Money Management

When I participated in extreme couponing, I bought a lot of stuff because it was free or paid money to buy it. Here are three wild things I purchased. 

Looking for ways to reduce costs when shopping can be a good thing, as the less you spend on groceries and other household or personal care items, the more money you end up being able to keep in your bank account.

But, it’s definitely possible to take your efforts to save a little too far. I learned this years ago, when I got very into “extreme couponing.” This was the process of using tons of coupons and searching out deals, not just in order to keep credit card bills down when buying essentials, but for the purpose of getting tons of stuff for free.

For several years, I clipped tons of coupons and spent time at multiple drug stores and grocery stores, all for the purpose of scoring carts full of goods for pennies on the dollar. Unfortunately, this ended up leading me to make lots of off-the-wall purchases — including the following three items.

1. Diabetes monitors (without having diabetes)

The weirdest thing I purchased as an extreme couponer was diabetes monitors. I purchased probably close to a dozen of these items over the years. I tried to donate or give them away, but most places did not want to take them even though they were new in the box.

There was a “good” reason for buying these. Drugstores routinely offered deals where you could buy the monitors and get perks for doing so. For example, CVS would give you ExtraBucks for purchasing them — and manufacturers also gave away coupons to make them free because they wanted you to buy the monitor and then use their test strips over time. When you combined the manufacturer and store deal, you could end up getting paid to buy them.

2. 100 Robitussin cough syrups

Robitussin cough syrup was another item I ended up getting paid to buy when combining coupons and cash back drugstore deals. The deal was so good and there was an abundance of coupons available, and the deal went on for a long time.

Every time I would go to the drugstore to do another coupon deal, I would buy Robitussin both so that I could get the money back on the item and so I would be able to use discount coupons like $5 off a $25 purchase (the Robitussin would help me get over that threshold).

After about a month of doing this, I ended up with more than 100 bottles of the cough syrup in my guest bedroom which I luckily ended up being able to resell.

3. Air fresheners

Plug-in air fresheners were another product that I was paid to buy so I ended up purchasing a ton of them — even though I didn’t use them. These were also items I was able to resell but at one time I had around 20 or 30 of them in my house.

Ultimately, the problem was that putting together “deals” to use coupons or get back more than I spent resulted in buying a lot of weird things — these items included. And that is one big reason I gave up extreme couponing since I was spending time both buying unnecessary things and finding homes for them.

I’ve now found better ways to save money and bulk up my bank account, so the diabetes monitors and cough medicine can stay on the shelves where they belong.

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Hedge funds are a popular option for wealthy investors. Learn about one huge drawback you should know about before investing this way. 

If you’re a wealthy investor looking for alternative investments, hedge funds are a popular choice. A hedge fund pools and invests money from investors. Hedge funds generally aren’t subject to the same regulations as other types of investment funds, and they use more complex investing strategies.

On the surface, a hedge fund seems like a smart way to get a better return on your portfolio. Since hedge funds are more exclusive and aimed at wealthy investors, one would expect that they also provide better performance than everyday investments. That’s not actually the case, and you could almost assuredly do better with funds offered by any of the top stock brokers. One major drawback makes hedge funds an investment you’re better off avoiding.

Hedge fund managers make more money than investors

The problem with hedge funds is the expensive fees involved. Hedge funds normally charge an asset management fee of 1% to 2% and a performance fee taking 20% of the profits, according to Investor.gov.

Investing strategy resource Market Sentiment shared a useful example of how much this could cost you. Let’s say when you’re 25 years old, you give a hedge fund manager $100,000 to invest for you. The hedge fund takes a 1.5% management fee and a 20% performance fee. The manager is able to get you an annual return of 8%, which is realistic given the stock market average.

When you’re ready to retire at 65, your portfolio will be worth $764,000. That probably sounds great — until you learn that your hedge fund manager, who didn’t put in any money, will have $1.24 million.

Because of fees, hedge fund managers don’t just make money. They become richer than the clients who are actually investing the money. The amount of time it takes just depends on the fee structure. If a hedge fund charges a 2% asset management fee and a 20% performance fee, it will only take about 17 years on average before it beats the investor.

Why do investors use hedge funds?

Considering how much hedge funds cost, it raises the question of why anyone would choose this type of investment. Market Sentiment found two explanations.

The first is that hedge funds tend to be far less volatile than the stock market. For wealthy investors who are more concerned with preserving their wealth than maximizing returns, lower volatility is a significant advantage. This is the most compelling reason to invest in hedge funds. They often provide reasonable returns, even during market downturns.

Another explanation is exclusivity. Many investors mistakenly believe that more exclusive investments are better. The research doesn’t support that notion. In all likelihood, you’d make much more long term by choosing investment funds with lower fees. But not every investor realizes this, and wealthy investors aren’t immune to these kinds of mistakes.

Better ways to invest your money

For most investors, hedge funds aren’t the best option. If your goal is growing your portfolio, then it doesn’t make sense to pay the hefty fees that hedge fund managers charge. So, what should you do instead?

You can still put your money in investment funds. The key is to find funds with low fees. One of the most popular and effective options is investing in index funds. An index fund attempts to track the returns of a market index, such as the S&P 500, the index for 500 of the largest publicly traded companies on U.S. stock exchanges.

There are also target-date retirement funds. A target-date fund is an investment fund built around a retirement year. It’s automatically rebalanced as time goes on, shifting the asset allocation based on how close you are to retirement.

There’s always the option to build your own portfolio, as well. You could do this by picking individual stocks or putting together a combination of stocks and investment funds you like. This takes more time, but you get full control of your investments.

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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.Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy.

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Getting a tax refund? Read on to see how yours might compare to the average filer’s. 

Now that the 2023 tax-filing deadline has officially passed, a lot of people are sitting back and waiting for their refunds to hit their bank accounts. If the refund you’re expecting this year is smaller than last year’s, you’re not alone.

For the week ending April 7, the average tax refund issued by the IRS came to $2,878. That’s down from $3,175 in 2022.

Of course, it’s easy to see why tax refunds are down this year. In 2021, several popular tax credits were boosted to give Americans relief at a time when unemployment was up and the pandemic was making it difficult for people to work.

Those enhancements expired at the end of 2021. So this year, many tax-filers no doubt had smaller credit amounts to claim. But no matter what your 2023 tax refund looks like, it’s important to make the most of it.

What to do with your tax refund

It’s easy to look at a tax refund as free money from the IRS. But it’s not free money — it’s your money. It’s important to make the most of it rather than spend it on a whim.

The first thing you should do before spending your tax refund is see if you’re current on all of your bills. If you’re behind on your rent, mortgage, or utilities, use your refund to catch up.

If you’re up to date on all of your bills, take a look at your savings account balance. Do you have enough money in there to cover a full three months of essential living expenses? If not, then it pays to put your tax refund into savings and bulk up your emergency fund.

We don’t know if the U.S. economy will take a turn for the worse later on in 2023, or at some point next year. The more money you have in emergency savings, the more protection you buy yourself in the event of a layoff. And the reason you should make sure to have enough savings to cover three months of bills is that it might easily take you that long to find work after losing a job — especially if you find yourself searching for an open role during a recession.

If your emergency fund is solid, your next best bet is to use your tax refund to pay off high-interest debt. That could mean chipping away at a credit card balance you’ve been carrying for quite some time.

When you’re free to spend your tax refund

If you have no high-interest debt, a solid emergency fund, and are doing well on retirement savings and other long-term goals, then you may decide to go ahead and spend the money the IRS sends back to you this spring on something like a vacation. And that’s perfectly fine.

But if you have a financial need to meet, like building savings or paying down debt, then try to refrain from spending your refund. At this point, it’s pretty clear that lawmakers aren’t looking to send out stimulus checks anytime soon. The money you receive in tax refund form may represent the only lump sum of cash you get for the rest of the year, so it’s imperative that you make the most of it.

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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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Costco’s Kirkland brand products can be very high in quality. But this is one Kirkland product I’d skip. Read on to find out why. 

As someone who shops at Costco on an almost weekly basis, I’ve purchased my fair share of Kirkland products over time. If you’re not familiar with Kirkland, it’s Costco’s signature brand. And often, buying Kirkland products means racking up a smaller credit card tab than you’d have when buying products from heavily marketed brands.

Now, through the years, I’ve heard rumblings from friends that Kirkland products can be inferior to name-brand ones. And I’ve largely found that to be untrue.

Whether it’s food, tissues, or other household essentials, I’ve generally been more than satisfied with the Kirkland items I’ve brought home. There is, however, one exception in my book.

I just don’t love Kirkland paper towels

As a mom, I’m no stranger to having to clean up spills, whether it’s a knocked-over cup of juice or an entire pitcher of water. And so I’ve become rather particular about my paper towels.

I need a paper towel that’s super absorbent. And to me, Costco’s Kirkland paper towels don’t quite get the job done.

To be clear, I wouldn’t call these cheaply made, and they definitely work better than other, more flimsy paper towels I’ve tried. But are they as good as the Bounty paper towels that have become my go-to resource for spills? In my book, no.

You may be drawn to Kirkland paper towels due to the price point. You can buy a 12-roll pack of 160 sheets each for $22.99 online. The price per square foot there is $0.02. Meanwhile, a 12-roll pack of Bounty paper towels with 101 sheets normally costs $29.99 when purchased online. That amounts to $0.0373 per square foot. (These prices may be different in your local market, or at your local warehouse club store rather than online.)

So Kirkland is clearly the less expensive option. And if you’re trying to reduce your spending and boost your savings account, you may be inclined to choose Kirkland over Bounty. But despite the higher price, Bounty paper towels will always beat Kirkland ones in my book because I’ve found that they do a much better job.

A rare exception

I’m the sort of person who buys $8 leggings and $5 t-shirts on Amazon and doesn’t think twice about it, so I’m certainly not the type to overpay for a recognized brand. That extends to my Costco and general supermarket shopping, too.

Kirkland products are generally very high in quality, and I make a point to buy as many as possible to keep my bills to a minimum. But because I rely on paper towels so much, I’d rather, in this one instance, spend more for what I feel is better quality. And I also can’t, in good faith, recommend Kirkland paper towels to the masses.

That said, you may find that Kirkland paper towels get the job done for you. And if so, you might as well save the money. But I think the average person is better off skipping this one specific Kirkland product and spending a little bit more for Bounty.

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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. Maurie Backman has positions in Amazon.com. The Motley Fool has positions in and recommends Amazon.com and Costco Wholesale. The Motley Fool has a disclosure policy.

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Certificates of deposit (CDs) are offering high interest rates right now. Here’s how to know if one of these accounts is a good home for your savings. 

Recent bank failures and rising interest rates have left a lot of people uncertain about the best home for their money right now. It’s not just a question of which bank you want holding onto your funds. You also have to think about which type of account you want to keep your money in.

Certificates of deposit (CDs) are one option for those hoping to earn a high interest rate on their savings. But they may not be the best choice for everyone. Below, we’ll look at what you need to weigh to decide if one of these accounts is right for you.

How CDs work

If you’re not familiar with CDs, they’re a type of deposit account that enables you to earn an above-average interest rate on your money in exchange for limited access. When you put cash into a CD, you’re agreeing not to touch it for a length of time known as the CD term. This can be anywhere from a few weeks to five years or more, depending on the CD you choose.

You typically can’t add money to the CD over time and you’ll pay a penalty in lost interest if you withdraw CD funds before the term is up. So these accounts are usually only a good idea if you know you won’t need the money for a while.

CDs are FDIC-insured, just like checking and savings accounts, so your money is protected even if your bank fails. CDs offered through credit unions, which are often referred to as share certificates, are protected by National Credit Union Administration (NCUA) insurance. This is similar to FDIC insurance but it applies to credit unions.

Are short- or long-term CDs a better choice right now?

As a general rule, long-term CDs typically pay a higher interest rate than short-term CDs, though this can vary by bank. Some banks offer special rates on some of their short-term CDs in an effort to attract new customers but don’t offer especially competitive rates on long-term CDs.

When choosing a CD term, you have to think about how long you’re comfortable locking your money up. But you also need to consider what interest rates are doing right now.

Typically, you want to avoid long-term CDs when interest rates are rising. If you lock yourself in for, say, five years, and rates rise after a year, you’ll be stuck earning that low rate for the remaining four years. You won’t be able to get your money out to put it in a higher-earning CD or an online savings account without incurring a penalty.

On the other hand, when interest rates are falling, long-term CDs can be a smart investment. You’ll guarantee yourself a high interest rate for the full length of the CD term while you might not earn very much with a savings account during that same period.

The Fed just raised interest rates again on March 22, 2023 in an effort to curb inflation. Inflation is now beginning to slow down, so there may not be any further rate hikes, but you may want to avoid locking up your savings for years just to be safe. Stick to shorter-term CDs right now or keep your money in a high-yield savings account where you can access it at any time.

How to open a CD

Many banks and credit unions offer CDs, so there are a lot of options to choose from. Since you can’t easily access your funds during the CD term, interest rate is the biggest draw for these types of accounts.

Think about which term length you’re comfortable with and then compare options to see which bank offers the best rates for that term. You should also watch out for minimum deposit requirements. Some banks may not have them while others can require $1,000 or more. This could prevent you from opening some CDs if you don’t have a lot to deposit.

Once you’ve chosen the account you like, the process is pretty much the same as opening any other bank account. You can apply online or in person if the bank you choose has branches nearby. You’ll need to provide some personal information, including your birthdate and Social Security number. And you’ll need money to fund your account in some way. Check with your bank to see what options you have for funding your account.

There’s not much for you to do once the CD is open. Your bank should notify you when the term is up so you can decide what to do next. Some automatically roll your funds over into a new CD with a similar term, but this usually isn’t a good idea. If you don’t plan to spend the money, shop around for a better CD when your initial term ends based on the criteria discussed above.

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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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