Money Management

Just because you’re offered a 401(k) plan doesn’t mean you have to save in one. Read on to see if there’s a better choice for you. 

One benefit of being a salaried employee is getting access to perks like subsidized health insurance, paid time off, and, in many cases, a 401(k). And you may find that saving in your company’s 401(k) plan is a convenient way to build up a retirement nest egg.

That’s because 401(k)s are funded via payroll deductions. You simply tell your employer how much you want to contribute toward your retirement savings, and that amount will be deducted from your paychecks before they hit your bank account.

Another benefit of 401(k)s is that they come with generous contribution limits. This year, you can put up to $22,500 into a 401(k) if you’re under the age of 50, and up to $30,000 if you’re 50 or older. By contrast, IRAs max out at $6,500 for savers under 50 and $7,500 for those 50 and over.

But while many people like the idea of saving in an employer-sponsored 401(k), you may want to opt for an IRA even if a 401(k) plan is available to you. Here are some reasons an IRA could be a better choice.

1. Your 401(k) plan comes with limited investment options

It’s common for 401(k)s to limit savers to a few dozen funds. And you might struggle to find funds that meet your investment goals or align with your objectives.

Also, investing in these funds could mean being charged high fees for the privilege of doing so. If you put your 401(k) into mutual funds, the fees you’re charged to do so could seriously eat away at your returns.

The nice thing about IRAs is that they generally allow you to invest in individual stocks, whereas 401(k)s don’t. That not only gives you more options and more opportunities to diversify your portfolio, but it could help you limit your investment fees substantially.

2. Your 401(k) plan charges hefty administrative fees

It’s not just investment fees that 401(k)s tend to come with. Many also impose high administrative fees to keep your plan running. Those fees have the potential to be lower for IRAs, so if you’re being charged a lot, it pays to see what administrative fees you’re looking at with an IRA instead.

3. Your company doesn’t offer any sort of 401(k) match

It’s common for companies that offer 401(k) plans to match worker contributions to some degree. A company, for example, might match contributions in full up to a certain amount — say, $3,000.

But if your employer doesn’t offer any sort of match, then there may not be much of a benefit to saving for retirement in your company’s 401(k). There are no matching incentives to be had with an IRA, but at least there, you get more investment choices and are generally looking at lower fees.

Saving for retirement in a 401(k) plan is a seamless way to build a nest egg. But even though falling back on your employer’s 401(k) might seem like the easiest option, it’s not necessarily the most cost-effective. And if any of these signs apply to you, you may be much better off building your nest egg with an IRA.

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If you’re looking to save some money while shopping for high-quality items, now is the time to visit Costco. Don’t miss these deals! 

Looking for some great deals? Then Costco is the place to be. In addition to its everyday competitive prices, Costco always offers amazing deals to customers. These ways to save can be found in its members-only savings booklet or online. Costco is currently offering over $100 off on some costlier items. Whether you’re shopping for electronics or home essentials, there is something for everyone. Read on for our top picks you won’t want to miss out on.

1. HP Laptops

If you’re in need of a new computer, then look at getting an HP Notebook laptop. Costco is currently offering $100 to $200 off. There are a wide variety of specs to choose from. You can choose an Intel 12th or 13th Gen Intel Core processor. These machines come equipped with Windows 11 and are a good fit for users who need a versatile and durable device. Here are two featured laptops.

HP Pavilion 14″ x360 Touchscreen 2-in-1 Laptop

12th Gen Intel Core i5-1235U – 1080p – Windows 11

$599.99 after $250 OFF

HP 14″ Laptop

Intel N200 Processor – 1080p – Windows 11 in S Mode – Microsoft 365 Personal (1-Year Subscription)

$249.99 after $100 OFF

2. Apple MacBooks

Costco also stocks Apple MacBook Pro and MacBook Air laptops. Costco is currently offering $150 to $200 off. These laptops have a long battery life and are equipped with the Apple M1 and M2 Max chip for high performance. Costco offers multiple models to fit your needs. Best of all, Costco offers its members a free two-year extended warranty on certain products.

MacBook Pro (14-inch)

Apple M2 Max chip with 12‑core CPU and 30‑core GPU, 1TB SSD (2023)

$2,849.99 after $200 OFF

MacBook Air (13.6-inch)

Apple M2 Chip 8-core CPU, 10-core GPU, 512GB SSD (2022)

$799.97 after $150 OFF

3. Lenovo Tab P12 Pro

The Lenovo Tab P12 Pro has a 12.6″ 2K AMOLED display. The tablet can double as a wireless second screen for your laptop and support both touch and pen input. It includes the Precision Pen 3 and with 128 GB flash memory that is expandable to 1 TB, this tablet is perfect for both work and play.

$514.99 after $135 OFF

4. Blink Whole Home Security Camera Bundle

Looking for greater peace of mind at home? This bundle includes two wire-free outdoor cameras, a video doorbell, a floodlight camera, an indoor camera, sync module, and yard sign camera. The camera’s long lasting battery runs for up to two years and you can see and speak to visitors from anywhere and at any time of day. It is compatible with Apple, Alexa, and Android.

$199.99 after $100 OFF

5. Agio Bridgeport 4-piece Outdoor Patio Seating Set

If you’re looking to update your outdoor furniture, jump on this deal now. The 4-Piece Wicker Set with dark blue cushions is currently $700 off. This set comes with two swivel glider chairs, a sofa, and a porcelain tile coffee table, making it perfect for outdoor gatherings with family and friends. The black wicker material is weather-resistant and easy to maintain.

$1,099.99 after $700 OFF

These are just some of the deals you can find at Costco. The warehouse retailer is also selling select Samsung and Whirlpool appliances for up to $1,450 off. If you are looking for a deal that won’t ding your checking account, then Costco is one of the best places to start. Whether you’re looking for a new phone, laptop, TV, or just some outdoor furniture, there is something to fit your budget. Don’t miss out on these fantastic deals, hurry and write your shopping list now!

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Travel can be costly. Read on for ways to save if you plan to do a lot of it. 

Travel can be an expensive thing to do at any stage of life. But when you’re younger and your earnings haven’t quite peaked, affording it can be a challenge.

A little more than 68% of Generation Z consumers want to travel more in 2023 than they did in 2022, according to data from iSeatz. If that’s a goal of yours, it’s a great one. But you also don’t want that goal to drive you deep into debt. With that in mind, here are some steps you can take to make your 2023 trips more affordable and help ensure that you’re able to pay for them without having to borrow money.

1. Plan ahead

You can sometimes manage to snag a deal on a last-minute flight. But for the most part, booking air travel in advance will result in a lower credit card tab. The same might hold true when it comes to booking lodging — though sometimes, hotels with unbooked rooms tend to discount them at the last minute.

2. Skip the hotel

You might enjoy the feeling of staying at a hotel and being pampered. But in many cases, you’ll spend less money by booking a private rental on a site like Airbnb. That might make it easier to travel with friends, too, since you could end up with a lot more room to spread out.

3. Don’t dine out for every meal

A big part of the fun of travel is getting to sample different cuisines. And so it’s okay to work the cost of dinner or drinks from a local brewery into your travel budget. But if you don’t want to end up in credit card debt after traveling, make a point not to dine out for every single meal you consume. Instead, hit the supermarket when you arrive at your destination and load up on breakfast and lunch foods you can take on the go.

4. Use the right credit card

You won’t necessarily get a discount on a flight, hotel, or restaurant meal by swiping one credit card over another. But some credit cards do offer more cash back than others. And the more of that you rack up, the more you’ll be able to offset the cost of your trip.

Plus, in some cases, using the right credit card will result in a lower cost. It’s common for travel reward credit cards, for example, to offer the benefit of a free checked bag when you take a flight. The savings there could be huge if you wind up flying multiple times this year.

Any time there’s strong demand for a given product or service, its price tends to rise. These days, Americans of all ages are making travel plans after largely staying close to home during the pandemic. So it shouldn’t be shocking if the cost of airfare and lodging is higher than what you’re used to. But you can do your best to keep your costs down to not only avoid debt, but open the door to even more travel in the near term.

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Research has found a few common investing strategies used by wealthy Americans. Here are the details on how millionaires invest their money. 

Many of us have been interested in how the richest Americans invest their money. It’s normal to wonder if there’s anything we can learn from them or if they have access to special investments that everyone else doesn’t.

Recent research has revealed some key insights on this subject. Brokerage firm Vanguard analyzed the investing behaviors of affluent households in its 2020 report, “How America Invests.” The report looked at households with assets of $500,000 or more, but the median account balance was $1.034 million.

A few investing behaviors stood out. And while it’s a good idea to put at least some of them into practice with your own portfolio, not all of the ways millionaires invest are worth adopting. Here’s what Vanguard found (all the Vanguard data below is from Dec. 31, 2019).

1. They have stock-heavy portfolios

Investors, and especially new investors, often want to know where the best place to put their money is. While affluent households hold a mix of assets, they’re most heavily invested in stocks. Here was their portfolio allocation:

64% stocks23% bonds13% cash

Younger affluent investors have an even larger stock allocation. Those below the age of 45 have a median stock allocation of 84%, and those between 45 and 54 keep 78% of their portfolio in stocks.

Some people worry about investing in stocks because of the risk involved. However, if you’re a long-term investor, this isn’t as risky as you might think. Historically, the average stock market return is about 10% per year. While it can be volatile from year to year, if you’re investing for 10 years or longer, it’s very likely that you’ll do well.

2. They favor domestic stocks and bonds

International stocks and bonds are a way to diversify your portfolio. Vanguard recommends investing at least 20% of your portfolio in international stocks and bonds. It says having about 40% of your stock allocation in international stocks and 30% international bond allocation is even better.

Affluent households don’t quite reach those numbers. Their average stock allocation is 81% in domestic stocks and 19% in international stocks. Allocation is the same for domestic and international bonds.

Which is the better approach? In recent years, the U.S. stock market has been the superior choice. It has outperformed international stocks in eight out of the last 10 years, according to analysis by BlackRock. But it’s not such a large difference if we look at a longer time period. From 1973 to 2022, U.S. stocks outperformed international stocks 59% of the time.

One of the main advantages of international stocks and bonds is that they can stabilize your portfolio when the U.S. stock and bond markets are down. You may want to check out brokers for international trading if that’s of interest to you. But you don’t need international exposure to have success with investing, especially if you don’t mind weathering some volatility.

3. They have a mix of active and passive investments

Vanguard’s report also looked at whether affluent households used active or passive investing strategies. It classified active investments as actively managed funds, meaning those with a fund manager making decisions, as well as selecting individual stocks. Passive investments, also known as index investments, are those that track a specific market index or section of the stock market.

Most affluent households went with a mix of active and passive investing. Here was the exact breakdown:

7% had only active investments16% had only index (passive) investments76% had a mix of active and passive investments

This is interesting because active investing usually isn’t the best choice for the typical investor. Actively managed funds have much higher fees than passive index funds. Despite those higher costs, nearly 80% of active funds underperform the market.

For most investors, the simplest and most effective option is to build a portfolio of quality index funds. You’ll keep fees to a minimum this way. If you want to actively invest, you could do so by adding individual stocks to your portfolio. But it’s usually best to avoid actively managed funds because of the fees they charge.

To recap, the one millionaire investment strategy you should definitely use is investing in the stock market. It’s also a good idea to invest heavily in domestic stocks, although you can add some international stocks if you want more diversification. While most millionaires actively invest to at least some degree, that’s not a must, as you can also do just fine with purely passive investing.

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Are you being short changed by your first employer? Read on to find out. 

A big reason many people are willing to take on the expense of college is that having a degree tends to lead to higher wages. Workers with a bachelor’s degree earn a median $2.8 million over the course of their careers, according to the Georgetown University Center on Education and the Workforce. By contrast, workers with only a high school diploma earn a median $1.6 million.

If you’ve recently graduated college, you may be aware that you’re probably not going to manage to command the most impressive salary. After all, your experience may be minimal to nonexistent, and if you didn’t study in a specialized field, you may not have a six-figure paycheck hitting your bank account right away.

At the same time, there is such a thing as an unreasonably low starting salary when you’ve recently graduated from college. Here are three signs that you’ve been offered a wage that just isn’t okay.

1. Pretty much everyone you know is earning more than you

If you graduated college with a degree in art and are planning to work as an assistant at a local gallery, you might end up earning less out of college than your buddy who majored in accounting and just got recruited by a major firm. But if pretty much everyone you went to college with and are in touch with has been offered a higher starting salary than you, it’s a sign that you may be looking at a lowball offer.

2. You’ve researched salary data for your role and the numbers don’t add up

Talking to your fellow recent college graduates may only give you a snapshot of what people in your boat are making. But let’s say you’ve been hired for an entry level position at a bank. If you research salary data (you can do so by using sites like Glassdoor) and find that your offer is well below what the typical person with your role makes, then that gives you a reason to say no to your offer or negotiate for higher pay.

3. Your paycheck is so minimal you have to get a second job just to stay afloat

Your first job out of college may not pay you enough money to steadily fund an IRA account and save up for major goals. But if that paycheck won’t even suffice in covering your basic expenses, and your expenses are modest, then you may want to try to find a better offer.

It’s pretty common for new graduates to take on a side hustle to boost their income. But in many cases, those side hustle earnings can be used for things like leisure and travel. If you’re looking at needing a side hustle just to be able to make rent, then you may not want to take the job you’ve been offered.

Let’s be clear — you’re probably not going to get a six-figure offer when it’s your first time applying for jobs. But it’s also important to set yourself up with a reasonable, livable wage — especially if you have lingering debt from your time in college that you now need to tackle.

So all told, if these signs apply to you, you may want to pass on the job you were offered, or otherwise negotiate for a higher salary. In many cases, you’re better off taking an extra month or two to find a full-time job than resigning yourself to one that’s just not going to pay enough.

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Being successful is largely about following productive habits. Discover the most valuable millionaire habits that are worth repeating in your own life. 

With any type of goal, it often helps to follow the same approach as the people who have already done it. For those who want to be financially successful, it makes sense to learn from millionaires and multimillionaires.

Certified Financial Planner Tom Corley got to know 233 millionaires, with an average net worth of $4.3 million, during a five-year study. He found that there were quite a few behaviors and habits this group shared. If you want to improve your financial situation, here are the millionaire habits to adopt.

1. They take care of themselves

This first habit isn’t directly related to personal finance, but it’s important nonetheless. Millionaires don’t neglect their health. Even though they have lots to manage, they make sure to follow healthy exercise and sleep routines.

Of the millionaires in Corley’s study, 76% said they exercise at least 30 minutes per day, four days per week. Many of them (63%) said they play competitive sports. And despite the stereotype of the successful person who works around the clock and barely has any time to sleep, 93% of millionaires reported sleeping at least seven hours per night.

Habits like these are beneficial for your physical and mental health. That allows you to be more productive throughout the day and puts you at less risk of health issues.

2. They automate their savings

Most millionaires recognize the importance of saving money, with 88% saying it was critical to their success. Corley also found that almost half of the self-made millionaires he surveyed fell into what he called the “Saver-Investor” category. That means they built wealth through their saving and investing routines.

Every millionaire in this group took the extra step of automating their savings. They always saved at least 20% of each paycheck.

There were three other millionaire categories that Corley found: Company Climbers who worked their way up to a high salary, Virtuosos who are experts at what they do, and Dreamers who went all in on pursuit of a dream, such as starting a business or being a musician. While not all of these millionaires were as strict about saving, many of them also automated their savings like the Saver-Investors.

3. They invest and build wealth over time

In addition to saving money, millionaires also invest their money so it can grow. All the Saver-Investors did this. Among those who saved 20% of each paycheck, that was normally split evenly between employer-sponsored retirement accounts and savings accounts.

The most popular investment choices millionaires used to build wealth were individual stocks and mutual funds. That makes sense, considering the stock market has been fairly reliable over long time periods. The average stock market return is about 10% per year for the S&P 500, which tracks the performance of 500 of the largest publicly traded U.S. companies.

As millionaires get closer to retirement, they focus more on wealth preservation. To do that, they shift some of their asset allocation from stocks to more conservative investments, such as bonds.

4. They practice frugality

It’s almost cliche at this point to bring up how frugal millionaires are, but most of them are careful about how much they spend. After all, becoming a millionaire is usually a long process. It took most of them longer than 20 years, on average, and it took Saver-Investors an average of 32 years. The only way to consistently save and invest for that long is by managing your spending well.

Here were a few examples Corley found of frugal behaviors by millionaires:

96% said they spend less than $6,000 per year on vacations64% described their homes as modest55% buy used cars

5. They’re highly productive

A 9-to-5 routine isn’t the norm for millionaires. They work much more than average, with 73% saying they work an average of 58 hours per week. However, 86% reported that they enjoy what they do, which certainly helps when putting in those long hours.

They also manage their schedules well and avoid wasting time. A whopping 81% said that they keep a to-do list, and 24% also had a to-don’t list of time-wasting activities.

That focus on productivity pays off. The millionaires that Corley talked to earn at least $160,000 per year, and half of them make close to $500,000.

The thing to remember about millionaires is that most of them are regular people, just like anyone else. It’s their habits that make them successful, including how they manage their finances and their lives as a whole. If you adopt those habits in your own life, they could be a big help in reaching your financial goals.

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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. Lyle Daly has no position in any of the stocks mentioned. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

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