Money Management

Dave Ramsey’s advice can make sense — but only for some investors. 

Investing for retirement is crucial to having a secure future. You’ll need money to supplement Social Security, which only replaces about 40% of your pre-retirement income.

But, exactly how should you invest enough to support yourself in your later years? Finance expert Dave Ramsey has provided some insight into what he believes is the optimum approach to growing your retirement account balance.

Here’s how Dave Ramsey thinks you should invest for retirement

Ramsey offered some simple advice to help you grow your retirement nest egg.

“If you have a traditional 401(k), the best way to help it grow at a steady pace is to invest up to your company’s match and invest the rest in a Roth IRA so that it can grow tax-free,” Ramsey advised. He also suggested putting 15% of your income away for retirement, with the money spread among your 401(k) and a Roth IRA at a brokerage firm.

A company match is provided by many employers that offer workplace 401(k) accounts. Essentially, this is free money your employer gives you when you contribute to a 401(k). You get to make contributions with pre-tax money, so during the year you invest, you save on your tax bill — to an extent. If you invested $5,000, for example, you could save up to $1,100 on your taxes if you were in the 22% tax bracket, so your contribution would effectively only cost you $3,900.

A Roth IRA, on the other hand, does not come with an upfront tax break. You get to claim your tax savings later. You don’t get to deduct your contribution when you make it, but you get to take tax-free withdrawals from the account. This is different from a traditional 401(k) because your 401(k) withdrawals are taxed at your ordinary income tax rate as a retiree.

Ramsey’s advice here is to first use the account providing the upfront tax break, only to get your employer match — then to opt for the account that gives you tax-free money as a retiree. He does say, however, that if your company offers a Roth 401(k), you can put all your retirement contributions into that account assuming it offers a good mix of investment options.

Should you follow Ramsey’s advice?

Ramsey is right that you should put money into a 401(k) to earn your employer match.

But whether you should invest in a Roth IRA over a 401(k) depends on your situation. If you think you will be in a higher tax bracket as a retiree, then deferring your tax savings until then makes sense. But if you expect your tax rate to decline, then a 401(k) might be a better option. A traditional IRA might be a good option if you want the upfront tax breaks but would prefer some of your money in a brokerage account that offers more investing options than a typical 401(k) does.

Think about your own tax situation when you decide whether Ramsey’s advice is worth following. No matter what kind of account you use, though, Ramsey is likely right that you should try to put away 15% of income for retirement and start working toward that goal ASAP if you aren’t saving that much already.

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A few tweaks could propel Trader Joe’s into that top spot. 

If you shop at Trader Joe’s often, you may be aware that doing so will often result in a lower credit card tab than you’ll rack up at other stores. That’s because Trader Joe’s prides itself on its consistently low prices.

And that’s not the only positive thing Trader Joe’s is known for. The supermarket chain has a reputation for offering outstanding customer service. And not only are its products affordable, they’re also delicious.

But surprisingly, in a recent YouGov survey of the most popular supermarkets in America, Trader Joe’s only managed to come in second. It was actually edged out by Aldi, a haven for shoppers on a budget looking to stretch their paychecks.

Now to be clear, snagging the No. 2 slot on a survey like this is more than respectable. But if Trader Joe’s were to make these key changes, it could be enough to help it reach No. 1 during the next go-round.

1. Keeping fan favorites on the shelves longer

Some of Trader Joe’s most beloved products, like its pumpkin-flavored snacks and holiday offerings, are only available in stores for a few weeks before they disappear for a good 12 months. It might work to Trader Joe’s benefit to keep some of these products around for a longer period of time. The company itself would likely see its revenue increase, as consumers might very willingly dip into their bank accounts to load up on their favorite buys.

2. Bringing samples back to all stores

Trader Joe’s has begun to offer up in-store samples at select locations. But samples have yet to return to many stores. Bringing them back universally might really please customers — especially those who miss those tiny cups of delicious Trader Joe’s coffee.

That said, one lesser-known perk of shopping at Trader Joe’s is that you can actually ask to try any product before buying it. All you need to do is find a store associate, and they’ll open up the item in question, let you try it, and pull it from the shelves — at no cost to you whatsoever. But that’s not the same thing as being able to walk over to a counter, grab a sample, and continue on your way.

3. Offering delivery

You may have noticed that Trader Joe’s does not offer grocery delivery, and there’s a reason for that. The supermarket chain wants consumers to benefit from the great customer service in-store shoppers get to experience. And it feels that customers who purchase groceries for delivery may not get the full benefit of shopping at Trader Joe’s.

Still, for some people, ordering groceries is far more convenient than hitting the store. And for those without transportation, grocery delivery could be a lifeline. So if Trader Joe’s were to change its stance, it might gain some new fans.

All told, there are plenty of good reasons to love Trader Joe’s. But it would be nice to see certain products hang around longer, as well as more in-store samples and the option to order groceries for home delivery.

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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.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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It makes me nervous to put my finances on cruise control. 

For a lot of people, one of the hardest parts of money management is keeping track of all their bills and remembering to pay them on time. If you struggle with this, there’s an easy solution: autopay!

Many entities, like credit card companies, utility providers, and mortgage lenders, are all too happy to help consumers sign up for autopay, so your bills owed to them are deducted from your checking account automatically every month. You can also use autopay to pay yourself, by way of transferring money from your checking to your savings account or to your brokerage or retirement account.

I have access to this convenient system, and I have thus far managed to mostly avoid it. My auto insurer (who also provides my renters insurance policy) and cellphone service provider both required me to sign up for autopay, so I did. And I have my minimally-funded old low-interest savings account set to withdraw a paltry $25 a month from my checking so I can avoid incurring a monthly maintenance fee. Here’s why I don’t autopay anything else.

I used to live paycheck to paycheck

My history with money has colored my feelings about autopay. Until I changed careers in 2021, I lived paycheck to paycheck, and thus the prospect of not knowing exactly when a bill would come out of my checking account made me extremely nervous. If you’ve never known the sinking feeling that comes with accidentally overdrafting your bank account, you’re a lucky person indeed.

Thankfully, I have managed to avoid this for many years, but it was often very close in the past, as I would get paid every other week, pay all the bills due in that two-week span, and be left with maybe $100 or $200 if I was lucky.

I set up an alert on my checking account so I get an email when my balance drops below $100 and also signed up for overdraft protection, so if I overdrafted my account, money would be transferred from my savings to cover it. This comes with a fee if you use it, however, so I was always striving to avoid overdrafts by manually paying my bills. Even though I no longer live paycheck to paycheck, old habits die hard.

I actually enjoy paying bills

My secret shame is a secret no longer: I like paying my bills. I don’t like the spending money aspect of it, but after some rough times in my 20s, I’ve been happy to be on top of my finances ever since (even if I never used to have much money left over after I paid those bills). And unlike a lot of people, I don’t struggle with managing my payments.

I use a wall calendar to track the monthly bills and their due dates (this way, I can see when things are due across the entire month). I “balance my checkbook” by way of a spiral notebook; every time I get paid, I sit down to pay bills and I keep track of my checking account balance in the notebook, and write down when bills get paid, so I can later check my account online and make sure they’ve been taken out.

I also keep track of money I transfer manually into my savings account, both for freelance tax payments and to fund my goal of buying a house. I move this money first, so I never forget about it. I haven’t made a late payment in years, and I get the thrill of clicking the mouse and watching my savings account balance get bigger.

Since I take these steps, I feel pretty confident in my money management skills and don’t see the need for autopay for me personally. Your mileage may vary, though.

Autopay has some great perks

My experiences and quirks notwithstanding, you might really enjoy using autopay for your bills and savings or investments. If you struggle with memory issues, for example, or are neurodivergent, being able to “set and forget” your finances might be a big help. And if you find that come the end of the month, you’ve spent the money you intended to save or put into your retirement account, automating cash transfers to these accounts first thing will help you meet your goals without coming up short.

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It’s a situation you may want to try to avoid. 

You may have money earmarked for emergency expenses, and that cash should sit in a regular savings account so it’s accessible to you at all times. You may also have money you’re saving for a far-off goal, like retirement. That’s money you should invest in a brokerage account or IRA.

But some of your money might fall into an in-between category of sorts. You might, for example, have money you’re setting aside for a shorter-term goal, like buying a house in three years. In that case, you shouldn’t invest that money, because you may not have enough time to recover from a potential market downturn.

At the same time, you may want a higher return on that money than what a savings account will allow for. And that’s where a certificate of deposit, or CD, might come in.

The upside of a CD is that you’ll generally be eligible for a higher interest rate on your money than in a regular savings account. The downside, though, is that you have to commit to keeping your money where it is for a preset period of time. That time frame could be six months, 12 months, two years, or longer.

Now, this doesn’t mean you can’t cash out your CD before it matures if you end up having a pressing need for that cash. But doing so will commonly result in a penalty. And that penalty could be pretty steep.

What are the penalties for cashing out a CD early?

When it comes to setting penalties for cashing out a CD before it comes due, each bank makes its own rules. But to give you a sense of the penalties you might looking at, Wells Fargo follows this penalty schedule:

You’ll lose three months of interest on a three- to 12-month CD.You’ll lose six months of interest on a 24-month CD.You’ll lose a year’s worth of interest on a CD whose term is longer than 24 months.

You should also know that it doesn’t matter whether you remove a small portion of your CD or your entire balance. In fact, you generally can’t just take a withdrawal from a CD — you have to either leave it as-is or cash it out entirely.

So, let’s say you’ve put $5,000 into a 12-month CD, and you need $500 of that in a pinch. You’re still going to face a three-month penalty (if you bank at Wells Fargo or an institution that follows the same penalty schedule) even if you don’t need all of the money in your CD.

How to avoid penalties for cashing out a CD early

One of the best ways to avoid being penalized for cashing out a CD ahead of schedule is to carefully consider the term, or length, of your CD before opening it. If you’re not sure you can manage to keep your money tied up for 12 months straight, opt for a six-month CD instead.

Another option is to build a CD ladder rather than put all of your money into a single CD. With this approach, instead of putting $5,000 into a single CD, you might break that sum up into four separate CDs worth $1,250 apiece. You might then put your first $1,250 into a three-month CD, your next $1,250 into a six-month CD, the following $1,250 into a nine-month CD, and your final $1,250 into a 12-month CD.

With this setup, you’ll have money getting freed up every three months. And at that point, you can decide whether you want to roll it into another CD or access your cash.

Sometimes, early CD withdrawals are unavoidable. But you can definitely take steps to lower your risk of getting hit with a penalty for accessing your cash before you’re supposed to.

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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.Wells Fargo 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Costco is offering big-time markdowns on big-ticket items. 

If you’re a member, Costco is a great place to visit when you have a big purchase to make. It offers generous discounts on all sorts of products, and the risk-free return policy comes in handy if you’re not completely satisfied. To give you some potential inspiration for your shopping list, here are 10 Costco buys that currently offer $100 or more in savings.

1. Dyson Cyclone V10 Animal + Cordless Vacuum Cleaner: $100 off

Dyson vacuums are known for their quality, and this Cyclone V10 is one of the brand’s most popular models. Reviewers rave about how powerful and maneuverable it is, and the fact that it’s cordless means you can go from room to room without plugging and unplugging anything. This vacuum can also be used on all surfaces, and the attachments are helpful for cleaning small spaces.

2. Sealy Posturepedic Carver 11-inch Firm or 13.5-inch Plush Mattress: $110 to $180 off

If you’re constantly tossing and turning because you can’t get comfortable, it’s probably time for a new mattress. One of the most common reasons people put this off is because of how expensive mattresses are, but this Sealy Posturepedic is a high-quality choice that’s also easy on your finances. And it gets even more budget-friendly with this discount offer, which varies based on the mattress size you buy.

3. SunVilla Harrington 4-piece Outdoor Seating Set: $500 off

Summer will be here before we know it, and if you’re planning any backyard gatherings, good seating is a must. Before the weather gets too much warmer, it’s the perfect time to snap up this SunVilla Harrington seating set at a hefty discount. It includes a sofa, two rocker chairs, and a coffee table, all with rust-resistant aluminum frames.

4. MacBook Air 13.3-inch: $150 off

Like just about all Apple products, the MacBook Air is beautifully designed. But it’s more than just a pretty face. It’s also high performance, courtesy of the Apple M1 Chip, and ideal for travelers with its ultra-thin design. While you may be used to sticker shock with anything Apple, this laptop is one of its more affordable models.

5. LG 4.5 cubic-foot Front Load Washer with TurboWash 360 and 7.4 cubic-foot GAS Dryer with TurboSteam: $500 off

Laundry can sometimes feel like an all-day event, especially if you’re washing clothes for the whole family. TurboWash 360 technology can handle large loads of laundry in less than 30 minutes, without sacrificing performance. And when you need to get rid of wrinkles, this dryer’s TurboSteam can do it quickly, steaming shirts in just 10 minutes.

6. Samsung 29 cubic-foot Smart 4-Door Flex Refrigerator: $930 to $1,100 off

It’s always frustrating to run out of fridge space and need to find a way to pack in everything. That’s a lot less likely with this Samsung refrigerator. Several buyers mentioned how roomy it is, and you can use the lower-right storage space as either a refrigerator or freezer, depending on your needs. The price includes delivery and installation, plus haul away of your old fridge and a two-year warranty.

7. Langdale Fabric Rocker Recliner: $100 off

A good recliner makes relaxing in the living room a whole lot more comfortable. This Langdale recliner has soft and durable padding, plus it also lets you rock back and forth. And if you need something that matches with your current decor, this comes in four versatile color options: gray, brown, blue, and tan.

8. Set of Four BridgeStone Tires: $150 off

Like gas and auto insurance, tires are one of those extra costs that come with owning a car. If it’s time to put new ones on your vehicle, Costco is offering a sizable discount on sets of four BridgeStone tires. You can get $70 off plus an additional $80 Costco member savings. Installation by Costco is required to get the offer, and wheels aren’t included.

9. Samsung 49-inch Class Odyssey CRG9 Series DQHD Curved Gaming Monitor: $300 off

If you’re used to a normal computer screen, this Samsung curved gaming monitor will make a huge difference. Reviewers love the picture quality and size. Don’t let the name fool you, either. Even though it’s a gaming monitor, this is also great if you use your computer for work or any other tasks that require having lots of windows open.

10. Firman 3200W Running / 4000W Peak Dual Fuel Inverter Generator: $200 off

Even when you’re getting away from it all, it’s still nice to have electricity. This Firman generator can power an RV, and it also works well as a back-up home generator in case of a power outage. You can use it with gas or propane, and best of all, it doesn’t make much noise. It runs at 57 decibels, which is below National Park standards.

Keep in mind that these are all limited-time deals, and most of them end in two to three weeks. So, if any of them caught your eye, make sure you buy before time’s up on the offer.

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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 Apple and Costco Wholesale. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.

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That’s some comforting news at a time when everything seems to be costing more. 

There was a point not so long ago when used car inventory was so low that buyers were scrambling to purchase previously driven vehicles. That drove the price of used cars way up.

But thankfully, used car prices have come down a lot. In January, the cost of used vehicles was 11.6% lower than it was a year prior, according to that month’s Consumer Price Index.

For some people, buying a used car is not ideal; they’d prefer to have a new vehicle with more updated features. But buying a used car could benefit you financially in more ways than one, so it may be worth it to forgo the new car — and buy a used one instead.

Fewer expenses on a whole

Consumer borrowing rates are up broadly these days on the heels of rate hikes on the part of the Federal Reserve. As such, it’s not the best time to sign a new auto loan. The upside of buying a used car is that your auto loan payments might be lower than what you’d face with a new car, since you’re likely to spend less (potentially a lot less) on a vehicle that’s previously owned.

Also, a used car might be less expensive to maintain and repair. Those fancy new car features you’re craving? They might result in higher bills through the years. An older car might result in fewer bills — and put less of a strain on your savings account.

Your insurance costs could be lower, too

Auto insurance companies take different factors into account when setting premium rates. One factor, for example, is the amount of experience you have as a driver and what your driving record looks like. Another factor is where you live. If you live in an area with a higher crime rate, you’re apt to pay more for auto insurance than if you lived in an area with a lower crime rate.

Similarly, the cost of your car is going to play into the cost of your auto insurance. The reason? If your car is totaled, it will cost your insurance company more to replace a new car than a used one. And so if you’re willing to purchase a used vehicle, you might end up with lower car insurance premiums.

Is a used car risky?

When you buy a used car, you take on certain risks — namely, that there are lurking problems with that vehicle. To make sure you’re buying a used car in decent shape, research its history before buying. An easy way to do so is to look up its VIN (vehicle identification number) on the National Highway Traffic Safety Administration website.

Another good bet is to take a used vehicle you’re looking to buy to a mechanic before completing your purchase (just make sure it’s a mechanic you trust). That way, they can check it out and tell you what condition it’s in.

There is some comfort in driving off in a brand-new car. But the cost of doing so might be prohibitive these days, between higher auto loan payments, maintenance, and insurance costs. So a used car may be a much better choice — especially now that prices have come down.

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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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