Money Management

We crunched the numbers on buying stocks, earning ROI, and making money grow for 30 years. Read on to see how to increase your cash tenfold. [[{“value”:”

When you’re first getting started with investing, it might feel as if the future is impossibly far away, and the numbers you need to retire are too big to reach. But if you buy stocks and invest in a diversified portfolio for many years, the numbers in your brokerage account will tend to go up.

What if you have $10,000 of savings, and want to make that money grow to $100,000? What do you have to do? Very little. If you use any of these simple investment strategies to invest $10,000 for 30 years, you’re likely to turn $10,000 into $100,000 without too much effort.

Let’s look at three easy strategies for how to invest $10,000 for maximum long-term growth — and which investment accounts can make it happen for you.

1. Open an IRA or brokerage account and invest in index funds

Let’s say you already have $10,000 of cash in the bank, or in your 401(k) plan at work, or in an individual retirement account (IRA) or brokerage account. If you want your cash to grow to $100,000, you can’t just leave it in the bank or keep it invested in CDs or cash equivalents. You must invest your money in financial assets like stocks and bonds.

Good news: it’s easier than ever before to invest $10,000 for 30 years of long-term growth potential. You don’t have to pick stocks, day trade, or buy alternative assets or obscure, risky investments. Instead, you can grow your money just by investing in diversified index funds of stocks and bonds.

The stock market might go up or down on any given day, and it might endure longer-term drawdowns that last for months or years. But most of the time, over the long run, the stock market tends to go up. The S&P 500 index has delivered compound average annual growth of 10.7% for the past 30 years.

If you start with $10,000 and earn 10.7% average annual returns per year for the next 30 years, your $10,000 of investments would grow to $211,011.

2. Use the best robo-advisors to invest automatically

What if you don’t know how to pick the right index funds and ETFs, or want some help to invest your money? Robo-advisors can help you set up a diversified portfolio of investments based on your age, income, financial goals, and how much investment risk you’re willing to accept.

With a robo-advisor, you can automatically invest your money for the long term, get automated rebalancing of your portfolio, and lean on other special perks and help. If you have $10,000 and want it to grow to $100,000, the best robo-advisors can give you a low-stress, low-effort path to success.

For example, let’s say that you’re not super aggressive about taking risks with your investments — you don’t want to lose 50% (or more) of your portfolio’s balance in case of a stock market crash. Robo-advisors can help you invest in a balanced portfolio of stocks and bonds that might not earn as high of an ROI as the S&P 500 index, but could protect you from risks.

What if you “only” earn 8% per year for the next 30 years? If you start with $10,000 and earn about 8% per year, after 30 years you’d have $100,626.

3. Put $10,000 of cash in a savings account and add to it

What if you don’t want to invest your cash in stocks, and you just want a big emergency savings fund? If you start with $10,000 of cash in the bank, it actually is possible to grow that money to $100,000 in 30 years — but you’ll need to keep adding to your savings account balance, and you’ll need to earn a decent APY.

Let’s say you start with $10,000 in your savings account, and you earn 3.00% APY per year for the next 30 years. (That high savings account APY is not guaranteed; interest rates change, and savings account APYs can be higher or lower based on the bank’s decisions and overall Federal Reserve interest rate policy.)

If you can earn 3.00% APY on your savings account for the next 30 years, and you save an additional $132.64 per month, after 30 years, your savings account will have $100,000 in it.

But here’s the problem: Leaving too much money in cash for too long can cause you to miss out on earning a lot more money by investing in stocks. If you start with $10,000 in an IRA or brokerage account, and invest an extra $132.64 per month for 30 years, and earn 8% per year in investment returns, you would have $280,067. That’s an extra $180,000 over 30 years that you could earn from investing in stocks and bonds, instead of keeping your cash in a high-yield savings account.

Bottom line

If you have a long time horizon to leave your money invested, you have plenty of time to grow your cash in the stock market. Even if the stock market goes through a near-term downturn, stock prices tend to go up in the long run, as companies innovate, earn profits, pay dividends, and attract new investment. $10,000 invested today could easily grow to $100,000 in the next 30 years.

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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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CD rates are at recent record highs, but there are still better investments. CDs don’t make a lot of sense for most people — find out why. [[{“value”:”

In recent years, CD rates have typically been around 2.00% to 3.00% or below, even for high-yield CDs. That changed when the COVID-19 pandemic led to surging inflation, prompting the Federal Reserve to raise interest rates repeatedly. Now, it’s very easy to find CDs offering rates above 5.00%.

With rates up so much, it’s tempting to believe CDs are a great investment that you should put some money into. The reality is different, though. For most people, investing in CDs simply is not the right move despite the fact there are better options out there now than in the past.

Here’s why you may want to pass up buying certificates of deposit, even though there appear to be some good opportunities within this asset class.

CDs mean giving up access to your money

The biggest downside of CDs has always been that buying them requires giving up access to your money. You have to commit to staying invested for the duration of the CD term, or else you’ll find yourself facing a penalty that could eat away at the interest you earned and even cause you to lose some of the principal you put in.

In the past, the justification for giving up the freedom to use your own funds was that CDs paid a higher rate of return than savings accounts. That’s not really the case right now. The rates offered by high-yield savings accounts are competitive with, and sometimes higher than, the yields you’ll earn with CDs.

If you can get the same or a better rate and keep your money accessible to you, why not just do that instead of locking up your money in a CD?

You’ll be limiting your ROI when you buy CDs

There’s another big reason you should steer clear of CDs. A rate of around 5.00% is fine, but not great. And once you’ve put your money into your certificate of deposit, that rate is not going up. You’ll earn those yields exactly if you leave your money in for the length of the CD’s term.

If you invest in the stock market, on the other hand, it is very reasonable to expect that you will earn a better return on investment than a CD could offer. The S&P 500 has historically provided 10% average annual returns, which is twice as good as 5% returns.

There is, of course, more risk when buying stocks. However, if you’re investing for at least several years and you pick an ultra-safe investment like an S&P 500 ETF, that risk is limited. Sure, you might lose some money if there’s a downturn or market crash soon after you invest. But as long as you can leave your money alone for a while, the odds of recovering your investment and making it back are high.

So, to recap. If you have money you won’t need for a while, the stock market gives you the best shot at getting better returns. And if you have money you might need soon, a high-yield savings account is the best place for it. With one, you can earn rates competitive with CDs and be able to access your cash when you need it.

There’s really no reason for most people to invest in CDs, as these other better options exist instead.

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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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Think the West is best? Read on for cities that could be the most affordable for some budgets. [[{“value”:”

Housing affordability hit a 40-year low last year, making it difficult for millions of Americans to find homes within their budget. Unfortunately, traditionally expensive locations, like homes in the West, have become even pricier over the past few years.

But that doesn’t mean they’re all unaffordable. If you’re like nearly one-fifth of Americans who plan to move in the next year, here are 10 affordable cities in the West you may want to consider.

10 affordable cities in the West

While the cities listed here are technically affordable, not all are cheap places to live. For example, most people would not suggest moving to Denver, Colorado, if you’re looking for an inexpensive home.

However, the cities listed below are affordable based on the median salary in those locations and their cost of living. Here are 10 you may want to consider:

Your cost of living is probably higher than it used to be

While inflation has cooled down recently, the damage to many Americans’ wallets has already been done. A recent survey of American workers found 60% of them say their wages haven’t kept up with rising costs.

Whether you plan to move to an affordable city out West or choose to stay where you are right now, there are a couple of ways you can lower your cost of living.

1. Negotiate your credit card interest rate

The average credit card has a 21.5% APR, making it a costly way to pay for everyday expenses. If you’ve got credit card debt, you may want to consider asking your card issuer to lower your interest rate.

While it may seem odd to ask, many card issues will lower your rate, sometimes temporarily, and it could save you a lot of money. If you lower your rate from 21.5% to 19.5%, have a $3,000 balance, and pay $100 per month, you’ll save nearly $200 in interest payments and pay off your balance one month sooner.

If your credit card company doesn’t lower your rate, you may want to try a balance transfer card to make it easier to pay down your balance.

2. Shop for cheaper insurance

This idea often flies under the radar because who wants to think about their car and homeowners/renters insurance? However, overlooking your insurance premiums could cost you serious cash.

Homeowners insurance premiums have jumped 20% over the past two years, and car insurance prices have risen 19.5% over the past year. To save money on both, get a few quotes from insurance providers and compare them.

Bundling your home and auto insurance is also a wise move, saving you up to 25% with some insurance companies.

Making a few simple changes to lower your monthly expenses could help make life a little more affordable. If that doesn’t work, you can always point your wagons west.

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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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As you get older, putting more money in the bank is helpful so you’re prepared for emergencies and unexpected expenses. How are 64-year-olds doing? [[{“value”:”

When you’re in your 60s, you may be retired or nearing retirement. You need to have your financial ducks in a row as you reach this age since your paychecks will soon stop if they haven’t already.

So, how much does the typical 64-year-old have in their savings account? The numbers aren’t pretty. Here’s the average balance for a 64-year-old.

The typical 64-year-old doesn’t have nearly enough savings

According to research from The Motel Fool Ascent, $8,000 is the median savings account balance for Americans between the ages of 55 and 64. That’s the amount people have in all transaction accounts, including checking, savings, money market, call accounts, and prepaid debit cards.

It’s not a huge sum, and it’s also less than what many other age groups have saved. Seniors beat out those under 35, who have a median balance of $5,400. They also do better than the $7,500 in bank accounts owned by Americans ages 35 to 44.

However, they have less than the $8,700 owned by Americans ages 45 to 54, and their balance is below both the $13,400 among Americans 65 to 74 and the $10,000 median balance held by Americans 75 and older.

This means only the youngest age groups have less than the typical 64-year-old. However, these younger Americans are in a better position despite having lower balances, as they have more years to save.

How can America’s seniors boost their savings?

Significant savings can provide an important financial cushion for those whose paychecks have already stopped or who will stop soon. Seniors need money for emergencies because if they’re on a fixed income, it can be harder to cope with surprise expenses without going into credit card debt.

Having three to six months of living expenses saved is just as important, if not more so, for older Americans who don’t have time to recover if an emergency depletes their financial cushion.

Since people in their 60s and 70s are likely to start relying on their investment accounts for income soon, it’s also a smart idea to have a few years of living expenses accessible in savings or other safe investments. This helps ensure that you don’t have to withdraw money from stocks during a market downturn.

Ultimately, the reality is that 64-year-olds with the average savings account balance may have some work to do. If they aren’t retired yet, it’s worth trying to increase their savings.

For those who have already stopped working, it’s worth looking at asset allocation. If you have plenty of money in investment accounts but very little liquid cash, it may be worth rebalancing and relocating some of those assets so you have a cushion in case of a market downturn. If possible, you want to avoid selling when stocks fall so you don’t lock in losses.

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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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