Money Management

Don’t buy life insurance without reading this. 

Buying life insurance coverage can be confusing, but it’s important for anyone who wants to provide protection for loved ones. An untimely death could cause financial disaster for those left behind, especially if they struggle to pay the mortgage loan on a family home or to cover the costs of caring for surviving children.

For those in the buying process, here are two big questions that must be answered early on to make sure a sufficient amount of protection is included in any life insurance plan that is ultimately purchased.

1. How long should the coverage term be?

For most people, term life insurance is the right type of coverage. Term life insurance means the policy is in effect for a preset amount of time (such as 20 years or 30 years) and the death benefit only pays out if the policyholder dies during that coverage period. Whole life policies are an alternative that remain in effect indefinitely, but most people don’t need coverage forever and so buying a costlier whole life policy isn’t worth it.

Since term life insurance is the best choice, a would-be policyholder must figure out how long their coverage term should be. Making this decision involves thinking about how long loved ones will need protection for. For example, if a policyholder wants to make sure their mortgage is paid off and their kids are protected until adulthood and they have a 2-year-old and 20 years of payments left on their mortgage, they’d likely want a policy that lasts around 25 years to provide time for their kids to go to college and their home to be paid off.

Ultimately, deciding the length of a coverage term should involve considering when loved ones will stop being dependent. When shared debts are paid off, kids are provided for, and there’s enough money in the bank for a surviving spouse or partner to live on without any income from the policyholder, insurance stops being necessary. So think about how long that will take and decide on a coverage term from there.

2. How large should the death benefit be?

The next big question is how large the death benefit should be. The death benefit is paid when a policyholder dies, and it should provide all the money surviving loved ones would need.

To figure out how much that is, the DIME formula is helpful. The policy should be enough to repay debt; replace income for a desired number of years; repay a mortgage; and cover education for the kids. By using this formula, would-be policyholders can get a good estimate for how much money they need their insurance to pay to their families in case of an untimely death.

By answering these two questions, anyone who is buying life insurance can be certain they are getting exactly the protections their surviving loved ones need. They can then shop around among different insurers to get the most affordable policy from a company that has a solid reputation for customer service and timely payment of claims. Once these steps are done, they can rest assured their family won’t face financial devastation should the worst occur.

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Many travelers get value from airport lounges — but they’re not for everyone. 

Even if you’ve never visited an airport lounge, you’ve probably heard about them. Many travelers like to retreat to the calm oasis an airport lounge can provide before boarding a jam-packed flight. Airport lounges are becoming increasingly popular as more travelers discover them. But are airport lounges worth it? For frequent travelers, airport lounges can be valuable and may help to improve the overall travel experience.

What to expect from the airport lounge experience

Most lounges feature plentiful seating options, including workspaces for travelers who want to be productive and comfortable chairs with tables for those who wish to relax and unwind. You can also expect free wifi access and all the USB and electric outlets you could need.

The majority of lounges also feature snacks and drinks, including alcoholic beverages. Premium lounges may offer more extensive offerings like signature cocktails and dinner buffets. Not all lounges are created equal. But when you compare most airport lounges to the overcrowded and loud public waiting areas available at most airports, it’s easy to see why travelers enjoy retreating here rather than waiting at their gates.

How to tell if airport lounges are for you

If you like to travel and dislike how busy the airport gets, you may want to check one out soon to see what it’s really like to visit an airport lounge. While they’re not for everyone, they can be worthwhile. You should consider your travel style, current airport habits, and budget when deciding if investing in airport lounge access is worth the extra expense.

Here are some questions you may want to ask yourself.

Do you spend money on food and drinks while at the airport?

It’s not unusual for food and drink prices to be highly inflated at the airport. If you spend a lot of money on snacks and beverages while waiting at the airport, lounge access may help you save money. Instead of paying an expensive airport bar tab, you can head to the lounge and consume free snacks and drinks there. Doing this could help you keep more money in your checking account.

How often do you fly?

For occasional travelers, airport lounges may not be worth it. Not every airport has a lounge, and they’re typically located in more popular airport terminals, so there may not always be one near your gate. Plus, some lounges don’t sell day passes and are only available to those who pay for a membership. Consider how often you’d put your membership benefits to use to determine if it’s worth the money. If you hardly ever fly, it’s probably not worth it.

Does your home airport have a lounge?

It’s also wise to research whether your home airport has airport lounges. If you live in a smaller city, you may be out of luck. You want to ensure you’ll get plenty of use from your investment, so check this before splurging on a pricey airport lounge membership.

Your credit card may unlock access to airport lounges

These days, many premium travel credit cards include airport lounge access as a perk. If you already have a credit card like this in your wallet, you should visit an airport lounge to decide if the experience suits you. Most travel rewards credit cards with this kind of benefit also come with a pricey annual fee. Ensure you’ll benefit from the card’s other features and can afford the yearly fee before applying for a card with airport lounge perks.

Airport lounges can be a win (but not always!)

While airport lounges can be a win for frequent travelers, they’re not a good fit for everyone. Additionally, as more people learn about airport lounges, they’ve become increasingly crowded. Even if you have an airport lounge pass, you may be denied entry if the lounge is too full. If you plan to visit an airport lounge soon, go in with an open mind. What matters most is if the experience is worthwhile to you — not what other travelers think.

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It’s good information for any seller to have. 

If you’ve been on the fence about selling your home, you may be leaning closer to making that move at this point. It’s pretty clear that mortgage rates aren’t about to drop back down to 2021 levels anytime soon. So if you’re waiting for mortgages to become more affordable for buyers, you could be waiting a long time.

Plus, home price gains have been slowing down over the past number of months. So if you wait too long to list your home, you may end up walking away with a lower sale price than you’re hoping for.

In fact, if your goal is to command a higher sale price for your home and move it off the market quickly, there’s a specific week in April you may want to target. And that means you may not have much time to get your home in shape for a sale.

It pays to sell the week of April 16-22

According to Realtor.com, the week of April 16-22 is expected to have the ideal balance of housing market conditions that work to sellers’ advantage more so than any other week of the year. In the past, homes sold during this time frame have fetched prices that are 2.1% higher than the average week. And prices this week are typically 12.1% higher than prices at the start of the year.

How to get your home ready for a sale

At this point, you don’t have a ton of time to get your home ready for a sale by April 16. But if you want to capitalize on that window, your first step should be to interview real estate agents and try to find the right one for the job.

A real estate agent can not only help you price your home, but they can also help market it. And, an agent can help you determine what repairs and updates you should focus on before putting your home up for sale.

Speaking of which, if there are things that are glaringly wrong with your home, don’t wait until it’s listed to address them. Instead, fix them immediately.

A broken fence, for example, might prompt buyers to run the other way, so rather than give that poor first impression, get your fence fixed before your initial open house. Similarly, if there’s stained carpeting or a non-functional sink or toilet in your home, don’t just hope potential buyers won’t notice. Instead, get ahead of those issues before listing your home.

There was a point not so long ago when buyers were willing to overlook numerous flaws in order to be able to purchase a home. That was back in 2021, when mortgage rates were super low, as was inventory.

But we’re in a very different housing market today, and now, sellers need to make more of an effort to get their homes sold. If you go that route and list your home at the right time, you may end up thrilled with the sale price you’re able to walk away with.

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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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It’s advice worth taking. 

There are different reasons why people invest in stocks. Your objective in buying stocks in your brokerage account may be to put your kids through college. Or maybe you have stocks sitting in your IRA that you hope will help pay your retirement expenses once you stop working.

Investing in stocks could end up being a lucrative move for you. Though stocks tend to be volatile, investors who buy them and hold them for years are often rewarded with strong returns.

On the other hand, trying to get rich quickly in the stock market is a move that’s likely to backfire on you. And selling stocks the instant they start to lose value isn’t a great bet, either. And if you’re not convinced, just listen to what this expert has to say.

Why ‘buy and hold’ is really your best best

You might sell your stocks quickly after buying them because you want to enjoy a quick profit. Or, you might dump some stocks at a loss shortly after acquiring them because you’re concerned about losing even more money.

Neither approach is ideal. A better one is “buy and hold,” which is when you load your portfolio with a diverse mix of quality stocks, and then hold them for many years, so they’re able to gain value over time.

Remember, stocks don’t always gain value from one year to the next. Sometimes, the broad market can have a down year. In other situations, the specific stocks you own might underperform due to factors like poor earnings or prospects.

These things are hard to predict. That’s why you should specifically plan for some down years in the course of your investing career. But if you also adopt a “buy and hold” approach to owning stocks, you’re more likely to avoid needless losses and make money in the long run.

Investing guru Graham Stephan agrees. In a recent tweet, Stephan said, “If you lose 95% of your money, you have to make a 1900% profit just to get back to where you started. Staying in the game is the most important thing. Make it priority No. 1.”

What Stephan is trying to say is that being quick to sell a stock that’s doing poorly could really backfire on you. So instead of doing that, plan to exercise patience.

And at the same time, only invest money in stocks that you don’t expect to need or use for at least seven to 10 years or so. That gives you a decent window of time to ride out years of poor stock market performance and come out ahead financially.

It’s all about thinking long term

Stocks aren’t the only asset with the potential to gain value over time. Real estate, for example, works similarly. If you buy a home today with the goal of selling it in three years, you may not walk away with a profit. But if you’re willing to hold onto that property for 10 or 15 years, your chances of making money are higher.

The same holds true in the world of buying stocks. So the next time you’re tempted to dump one in a panic or sell one for a near-term profit, remember to think long term and keep that stock in your portfolio.

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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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The quick answer? It depends. 

If you’re in the process of filing your taxes, you may be eager to take advantage of as many deductions as you can. The more deductions you’re able to claim, the more you can reduce your tax liability.

Now, if you’re itemizing on your tax return, there are a host of deductions you may be eligible for. You can deduct the interest you paid on your mortgage last year, property taxes, and medical expenses exceeding 7.5% of your adjusted gross income. You can also deduct charitable contributions you made in 2022.

But do GoFundMe donations count? The quick answer is that in many cases, they won’t. But there are some exceptions.

Don’t claim the wrong tax deductions

Claiming tax deductions you aren’t actually eligible for could lead to an IRS audit. And that’s probably a scenario you’d rather avoid. That’s why it’s important to know the rules of deducting charitable donations.

In a nutshell, you can deduct donations to a 501(c)3 or registered charity. Some GoFundMe donations might fall under that umbrella, so you’ll need to check the details of the donations you made to be sure.

But in many cases, GoFundMe donations are to personal fundraisers, not fundraisers for registered charities. And so if you donated to those, well, it was a nice thing to do, but it won’t necessarily result in a tax break.

As an example, let’s say a child in your neighborhood needed surgery and neighbors rallied to help the family cover the cost of that care. If you donated $25 to that campaign, you no doubt helped the family in question. But that $25 is not a donation you can write off. However, GoFundMe partners with different organizations, like the American Red Cross and American Cancer Society, so if you contributed to a fundraiser for a registered charity like these, you may be eligible to deduct your contribution on your tax return.

When in doubt, ask a tax professional

The tax code is very complex, and the rules surrounding deductions can be complicated. So if you’re not sure whether a given tax deduction is one you’re eligible for, your best bet is really to ask someone who knows, like an accountant or tax preparer.

In fact, if you’re itemizing deductions on your tax return, it’s often a good idea to enlist the help of an accountant or tax preparer to make sure you aren’t making mistakes. Those mistakes could include claiming deductions you aren’t entitled to, or failing to claim deductions you’re actually eligible for.

Many people overlook the fact that using a tax preparer might mean getting to reap more tax breaks in total. So while you may not be so eager to pay the fee associated with hiring a tax preparer, your savings might more than make up for it.

Just as importantly, using a tax preparer might spare you the hassle of having to deal with an audit if you innocently claim a deduction you thought you could take. And that benefit alone is probably worth the money.

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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.

 Read More