Money Management

When you open a 401(k) account, Dave Ramsey says to make sure you complete your beneficiary form. Here’s why taking care of this task is so important. 

Opening a 401(k) account is one of the most important steps you can take if you want to save for retirement. The good news is, it’s pretty easy to do. Unlike when you open an IRA and need to find a brokerage firm to hold your account, your employer takes care of the administrative tasks associated with a 401(k). All you must do is enroll in your plan at your workplace.

When you do enroll, though, there are a lot of forms you need to fill out. And finance expert Dave Ramsey warns there is one in particular that you can’t afford to forget about.

Make sure you fill out this form and keep it up to date

Ramsey cautioned that it’s important for anyone who is opening a 401(k) to be certain they complete their beneficiary designation form.

“This is where you state who will receive your 401(k) money if you die,” Ramsey explained. He explained that for those with a spouse and children, completing this form is usually pretty easy upfront — but then it ends up getting forgotten and this could be a problem.

“This is one form people tend to truly fill out and forget,” he said. “In some cases, people have divorced and are remarried, but their 401(k) would still go to their ex if they died because they never updated their beneficiaries. Other times, the investor may have had children, but forgot to add them to the form.”

You don’t want the wrong person to inherit your retirement money because you overlooked some simple paperwork, so Ramsey’s warning here is an important one to heed. You can’t forget to make sure this form is up to date at all times.

How to choose your 401(k) beneficiary

If you are married, you may be required to designate your spouse as your 401(k) beneficiary unless they waive their right to inherit the account. You’ll want to make sure you understand these rules when you decide who is going to inherit the funds.

If you don’t have a spouse, think about what close relatives or loved ones would benefit from inheriting the money that you have available. This could be your children or other people who are dependent on you or who you want to provide for financially.

You can also consider your beneficiary designation as part of your larger estate planning process. For example, you may decide to purchase life insurance to provide for some dependents while leaving your 401(k) balance to others.

The important thing is to make an informed choice, complete your form, and keep it up to date by contacting your employer’s human resources department or signing into your online 401(k) account to modify your beneficiary if your life needs change. You should also name a contingent beneficiary if your 401(k) forms allow it, which is a person who will inherit if your primary beneficiary is unable to because they passed before you.

Remember that whoever is designated as the beneficiary is going to be the one who gets the account funds, so follow Ramsey’s advice and make sure this important form is not one you overlook.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2024

If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee.

In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

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.

 Read More 

Accidentally bought the wrong stock? Read on to see what to do. 

Buying stocks in a brokerage account has become a pretty easy thing to do these days. That’s because many brokerages don’t even limit you to full shares of stock. Rather, you’re often allowed to purchase shares of stock on a fractional basis so that if a given company’s stock is trading for $500 a share and you only have $100 to invest with, you can buy one-fifth of a share instead.

And it’s not just individual stocks that can be traded fractionally. It’s generally also possible to buy ETFs on a fractional basis.

Meanwhile, many people are in the habit of buying stocks using an app. That’s a good thing, to some degree, because it means you can buy stocks on the go. You don’t even have to commit to sitting at a desk.

But when you’re buying stocks on the go, you might make a mistake. See, stocks have a ticker or symbol that may or may not be an abbreviation of the company name. And because of that, you might accidentally input the wrong ticker when making a trade.

Coca Cola’s ticker, for example, is KO, which may not be what you’d expect it to be. By contrast, Walmart’s stock symbol is WMT, which reads more like an abbreviation.

It’s more than possible to accidentally enter the wrong stock symbol when adding shares to your portfolio, and boom — you’ve bought a stock you didn’t want. If you realize your mistake right away, you can simply unload those shares and move on. It’s when you don’t realize you’ve made a mistake that you might face some consequences.

When you realize you’ve goofed down the road

It’s a good idea to review your trade details carefully before hitting the “buy” button on your brokerage app (or whatever button you hit to confirm a trade). But we’re all human, and humans make mistakes. So if you wound up purchasing a stock you never intended to, try not to beat yourself up.

Now, let’s say you realize a few weeks down the line that you bought the wrong stock. In that case, you can always sell your shares and replace them with shares of the company you wanted to own in the first place. But in doing so, you might face a loss.

Say you bought three shares of the wrong company at $100 apiece. If they’re now only worth $90 apiece, you’re looking at losing some money. Is it a catastrophic amount? No. But it’s a loss nonetheless.

That said, you don’t really want to hang onto a stock that doesn’t fit your investment strategy to avoid a small near-term loss. In this example, if you feel the company is a bad buy and you hang onto it, you’ll risk having its share price plummet to $50, leading to even more losses.

Buying the wrong stock in your brokerage account might also end up benefiting you financially. Let’s say that once you realize your mistake, the shares you bought for $100 apiece are now trading for $110. If you sell, you can profit. But in that scenario, you’ll be subject to short-term capital gains taxes on your profit, which are taxed at a less favorable rate than long-term gains.

Slow and steady is the best bet

The fact that you can buy stocks while running, stirring a pot of soup, or doing laundry is a good thing — to a point. But generally, when you’re buying stocks, it’s a good idea to stop what you’re doing and focus for the minute it takes to complete your transaction. Doing so might prevent you from buying shares of a company you don’t want.

Our best stock brokers

We pored over the data and user reviews to find the select rare picks that landed a spot on our list of the best stock brokers. Some of these best-in-class picks pack in valuable perks, including $0 stock and ETF commissions. Get started and review our best stock brokers.

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 Walmart. The Motley Fool has a disclosure policy.

 Read More 

Representative Ilhan Omar has written an op-ed arguing for more stimulus money from the federal government. Find out about the proposals she supports. 

Stimulus checks issued by the federal government during the COVID-19 pandemic had a dramatic impact on reducing childhood poverty and played a crucial role in helping families stay afloat during economically stressful times.

There has been no federal stimulus money delivered to Americans’ bank accounts for a very long time, though. And one influential lawmaker wants to change that.

Representative Ilhan Omar is a member of “The Squad,” which is a powerful group of progressive young lawmakers. She recently wrote an editorial in the Star Tribune voicing her support for several stimulus programs that would deliver much-needed cash to the vast majority of Americans.

These proposals would make a huge difference in your finances

Omar’s op-ed was inspired by proposals in her home state of Minnesota that are designed to help working families. These Minnesota proposals include an expanded Child Tax Credit, which would provide payments of $1,000 per child to families earning $50,000 or less. Omar voiced support for this proposal, indicating it is the type of action that should be taken on the federal level rather than being left to the states.

Omar went on to explain two specific plans she would support on the federal level.

One is the restoration of the expanded Child Tax Credit. The expanded credit was created by the most recent COVID-19 stimulus bill passed soon after President Joe Biden took office. It offered parents of children under age 6 a credit of $3,600 per year and parents of children aged 6 to 17 a credit of $3,000. These credits were partly distributed throughout the year in the form of monthly payments totaling $250 or $300.

The expanded credit expired in 2021, and Omar wants it brought back.”We are pushing to reinstate the expanded Child Tax Credit and make it permanent, so millions of families have the lifeline they need,” she wrote.

In addition to this, she also said that she plans to keep pushing for the passage of the SUPPORT Act, which would provide monthly payments of $1,200 per adult and $600 per child over the course of five years.

Will these proposals become law?

Omar is not the only lawmaker on the left who wants the Child Tax Credit to be expanded again or who wants payments to go out regularly to people to provide a universal basic income. But, there is currently no majority support for these proposals. With the current Congress, neither is likely to happen.

However, with people like Omar continuing to push for these changes, it’s possible that some additional stimulus aid could be offered in the future — especially if the Congress moves left as new young progressive candidates run for office.

So, while these proposals to restore and expand stimulus money won’t be passed any time soon, those hoping for another check still have reason to believe that they aren’t off the table as the conversation about more aid remains ongoing.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2024

If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee.

In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

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.Christy Bieber has no position in any of the stocks mentioned. The Motley Fool recommends Progressive. The Motley Fool has a disclosure policy.

 Read More