Money Management

For some, the idea of a guaranteed rate for 100 years is attractive. Find out why one writer would never make the commitment. [[{“value”:”

I’m not sure how I missed it, but a friend recently pointed out a story The Motley Fool Ascent ran about a bank offering a 100-year certificate of deposit (CD) with a 4.75% APY. The minimum deposit is $1,000 and the maximum is $150,000.

If I were to invest $10,000 today, it would be worth $1,036,104 in 100 years, decades after I’m gone. While it sounds like a lovely way to leave money to a specific charity, I would never consider it. Here’s why.

Inflation

I realize that inflation has become a dirty word, and out-of-control inflation puts a pinch on our checking accounts. However, in the middle of all the hand-wringing, we seem to forget that inflation has always existed. Due to how the economy cycles, sometimes inflation is up, and sometimes it’s down.

Out of curiosity, I went back to see how much $10,000 was worth in 1924. A century ago, $10,000 had the buying power of $183,666 today. That was with an average inflation rate of 2.96%, slightly lower than our current rate of 3.3% and higher than the Federal Reserve’s target rate of 2%.

If the average rate of inflation over the next 100 years is 2.96%, my initial investment of $10,000 will have the buying power of $61,940 today, which doesn’t sound bad — until I compare it to other options.

The good old stock market

My husband and I started “adult life” early, marrying when we were teenagers, having kids, and putting each other through college. In short, there were some lean years. As a result, we didn’t seriously begin investing for retirement until much later than we should have. There are two reasons this doesn’t upset me as much as one might expect.

When we got serious, we got really serious. We learned to live below our means and invest a good portion of our income.The stock market has been very good to us over the past 15 years. The S&P 500 has enjoyed an average annual return of 12.6%, the Dow Jones Industrial Average has pegged in at 10.7% annually, and the Nasdaq Composite has added an average annual return of 16.4%.

I understand that, like inflation, the market will be up in some years and down in others, but historically, there have been far more years of growth than contraction over the past 100 years.

It’s ultimately about weighing which option leaves you with the most money in your bank account. If I’m going to invest money to leave to someone in 100 years, I don’t think doing it via a CD will provide them with the most bang for the buck.

Tying up money for a century gives me the willies

CD rates are up right now, and these accounts have some great features. I especially appreciate the opportunity to grow my money at a guaranteed rate for short periods of time.

However, when I think of all the great investment opportunities that are bound to pop up over the remaining years of my life, I can’t imagine how frustrating it would be to have money tied up that I can’t access without paying a penalty.

Just as I know that a 100-year CD is the wrong investment product for me, I’m sure it works for others. That’s the great thing about investing — we all get to choose our own adventure.

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

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Want an easy way to keep track of your insurance policies and save money on car insurance? The Marble app can help. Here’s how. [[{“value”:”

Marble (marblepay.com) is a personal finance app that works like a digital wallet for all your insurance policies — from auto insurance to life insurance and more. This insurance app could be helpful for anyone who wants to compare price quotes on car insurance, get better insurance policies for different ages and stages of life, and more.

Let’s look at a few ways the Marble insurance app can help make your life easier as an insurance policyholder — and why finding lower-cost insurance might be more important now than ever before.

What is Marble: Insurance app for cost savings

If you’re a typical American adult, you probably (hopefully) have several types of insurance — such as auto insurance, homeowners or renters insurance, health insurance, and life insurance.

But even though insurance is a huge part of people’s financial lives, and a monthly expense that people keep paying, many people don’t really understand what’s in their insurance policies or how to get a better deal. Insurance can be complicated, and most people don’t love reading the fine print on their policies, or sitting through sales pitches from insurance agents.

This is where Marble can help. Marble works as a helpful guide to manage your insurance policies. In the same way that budgeting apps can connect to your bank accounts to track your spending and find opportunities to save more, Marble takes a big picture look at your insurance policy details (with your permission). Then, Marble manages your insurance for you — by recommending different insurance policies that could give you better coverage for your needs, lower premium costs, or both.

How the Marble insurance app works

When you sign up to be a Marble insurance app user, you just have to follow a few quick steps:

Tell Marble if you want to use the app to manage your policies, shop for better insurance deals, or both. Tell Marble which insurance policies you have. Marble supports auto insurance, homeowners insurance, renters insurance, life insurance, and pet insurance. Enter your email address and set up an account. Give Marble your name and other details to complete your profile.

The Marble insurance app has a special feature called Marble Rate Check™ that ensures you’re getting the best insurance rates for your coverage type. It also gives you a digital wallet to store your insurance policies — instead of worrying about remembering multiple logins or losing important paperwork. Marble even reminds you of your policy expiration dates, in case you need to renew your insurance or make changes.

Why car insurance price shopping is important

Americans have been struggling for the past few years with higher prices for groceries, cars, and many other everyday items. When you go shopping for a car or airfares, do you take the first price that’s listed, or do you try to find the best price? Most people price-shop for items like cars, flights, hotels, and even groceries — switching to generic brands if needed.

But strangely enough, many Americans do not price-shop for car insurance. Recent research from The Motley Fool Ascent found that 75% of Americans do not shop around for new car insurance each year — instead, these people just stay with the same car insurance company even if they could get a better price elsewhere.

The Marble insurance app can help you shop for better deals on car insurance (and other types of insurance) with some of the best car insurance companies.

Bottom line

The Marble insurance app is a great way to shop around for cheaper car insurance. This app can be your new “digital wallet” for insurance policies — reminding you of expiration dates, keeping all your policies in one place, and helping you find a better deal on car insurance and other insurances as your financial needs evolve.

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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!

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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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A 60-month CD may not have the most competitive APY. But read on to see why it could still be a good choice this month. [[{“value”:”

If you’re thinking about opening a CD this July, you’re probably in good company. A lot of people are opening CDs to take advantage of today’s competitive rates.

You may be inclined to open a 6- or 12-month CD this July while rates are up. But have you considered a 5-year, or 60-month, CD?

You might think that a CD like that doesn’t make sense for a couple of reasons. First, it’s a long commitment. But also, most 5-year CDs aren’t offering as high an APY as shorter-term CDs.

But actually, if a 60-month CD aligns with your financial goals, then July could be a great time to open one. Here’s why.

It’s all about the guaranteed interest

Most banks are offering their best interest rates on shorter-term CDs right. For example, you’ll find the APY on a 12-month CD is around 5%. For a 60-month CD, it’s around 3.9%. That’s a pretty notable difference in CD rates.

But one factor you should keep in mind is that with a 60-month CD, you’re guaranteed today’s rate for the next five years. With a 12-month CD, you’re taking the risk that rates will fall over time.

You may have heard that the Federal Reserve is planning to cut interest rates now that the pace of inflation has slowed down. Once that happens, CD rates are likely to fall, as are interest rates for regular savings accounts.

In fact, July may be the last time you’re able to lock in a CD before the Fed’s next interest rate cut. The central bank is scheduled to meet on July 30 and 31. If a rate cut is announced then, CD rates could start to fall as early as August.

Does a 5-year CD make sense for you?

Clearly, you won’t lock in as high an APY with a 5-year CD as with a 12-month CD. But remember, we don’t know how low CD rates will get over the next few years.

If you open a 12-month CD today, in a year, the best rate you may be able to get could be 3.7%. A year later, you may be looking at 2.3%. And a year after that, the top rate for a 12-month CD may be 1.75%.

Of course, without a crystal ball, we can’t predict with any sort of certainty what CD rates will look like in the coming years. What is certain, though, is that if you open a $10,000, 60-month CD today at 3.9%, you’re guaranteed to earn $2,108 in interest. With a 12-month CD at 5%, with that same amount, you’re guaranteed to earn $500 in interest in the next year. Beyond that, it’s anyone’s guess.

That’s why a 5-year CD could make sense for you if it aligns with a financial goal you have. If you’ve just started saving for a home but know you’re at least five years away from being able to buy, then a 60-month CD might help you grow your down payment nicely.

Or, if you have a child who’s set to start college in a little more than five years, a 60-month CD allows you to earn a nice amount of interest without taking on the risk of investing your education fund in stocks (something you may not want to do at the tail end of your savings window).

But remember, five years is a long time. If you’re not sure you should be tying up your money in the bank for that long, then don’t do it. But if a 60-month CD works for you in theory, then July is a great time to open one.

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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.The Motley Fool has a disclosure policy.

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Did you ever wonder how Costco keeps prices so low? It’s because of all the money Costco makes on one special item. Learn more! [[{“value”:”

The shelves and aisles at every Costco store are full of thousands of items, but did you know that just one item helps Costco make billions of dollars per year? Costco still wants to sell you hot dogs, groceries, toilet paper, furniture, appliances, and other big-ticket items, but the store makes a major amount of revenue just by selling one thing: memberships.

That’s right: if you buy a Costco membership ($60 for the lower-cost Gold Star membership, or $120 for the Executive membership), you are helping Costco make reliable recurring revenue. This, in turn, keeps costs low. Since Costco makes so much money from memberships, it can afford to make smaller margins on everything else.

Let’s look closer at what the Costco membership means for Costco’s business — and for your personal finances.

How much does Costco make from membership fees?

According to Costco’s latest annual report (December 2023), last year the company generated $4.6 billion from membership fees alone. That’s a small percentage of Costco’s total sales ($237.7 billion) but a large percentage of Costco’s profit (“net income”) of $6.3 billion. Another way of thinking about it is that Costco’s membership fees were equal to about 73% of Costco’s profits.

Does it feel unfair to pay money for permission to shop at a store? Costco members don’t think so; they tend to be extremely loyal and keep coming back. Costco now has 128 million members and a 90% membership renewal rate. Clearly, millions of members are getting enough value from that annual fee.

Why Costco membership matters for Costco shoppers

According to CNBC, Costco CEO Ron Vachris said the Costco membership is, “The most important item we sell.” He added, “Everything we do supports that transaction.” Essentially, ensuring members keep coming back and renewing their Costco memberships is at the core of the business.

As a Costco member, you get special deals and discounts on a surprisingly wide range of items and services, including:

Gasoline: Costco gas is often lower-priced than nearby gas stations.Food: As well as Costco’s big discounts on bulk grocery items, the famous Costco $1.50 hot dog combo meal is in such high demand that Costco has had to crack down on non-members trying to eat at the food courts.Tires: Costco tire prices are often competitive with (or better than) nearby discount tire warehouses.TVs and appliances: You can get new appliances and big-screen TVs delivered to your house by Costco staff. The service includes customer-friendly warranties and concierge support.Healthcare: Need an eye appointment or a lower cost on prescription drugs? Costco can help. It even offers a special deal for members to use the Sesame telehealth service.Treasure hunts: One fun aspect of being a Costco member is wandering the aisles to find surprisingly great deals on items you didn’t even know you needed, like patio dining sets, sectional sofas, seasonal deals, laptops, and tech gadgets.

Check out our guide on maximizing your Costco rewards for more ways to get the most value out of your membership.

Bottom line

Costco earns about 73% of its profits from membership fees. That’s a good sign for Costco shoppers’ bank accounts, because it means the store really is trying to offer the best possible deals at the lowest prices. Since Costco has a membership loyalty rate of 90%, this is a good sign that most Costco members feel like the value of a Costco membership is well worth the cost.

Top credit card to use at Costco (and everywhere else!)

If you’re shopping with a debit card, you could be missing out on hundreds or even thousands of dollars each year. These versatile credit cards offer huge rewards everywhere, including Costco, and are rated the best cards of 2024 by our experts because they offer hefty sign-up bonuses and outstanding cash rewards. Plus, you’ll save on credit card interest because all of these recommendations include a competitive 0% interest period.

Click here to read our expert recommendations for free!

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

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