Money Management

You may find this option much less stressful. 

Any money you might need for near-term expenses, goals, or unplanned bills should go into your savings account. But if you have extra money you don’t need for those purposes, then investing it in a brokerage account makes a lot of sense. That way, you’ll have an opportunity to generate a strong return on that money and grow wealth over time.

Now, you’ll often hear that the key to building a successful portfolio is to diversify your holdings. That could mean loading up on different stocks across a range of market sectors.

But what if the idea of choosing your own stocks makes you nervous? If so, you’re certainly not alone. It can be difficult to determine which stocks are a good fit for your portfolio, especially if you’re fairly new to investing.

Here’s some good news: You can build yourself a nice diversified portfolio without having to bear the stress of hand-picking stocks individually. All you need to do is fall back on exchange-traded funds, or ETFs, instead.

The upside of ETFs

ETFs are funds that trade publicly and aim to match different benchmarks. If you buy shares of an S&P 500 ETF, it’s like putting your money into the 500 largest publicly traded companies in the stock market. You can also buy sector-specific ETFs. For example, if you’re eager to invest in energy stocks but you’re not sure which ones to pick, you could buy shares of an energy ETF instead.

With ETFs, you’re effectively investing in a whole bunch of different companies, only without having to spend the time researching them all. Because of this, ETFs should lend to a nice amount of diversification within your portfolio.

But just as importantly, ETFs can take a lot of the stress out of investing. That’s because you won’t have to rack your brain wondering if you should choose one company over another. Instead, you can buy into a whole bunch of companies in one fell swoop.

Should you give up on buying individual stocks?

Buying individual stocks means doing a lot of research initially, and then keeping tabs on those stocks to make sure their performance is up to par. With ETFs, you still have to keep tabs on your portfolio, but you shouldn’t have to do nearly the same amount of research.

It’s more than possible to build an investment portfolio that consists of both individual stocks and ETFs. So if you decide to largely go the ETF route but there are a few individual stocks that still appeal to you, then by all means, scoop them up.

Similarly, you may want to start your portfolio off with ETFs, but then pledge to add one individual stock per month. That gives you more time to research companies one by one.

There’s certainly lots to be gained by putting money into individual businesses that have the potential to outperform the broad market. But if you’re nervous to do so, there’s absolutely nothing wrong with falling back on ETFs.

Some people never invest outside of ETFs and do perfectly well for themselves. If joining their ranks helps take the pressure off and allows you to sleep more easily at night, that’s well worth it.

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.The Motley Fool has a disclosure policy.

 Read More 

Having a credit card canceled can be a hassle. 

It’s the middle of February, and I plan to Christmas shop tonight. I’ll probably do a little birthday shopping, too. I have nine credit cards, and my job this evening is to make a purchase using each of them at least one time.

Why I’m going on a charging spree

When it comes to my children, I don’t have a favorite. In terms of credit cards, though, I have an absolute favorite, a card I use daily. Its primary selling point is a great rewards system that pays for one nice vacation each year. The other eight cards sit in reserve. And that’s what gets me into trouble.

I received a letter from one of the credit card companies last week telling me that if I don’t use the card sometime soon, it will be canceled.

Can they do that?

Credit card companies are under no legal obligation to let users know that their cards are being canceled due to inactivity. Thanks to the Credit Card Act of 2009, companies must give customers 45 days’ notice when there are significant changes to their accounts. Still, for some reason, that rule does not apply to cancellation due to inactivity.

Why I care

You may wonder why I care if they cancel the card. After all, I don’t use it anyway. There are two reasons:

Any time a consumer has a credit card canceled, it can affect their credit utilization ratio. In short, this ratio measures how much debt you carry in relation to how much credit you have access to. Keeping a very low balance relative to your credit limit makes it look like you’re in control of your spending, but having a card closed lowers your credit limit. The bottom line is that this ratio makes up 30% of our overall credit score. I refuse to let my credit score take a beating because I forgot to use a card.I don’t like the idea of losing rewards points. Back when I used the card, I accumulated a fair number of airline points. It’s possible I’ll lose all those points if the card is canceled.

What if?

I’ve spent the past few days thinking about that letter. First, I realize I’m fortunate that the company let me know I’m teetering on the edge. As mentioned, it did not have to do that.

What gets me is how tough having a card canceled for inactivity might be on someone. Let’s say a person is rightfully concerned about credit card debt and keeps one card safely tucked away for emergencies. Now, imagine that it’s the middle of winter, their furnace kicks the proverbial bucket, and they’re left shivering in their house. A repairperson comes, and when the homeowner pulls out the emergency credit card to pay, the payment does not go through.

There’s something scary about not knowing that a credit card has been canceled until it’s needed.

Prevention

The shopping I do this evening is preventive in nature. I’m going to use each card to make one purchase, and one week from today, I’ll go back through and pay each card in full. While there’s no hard-and-fast rule regarding how often a credit card should be used to remain active, experts recommend pulling it out for a small purchase every three months.

Yes, it will take a lot of work to come up with nine purchase ideas when I’m not in the mood, but having a card canceled due to inactivity sounds like a bigger hassle.

I think I may put some Christmas music on.

Top credit card wipes out interest until 2024

If you have credit card debt, transferring it to this top balance transfer card secures you a 0% intro APR for up to 21 months! Plus, you’ll pay no annual fee. Those are just a few reasons why our experts rate this card as a top pick to help get control of your debt. 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.
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 

It’s advice worth taking, and it’s easy to follow. 

There are so many different reasons why consumers wind up with credit card debt. For some, it’s a matter of overspending and not following a budget. But for others, it can be a matter of circumstances outside their control, like the loss of a job, unplanned home repairs, or medical debt.

Either way, if you have a credit card balance, you’re probably pretty eager to pay it off. And financial guru Ramit Sethi has some great advice for making that happen.

Set your payoff date

When you owe money on a loan, it will often come with a specific payoff date. Credit card debt can be trickier because you’re not necessarily looking at a predetermined payoff date. But in a Business Insider interview, Sethi said the first question he likes to ask anyone with credit card debt is what date they plan to make the last payment on their balance. A person who has a payoff date in mind clearly has a plan, says Sethi.

If you don’t yet have a payoff date in mind for your credit card debt, that’s okay. But it may be time to establish one.

Think about how much you owe on your balance, and then figure out how much money, realistically, you can save each month by taking steps like cutting back on expenses and/or boosting your earnings with a second job. From there, you can figure out when you might be debt-free.

So, let’s say you owe $2,000 on your credit cards and you think you can conceivably free up $200 a month to go toward that debt. That means you could be debt-free in 10 months if you stick to that plan.

However, in that scenario, you might hit a snag for one reason — the $2,000 you owe only represents the principal amount you owe on your credit cards. It doesn’t account for interest you’ll keep accruing while you work on paying your debt off.

That said, if you have an end date in sight, and it’s not so far out, it could pay to move your balance(s) over to a new credit card with a 0% introductory APR. That will make it so you’re not accumulating interest on your debt as you pay it off.

Now, the downside of 0% introductory APR cards is that your intro period will usually be limited — sometimes to 12 months or less. But in this sort of scenario, that setup might work, because you might have your debt paid off before your introductory period comes to an end. And even if you’re looking at a payoff debt that’s further out, it still pays to get a reprieve from accumulating interest for a period of time.

Have a goal to work toward

Establishing a payoff date for your credit card debt could help you stay motivated and on target. So if you don’t have one in mind, run the numbers and come up with a payoff date that’s reasonable and realistic. It might be just the thing that helps you stay on track and gets you out of debt sooner.

Top credit card wipes out interest until 2024

If you have credit card debt, transferring it to this top balance transfer card secures you a 0% intro APR for up to 21 months! Plus, you’ll pay no annual fee. Those are just a few reasons why our experts rate this card as a top pick to help get control of your debt. 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.
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 

Shedding that debt ahead of schedule doesn’t always make sense. 

There’s a reason U.S. personal loan balances reached $222 billion as of 2022’s fourth quarter, according to TransUnion. Personal loans are extremely flexible in that they allow you to borrow money for any purpose.

Want to fix up your home? You can use the proceeds from a personal loan to make that happen. Want to take an extended vacation with your family? A personal loan could help you pay for it.

But while a personal loan may be a convenient way to borrow money, ultimately, it’s still a form of debt. And that means the longer you carry it, the more interest you’re apt to accrue on your loan.

As such, you may be thinking about paying off your personal loan early. But if these factors apply to you, then you may want to reconsider that idea.

1. When you have a low interest rate

Any time you owe money on a loan, you’re paying extra in the form of interest. But if you happen to have snagged a low interest rate on your personal loan, then it could make sense to stick to your regular payment schedule rather than push yourself to pay it off early.

Imagine you’re paying 7% on a personal loan, but the investments you have in your brokerage account are earning you an average yearly 9% return. You could technically cash some out to pay off your personal loan. But since you’re making more money on your investments, why go that route?

2. When you’re short on emergency savings

Your primary financial goal, regardless of your age or income, should be to build yourself a solid emergency fund. At a minimum, that means having enough money in your savings account to cover three full months of essential bills.

If you haven’t yet reached that savings threshold, then you should divert every spare dollar to your savings. And that could mean hanging onto your personal loan a bit longer rather than using your extra money to chip away at its balance early.

3. When you have more expensive debt to tackle

The idea of spending money on interest may not be sitting well with you. And if that’s the case, you may be motivated to pay off your personal loan early. But if you have another debt with a higher interest rate attached to it, then that’s the debt you should be looking to pay off first — even if your personal loan balance is smaller and seems easier to tackle.

Let’s say you owe $1,000 on a personal loan charging 7% interest, and you also owe $2,500 on a credit card charging 17% interest. Paying off a $1,000 balance might seem more attainable. But since you’re paying twice as much interest on your credit card balance, that’s the balance worth whittling down first.

In many cases, paying off a personal loan early makes sense. And you generally will not face a penalty for getting rid of that debt ahead of schedule (though it’s always a good idea to read your loan document first, just in case). But before you pay off your personal loan early, make sure that’s the best use of your money, and that there isn’t another financial matter you should be focusing on first.

Our picks for the best credit cards

Our experts vetted the most popular offers to land on the select picks that are worthy of a spot in your wallet. These best-in-class cards pack in rich perks, such as big sign-up bonuses, long 0% intro APR offers, and robust rewards. Get started today with our recommended credit cards.

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 

Enjoy your vacation without worrying about your budget. 

After a few years of remaining close to home, people are eager to get back out and explore the world again. Travel volume for the spring break season, which goes from the middle of February until the middle of April, is expected to exceed pre-pandemic levels, according to the Transportation Security Administration.

But high demand usually leads to high prices, both on airlines and travel accommodations. Here are five tips you can use to score a good deal in the coming weeks.

1. Shop around

Compare prices from several airlines and hotel chains before you book anything. Don’t be afraid to watch prices for a few days before you buy either. Rates fluctuate over time, and a better one could still come up.

If you have a hotel or airline credit card, you might feel like you have to remain loyal to that brand. Doing so could net you special perks, like priority boarding or even free stays. But you have to weigh that against the cost and availability that hotel or airline offers you to decide if that’s the right move for you this time.

2. Consider driving

Gas prices aren’t as high as they were a few months ago, so driving could be a feasible option if you aren’t traveling too far. It’ll take longer to reach your destination, but you’ll also have the opportunity to stop and see things you wouldn’t have if you’d flown instead.

Again, you’ll have to weigh this against the cost of a flight to decide whether it’s worth it for you. You’ll have the cost of gas and possibly some hotel stays and meals along the way. Plus, you may have less time at your final destination if you drive instead of fly.

3. Fly on weekdays

Weekends are some of the most popular days to fly, which also makes them some of the most expensive days to fly. Sometimes, all it takes to shave hundreds of dollars off your travel expenses is delaying your flight by a day or two.

Tuesday and Wednesday are the best days to fly if you’re trying to keep costs low. With fewer people flying on these days, that could also make your journey through airport security a little easier.

4. Avoid checking bags

Traveling light could help you avoid fees for checked baggage. The savings might not be significant from doing this, but even if you only save a little, that’s money you could put toward activities you enjoy at your final destination.

This may not be necessary, though, if you have an airline credit card that enables you to check bags for free. Check your card’s terms to learn more about whether it offers this perk.

5. Look into alternative accommodations

Hotels are always an option, but these days, you may also want to look for short-term rentals in your final destination. These could be more affordable than a traditional hotel. Plus, they can make you feel more at home than you would in a cramped hotel room.

It’s possible that a short-term rental could even save you money indirectly. If the place has a full kitchen, you may be able to cook meals in rather than going out for every meal. You may also be able to do laundry here, which could make it easier to pack light.

There’s no time to waste if you haven’t begun booking your spring break travel plans yet. The tips above may not all work for you. But do your best to incorporate as many as you can to see how much you can save.

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.Kailey Hagen 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.

 Read More