Money Management

Looking to get an electric vehicle? Read on to see how you might reap huge savings on certain models at Costco. 

When the IRS first announced that electric vehicle purchases could result in a $7,500 tax credit, many consumers were eager to line up to purchase them, despite their higher price tag. But the rules surrounding the federal EV tax credit have become stricter. And as a result, many EVs on the market do not qualify for the credit.

As of April 23, there were no Volvo models that met the requirements for the EV tax credit. But since Volvo has long been a trusted name in vehicles, you may be looking at getting a Volvo EV.

The good news is that if you buy a Volvo EV through Costco, you might enjoy some massive savings. But you’ll need to act quickly to benefit from the warehouse club giant’s limited-time deal.

Save big on your Volvo EV purchase

Current Costco members can receive $2,500 off a Volvo XC40 Recharge or C40 Recharge, which are both electric vehicles. They can also receive $1,000 off of certain non-electric Volvo vehicles, including the XC90 and XC60 luxury SUV/crossover, and the S90 and S60 luxury sedans. A full list of Volvo vehicles eligible for savings is available on Costco’s website.

To qualify for this promotion, you need to have been a Costco member as of May 1. You also need to take delivery of your Volvo by July 31.

Should you buy an electric vehicle through Costco?

It’s hardly a secret that buying a car is a very expensive prospect these days. And this especially holds true for EVs.

Find My Electric reports that the average price for the top 10 new EVs in the U.S. is $61,442. Of course, some EVs sell for far less, while others sell for over $100,000. So it’s really a matter of what you’re looking for.

But either way, it’s important to shop around when buying a car to seek out the lowest price. In some cases, that may be Costco — but do your research first rather than assume.

Of course, one benefit of buying an EV through Costco (aside from near-term savings on Volvo models) is that Costco prides itself on solid customer service. So you may find that using its auto program is your most hassle-free option.

That said, you shouldn’t buy an EV through Costco for the express purpose of racking up cash back on your purchase. Costco executive members get 2% back on Costco purchases, including those made online and travel booked through Costco. And many categories count toward that 2% reward. Car purchases, however, do not.

In fact, the Costco executive membership limits you to a $1,000 annual reward for Costco purchases. To get that $1,000, you’d have to spend $50,000 in a single year at Costco. A car purchase could easily help you reach that threshold, but alas, it won’t count. But you might still want to look at Costco for your next EV, especially if you’re interested in buying a Volvo and you’re able to move forward with a car purchase soon.

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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.Maurie Backman 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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Picking investments in a 401(k) can be complicated. But there’s an easy solution. Read on to learn how to simplify the process. 

Whether you’re investing for retirement in a 401(k) or an IRA at a brokerage firm of your choosing, you have to pick investments. And this can be an overwhelming process.

The good news is, there’s a simple shortcut that you can try out to make the process very easy. Here’s all you need to do.

This can make 401(k) investing easier

If you want to make investing in your 401(k) as easy as possible, you can do so by choosing to put all of your retirement money in your employer’s plan into a target date fund.

When you put your money in a target date fund, you don’t invest in just one company or even one mutual fund or one ETF. Instead, what happens is your money is pooled, becomes part of the fund, and is used to buy a big mix of different assets. The specific nature of that mix is what makes target date funds so attractive.

See, a target date fund is a fund designed to expose you to a particular mix of assets that’s appropriate for your risk level given your retirement timeline. For example, you’d pick a target date fund based on when you’d ideally like to retire.

This target date fund would have a mix of stocks and bonds that is appropriate for someone with your goals. You’d make one purchase — buying the fund — and you’d get a very small ownership share in a whole bunch of different investments tailored to you.

Why does a target date fund simplify things?

The reason buying a target date fund can simplify your life so much is that it gives you the right asset allocation. This way, you don’t risk losing too much money or earning returns that are too low.

Investing in stocks is riskier than other investments like bonds, but has more potential upside. So only a percentage of your portfolio should be in the market. If you were figuring this out yourself, you could subtract your age from 110 to figure out what percentage of your portfolio should be in stocks. So, if you were 50, you’d want 60% of your money to be in stocks.

If you took this approach, you’d need to pick a fund in your 401(k), such as an S&P 500 index fund, that’s invested in stocks. Then, you’d need to find a different fund — like a bond fund — for the other 40% of your money. And you’d need to change your asset allocation every year which would mean buying and selling different investments.

If you buy a target date fund, you don’t need to worry about any of that. The fund you buy will make changes to your asset mix each year as you get closer to your retirement date and can afford to take on less risk. You just hold that fund year after year and ideally will end up with plenty of money so you can retire comfortably and not worry about your checking account balance.

Here’s how to pick a target date fund

Your 401(k) likely has a pretty limited selection of target date funds. You can sign into your online account or ask for your plan documents to see what is available.

When you check out the available offerings, you’ll see they have names like 2025 fund or 2040 fund. Pick the ones that are closest to the date you want to retire. If you have multiple choices, compare the fees charged by each fund and the past performance of each and pick the most affordable one that provided the best returns.

If you have just one option, then just make sure the expense ratio (cost of investing) isn’t too high (it should be below 1.00% ideally) and the returns are reasonable (which varies depending on timeline, but which could be anywhere from around 5.00% for those retiring soon to about 8% for those with a longer timeline). Then, buy it.

That’s all you’ll have to do, other than continuing to make regular 401(k) contributions over time so your money can grow and make you a rich retiree.

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You’re not necessarily stuck with the interest rate and payment terms on your auto loan. Read on to learn a few scenarios where it might pay to refinance it. 

Along with just about everything else, cars have gotten extremely expensive, and these last few pandemic years haven’t been a great time to buy one. This is especially true if you’ve had to finance a car purchase via an auto loan. In fact, a report from Edmunds noted that 15.7% of consumers who financed a new car in Q4 2022 committed to payments of at least $1,000 per month — ouch!

The good news is that you may be able to refinance your loan. Here are a few reasons you might want to consider doing just that.

1. Your payments are uncomfortably high

If you got stuck with one of those recent auto loans that came with $1,000-plus payments every month, you may be excited at the prospect of refinancing to bring that payment down. And if you’re having trouble affording your car payments, the main thing NOT to do is to tread water and pretend all is fine. The consequences of not paying your auto loan can be dire, after all. So reach out to your existing lender or perhaps some of the best personal loan lenders out there, compare your offers, and get the refinance ball rolling, sooner rather than later.

2. Your credit has improved

Perhaps your credit score has taken a turn for the better since you signed on for your car loan. If your FICO® Score was in, say, the “fair” range before, and you’ve paid off some debt, corrected errors on your credit report, or added to your overall available credit via a new credit card, your score might now be up to “good” or “very good.” A higher credit score can qualify you for a lower interest rate than you received when you got the car, lowering your payments.

3. You want to pay the car off sooner

Maybe you can actually afford a higher car payment every month (did you get a new job or otherwise increase your income? Well done!). If you can afford to make higher payments, you’ll pay the car off sooner (and may also qualify for a lower interest rate, as you’ll be less of a risk to the lender with a shorter repayment term).

4. You want to tap the equity in your car

Some lenders offer the chance to refinance your auto loan and actually take money out, in basically the car equivalent of a cash-out refinance for your mortgage loan. So if you’re in need of money and have a lot already paid into your car loan, you may be able to do this. Weigh your options and intentions carefully if you’re considering this option, however.

Cars don’t appreciate in value the way homes often do, and taking on a cash-out refinance could leave you upside down on the car loan (meaning you owe more than it’s worth). Being upside down isn’t automatically a bad situation, especially if you intend to keep the car for the long term. But if you need to sell it and owe more than it’s worth, you’d need to come up with the extra money beyond what you could get for it to pay off your lender.

If you know you can qualify for a lower interest rate and want to either make lower payments or potentially pay off your auto loan sooner than originally planned, it might be worth considering a refinance. Shop around for the best deal and enjoy the 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.The Motley Fool has a disclosure policy.

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