Money Management

Costco shoppers aren’t so happy with the higher-than-usual price point. 

There’s a reason so many people love to shop at Costco. Buying groceries and household essentials there often results in a much lower credit card tab than a traditional supermarket or big-box store.

Not only is Costco known for affordable items on its shelves, but it’s also known for its competitively priced food court. In fact, the warehouse club giant has long upheld its almost ridiculously cheap $1.50 hot dog and soda combo, and has no plans to increase its price anytime soon.

It’s therefore a bit surprising to learn that Costco’s latest food court offering is anything but inexpensive. In fact, you might even go so far as to call it overpriced.

How much would you pay for a roast beef sandwich?

Costco’s food court features a host of delicious items, but the menu is limited at best. Now, the warehouse club giant is mixing things up by adding a new roast beef sandwich into its rotation.

The problem? That sandwich comes with a price tag of $9.99, reports the New York Post.

Not shockingly, many Costco fans are less than happy with the idea of shelling out $10 for a sandwich — not when they can walk away with an entire pizza for a similar price. And also, the move just seems strange on Costco’s part.

While it’s true that Costco’s $1.50 hot dog and soda combo isn’t exactly a big money-maker (if anything, it’s more like a loss leader to get hungry members over to the food court or into the store), it’s hard to reconcile a deal that sweet with a $10 sandwich that doesn’t seem particularly special, despite the artisan roll it reportedly comes with.

In fact, other than a whole pizza, no other individual Costco food court item comes close to the cost of the new roast beef sandwich. So it won’t be surprising to see consumers pass on this new offering — and to see it disappear off food court menus in short order.

Should you eat at Costco’s food court?

Nutrition matters aside, there are some good deals to be had at Costco’s food court if you take the new roast beef offering out of the equation. But you’re generally better off buying your own groceries and making your own food if your goal is to eat as cheaply as possible in an effort to grow your savings balance.

What’s more, while you might end up in a situation where you get hungry in the course of your Costco shopping, don’t forget that the warehouse club giant is quite generous when it comes to free samples. You can frequently find those all over the store, and they’re a good way to cope with hunger pangs until you’re able to get home and whip up a more complete meal.

This isn’t to say that you shouldn’t visit Costco’s food court if you have a hankering for a hot dog, slice of pizza, or chicken bake. But if you’re trying to conserve funds, you may want to steer clear of the roast beef sandwich — and if anything, make your own version at home.

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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 positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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Knowing the history of the stock market is one of the best ways to feel comfortable about your investments. 

Real estate investor and media personality Graham Stephan recently tweeted, “Don’t invest in the market expecting every year to produce the ‘average returns’ of 10%. Some years, you get 40%. Some years you get -15%. The only way to hit the average is to invest long-term!”

It appears that Stephan is using the average annual returns of the S&P 500. While some estimates put this number slightly higher and some slightly lower than 10%, it’s safe to say that 10% is a fair average.

Stephan’s audience

Given that Stephan is only 32 years old, it’s no surprise that many of his followers skew young. And for many young adults, stories about the stock market surround the Great Recession of 2008 and the pandemic-related stock drop of 2020. In other words, they don’t have a lot of cheery memories from which to draw. It’s easy to fall into the trap of believing that there must be a better way to build wealth — and to build it quickly.

A graphic illustration

Stephan’s point about investing in the market is this: It’s the investors who adopt a buy-and-hold strategy who average 10% returns over the long term. To illustrate this point, Stephan provided a chart showing S&P 500 annual returns from 1926 through 2020. In the 94 years the chart covers, annual returns fell into the negative 25 times. Returns were positive in 69 out of 94 years.

Viewing annual returns as dots on a chart is a simple but impressive way to recognize four things:

How often the market has made gains rather than suffered losses.How much more dramatic the gains have been compared to the losses.How the market has historically rebounded after each drop.How clear it is that selling off during “down” periods is a sure way to miss out on gains.

Historical support

Hartford Funds put an impressive amount of work into compiling statistics regarding the ups and downs of the stock market since its early days. What Hartford Funds found underscores Stephan’s assertion that standing firm is the best way to enjoy market gains.

Bear markets

When the market drops in value by 20% or more, it’s considered a bear market. On average, stocks lose 36% of their value during a bear market, and that’s when investors get nervous. However, stocks gain an average of 114% once the market rebounds, and we move into bull market territory.

Selling when the market is dropping is the surest way to miss gains as the market rebounds.

The news is nerve-wracking

As of this writing, there is news that the Dow has dropped 500 points. It certainly makes investors nervous, but for the most part, the daily peaks and valleys mean little. If you were to start investing today and kept at it for 50 years, you can expect to live through approximately 14 bear markets. When averaged, each bear market in U.S. history has lasted just shy of 10 months.

On the flip side, the average bull market lasts around 2.7 years. And yet the nerve-wracking nature of the news drives some investors to dump their investments before they have time to appreciate.

Regardless of how Stephan’s followers reacted to his tweet, history backs him up.

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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.Dana George 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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Ideally, you can hang around long enough to make a profit on your home. 

I don’t want to think about the number of times we’ve purchased a home only to sell it a year or two later. Such was the unpredictability of my husband’s career. Each time we bought a house, we were confident we would be there for many years. And then, a promotion, transfer, or unexpected opportunity would pop up, and we would end up selling.

Unless you’re fortunate enough to time the market just right (which, by the way, is impossible), selling too soon can be expensive.

The trend

On average, homeowners stay in their houses for 10 years or more before selling and moving on to the next. That’s twice as long as before the 2009 housing crisis. Watching neighbors lose their homes awakened many to the value of building equity. And for most of us, building equity means staying put.

Life happens

As mentioned, it’s possible to buy a property believing it’s your “forever home.” Life happens, though, and there are plenty of legitimate reasons a homeowner may sell. For example:

A job relocation that you can’t imagine missing out on.A death in the family (or global pandemic) makes you reassess where you want to be and who you want to live near.A health emergency that makes living in your current home uncomfortable or unexpectedly expensive.A new financial challenge that makes selling your home the smartest financial move.

We once sold a house to pay for my husband to finish graduate school. It never occurred to us that we might need to do that.

The cost

It’s possible to get lucky and live in a house during a time when market conditions drive home values skyward. For example, if you purchased a home shortly before COVID-19 hit, it’s possible you found yourself with enough equity mid-pandemic to sell without losing anything. Still, that’s the exception to the rule. It usually works out differently.

Before purchasing a home, try to figure out if you’ll live there long enough to justify selling. Here are some of the expenses you’ll run into if you sell too soon.

Real estate fees

Typically, the seller must pay agent fees, with 3% of the sale price going to the seller’s agent and 3% to the buyer’s agent. Home sellers love to negotiate this point, and some are even successful.

Let’s think about it, though. Let’s say you refuse to pay an agent more than 2% to list your property or pay a buyer’s agent more than 2%. If your agent has more than one listing, it would be tough for them to prioritize yours over a listing paying them the full 3%. After all, agents must pay a portion of that commission to their broker. They must also cover the cost of marketing your home and dedicate hours of their time to showing your house.

By the same token, it would be tempting for a buyer’s agent to avoid showing your home if they know they can earn more money by selling someone else’s property to their clients.

By the time a seller has paid to get their house ready for market, covered the cost of real estate agents, and paid closing costs, it’s safe to figure that they will have spent approximately 10% of the sales price. So, if a home sells for $400,000, it’s reasonable to expect to spend up to $40,000.

We’ve never spent that much money selling a house, but 10% is what we budget for, just in case.

Capital gains

If you sell a property before you’ve owned it for a year, you must pay capital gains tax on any profit. We once purchased a home for $430,000 and sold it one year later for $475,000. We just missed getting stuck with a capital gains bill for the difference between how much we paid for the property and the amount it sold for.

If you add any permanent improvements to a home, like a new roof, siding, or tile floors, hang on to the receipts because you can use them to reduce your total capital gains. Let’s say you have a capital gain of $50,000 but have made $30,000 in permanent upgrades. That leaves you with $20,000 in capital gains.

Prepayment penalties

Some mortgages include a prepayment penalty, although it’s not as common as it once was. The Dodd-Frank Act eliminated the penalty for all conforming mortgages signed on Jan. 10, 2014 or later. A conforming mortgage is a loan that adheres to the financing limits established by the Federal Housing Finance Agency and is underwritten by Freddie Mac or Fannie Mae.

If you have a non-conforming loan signed after Jan. 10, 2014, it may include a prepayment penalty that applies only during the first three years of the repayment period.

Moving expenses

Companies used to offer sweet deals for employees willing to relocate, but we’ve found that most of those have gone the way of the dodo. Today, employers may give you a fixed amount of money and expect you to make the most of it, even if you hold an executive position. Invariably, moving is more expensive than you expect it to be.

By the time you factor in movers, tips, hotels, and other expenses, there’s a good chance you’ll find yourself forking over funds from your personal bank account.

If you’re not moving due to a job transfer but out of necessity, you can count on paying all moving expenses. We moved nearly eight months ago, and the 400-mile move cost approximately $14,000. Fortunately, my husband’s company covered much of it, but we were still out thousands of dollars thanks to a comically bad moving company.

None of this is intended to discourage you. We were meant to see the places we’ve seen and meet the incredible people we’ve met. I cannot imagine how different our lives would have been if we’d stayed in one place for decades. Moving can be good for the soul.

I know from experience that we can’t predict the future and can’t always control when it’s time to move. If you have a choice, though, stay in a home long enough to recoup the money you’ve poured into it.

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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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