Money Management

Image source: Getty Images
What happenedSoFi Checking and Savings members will now have access to up to $2 million in FDIC insurance for deposits. The standard level of protection is a maximum of $250,000 per depositor. SoFi Checking and Savings is making this added coverage available through the SoFi FDIC Insurance Network, a recently created partnership with multiple banks.So whatThe recent banking industry meltdown, fueled by the collapse of Silicon Valley Bank, has many consumers with money in savings accounts wondering if their cash is safe. The good news is that FDIC insurance protects deposits of up to $250,000 per person. But cash reserves beyond that point aren’t covered in the event of a bank failure. Now, SoFi is taking that worry off the table.
Save: This credit card has one of the longest 0% intro APR periods aroundMore: Save while you pay off debt with one of these top-rated balance transfer credit cards
“It’s our goal to help people get their money right, which we know goes hand in hand with feeling good about the safety of their funds,” said Anthony Noto, CEO of SoFi. “By offering access to up to $2 million in FDIC insurance, we are making sure our members have peace of mind about their money at SoFi. We know the last few weeks have been unnerving for many consumers, and we hope this helps.”Now whatThe FDIC does not receive funding to do what it does. Rather, it’s funded by premiums that banks pay for. To keep those premiums reasonable, the FDIC only guarantees coverage of up to $250,000 per depositor. Giants like Chase and Wells Fargo, for example, limit their coverage to $250,000, so SoFi is clearly going above and beyond in this regard.That said, for many savers, protection for up to $250,000 per depositor is more than enough. A 2022 study by The Ascent found that the average savings account balance among Americans is $4,500. Furthermore, savers who have more than $250,000 in cash can look to spread their money across different banks. Now SoFi happens to offer a competitive 4% savings account APY right now, so moving over to SoFi isn’t a bad idea for consumers looking to earn more interest on their money. But those who are happy with their banks don’t necessarily need to rush to switch over to SoFi — especially if they’re earning a competitive APY and are satisfied with other features of their bank, like ATM access and customer service.Given the upheaval the banking industry has experienced over the past few weeks, it won’t be surprising to see more institutions begin to offer FDIC protection beyond $250,000. But for now, that certainly isn’t the norm, so banking customers with extra cash reserves can definitely consider looking to SoFi for optimal protection.These savings accounts are FDIC insured and could earn you 13x your bankMany people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts can earn you 13x the national average savings account rate. Click here to uncover the best-in-class picks that landed a spot on our shortlist of the best savings accounts for 2023.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.Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy. 

What happened

SoFi Checking and Savings members will now have access to up to $2 million in FDIC insurance for deposits. The standard level of protection is a maximum of $250,000 per depositor. SoFi Checking and Savings is making this added coverage available through the SoFi FDIC Insurance Network, a recently created partnership with multiple banks.

So what

The recent banking industry meltdown, fueled by the collapse of Silicon Valley Bank, has many consumers with money in savings accounts wondering if their cash is safe. The good news is that FDIC insurance protects deposits of up to $250,000 per person. But cash reserves beyond that point aren’t covered in the event of a bank failure. Now, SoFi is taking that worry off the table.

“It’s our goal to help people get their money right, which we know goes hand in hand with feeling good about the safety of their funds,” said Anthony Noto, CEO of SoFi. “By offering access to up to $2 million in FDIC insurance, we are making sure our members have peace of mind about their money at SoFi. We know the last few weeks have been unnerving for many consumers, and we hope this helps.”

Now what

The FDIC does not receive funding to do what it does. Rather, it’s funded by premiums that banks pay for. To keep those premiums reasonable, the FDIC only guarantees coverage of up to $250,000 per depositor. Giants like Chase and Wells Fargo, for example, limit their coverage to $250,000, so SoFi is clearly going above and beyond in this regard.

That said, for many savers, protection for up to $250,000 per depositor is more than enough. A 2022 study by The Ascent found that the average savings account balance among Americans is $4,500. Furthermore, savers who have more than $250,000 in cash can look to spread their money across different banks.

Now SoFi happens to offer a competitive 4% savings account APY right now, so moving over to SoFi isn’t a bad idea for consumers looking to earn more interest on their money. But those who are happy with their banks don’t necessarily need to rush to switch over to SoFi — especially if they’re earning a competitive APY and are satisfied with other features of their bank, like ATM access and customer service.

Given the upheaval the banking industry has experienced over the past few weeks, it won’t be surprising to see more institutions begin to offer FDIC protection beyond $250,000. But for now, that certainly isn’t the norm, so banking customers with extra cash reserves can definitely consider looking to SoFi for optimal protection.

These savings accounts are FDIC insured and could earn you 13x your bank

Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts can earn you 13x the national average savings account rate. Click here to uncover the best-in-class picks that landed a spot on our shortlist of the best savings accounts for 2023.

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.Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.

 Read More 

It’s simple, effective, and anyone can use it. 

Warren Buffett is undoubtedly one of the greatest investors of all time. Fortunately, he’s not shy about sharing his wisdom, including how he picks stocks and an investing strategy he recommends.

In his 2013 letter to Berkshire Hathaway shareholders, Buffett shared investing advice he’ll give for the money he leaves to his wife in his will. Although it’s advice for what will be his wife’s portfolio, it’s a winning strategy for anyone. Buffett even says that he believes that the “long-term results from this policy will be superior to those attained by most investors.”

Warren Buffett’s 90:10 investing strategy

Buffett’s recommendation is an investment portfolio with a 90:10 ratio of stocks to bonds. Specifically, he advises putting:

90% in an S&P 500 index fund, with Buffett suggesting one from Vanguard10% in short-term government bonds

Why these two investments? Most of your funds will be in an S&P 500 index fund, which is there to grow your money as efficiently as possible. The S&P 500 is an index of 500 of the largest companies on U.S. stock exchanges, and its average return is about 10% per year over the last 50 years.

Now, there are lots of ways to invest in stocks. The reason this option works so well is because it gives you a diversified portfolio in one investment. It’s easy, it takes hardly any time, and it provides strong returns when the stock market is doing well. Also, index funds tend to have very low fees.

Short-term government bonds are there to add some stability. These provide fixed income in the form of interest payments on the bonds. You also don’t need to worry about losing money on them.

Pros and cons

Buffett’s strategy offers maximum growth potential for a minimal time commitment. Although stocks are more volatile, they can also earn much larger returns than bonds. By having 90% of your funds in stocks, your portfolio will have more long-term growth. And since you’re just putting your money in an index fund every month, there’s no research required on your part. You could even automate your investments.

The biggest downside is volatility. Stock-heavy portfolios can decrease in value quite a bit during bear markets. A portfolio with a larger bond allocation, such as 70:30 or 60:40 stocks to bonds, will be more stable.

This strategy is also very hands off. That’s a benefit if you just want to take the “set it and forget it” approach with your investments. On the other hand, it’s a drawback if you want to take an active role and pick your own stocks.

Should you try it?

The investment portfolio Buffett recommended will work for long-term investors. Even though the stock market goes through highs and lows, when you look at it over the decades, it has consistently gone up.

If you’re looking for an easy way to invest for retirement, Buffett’s portfolio advice is worth considering. It’s an especially good approach for younger investors. If you have 20 years or more until retirement, your portfolio will have plenty of time to recover from any downturns, which takes the risk out of investing heavily in stocks.

Those who are nearing retirement may want to have more money in bonds for greater stability. However, this also depends on your risk tolerance and how much you have saved.

One last thing to remember is that there are many effective investing options out there. Some people like to add other types of assets to their portfolios, such as real estate. Some like stock picking — which, to be fair, is how Buffett made his billions. It all depends on what best fits your goals and your investing style.

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

 Read More 

The cash back is the standout feature, but there are also some useful extras you might not know about. 

For Costco members, the warehouse club offers a Costco credit card. The Costco Anywhere Visa® Card by Citi is most well-known for its cash back rewards, and especially its gas rewards, where it earns one of the highest rates I’ve seen.

While that gets most of the attention, this card also has valuable benefits that don’t get discussed as often. Just like there are little-known perks of a Costco membership, the same is true for its credit card. If you have a Costco credit card, or you’re thinking of getting one, here are those little-known benefits you should know about.

1. Damage and theft purchase protection

Eligible purchases paid for with your Costco credit card include damage and theft protection. This covers you if the purchase is damaged or stolen within 120 days of purchase (90 days for New York residents). The coverage limit is generous, too. The maximum coverage per item is $1,000 or the amount charged to your card, whichever is less, and the coverage limit per calendar year is $50,000.

Let’s say you buy a new laptop with your Costco credit card for $800. A month later, someone breaks into your car and steals your bag, which has your laptop in it. You can file a claim to get reimbursed for the $800. This protection applies to eligible purchases whether they’re made at Costco or another retailer.

2. Access to Citi Entertainment

Like many other Citi credit cards, the Costco credit card allows you to use Citi Entertainment. Citi Entertainment provides access to purchase tickets to thousands of events. It includes presale tickets and exclusive experiences for concerts, sports, arts, and cultural events.

This is a huge perk if you want to get tickets for in-demand events. For example, when Beyoncé released tickets for her Renaissance World Tour, she teamed up with Citi Entertainment.

3. Travel protections

Even though the Costco credit card isn’t really considered a travel credit card, it does provide travel perks. In addition to earning 3% cash back on eligible travel purchases, it offers the following travel protections:

Worldwide car rental insurance: If your rental car is damaged or stolen, this insurance covers up to $50,000 toward the cost of repairs or the cash value of a rental car. It applies to eligible car rentals with rental periods of no more than 31 days paid for with your Costco credit card.Travel and emergency assistance: If you need assistance before or during a trip, you can get services and referrals worldwide in case of emergency, as well as help with travel requirements or complications.

4. No foreign transaction fee

Many credit cards still charge a foreign transaction fee, and the standard fee amount is 3%. If you travel abroad and spend $3,000, a 3% fee would add another $90 to your bill. For frequent travelers, this extra fee adds up. That’s why it’s nice that the Costco credit card doesn’t charge a foreign transaction fee.

5. Use it as your Costco membership ID

Normally, you need your Costco membership card to get into warehouses and for the cashier to scan during checkout. But a Costco credit card doubles as a membership ID. Once you have one, you can leave your membership card at home and reserve your wallet for just your credit cards.

The Costco Anywhere Visa® Card by Citi is one of the most valuable store credit cards. That’s not just because of its cash back rewards, but also because of all the extra perks it has. If you spend a lot of money at Costco, this card could be a valuable addition to your wallet.

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.Citigroup is an advertising partner of The Ascent, a Motley Fool company. Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale and Visa. The Motley Fool has a disclosure policy.

 Read More 

There’s an easy way for the IRS to know you funded your retirement plan. 

It’s a good idea to contribute money to a 401(k) plan if your employer offers one. First of all, you’ll need savings to help cover your living expenses once you retire, so the more money you’re able to sock away for your senior years, the better. In addition, many employers that sponsor 401(k) plans also match worker contributions to some degree. Taking advantage of those matching incentives is akin to scoring free money.

But another benefit of funding a 401(k) plan is getting an up-front tax break in the process (assuming you put money into a traditional 401(k), not a Roth). And if you contributed to a traditional 401(k) plan in 2022, you may be wondering how to claim that benefit when you file your taxes.

The answer is that snagging that tax break is really easy. And you don’t need to claim a specific deduction, either.

Your taxable income is reduced

What tax deductions do is reduce your taxable income. Now you’ll often hear that to claim a tax deduction on your return, like medical expenses or mortgage interest, you need to itemize your deductions. But that doesn’t always hold true. And you can certainly reap all of the tax benefits you’re entitled to for making a 401(k) contribution even if you claim the standard deduction.

In 2022, 401(k) plans maxed out at $20,500 for savers under the age of 50 and $27,000 for those 50 and over. So any dollar amount you contributed to your 401(k) up to these limits could reduce your tax liability.

However, you don’t actually claim a specific deduction on your taxes for funding your 401(k) plan. Rather, when you get your W-2 from your employer, which is a form summarizing your wages for the year, any contributions you made to your 401(k) will be subtracted from your taxable wages. So let’s say your salary in 2022 was $80,000, but you contributed $10,000 to your 401(k) plan. Your W-2 will essentially report your taxable wages as $70,000, so you don’t have to worry about claiming a separate tax deduction.

It pays to fund your 401(k)

The idea of putting money into a 401(k) plan might seem unappealing. After all, why part with money now that you won’t be able to touch until you reach retirement age? And why save that money for the future when you have so many bills piling up today?

It’s something a lot of people struggle with. But if you can afford to make 401(k) plan contributions, do it. When you put money into a 401(k), you get the opportunity to invest it so it can grow into a larger sum over time. But if you wait until your 50s to start funding that retirement plan, you might end up with less savings than you’d like by the time retirement rolls around.

Plus, the more money you put into your 401(k) plan, up to the annual allowable limit, the more income you shield from the IRS. And that’s a win right there.

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