will be covered by Costco’s usual satisfaction guarantee. In the example of the high wind, one reviewer said their greenhouse fell to pieces, but Costco still accepted the return and gave them their money back.

Some DIY required

One important thing to keep in mind with Costco greenhouses is that they’ll all need some level of assembly. In the case of the cheaper planter or hothouse options, that should be fairly minor assembly.

When it comes to the larger greenhouses, however, you’re going to need actual tools. And probably a friend (or three). If you’re not handy — or know someone who is willing to assemble it for you — then a Costco greenhouse probably isn’t the best option, no matter how good a deal it may be financially.

Potential for value, with a caveat

Overall, a Costco greenhouse could be a good buy. Prices are at least comparable to other retailers, and most of the models are well-reviewed. Just be sure to spend some time in your space so you know what conditions to expect, then buy accordingly.

I do want to add one caveat: If the price of the Costco greenhouse is the same as you can get at another retailer, it might be worth buying elsewhere.

Why? Costco has that pesky credit card restriction (Costco only accepts Visa cards). For something likely to cost $1,000-plus, you want to maximize your rewards, perhaps through a sign-up bonus. But if the rewards card you want isn’t a Visa, you can’t use it at Costco. This isn’t going to be a consideration for everyone, but it’s definitely something I think about.

Of course, you’d then be forfeiting the Costco customer service. So you’ll need to decide if that’s worth the extra credit card rewards.

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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. Brittney Myers has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon.com, Costco Wholesale, and Visa. The Motley Fool has a disclosure policy.

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