Money Management

You may have an easier time vetting a stock than a given digital coin. 

More than 84 million people hold cryptocurrency, per U.S. News & World Report. So if you’ve been feeling the pressure to add crypto to your investment portfolio, that’s understandable. And if you’re afraid to do so, well, that’s understandable, too.

Although stocks are a risky-enough asset in their own right, crypto tends to be far more volatile. And so the value of your portfolio might swing even more wildly if you add crypto to your personal investment mix.

But volatility isn’t the only reason you may want to choose stocks over crypto. Rather, you may take some comfort in the fact that stocks can be much easier to research, and that they’ve been around a lot longer.

A fairly new investment

At this point, crypto has become so mainstream that it’s easy to forget how new it is. But actually, Bitcoin, the first form of crypto, was first launched in early 2009. That means that if crypto were a U.S. citizen, it wouldn’t even be old enough to vote.

By contrast, many of the companies whose stocks trade today have been around for over 100 years. Take Procter & Gamble, for example; it was founded all the way back in 1837. Similarly, Johnson & Johnson was founded in 1886.

Now obviously, there are plenty of newer companies you choose to invest your money in, too. The point, however, is that the oldest crypto is a mere teenager, so it’s hard to know how much staying power digital currency has. But it’s pretty fair to say that many of the companies that trade publicly today are not on the verge of disappearing, based on the fact that they’ve already proven their ability to last.

A matter of value

When you’re buying stocks to add to your brokerage account, it’s important to make sure they’re a solid bet. What you’ll generally want to look for is stocks that offer a lot of value, or good value for their share price. Similarly, you’ll want your stocks to have the potential to gain a lot of value in time. And there are different metrics you can use to see if a given stock is a good pick.

For one thing, you can look at earnings. Publicly traded companies have to disclose earnings so investors can see what they’re getting into. You can also take a look at a given company’s cash flow and debt to get a sense of how well it’s faring.

There are other metrics you can look at as well to see if a stock is worth the price it’s trading at, including earnings per share. With crypto, it’s hard to determine if a given currency is trading at a fair price and if it’s worth the price at hand. That’s because digital coins aren’t businesses — they’re an asset whose value largely hinges on what investors want to pay at that moment.

Go with your gut

Some people have enjoyed a lot of success with crypto. But if you feel that it’s too risky, there’s really no need to put your money into it. There are plenty of other assets you can load up on that could help you meet your financial goals, so there’s no sense in taking a risk on a newer, more speculative asset you just aren’t comfortable 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.Citigroup is an advertising partner of The Ascent, a Motley Fool company. Maurie Backman has positions in Citigroup. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.

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Let’s just say he has a very valid reason. 

It’s important to have a little extra money in your checking account in case your bills come in higher than expected. And it’s definitely important to have plenty of money in your savings account for emergency expenses, like home and car repairs.

Meanwhile, if you’re saving for a relatively near-term goal, then it’s generally a better idea to keep your money in savings rather than invest it. So if you’re hoping to buy a home within the next two years, you shouldn’t invest your down payment in a brokerage account. Rather, you’re better off keeping it in cash so you don’t lose out on principal.

But let’s say your checking account is nice and beefed up, you have a fully loaded emergency fund, and you’ve recently tackled your biggest near-term goal. If you have extra money at that point, you may be inclined to pump it into your brokerage account and put it to work by investing every last dollar in stocks or other assets.

It’s a good idea in theory. But you may not want to invest all of your spare cash.

In fact, financial expert Graham Stephan is a big proponent of investing money and allowing it to grow into a larger sum over time. But even he doesn’t invest every single dollar he has. Here’s why.

It’s all about keeping doors open

In a recent tweet, Stephan said, “I always keep some cash on the sidelines. It might not be the most efficient way to invest, but it lets me move fast when I find opportunities.”

He makes a really great point. Let’s say you put all of your money into a mix of stocks and they all drop in value due to a broad market decline. At that point, another stock that’s been on your watchlist for quite some time might suddenly look very attractive. But if you have all of your spare cash tied up in other stocks, you’ll miss out on the chance to buy the recently discounted stock you’ve been eyeing.

Of course, in this situation, you could sell some of your other stocks to free up the cash. But then you’ll be taking a loss, which clearly isn’t ideal.

That’s why it’s actually a good idea to keep a little cash in your brokerage account. It doesn’t have to be a ton of money. It can be $300, $500, $1,000, or another sum you’re comfortable with. But that way, if the opportunity arises to scoop up an attractive investment on the cheap, you’ll be able to pounce on it immediately without potentially losing out on the opportunity.

A good strategy to mimic

Stephan isn’t one to pass up a chance to make money. But if he insists that it’s best not to invest every single dollar you have, but rather, reserve some money to jump on opportunities, then it’s worth heeding his advice.

By keeping a little extra money on the side, you might lose out on some near-term returns. But in the long run, you might come out ahead financially.

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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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Stop yourself from making a big mistake. 

These days, many consumers are struggling to cover their living costs because of inflation. And if you’re someone who’s been dipping into savings and racking up debt just to stay afloat, then you may be eager to do whatever you can to spend less on essential expenses, like groceries.

Shopping at Aldi might be a good solution. Aldi is known for its low price points, and shopping there might mean racking up a lower credit card tab than buying food at a regular supermarket.

But there’s one big trap you might fall into when you do your grocery shopping at Aldi. And it’s a trap that could cost you money at a time when you’re so desperately trying to save.

Beware the danger of buying unknown brands

If you’re new to Aldi, one thing you should know is that most of the brands you’ll find on its shelves aren’t nationally recognized ones. Aldi even says on its website that more than 90% of the products carried in stores are exclusive brands. And it’s this practice that allows Aldi to offer groceries at such a competitive price point.

National food brands commonly spend a lot of money on marketing and advertising, whereas most Aldi brands do not. That explains why you’ve never heard of them. But it also explains why you might be able to buy a box of cereal at Aldi for $2.50 when a known brand sells a similar product for $5.

Now, if you’re not someone who’s choosy about brands, then loading up on Aldi products is a great choice. But if you have picky eaters in your household (hey, kids, we’re talking to you), then you may want to think twice about scooping up Aldi specials.

Let’s say a box of six granola bars normally costs you $2.99. Aldi might sell the same quantity for $1.99, so you’re saving $1. And if you buy two boxes of granola bars every week, the savings can add up.

But if your children refuse to eat the Aldi granola bars you bring home, then you won’t end up saving $1. Rather, you’ll end up throwing out almost $2.

You may want to limit the items you buy at Aldi

It’s often the case that unknown brands are just as tasty as the ones you see commercials for all the time. But if your kids are stubborn, then you may not want to bring home items they don’t recognize.

That doesn’t mean you can’t shop at Aldi, though. What you may want to do instead is limit your Aldi purchases to things like produce. After all, your kids probably have no idea who’s producing their apples or strawberries — they just like those fruits. So produce, which is often not packaged, is something you can probably get away with buying at Aldi. It’s the packaged stuff you have to worry about.

The good news is that as kids get older, they tend to outgrow some of their pickiness. So in time, you might be able to better take advantage of Aldi’s product line, even if you’re limited in your ability to do so right now.

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Make sure you have a plan to pay it off. 

With a credit card, you can spend up to the credit limit. For example, if you have a $10,000 credit limit, then that’s the maximum balance the card can carry. But if you’ve always used your credit card for everyday expenses, you might be wondering what will really happen with bigger purchases, like more than $5,000 in spending.

There are several ways this can affect you. Some could be issues, but there’s also a potential benefit. If you’re planning to spend over $5,000 on your credit card, or you just want to know what would happen if you did, here’s what to expect.

It could lead to credit card debt

If you spend more than you can afford with your credit card, you’ll end up in credit card debt. That’s a situation you never want to be in, because credit cards have high interest rates. In fact, the average credit card interest rate recently surpassed 20%. That means a $5,000 balance could cost you over $1,000 per year in credit card interest.

The best thing to do with your credit cards is to pay them in full every month. Only spend what you can afford to pay off with money in your bank accounts. If you absolutely need to make a big purchase you can’t pay off right away, check out 0% intro APR credit cards. These charge no interest on purchases during an introductory period, which can last 12 months or longer.

You’ll increase your credit utilization and possibly lower your credit score

One of the major factors in your credit score is your credit utilization ratio. Credit bureaus calculate this by taking your card balances and dividing them by your credit limits. To avoid hurting your credit score, it’s recommended to keep your credit utilization below 30%.

Let’s say you have one credit card with a $1,000 balance and a $10,000 credit limit. That’s a 10% credit utilization, which means you’re doing great. Then, you spend $5,000, bringing your balance to $6,000 and your credit utilization to 60%. That would negatively impact your credit score.

Keep in mind that only your current credit utilization matters. If you pay off your credit cards and bring your utilization back down, then your credit score will be fine. Another option, if you often make big purchases, is to look into high limit credit cards. Since these offer higher credit limits, they help you keep your credit utilization lower.

The credit card company may get in touch with you

Credit card companies monitor accounts for fraud, and large purchases are a warning sign they look for. When you attempt a large purchase, your card issuer could reach out to confirm you’re really the one making it. It may also decline the transaction until it has your confirmation that everything’s on the up and up.

Generally speaking, this is more likely with larger transactions, but it also depends on your normal spending habits. There may be a fraud alert if you spend more than $5,000 on a single purchase. Or, it may not happen unless you spend more than $10,000 on your credit card. It depends on you and your card issuer’s fraud controls.

If your card issuer declines the transaction, you’ll need to confirm that it’s legitimate. Once you do, you’ll be able to attempt it again, and the purchase should go through.

You could use that spending to earn a sign-up bonus

Big purchases can be a great way to maximize your credit card rewards. If you have a rewards card, you’ll earn cash back, points, or miles on your purchases. You could also take advantage of your spending to earn a sign-up bonus.

For most sign-up bonuses, the only requirement is to spend a certain amount within a time limit. For example, a card could offer a bonus of 50,000 points or $500 cash back to new cardholders. To earn it, you simply need to spend $5,000 in the first three months. If you plan to spend more than usual soon, you could use that to get a bonus you wouldn’t qualify for with your regular spending.

It’s important that you only make purchases you were planning to make anyway. If you need to spend $5,000 or more on furniture or a home remodel, by all means, get a bonus out of it. But don’t use a sign-up bonus as an excuse to waste money.

You shouldn’t have any trouble spending more than $5,000 on your credit card if you have the available credit. But the fact that it’s easy to spend this much is also one of the dangers of credit cards. If you overspend, you could find yourself stuck in credit card debt and incurring hefty interest charges. To avoid this, set limits on how much you’ll spend and plan to always pay your credit card in full.

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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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Making money on social media? Don’t forget your taxes. 

Think you have what it takes to become a social media influencer? According to a new social salary calculator, here is what it takes to make $100,000 a year on these popular platforms:

YouTube: minimum of 1,000 subscribers and 24,000,000 yearly viewsInstagram: minimum of 5,000 subscribers and 308 sponsored posts a yearTikTok: minimum of 10,000 subscribers and 270,000,000 views a year

Being an influencer on social media can be a lucrative career, but it also comes with its own set of tax rules. With the emergence of new ways to make money online, it’s important for influencers to know how taxes work. They need to also stay up to date on any changes in the law that could affect their bottom line. That’s why we’ve put together this guide on how social media influencers pay taxes.

Tax basics for social media influencers

Since influencers work for themselves, the first step is to understand the basics of filing taxes as an independent contractor. Social media income is generally subject to self-employment tax and both federal and state income taxes. Influencers are typically required to file an annual return and pay estimated taxes every quarter. The IRS recommends that self-employed workers make quarterly payments if their tax liability is $1,000 or more. Those who don’t pay enough taxes throughout the year may have to pay a penalty for underpayment.

Generally speaking, all income earned must be reported even if it is considered “passive” or “unearned” income (i.e., brand deals or sponsored posts). Since taxes are not automatically withheld from the self-employed paychecks, they are responsible for paying taxes on their own. They get a Form 1099-NEC for any payments over $600 that they receive from a platform or brand. It is also important for self-employed workers to keep track of all expenses related to the business and report them on their tax return in order to take advantage of deductions and credits. Self-employed individuals can open their own retirement accounts, as well.

How social media income is taxed

The self-employment tax rate is 15.3%, which consists of both 12.4% for Social Security and 2.9% for Medicare. This is similar to the payroll taxes that W2 workers pay. Income taxes will be based on the tax bracket you are in. Both of these taxes are based on “net earnings,” which is your gross income minus your business expenses. If you are losing money, then you will generally not have to pay taxes.

If you do make money via social media and expect to owe taxes of $1,000 or more when your return is filed, then you may send the quarterly estimated tax payments with Form 1040-ES by mail, online, by phone, or from your mobile device using the IRS2Go app. You will also have to file a Schedule SE (Form 1040 or 1040-SR) form for any payments over $400 that you receive from a platform or brand.

Your annual return will depend on the type of business entity you use. If you are a sole proprietor, to file your annual tax return, you will need to use Schedule C to report your income or loss. If you are using a different entity, contact a tax professional to help you file your return correctly. Penalties for not paying your taxes can range from fines to criminal tax evasion charges. It is important to stay on top of your accounting so you are aware of any potential liabilities.

Filing taxes as a social media influencer can feel overwhelming at first, but knowing the basics can help simplify the process considerably. Staying organized and up to date with current tax regulations will ensure that you never miss out on deductions or find yourself facing hefty penalties due to incorrect filings. With these tips in mind, paying taxes as an influencer will become easier each year!

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Adding a new family member is always cause for celebration — and planning. 

If you’ve got space in your heart and space in your home, you might be looking to fill it with a new pet. Companion animals come in all shapes, sizes, and species, from your run-of-the-mill cat or dog all the way to exotic pets like tropical birds, saltwater fish, and scaly reptiles. Each of these pets has different requirements, and it’ll be up to you to fulfill them. The steps you take before your new pet comes home can help ensure their health and happiness, as well as keep your finances in good shape.

Yes, like so many aspects of life, money plays a big part in successful pet ownership, too. You want to be able to give your beloved pet the best life possible while they’re with you. According to PetMD, the average lifespan of a cat is 13 to 17 years, and the average lifespan of a dog is 10 to 13 years. There’s a lot of variables that go into these figures; for example, a smaller dog will generally live longer than a large one, and an indoor cat will generally live longer than one who roams the outdoors.

A Synchrony study found the cost of care over a 15-year lifespan for a dog runs $19,893 to $55,132, and for a cat, those same 15 years will cost $15,055 to $45,790.

Give your companion animal the best shot at a long and healthy life by taking the following steps before they arrive.

1. Save up an emergency fund

Many people have acquired a new pet on the spur of the moment (myself included; pro-tip, if someone offers to let you hold a kitten, you may want to decline the offer if you don’t want to be tempted). This actually isn’t ideal, as you may not have had the chance to save up a solid emergency fund beforehand (or plan to devote a chunk of your existing emergency fund to pet expenses). Why do you need cash savings for a new pet?

Expenses can pop up out of the blue at any time, under any circumstances, and the last thing you want when you’re getting a new pet is to have to go into debt because of a medical emergency or other big cost you weren’t expecting.

I last added a new pet to my household in 2021, when I adopted a kitten from an animal shelter. All was well with him for the first few days, but then he got sick. Seymour needed a trip to an emergency vet clinic and expensive medication for a few weeks, and since I didn’t have an emergency fund at that time, I had to rely on my credit card to cover costs.

Pet insurance could have defrayed some of the cost for me (more about that below), but since it usually works on a reimbursement model, I would’ve had to pay for Seymour’s care upfront and wait to be paid back. Do yourself (and your new pet) a favor and ensure you have some cash savings put aside in a good high-yield savings account.

2. Get a pet insurance policy

If you’ve decided to get a new pet, look into a pet insurance policy. If you’re adopting a dog or cat, you’ll have the choice of many different insurers. For exotic pets, your choices will be more limited, but it’s still worth getting a policy. As noted by the Texas A&M School of Veterinary Medicine & Biomedical Sciences, many people are unprepared for the costs of exotic pets (including vet bills), and you can likely save money on veterinary care with a pet insurance policy.

Research the best pet insurance companies and plug in your new pet’s data to get quotes. Generally, you’ll need the species, breed, and age, so you’ll probably want to wait until you know for sure which pet you’re getting! It’s a good idea to shop around for coverage, as costs vary. You’ll also want to consider whether to add preventive care coverage to your policy; it costs extra, but can help defray the cost of routine vet visits and health procedures your pet needs.

3. Find a good veterinarian

Going right along with securing a pet insurance policy, you’ll also need the right medical care for your new pet. If you already have pets at home, you likely have an existing relationship with a veterinarian. Give their office a call to let them know you’re getting a new pet. Go ahead and see if you can set up a quick checkup appointment to get a file started on the new addition and ensure their health is in good shape right from the start.

4. Pet-proof your home

Again, if you already have pets, it’s likely that your home is set up for their comfort and safety, but if you’re going from just having adult pets to adding a puppy or kitten, you’re definitely going to want to spend some time pet-proofing.

I already had two adult cats when I adopted Seymour, and while I did my best to ensure that he didn’t have access to anything dangerous (like cleaning supplies or electrical cords), kittens are wily. Seymour proved to be a jumper, which meant I had to kitten-proof shelves and tables too. It’s a good idea to watch your new pet carefully when you bring them home and be prepared to do even more cleaning and organizing once you discover what kind of trouble they like to get into!

5. Source your supplies

Pets cost money, every day and in so many ways. And they require so much stuff, like an ongoing supply of nutritious food, toys, and other equipment. Before I brought Seymour home, I purchased another litter box, more food and water dishes, extra toys, a new cat bed, and a supply of kitten food, as he was too young to eat the adult food my other two cats were eating.

You can comparison shop for pet supplies too, and it’s a great way to save money. Check prices at pet supply stores in your area (it’s a good bet you have a big-box pet shop or two local to you), as well as online retailers like Chewy and Amazon. Having pet supplies delivered is extremely convenient, and even if you don’t pay less in dollars, saving the time can also be a money-saver.

I’m a freelance worker, and the less time I have to spend driving to the store, shopping, and then hauling heavy bags of cat food and litter up to my apartment, the better it is for my bottom line. You might also consider setting up regular deliveries of pet food and other supplies you use often, once you figure out how frequently you’re buying them. Buying in bulk can sometimes save you money, too.

It’s wonderful to give a companion animal a new forever home, and get to know and love them as they settle in. Take the steps above before you bring home your pet, and give them the best shot at a happy life with you.

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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. Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Synchrony Financial is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool has positions in and recommends Amazon.com. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

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