Money Management

You shouldn’t ignore your HSA for too long. Read on to see why. 

Healthcare can be a huge expense at any age, so it’s a good idea to set aside money for it. And in this regard, you have options. You could simply put more money into a regular savings account and earmark those funds for medical bills. Or you could enjoy some tax breaks in the course of saving for healthcare by funding a flexible spending account (FSA) or health savings account (HSA).

Both of these accounts let you set aside tax-free money for medical expenses. But despite the name, flexible spending accounts aren’t actually so flexible. That’s because they require you to spend down your balance each year or risk forfeiting funds.

HSAs, on the other hand, give you a lot more leeway. With an HSA, you do not have to deplete your plan balance by the end of the year. HSAs allow you to invest unused funds and carry your money forward.

In fact, you’ll often hear that it’s a good idea to leave your HSA untapped as long as possible and reserve that money for retirement. At that stage of life, you might end up spending more money on medical care because health issues tend to arise with age.

But while it’s a good idea to actively contribute to your HSA, invest your funds, and carry your balance forward into retirement, you don’t want to simply ignore an existing HSA. Doing so could put you at risk of losing your money.

Your HSA shouldn’t just sit dormant

Of the more than 20 million Americans who have an HSA, at least 24% leave their accounts inactive, says research firm Devenir. This means they don’t access their accounts, add money to them, or take withdrawals. Rather, those accounts just sit there.

It’s when your HSA is inactive for too long that you could get into trouble. At that point, the bank holding your HSA could technically seek to turn your balance over to the state as unclaimed funds.

Rest assured that this won’t happen before you’re issued a warning. The bank holding your HSA will need to contact you (usually by mail), inform you that your account has been inactive for too long, and give you some options. But if you ignore that letter or never receive it, then your HSA balance could be turned over to the state.

How to avoid losing out on HSA funds

The last thing you want is to risk losing out on the money you’ve socked away in an HSA. If you make a point to keep contributing to your account, however, then that alone should be enough to keep it active.

So let’s say your goal is to reserve all of your HSA funds for retirement, and you’re only in your 40s. If you make an HSA contribution every year, that should do the trick in keeping your account active. Making investment changes in your account might do the same.

If you have an old HSA you know you haven’t put money into for quite some time and you don’t plan to make a contribution or withdrawal anytime soon, then it could pay to contact the bank holding your HSA and confirm that you wish to keep your account active. At that point, your bank should be able to tell you what steps, if any, you need to take to make sure you don’t end up forfeiting any funds.

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Stocks can be risky for retirees. But in some cases, buying more stocks makes sense. Read on to learn more. 

There’s a reason retirees are often advised to scale back their stock holdings, whether in a brokerage account or IRA, and load up on more conservative investments, like bonds. Stocks have a tendency to be very volatile, so their value can swing wildly from one week (or even one day) to the next.

Bonds, on the other hand, tend to be more stable. This isn’t to say that the value of bonds can’t drop over time. But you’re less likely to see the value of your bonds move significantly from one day or week to the next. And so bonds are commonly considered a suitable investment for retirees.

But all told, it’s still a good idea to hold some stocks in your brokerage account or IRA in retirement. And if you happen to be sitting on extra money, you really shouldn’t hesitate to put it into the stock market.

You might as well put your extra money to work

Many retirees end up in a situation where money is tight. But what if you’re in a different boat?

Maybe you saved so well throughout your career that you managed to amass a giant nest egg worth millions. If that’s the case, and you’re comfortable financially, then you may end up having extra money at your disposal in retirement. And if so, you should feel good about putting it into stocks.

See, stocks are dangerous when the money you’re investing is money you might need in the near term (say, within five to 10 years). If you’re forced to liquidate a stock position when the value of those stocks is down, you’ll lock in a loss.

But if you’re talking about having extra money you don’t expect to use to cover bills, then you might as well invest it and see if you can grow it into a much larger sum. That way, you’ll have additional funds to spend on travel, hobbies, gifts for your grandchildren, or pretty much anything you want.

The upside could be big

Over the past 50 years, the stock market has delivered an average annual return of 10%, based on the S&P 500 index’s performance. So, let’s say you have an extra $20,000 in cash and you feel there’s no way you’re going to need that money within the next 10 years. If you invest it in stocks and snag a 10% return, you’ll grow your $20,000 into about $52,000 in a decade’s time.

Of course, if you’re sitting on money you technically don’t need, you might say to yourself, “Why take the risk of investing in stocks?” And that’s fair. On the other hand, if you’re talking about money you really don’t need, you’re actually not taking such a big risk — because if you were to lose all that money, it probably wouldn’t stop you from paying your bills and doing the things you want to do.

This isn’t to say that anyone wants to lose a chunk of money. But the typical investor who holds stocks for a longer period of time doesn’t tend to lose money. If that were the case, fewer people would have stock portfolios. So that’s something to consider as well.

Many retirees don’t have extra money — they barely have enough money to scrape by. But if you’re in the opposite situation with your personal finances, investing your excess cash in stocks could be a really smart move.

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Your gender might impact your life insurance costs. Read on to learn more. 

If you have people in your life who rely on you financially (such as a spouse or children), then you should strongly consider putting a life insurance policy in place. Without life insurance, your dependents might struggle to cover their living costs in the event of your passing.

Generally speaking, term life insurance is a far more affordable option than whole life insurance. With the former, you’re only covered for a preset period of time and your policy does not accumulate a cash value. With the latter, your policy does accumulate a cash value, and you get coverage for the rest of your life. But the cost of whole life insurance can be so prohibitively expensive that despite those extra benefits, a whole life policy just isn’t worth it.

You may be wondering how much you should expect to spend on term life insurance. And the answer is that it depends on a host of different factors, like your age at the time of your application and the state of your health. But your gender could also play a role in determining how much life insurance ends up costing you.

The one area where women seem to have an advantage

Many people are familiar with the gender pay gap, which has women earning less money than their similarly qualified male counterparts. That clearly puts women at a financial disadvantage.

But one area where women seem to benefit financially is life insurance. Specifically, it tends to cost women less money to buy life insurance than men. And the reason is actually pretty simple.

Women tend to live longer than men. Because of that, women who buy term life insurance are more likely to outlive their policies, resulting in a situation where their insurance companies don’t have to pay out any benefits. And that’s what insurance companies want.

How much of a difference does gender make when buying life insurance?

Dave Ramsey says that a $1 million life insurance policy for a 30-year-old male costs an average of $42 a month for a 10-year term and $54 a month for a 20-year term. By contrast, a $1 million life insurance policy for a 30-year-old female costs an average of $28.50 a month for a 10-year term and $43 a month for a 20-year term.

But this doesn’t mean that if you’re a man, you’re doomed to high life insurance premiums. There are steps you can take to minimize those.

First, apply for coverage at a relatively young age. Secondly, work on making improvements to your health before undergoing a medical exam for life insurance. If you smoke, try your best to quit. If you’re considered medically overweight, try to shed some pounds by making changes to your diet and exercise routine.

The cost of your life insurance premiums will hinge on how much risk your insurer thinks it’s taking on. If you present yourself as a less risky candidate, you’ll generally be rewarded in the form of lower premiums. It’s that simple.

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The Fed appears to be winning the battle over inflation. Read on to learn how that could affect today’s high CD rates. 

For investors who love fixed income, 2023 has so far been the year of the CD. Rates on short-term CDs have skyrocketed from a meager average of 1.3% in May 2022 to an eye-watering 5% this April, with one CD even hitting 7%.

But if this upward climb has convinced you to wait for potentially higher yields later this year, the downward trend in inflation could leave you waiting for quite some time. Here’s what the latest inflation data could mean for CD rates.

How CD rates and inflation are connected

Inflation and CD rates aren’t inextricably linked. In other words, your bank doesn’t offer higher CD rates just because inflation is high (they’re not that generous). But inflation and CD rates do have a correlation through the federal funds rate.

The federal funds rate and national CD rates typically move in tandem. This is because whenever the Fed adjusts its funds rate, it also adjusts how much interest it pays to banks who hold reserves within it. A higher funds rate means banks are generating more income on interest. This extra money incentivizes banks to offer higher CD rates as a way to bring in more depositors.

Since March 17, 2022, the Federal Reserve has combated inflation by hiking the federal funds rate from a range of 0.00% to 0.25% to one of 5.00% to 5.25%. And its strategy is working: For the tenth consecutive month, the Consumer Price Index trended downward in April, dropping to 4.9%. That’s still far from the Fed’s target of 2%. But the downward momentum is encouraging and it might lead the Fed to reconsider hiking rates at its next meeting in June.

Don’t miss that last part: If the Fed doesn’t hike rates in June, it will be the first time in 14 months that it pauses its campaign. That doesn’t mean CD rates will all at once swan dive to all-time lows. But it could lead APYs to creep downward, which could make today’s high rates the peak.

Could CD rates drop in 2023?

The real question here is this: Could the Federal Reserve reverse course and hike its federal funds rate downward in 2023?

It’s certainly possible. And, in fact, many economists are anticipating that it will. According to the CME Group’s FedWatch Tool, which compiles pricing data from 30-Day Fed Funds futures, the odds of the Fed pausing its interest hiking campaign is high — around 87%. Likewise, the probability that the Fed will begin hiking rates downward before winter is also high, with a 43% probability in July and 48% in September.

Of course, anything is possible. But at this point the likelihood of CD rates soaring higher than their current average is slim. It would take an alarmingly high inflation rate for the Fed to feel compelled to continue hiking interest rates. Not impossible, but trends in inflation data aren’t supporting it.

To be sure, CD rates are still hovering between 4.5% to 5%. But if you want to lock money into a CD, I wouldn’t wait: Now might be the most opportune time to get a CD before they begin trending down. Of course, CD rates aren’t falling just yet, so you still have time to shop around for the best CD rate. If you’re hesitant, you could look at shorter terms — like 3- or 6-month CDs — then reconsider your position when that CD reaches maturity.

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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.
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Things are already warming up at Sam’s Club with new products designed to enhance summertime fun. Read on for the seven best deals right now. 

If you’re ready to dive into summertime and all it has to offer, Sam’s Club is the place to be. One thing you can always count on from the warehouse giant is a wide selection of seasonal items, including pool toys and barbecue grills. We compared Sam’s Club prices to Walmart’s to get a better idea of just how deep the discounts are.

1. My First Waterslide Inflatable Splash & Slide

Sam’s Club price: $220Walmart price: $348

If you’d love nothing more than to see the little one blow off some steam, chances are, this curved waterslide will do the trick. It comes with climbing walls and an exciting slide that leads to a splash pool. A continuous air blower provides constant inflation, saving you the trouble of a deflated slide and disappointed children.

2. Propel 14′ Heavy-Duty Pro Trampoline With Basketball Hoop

Sam’s Club price: $270Walmart price: $499

Propel Trampolines bills this model, surrounded by a safety net, and featuring a basketball hope, as “one of the safest, bounciest trampolines on the market.” And for $229 less than Walmart, the Sam’s Club price cannot be beat.

Tip: If you decide on a trampoline, make sure to let your homeowners insurance know so it can be added to your policy.

3. Backyard Discovery Saxony Grill Gazebo

Sam’s Club regular price: $899Sam’s Club sale price (through June 4): $699Walmart price: $1,199

Love to grill but truly dislike standing in the rain? This 7.81′ x 5.35′ x 7.63′ gazebo is large enough to protect both you and a grill up to 70 inches wide. It’s built to withstand up to 100 mph winds, and when winter rolls around again, up to 30 inches of snow.

4. SwingLogic SLX MicroSim Home Golf Simulator

Sam’s Club price: $189Walmart price: $216 (online special)

This golf simulator is ideal for adults on days when it’s too stinkin’ hot to be outdoors. This sensor-based golf simulator analyzes your swing and provides instant data readouts. The system allows you to play virtual courses, rain, shine, or extreme heat.

5. Big Mouth 6′ Inflatable Fire Hydrant Sprinkler

Sam’s Club price: $30Walmart price: $40

If you think back to childhood and can remember days running through the sprinkler, you’ll probably appreciate this huge, adorable inflatable fire hydrant. Water sprays out of the top and sides, creating a 360-degree soak zone. Just for fun, the sprinkler on top spins to spray water in every direction. All you need to do is inflate the hydrant and connect it to a standard water hose.

6. Prism Frame 16′ x 8′ x 42″ Rectangular Above Ground Pool Set

Sam’s Club regular price: $499Sam’s Club sale price (through June 4): $399Walmart price: $694

If you’ve been looking for an above-ground pool that won’t drain the bank account, look no further. This 16′ x 8′ x 42″ rectangular model will fit in just about any backyard. While the rectangular shape may be a bit unusual, it’s built to provide extra swimming space and to hold more pool water than traditional round frame pools. The pool includes a 1,000-gallon cartridge filter pump, ladder, pool cover, and ground cloth.

7. Ninja CREAMi, Ice Cream, Milkshake, Sorbet, and Lite Ice Cream Maker, 7 One-Touch Programs

Sam’s Club price: $170Walmart price: $240

As the sun sets after a busy day, this Ninja™ CREAMi® makes it easy to create your own flavors of ice cream, sorbets, milkshakes, and more. Old-fashioned cranks are so pre-21st century. This model works with the touch of a button.

Whether you’re planning for a vacation or hanging around the house, one of the best things about summer is the anticipation. Sam’s Club makes it easy to enjoy those long summer days and cool summer evenings by offering plenty of options for fun.

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

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Dave Ramsey has warned against signing on for a rent-to-own arrangement. Here’s why you should steer clear of this approach to buying a home. 

If you are eager to buy a home as soon as possible, you may be interested in exploring all options that could get you into a property sooner. That’s especially true if you don’t have the down payment or the credentials to qualify for a mortgage right now.

If that sounds like your situation, a rent-to-own arrangement may seem attractive. When you buy a house with a rent-to-own deal, you typically agree to rent a property for more than the current market rate in exchange for the option to buy it at some set price later on. The money you’re paying in rent each month helps you build equity in the home that can serve as your down payment. Then, you eventually take out a mortgage to buy the house once you have some home equity in it.

While this may sound like a good deal, finance expert Dave Ramsey is not a fan of rent-to-own arrangements. Here’s what he had to say, along with some thoughts on whether he’s right.

Ramsey’s problem with rent-to-own

Ramsey has referred to rent-to-own arrangements as a “bad deal,” for one key reason. His big issue is you’ll get stuck paying higher rent payments under the arrangement but you may not be able to follow through on the home purchase. You could end up losing a lot of money if this happens.

“If you later decide you don’t want to buy the house or something happens to break your contract (like you don’t get approved for the mortgage), you won’t get all those extra payments back,” Ramsey warned. “They’ll have been a waste!”

Ramsey also said there’s another big downside to rent-to-own contracts. Often, the contracts are structured so you are required to pay for repairs to the property even when you are a renter. Normally, a landlord would cover these costs, which can be expensive. But if you get stuck paying them, you’re going to be spending a lot of money on a house that you don’t yet own and may never end up being the owner of. This is money that would be lost as well.

Is Ramsey right?

Ramsey is absolutely right that rent-to-own is not a good way to buy a house. The simple reason for that is rent-to-own contracts are almost always drafted in a way that heavily favors the home’s current owner while disadvantaging the renter (who is usually just desperate to buy a house and feels as if they don’t have other options).

Many rent-to-own contracts have clauses that put you at serious risk of losing money, such as a clause that says you lose the chance to buy the property if you miss a payment or are late with it. This could mean losing all the money you’ve already put in. Plus, in many cases, very little of your rent actually goes toward earning equity in your house, and you could end up overpaying for the house, depending on the valuation set.

Rather than taking on the huge risks of rent-to-own, you’re far better off listening to Ramsey’s warning and steering clear. Instead, continue renting normally while saving up the cash you need to get a mortgage loan the traditional way.

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