Money Management

Scientists don’t agree on the benefits of organic food, but many people want to avoid exposure to pesticides and chemicals. Learn how organic costs can add up. 

A lot of people are willing to push the boat out a little to afford organic produce. The thinking is that organic food, which is grown without many harmful pesticides, will be healthier, more nutritious, and better for the environment. But as households look for ways to save money on groceries, it’s worth questioning whether it’s worth shelling out that extra cash — especially as our calculations showed the additional cost can be significant for your personal finances.

Organic produce can cost almost 40% more

Price comparisons on groceries are always difficult because there are so many variables. For example, it’s not really fair to compare Dave’s Killer White Bread with Walmart’s Great Value White Round Loaf as they are very different products. And, to muddy the waters further, packages aren’t always the same sizes.

All the same, we took a handful of common products and compared the organic and non-organic prices on Walmart.com. The research showed there can be a dramatic price difference between organic and non-organic food, especially on staples like eggs, bread, and rice. Overall, the organic basket was 38% more expensive than the non-organic one.

My old math teacher would shudder at this calculation, but we’re in the land of hypothetical spending, so roll with me. Data from the Bureau of Labor Statistics shows that the average American household spends $5,259 a year on food at home. That’s about $438 a month. If we apply the 38% difference to the average American’s grocery spend, an organic-only shop might cost over $600. My very rough back-of-the-envelope estimate would mean organic shoppers could spend over $160 more at the till every month.

The cost of organic vs. non-organic products at Walmart

Methodology-wise, we took the lowest-cost non-organic product when there were several options. And when package sizes didn’t match, we used the price per ounce to match the non-organic package to the organic one.

Is it worth buying organic?

With such a big price difference on some products, it’s worth looking into the reasons for buying organic in more detail. If a product has been certified organic by the USDA, it means farmers rely on biologically based farming methods as much as possible. Animals raised for organic meat cannot be given antibiotics and hormones. As a result, organic farming is viewed as a more environmentally sustainable way to produce food.

Health-wise, the desire to reduce your family’s exposure to pesticides, hormones, and other chemicals is understandable. There are various studies that tout the health benefits of going organic. For example, one study by East Tennessee State University showed that organic produce contained lower concentrations of heavy metals.

Even so, a Harvard Health Publishing article says, “There isn’t clear evidence that organic foods are also healthier for people.” It cites one French study that showed the risk of cancer in people with the highest consumption of organic foods was reduced by 25%. However, it stressed that more research is needed, as it’s hard to prove cause and effect and pointed to issues with the study’s methodology.

You can find scientists on both sides of the organic debate. Our diets are so varied that it isn’t easy to prove whether one single food production factor is better for us. Ultimately, many people who opt for organic do so because they instinctively feel they’d rather put fewer chemicals into their bodies. One thing we do know is that eating fruit and vegetables — organic or not — is good for us. Don’t skip them altogether, even if you can’t afford the organic option.

Reducing the cost of organic shopping

If you’re looking to reduce the impact that organic foods have on your bank account, you might opt to buy organic for some, but not all, of your groceries. For example, produce with thin skins are more likely to be high in pesticides. In contrast, products like avocados, onions, and kiwis with thick, peelable skins are less likely to contain pesticide residues.

Every year, the Environmental Working Group publishes a list of fruit and vegetables that are most contaminated with pesticides, pushing them up people’s organic lists. Here’s its “dirty dozen” for 2023:

StrawberriesSpinachKale, collard, and mustard greensPeachesPearsNectarinesApplesGrapesBell and hot peppersCherriesBlueberriesGreen beans

Seasonal produce is your friend when it comes to cutting costs and still eating healthfully. Farmers markets can sometimes be cheaper than grocery stores, but it depends on where you live and what you buy. One advantage of markets is being able to talk to producers directly about what chemicals they use. You may find food that’s been produced with limited pesticide use, even if it’s not certified as organic.

Bottom line

With any type of grocery shopping, price comparisons can be powerful. Shop around to find the best deals and be selective about which organic products you buy. Use rewards credit cards and cash back apps to help you earn points or rewards on all your grocery spending. And if you can’t afford to only eat organic, be selective. Prioritize organic options on produce containing particularly high levels of pesticides, but don’t skip fruit and vegetables altogether.

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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 positions in and recommends Walmart. The Motley Fool has a disclosure policy.

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The Federal Reserve raised rates again. Take a look at what stock market investors should know. 

What’s got investors up in arms about Fed interest rates? The question is more important than ever. Recently, the Federal Reserve has raised rates by 25 basis points again, and there are a handful of important consequences to that.

In some ways, the stock market is like a mood ring. When investors are optimistic, the stock market turns green, and prices rise. But when investors are pessimistic, the stock market turns red, and prices fall.

When the Federal Reserve raises interest rates, investors typically get pessimistic in the short term. Here’s why, and what that means for the stock market.

Stock market investors get pessimistic

Investors tend to react badly to Federal rate hikes. History has shown that rate hikes can precede recessions, such as when the Federal Reserve hiked rates in the 1980s to combat inflation. It worked, and inflation fell — but the stock market also tumbled.

There are many reasons Fed rate hikes make stock investors pessimistic. Here are three:

Borrowing: It costs more for businesses to borrow money, which lowers profits.Spending: It costs more to borrow money on credit, so spending falls, lowering profits.Bonds: Bonds become more valuable, so investors flee to the bond market.

Here’s an example of how this is playing out in real life: Yesterday, my housemate said she was no longer using her credit cards because credit card debt has gotten much more expensive to pay off. Now she’s not spending as much money at stores like Costco, which hurts Costco’s profits. Fed rate hikes are indirectly responsible.

Should you sell your stocks until rates come down?

Probably not, as you’d be on the hook for any capital gains taxes, which are taxes the government charges you for profiting on investments sold. Plus, the stock market isn’t set in stone. Like people’s moods, it swings — sometimes dramatically and without apparent reason.

Basically, it’s complicated. Short-term predictions are hazy guesses at best. Not even Warren Buffet has a perfect read on the stock market (though I’d bet on him more than on 99% of investors). Long-term investors should consider holding onto stocks for five years or more and only selling when fundamentals change or they meet their investment goals.

Despite rate hikes, the stock market (SPY) is up year-to-date. Over the last 50 years, the stock market has gone up at an average rate of 10%. It pays to hold onto a diversified portfolio of stocks long term. Don’t let interest rate fears knock you out of the market — stay strong.

Brokers offer free investing

When fees go up, free becomes all the more valuable. The best stock brokers charge zero fees for buying or selling stocks. But be wary of opening margin accounts, which let you borrow money to invest. Rate hikes make interest payments much more expensive.

Other perks to look out for in a brokerage account include stock research, retirement accounts, and more ways to earn money on investments. Shop around for the best deals, stick with accounts that offer low fees, and be careful of borrowing. Even when rates are low, carrying debt eats into your long-term savings.

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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 Costco Wholesale. The Motley Fool has a disclosure policy.

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