Explore these overseas retreats where you can leave it all behind. Dixon Hamby / Shutterstock.com
In 1989, Italian schoolteacher Mauro Morandi was sailing between Corsica and Sardinia when the engine of his catamaran gave up. He washed up on the shores of Budelli — an island that had gone from hosting thousands of tourists a day to being placed under environmental protection. When Morandi showed up, the only inhabitant was the island’s caretaker who was preparing to retire.
Here’s the financial burden college students can expect to face. dfoto / Shutterstock.com
Paying for college is no easy task. Families often start saving nearly as soon as their children are born. Some even begin planning where to live before that, aiming to get the best value within their home state. However, with the right research and accurate data, college planning doesn’t have to be such a daunting task. To assist with this process, EDsmart collected data from College…
Business class isn’t always worth paying a premium. Learn about when you could be better off choosing a cheaper seat. [[{“value”:”
Image source: Upsplash/The Motley Fool
Flying is usually much more enjoyable when you have a business-class ticket. You get to visit an airport lounge, sit at the front of the plane in a spacious seat, and have a fancy meal on your flight. It can also be much more expensive. Business class often costs three or four times what you’d pay for economy.
Sometimes it’s worth spending extra, like if you find a great deal or can pay with points on your credit cards. Other times, it makes sense to get a cheaper ticket. Here are a few signs that you could be better off skipping business class.
The most affordable way to book business class is with travel rewards. Lots of popular travel credit cards either earn miles with a specific airline or points you can transfer to multiple airlines. When you transfer points to an airline, they turn into miles that you can use to book flights.
If you have enough miles, you can book an award ticket instead of paying in cash. All you’re responsible for are taxes and fees, which can be as low as $5.60. You get the business-class experience without the hefty price tag.
Because of how expensive business class is, lots of travelers only book it if they can do so using their travel rewards. If you’re short on miles, you may want to book an economy seat instead of paying cash.
Business-class airfare is a luxury expense. It’s nice if you can afford it, but it’s not worth paying for if it’s going to cause financial issues.
Only book business class if you can afford to pay for it with money in your travel savings. If you’ll need to go into credit card debt or get a loan to afford it, it’s not worth it. That’s a sign it’s too expensive — and it will end up costing you even more in total because of the interest charges.
Also, consider how splurging on a business-class ticket would affect the rest of your trip. If you have a $5,000 travel budget, you could spend $2,500 to fly business class. But that means you’ll have just $2,500 left to cover your hotel, activities, meals, and all your other travel expenses.
Some travelers are fine with that. Others would rather splurge on a great hotel or on activities at their destination.
The main reason airlines can charge a premium for business class is because of how much more comfortable it is. But not everybody needs a business-class seat to get comfortable on a plane.
Some people are good at finding ways to make the most of an economy seat. If you’re one of them, you probably don’t need to spend your money on business class. And if you want a middle ground between economy and business class, many flights have a premium economy option.
The length of the flight is important, too. On a 10-hour flight, having a lie-flat seat makes a huge difference. On a two-hour flight, business class probably won’t have lie-flat seats (not that you’d really need it), and an economy seat could be perfectly fine. After all, you won’t be sitting there for too long.
Flying business class is fun, but because of the cost, it doesn’t always make financial sense. If you can’t pay for your ticket with travel rewards, it doesn’t fit your budget, or you’d be just fine in economy, a business-class ticket isn’t the best use of your money.
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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.Lyle Daly 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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Saving $1 million for retirement is a common goal, but it’s not necessary for everyone. Find out here if you should set your sights so high. [[{“value”:”
Image source: The Motley Fool/Upsplash
It can be hard to figure out how much to save for retirement. One common approach is to simply assume you need $1 million in your 401(k) or retirement accounts with your brokerage firm. After all, $1 million is a number often associated with wealth.
Unfortunately, saving a seven-figure nest egg may seem out of reach, especially if you’re getting started investing late or don’t have a lot of spare cash. So, it’s worth looking at whether saving $1 million is really necessary for most people or whether you can get by with less.
While it may be easy to assume you need $1 million, choosing an arbitrary number like this isn’t the right way to set your retirement savings goals. Instead, you should make a personalized plan for the amount of savings you need based on factors like:
Your retirement budget. Will you be living in a high-cost-of-living area and traveling the world? Or will you be staying home and hanging with your grandkids in your paid-off house in a small town? These choices will have a huge impact on the savings you need and the budget you’ll create.Your projected life expectancy. Does everyone in your family live into their 90s? Or do most people pass away at a younger age due to a family history of hereditary conditions? The longer you’re expected to live, the more money you’ll want saved so your accounts don’t run dry.Your income. If you make more money during your working life, you’ll have established a higher standard of living. You’ll need more money to continue to live the lifestyle to which you’ve become accustomed.
All of these examples demonstrate a fundamental fact. Your retirement goals are personal and they directly impact the amount of money you’re going to require.
So, will $1 million be necessary for you to retire comfortably based on your goals? Here’s a simple way to tell.
Most experts say you must replace around 70% to 80% of pre-retirement earnings to maintain your lifestyle. If you plan to spend a lot during retirement, you may want to err on the side of caution and aim to replace 90% or even 100% of what you made before you left work.
Your Social Security benefits are going to take care of replacing around 40%. So, depending on your goals, you may need to replace another 30% to 60% of what you were earning.
If you were making $50,000 per year and you want to end up with 80% of pre-retirement earnings in total from savings and Social Security, that would mean you need $20,000 to add to your $20,000 in Social Security checks.
Now you need to figure out how much you must have saved to produce $20,000 in annual income. A common rule of thumb says you can take 4% of your balance out of your investment accounts the first year and adjust upward due to inflation if you don’t want your money to run out. This is called the 4% rule.
If you follow the 4% rule, then you can figure out how much savings you need by multiplying the income you want it to produce by 25. So based on this example, $20,000 times 25 means you must have $500,000 saved — only half of the $1 million nest egg you might have thought you needed.
If you need your savings to produce around $40,000 to combine with Social Security and enable you to live a comfortable life, you must save $1 million. But if you think you can get by on less based on your goals, you don’t need to stress yourself out trying to hit that big target.
Instead, set a goal that’s realistic for you and do everything possible to hit it, so you can have the retirement you’ve always hoped for.
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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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Banking can be done entirely within the confines of the internet. Read on to see how online banks edge out their traditional cousins. [[{“value”:”
Image source: Getty Images
I’m a millennial, and that means I have high standards for the companies I do business with. Plus, I’ve lived through plenty of supposedly once-in-a-lifetime financial calamities, meaning it’s even more crucial that I choose great banks.
In 2022, I opened a high-yield savings account with an online-only bank. I then went on to add a checking account, and I even just opened my first-ever retirement account with the same bank. I’ve discovered a few unexpected advantages online banks have over their more traditional brick-and-mortar counterparts — so here’s a breakdown for you.
If your idea of bank customer service is face-to-face communication, I can respect that — and will note that an online bank may not meet your needs. But if you relish the idea of being able to call customer service at 2 a.m. when you notice something awry with a withdrawal from your checking account, an online bank will let you do that.
There are no branches, but there’s often excellent customer service over the phone, email, and potentially live chat. My online bank even has an estimated wait time for phone help on its website — I love never hearing the words, “Call volume is higher than normal. We will answer your call in the order it was received,” while intermittent tinny hold music plays in the background.
OK, this one might be a bit weird, but stay with me here. Online banks can sometimes make it harder to access your money. Paradoxically, this gives them an advantage over brick-and-mortar banks, especially if you’re using one to build and hold your savings.
If you’re saving for a big goal, like buying a home, it might be hard to commit to leaving the cash alone. Life is full of shiny new things to buy, and delaying gratification can be difficult, especially if you view homeownership in more of a nebulous way. (Trust me, it’s hard to comprehend how good it can feel before you do it.)
But if it would require transferring money to another bank to gain access to spend it, you might just be more likely to leave your savings in an online bank long enough to meet that huge (and very worthy) goal.
If you deal in cash often or receive cash payments, an online bank could prove a difficult switch for you. Depositing cash in an online bank often requires an extra step — namely, depositing it with a bank that allows cash deposits, then transferring the money to the online bank. This could be a dealbreaker for you, and I respect that.
But if you get paid via direct deposit and sometimes like to buy items with cash, you might be able to reap the benefits of an online bank anyway. Some of the best ones have robust ATM networks with tens of thousands of machines.
And some of them reimburse a certain dollar amount per month in ATM fees incurred by using out-of-network machines. My own online bank reimburses up to $10 in these fees per statement period, for example.
Have I convinced you that online banks are worth considering? Here are a few key factors to evaluate when you’re comparing online banks:
FDIC insurance: This vital coverage means that up to $250,000 of your money (per depositor, per FDIC-insured bank, per ownership category) will be returned to you in the event of bank failure.A well-rated mobile app: An online bank should invest in technology, so dig into reviews of its mobile app to see what features (and issues) it has.ATM availability: If you need to take out cash, you’ll need an ATM, so plug in your ZIP code to see if there are in-network machines convenient to you. Alternatively, opt for a bank that reimburses fees.Competitive APYs: Online banks don’t have the overhead costs of branches, so they pass the savings on to you in the form of higher rates on CDs, savings accounts, and money market accounts.
Opting for an online bank can be a revolution for your money management toolbox. If it’s been ages since you visited a bank branch and you’re tired of silly fees and low APYs, give online banks a closer look.
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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.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.
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Can you really earn money through passive income? We’ll look at some of the top passive income streams and whether they’re truly passive. [[{“value”:”
Image source: The Motley Fool/Upsplash
The idea of passive income — income you make using a “set it and forget it” model — has been a popular idea for decades. Who doesn’t want to make money doing little to nothing? There’s no shortage of people online offering to teach you how to make passive income doing everything from real estate to investing in stocks.
But is passive income really possible or is it a myth? Let’s look at some of the more popular passive income streams and explore just how “passive” they really are.
One of the most popular passive income strings is real estate. Buy a home (or several homes), rent them out and watch the money roll in. Sounds great — but who does the renter call when the water heater goes out or the toilet breaks? You.
You’ll also have to send contracts, run background checks, and find new renters when people move out. That doesn’t sound very passive.
You can hire a property management company, but they take a portion of your profits, usually around 10% of the monthly rent. Plus, you have to have the money or the ability to take out a mortgage, which is out of reach for many people.
Verdict: Passive if you hire a property management company, but also requires large start-up costs.
The average affiliate marketer makes around $82,000 per year writing articles, posting on social media, or recording videos. The problem is, affiliate marketing and blogging jobs aren’t passive at all.
Affiliate marketers can spend hundreds of dollars on website hosting fees, ads, and expensive video equipment or editing software. Writing just one article or recording a video and editing it can take several hours or even days.
The Google algorithm, which helps bloggers get traffic, changes several times a year, so you’ll need to constantly learn new marketing strategies. While this flavor of passive income can “make you money while you sleep” if someone buys a product you’ve promoted, it’s far from passive.
Verdict: Not passive at all, though it has lower start-up costs than real estate.
This is a truly passive income stream. The S&P 500 earned an average return of 12.6% per year over the last 15 years. So, if you put $10,000 in stocks (and picked the right stocks or invested in index funds), you might expect to earn an average of $1,260 per year for doing nothing more than letting companies borrow your money. To earn $70,000 a year, you’d need to invest $555,555, which is a lot.
Keep in mind that 12.6% interest is an annual average over 15 years, so you wouldn’t earn that every year. Plus, historical averages don’t guarantee returns in the future.
Buying CDs is less risky, but current average CD rates are around 5% (and these are unusually high), so you’ll only earn $500 a year off that $10,000, which isn’t enough to live on. Those rates also fluctuate and may go down in the near future.
Verdict: Definitely passive, but you need to invest a lot of cash to earn decent returns.
Passive income is not a myth, but most passive income streams require a lot of work to get started. You are unlikely to make thousands of dollars in income while you sleep. But spending time writing articles, purchasing homes, or investing can set you up for financial stability by providing another source of income.
When reading articles about passive income, pay attention. Is the person suggesting a passive income stream trying to sell you something? If so, you might just be their passive income stream.
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.
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.Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.
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