Learn how to gauge the state of the economy — and how that can affect your financial moves.
The U.S. economy can throw off mixed signals. How can you know if things are okay or not? The economic indicators can seem a bit confusing. Unemployment, interest rates, inflation and gross domestic product can make for a mixed bag of good and bad news that goes on. So, what does it mean for projecting the future of the economy? What about predicting your future?
Here’s where middle-class families have the most available income after covering necessities.
As economic pressures mount, middle-class families across the U.S. are finding it increasingly difficult to cover essential living expenses while maintaining a comfortable lifestyle. While financial pressures affect families nationwide, the degree to which a middle-class income stretches varies significantly depending on location. To find the states where a middle-class income stretches the…
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With interest rates shifting over the last few years, it can be hard to keep track of the best places to keep your money. So is a 6-month certificate of deposit (CD) a good idea?
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Right now, the annual percentage yields (APYs) on the best 6-month CDs hover around 4.00% to 4.50%. These rates definitely seem attractive, but let’s break down whether a 6-month CD is the best fit for you.
A 6-month CD offers a guaranteed return on your money over a short period. You lock in a fixed interest rate, and when it matures in six months, you get your principal plus interest. It’s a safe option with no market risk.
However, the catch is that your money is locked away for six months. Withdraw early, and you’ll likely face a penalty.
If flexibility is your priority, a high-yield savings account (HYSA) might be more appealing. HYSAs currently offer competitive APYs around 4.00%, plus, your money remains accessible, allowing you to withdraw it without penalty.
If rates rise later in 2025, keeping your money in an HYSA allows you to stay nimble and take advantage of better opportunities. On the flipside, if the Federal Reserve cuts rates, it’s likely your HYSA rate drops, too.
So, how do you decide between a 6-month CD and a high-yield savings account? It comes down to your financial goals and market outlook.
Choose a 6-month CD if:
Explore top-rated 6-month CDs offering up to 4.50% APY here.
Opt for an HYSA if:
Compare the best high-yield savings accounts with rates up to 4.50% now.
Both options have strong selling points. A 6-month CD locks in today’s rates and offers security, while an HYSA provides flexibility and competitive returns. The choice hinges on your short-term needs and interest rate predictions.
Making a confident choice today can mean more financial peace of mind tomorrow. Take a closer look at the latest rates and see which option better aligns with your 2025 financial goals.
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
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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.
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There are a lot of places to stash your retirement savings — like a brokerage account, a 401(k), or a really, really big wallet (impressive but unwise).
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For me, though, there’s one clear winner. And it’s not just one account, but a certain type of account.
Here’s where I’m putting all my retirement savings — and how I expect it to save me well over $100,000 in retirement.
A Roth account is a type of 401(k) or individual retirement account (IRA). We call these “tax-advantaged retirement accounts,” because they offer big tax breaks on your retirement savings.
When you put money into a Roth 401(k) or Roth IRA, you don’t get an immediate income tax deduction, as you would with a traditional 401(k) or IRA. However, once you reach age 59 1/2, you can start withdrawing money with no income tax. That’s a huge benefit for retirees living on a fixed income.
Furthermore — and this is where the savings really start to rack up — the investments you make through your Roth account are not subject to capital gains tax or dividend tax.
Typically, when you sell an investment that’s gone up in value, you’ll pay capital gains tax on your earnings. The rate varies based on your income and filing status, but most people pay 15% if they’ve held the investment for a year or longer. If you’ve held the investment for less than a year, your gains will be taxed at your ordinary income tax rate.
Dividend tax is assessed on any dividends you receive throughout the year — and a lot of retirees have dividend-heavy portfolios. The rate typically ranges from 0% to 20%.
In my case, I’d normally pay 15% on both capital gains and dividends. But because my retirement savings are in a Roth 401(k) and a Roth IRA, I’ll pay no taxes on either. Based on my current retirement savings and where I expect them to be in 25 years or so, these tax breaks could save me hundreds of thousands of dollars.
As I mentioned above, a traditional 401(k) or IRA allows you to deduct your contributions from the current year’s income. So you get a tax break now instead of when you retire. You also pay no capital gains or dividend tax on investments held in a traditional 401(k) or IRA.
If you currently make more income than you expect to make in retirement (via retirement savings withdrawals), then in theory a traditional 401(k) or IRA is a better deal. It’s better to take a tax break on a larger income than a smaller income.
However, the future is uncertain, and I’d rather not worry about all the things that could throw my retirement plan off course. For example:
If any of the above happens, I’ll be happy that I’m not paying tax on my retirement income.
Want to invest for the future while earning huge tax breaks? Check out our list of the best IRA accounts and open a new IRA today.
Not every employer offers a Roth 401(k). People who earn more than a certain amount can’t contribute to Roth IRAs, and those who are eligible can only contribute up to $7,000 per year (or $8,000 if they’re 50 or older). Read up on the Roth IRA rules to see if they’re an option for you.
The good news is that traditional 401(k)s and IRAs are fantastic retirement savings vehicles as well. Many employers offer traditional 401(k)s, and traditional IRAs are available to everyone. You can’t go wrong with either a Roth or traditional retirement account.
Unsure which option is best for you? You could always split your retirement savings between traditional and Roth accounts to enjoy some tax breaks now and some later. The best stock brokers offer both types of account, so you can manage your retirement savings in one place.
Personally, I choose to give my future self the gift of tax-free retirement income.
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes.
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.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money 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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