Money Management

CDs are still paying decently. But read on to see why investing your money makes so much more sense. [[{“value”:”

There’s a reason so many people are rushing to open CDs before the end of 2024. In September, the Federal Reserve lowered its benchmark interest rate by half a percentage point. And the Fed still has two more opportunities to cut interest rates before the end of the year.

Not only are CD rates down already thanks to the Fed’s initial rate cut, but they’re expected to keep falling. If you lock one in today, you might still be able to get close to 5% on your money. If you wait, you risk getting stuck with an even lower rate. Click here to see a list of the best CD rates that we cover.

But while a CD is a good place to keep money you might need within the next few years, if you have money you don’t expect to need or use for a good seven years or longer, then you may want to forget about CDs altogether. In that situation, there’s a much better place to put your cash for significantly higher returns.

It pays to think bigger than CDs

Though it’s harder to find a 5% CD today, you can still lock one in for above 4%, depending on the bank and term you choose. But why settle for a 4% return on your money when you might be able to get 10% instead?

Over the past 50 years, the S&P 500 has rewarded investors with an average annual 10% return. And that 10% accounts for years when the market performed very well, but also, years when it utterly tanked.

If you put money into a stock portfolio and leave it alone for many years, there’s a good chance you’ll earn a similar return (but keep in mind, past returns don’t guarantee future results). And the amount you earn might well outpace what a CD might pay you.

Let’s say you have $5,000 to put into a CD. And let’s say that somehow, CDs end up paying 4% over the next 30 years (which, let’s face it, is highly unlikely). That would leave you with about $16,200.

On the other hand, let’s say you invest that $5,000 in an S&P 500 index fund that gives you a 10% annual return over the next 30 years. In that case, you’re left with about $87,250. That’s a huge difference of about $71,000.

Is a stock portfolio right for you?

As mentioned above, investing in stocks isn’t something to do on a short-term basis. You need time to ride out market downturns, so you generally want your investment window of about seven years or more.

You could get away with investing on a slightly shorter-term basis than that. But the less time you have, the more risk you take on. And on the flipside, the more time you have, the less risky stock investing becomes.

So think about your money and when you might need to use it. If it’s for a home purchase in three years, then sticking with a CD makes sense. But if it’s for your retirement that’s probably 26 years away, then it pays to open a top-rated brokerage account and start putting your money to work. It’s a decision that could pay off big time, especially as CDs start to pay less as the Fed continues to cut rates.

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Most mortgages require a down payment. Check out three strategies to help you save up faster to make homeownership a reality. [[{“value”:”

Saving for a down payment can be one of the biggest challenges to homeownership, especially for young people. With rising costs, family expenses, and numerous financial commitments, setting aside enough cash can be overwhelming.

But with some creative thinking and smart financial moves, you can speed up the process and get the keys to your new home faster than you think. Here are three proven ways to help you save for your down payment. And when you’re ready to get a mortgage, check out our list of the best mortgage lenders.

1. Use a lease option

When my wife and I (and new baby!) were ready to buy our first home, we didn’t have enough saved for a down payment. But instead of giving up, I explored the idea of a lease option, or even a rent-to-own agreement, with a homeowner.

The homeowner didn’t really know what a lease option was, but as her home had been on the market for a year, she was willing to listen to almost anything.

We negotiated a deal whereby 50% of my monthly lease payments would go toward the down payment and 50% toward the rent/lease. Say I was paying $1,000 a month; $500 every month went to the down payment, and $500 was hers for rent.

This approach allowed us to live in the house we wanted to buy while simultaneously building up our down payment with her, without needing all the cash upfront. After two years, if I couldn’t come up with the rest, she was able to keep it all. But I did, and that $12,000 that we’d paid her was all we needed for the down payment.

It was a win-win: I eventually secured our future home, and the homeowner benefited from a reliable tenant with a vested interest in the property.

For buyers looking for a creative solution to down payment challenges, a lease option can be a powerful tool. Not only do you get to live in the home you want to buy, but you also have the opportunity to build equity along the way.

2. Save in a high-yield savings account

One of the simplest ways to speed up your savings is to place your money in a high-yield savings account. Traditional savings accounts offer low returns, but high-yield accounts can multiply your earnings significantly, allowing your money to grow faster. If you’re serious about building up your down payment quickly, then moving your savings into one of these accounts is a no-brainer.

For example, if you save $10,000 over two years in a high-yield account offering 4.5% interest, you could earn hundreds more than you would in a traditional account paying hardly anything. The key here is that your money works for you without any additional effort on your part.

3. Automate your savings

Saving consistently is critical to hitting this big goal, but it’s not always easy. Automating the process helps. By setting up automatic transfers from your checking account into your down payment fund, you can effortlessly build up savings over time. Only 17% of workers choose to set up automatic deductions to help them hit their savings goals, but it can be a big help.

Setting up an automatic transfer of, say, 10% of each paycheck into your savings ensures you’re consistently contributing to your goal, even when life gets hectic. This method makes saving a priority — even during tough times — by removing the temptation to spend the money elsewhere.

By using strategies like these and shopping around for the best mortgage rates you can make your down payment goal a reality faster. And when that happens, having that baby crying down the hall in your house might only be a short while away!

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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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Discover how to repair your credit at no cost. From disputing errors to negotiating with creditors, these steps can help you boost your score fast and free. [[{“value”:”

Repairing your credit can feel overwhelming, but you can take control of your credit score without spending any money. Sometimes it requires getting a loan to pay off high-interest debt (we list our favorite hardship loans here), while in other cases, it may simply be a matter of getting black marks off your credit report.

Take it from me, I wrote a book about how to get out of debt and clean up your credit (The Complete Idiot’s Guide to Beating Debt), and I know this stuff works.

Dispute errors under the Fair Credit Reporting Act (FCRA)

One of the first steps in repairing your credit is to review your credit report for inaccuracies. Under the Fair Credit Reporting Act (FCRA), you have the right to dispute any incorrect or outdated information on your report, and credit bureaus must investigate those disputes. This gives you the opportunity to delete old or inaccurate items that may be dragging down your credit score.

You are entitled to one free credit report each week from the major credit bureaus — Equifax, Experian, and TransUnion. Carefully examine your report for errors such as:

Accounts you do not recognizePayments that were wrongly reported as lateBalances that are listed incorrectlyItems more than seven years old (by law, those need to be deleted)Other incorrect information

If you do find a mistake, you can file a dispute with the credit bureau — and be sure to do so in writing, to create a paper trail. Once the error is corrected, your credit score will improve, often quite significantly, without you spending a dime.

This is one of the most powerful tools you have for credit repair, as correcting errors can have an immediate positive impact.

Negotiate with creditors directly

If you have overdue accounts or debts in collections, the next trick is to start negotiating with your creditors, because if you can get your accounts up to date, balances lowered, or debts paid off altogether, then you are really cookin’!

The fact is, many creditors will be open to working with you, especially if they believe you are willing to resolve the debt. For example, one good trick is that you can ask them to remove negative entries from your credit report in exchange for paying off or settling the debt.

Another strategy is to request that the creditor report the debt as “paid in full” or “paid as agreed,” rather than “settled,” even if you agree that you will only be paying part of the full amount due. Creditors agree to this because it is often easier and cheaper than carrying a long-term, dead number on the books.

Receiving some amount of money is usually better than nothing.

This move certainly will positively reflect on your credit report. Some creditors may even agree to delete the negative entries entirely if the balance is paid in full.

Between getting bills paid off (even if not at 100%), and getting old negative information off your credit report, you will go a long way toward having a solid credit rating again.

Pay off — or pay down — your credit cards

Revolving credit card debt is the biggest thing that can affect a credit report either positively or negatively; your credit utilization (how much credit you’re using relative to how much you have access to) represents 30% of your FICO® Score. So your job is to get those paid down, or better, paid off.

That may require getting a better balance transfer card with a lower rate — that is a good first step, and you can click here to check out our picks for the best balance transfer cards.

Also consider borrowing money from family if possible or applying for a hardship or debt consolidation loan, and then paying that off. You could also grow your income by taking on extra work or selling some assets to get clear of the debt. For your peace of mind and to repair your credit, it’s worth the time and sacrifice.

You can do it!

Between getting rid of outdated and incorrect items on your credit report, negotiating with your creditors to pay less and have them report you as “paid as agreed,” and then reducing your credit card balances overall, you will go a long way to having stellar credit again. You may be surprised at how soon you’ll see improvement in your credit score.

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

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Though it’s a good thing to have extra savings, there’s also such a thing as having too much. Read on to learn more. [[{“value”:”

At a time when many people are struggling to make ends meet, it’s a pretty amazing thing to be sitting on an extra $10,000 in your savings account. But you should know that there is such a thing as having too much money in savings. And if you’re not careful, you could end up losing out on much bigger returns.

A better place for your money

You might think that having extra savings is a good thing. But the problem with savings accounts is that even though they’re paying pretty generously right now, that won’t always be the case.

The Federal Reserve has already slashed its benchmark interest rate once this year. And there’s a good chance we’ll be looking at further cuts before 2024 comes to an end.

Plus, the Fed is likely to keep cutting interest rates in 2025. So all told, even though many high-yield savings accounts are paying around 4% today, that may not be true for much longer. If you have extra money just sitting in a savings account, you’re doing yourself a disservice when you could be investing your cash instead.

See, over the past 50 years, the S&P 500’s average annual return has been 10%. This accounts for years when the market did well and years when it most certainly did not.

Chances are, in a year from now, you’re going to be looking at 3% or less from a savings account. And it’s not unheard of for savings accounts to pay 1% — or even less. So if you have money you don’t need for your emergency fund, or for planned purchases, then it’s best to look at investing it.

What can an investment portfolio do for you?

Let’s say you have an extra $10,000 in your savings account that earns you 4% interest over the next 20 years. (And yes, we just said that’s unlikely, but let’s go with it.) In that case, you could end up with about $22,000 when you factor in all of that interest.

But if you were to invest that money instead and earn a 10% return over the next 20 years, you’d be looking at a little over $67,000. That’s a difference of $45,000, which is hard to overlook.

If you’re ready to start investing, check out this list of the best brokerage accounts and start putting your extra $10,000 to work. And if you’re not sure how to get started investing, you can always choose an S&P 500 ETF (exchange-traded fund), which basically lets you put your money into the broad market instead of having to choose specific stocks — something you may not be comfortable doing just yet.

Of course, if you think you might need your extra $10,000 in the next few years, then it’s best to keep it in a savings account. Investing money is something you should only do on a long-term basis because you need time to ride out potential market downturns.

If investing isn’t right for you, shop around for a great interest rate on a savings account to earn the highest return you can. Check out this list of the top savings accounts today.

Otherwise, start investing your extra $10,000 immediately. The sooner you get started, the more money you stand to end up 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.The Motley Fool has a disclosure policy.

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Costco’s prices often can’t be beat, but it pays to buy some items in smaller quantities. See when to stick to your regular supermarket. [[{“value”:”

Making a weekly shopping trip to Costco helps me save more money on groceries and household essentials, like cleaning supplies and toilet paper. By purchasing these items in bulk, I pay less on a per-ounce or per-unit basis compared to my regular supermarket in town.

But you need to be careful with certain items when buying in bulk. Despite the potential savings, I’d suggest purchasing these three things at your regular supermarket instead of Costco.

1. Over-the-counter medication

At Costco.com, 1,000 ibuprofen tablets cost $12.99, or $0.01 per tablet. And Costco’s in-store prices are pretty much always lower than its online prices, which means that buying 1,000 pills from your local store could save you even more money. At my local supermarket, a 100-pill supply of Ibuprofen costs $4.49, so I’m paying $0.04 per pill.

But I don’t use ibuprofen daily, and those pills only last for so long before they lose their potency. So if I spend $12.99 on 1,000 pills, I’m likely to throw most of them out. If I spend $4.49 on 100 pills and that quantity lasts me the year, that’s the better deal for me.

I’d encourage you to think carefully about your medication usage. You may want to avoid bulk purchases of over-the-counter medications you tend to use sparingly.

2. Flour

I like to bake, so I find myself replenishing the five-pound bags I buy at the supermarket pretty often. But there’s a reason I refuse to buy 20 pound bags of flour from Costco. Despite the potential savings, I’m opening the door to spoilage and a huge hassle.

Flour can last a while once it’s opened if you store it in an airtight container. But I only have so many of those. It’s better for me to just buy flour in five-pound increments rather than figure out how to keep four times that amount fresh enough to use for months.

Also, Costco doesn’t always have the best prices on flour. Right now, you’re looking at paying $1 per pound if you buy your flour online. But my local supermarket has flour for about $0.72 per pound. And even though that per-pound price at Costco is likely to be cheaper in stores than online, it’s probably not going to beat $0.72 per pound by much. So why deal with the extra hassle?

Of course, if you bake multiple batches of cookies or cakes a week or run a baking business out of your home, then buy your flour from Costco if you find that the price there is better. But otherwise, you should probably buy it from your regular supermarket.

3. Food items you’ve never tried before

If your family eats eggs almost every day or goes through cherry tomatoes like nobody’s business, then it probably pays to scoop up these items in bulk at Costco. But generally speaking, you shouldn’t buy items in bulk you’ve never tried before.

You might think chocolate-covered blueberries sound like a delicious snack only to realize you’re not a fan. (This is an actual item Costco sells, and while I love it, my husband insists it’s terrible.) A better bet is to try a smaller amount at your regular supermarket first, then purchase a bulk supply from Costco if you end up loving whatever the new product is that you’re trying.

Be strategic with your bulk purchases

Costco’s prices are often hard to beat, so it can be tempting to buy a host of products there. But these three items are a big exception.

The good news is that with the right approach, you can save plenty of money on your supermarket shopping. One way to lower your costs is to be on the hunt for coupons. Another is to use the right credit card at checkout. Click here for a list of the best credit cards to use at Costco.

And don’t forget to sign up for a shopper’s card at your local supermarket for added savings and incentive programs. Right now, for example, my local store is giving out free turkeys to customers who spend $400 between late October and late November. You may find similar programs available at your neighborhood supermarket throughout the year, so it pays to keep tabs on the perks your local grocery store offers.

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We love versatile credit cards that offer huge rewards everywhere, including Costco! This card is a standout among America’s favorite credit cards because it offers perhaps the easiest $200 cash bonus you could ever earn and an unlimited 2% cash rewards on purchases, even when you shop at Costco.

Add on the competitive 0% interest period and it’s no wonder we awarded this card Best No Annual Fee Credit Card.

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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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