Money Management

Millionaires tend to share a few important investing habits. Get a peek inside how millionaires invest so you can follow the same strategies. [[{“value”:”

Millionaires make up about 2% of the adult population in the United States, according to a wealth report by Henley & Partners. It’s a select group, overall. For self-made millionaires, it usually takes good money management and smart investing to get there.

If you want to get better at investing, it makes sense to learn from the people who have been successful at it. Here are a few of the most common millionaire investing habits.

1. They invest in stocks, real estate, and their own businesses

Wealthier Americans distribute their money differently than everyone else. Visual Capitalist created a chart breaking down average asset distribution at each net worth tier, starting at $10,000 and going all the way up to those with $1 billion.

Millionaires put their money into appreciating assets (assets that can grow in value). In particular, people with net worths of $1 million or higher tend to have more of their money in the following:

Stocks/mutual fundsReal estateBusiness interests

Those in the $10,000 and $100,000 tiers invest in those, too, but not nearly as much. They have a much larger portion of their wealth in their primary residences and their vehicles.

Fortunately, you don’t need to be a millionaire to invest in the same types of assets. You can buy stocks, mutual funds, and real estate investment trusts (REITs) with many online stock brokers.

2. They make it automatic

For those who want to invest their way to $1 million, there are a couple ways to improve your odds. Set aside at least 20% of each paycheck for savings and investments, and make this automatic.

Tom Corley talked to 233 millionaires for his Rich Habits study. He found that nearly half (49%) followed what he coined the “saver-investor” path. They amassed a fortune by diligently saving and investing a portion of their income.

Many of the millionaires in Corley’s study automatically contributed 10% of each paycheck to 401(k) plans with their employers. They had another 10% automatically sent to a savings account, and then an investment account.

3. They avoid hedge funds, venture capital, and private equity

There’s a misconception that millionaires get access to better investments than everybody else. While some investments are only available to people with a large net worth, they’re not better investments — and most millionaires don’t even use them.

Take the professionally managed hedge funds available to wealthy investors. Average hedge fund returns normally lag far behind the returns of the S&P 500, which anyone can invest in through index funds.

Millionaires largely stick to the same public investments that are available to everyone. A study by the National Bureau of Economic Research found that only 10% of millionaires invest in hedge funds, venture capital, or private equity.

How to invest like a millionaire

Anyone can follow the same investing habits that work for millionaires. Here’s a quick summary of how to do it:

Invest a portion of every paycheck. While many millionaires invest 20%, choose any amount that you can afford — you can always increase it later. The key is consistency.Prioritize investing through retirement accounts. Individual retirement accounts (IRAs) and 401(k) plans are excellent options because of their tax benefits. Start with these, and if you have money left over, you can invest it through a taxable brokerage account.Put your money in proven investments. Most millionaires have money in the stock market, which has an average historical return of about 10% per year. Real estate is another popular investment of those with $1 million or more.

Investing doesn’t need to be complicated. In fact, it’s better if it isn’t. The approach above has worked for plenty of self-made millionaires to build wealth, and it could do the same for you.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

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.

“}]] Read More 

Passive income can bring in extra revenue. Read on for the most popular sources of extra revenue in 2024 to see how they might help your business. [[{“value”:”

If you’re a small business owner or entrepreneur, earning passive income can give you some breathing space during difficult months or when you’re trying to get things off the ground. If you’re retired or work an office job, it can give you some extra security and spare cash to put toward your financial goals.

In short, alternative revenue streams can help you build wealth or keep your head above water financially. Here are some popular passive income trends in 2024.

1. Getting imaginative with rentals

The most obvious way to make passive income through rentals is by letting out a room or a whole property. If you have space to rent, that can be an excellent plan. But space isn’t the only asset you can rent out. You may have all kinds of items that you rarely use and could rent out to people who live nearby.

Apps and websites make peer-to-peer rentals increasingly feasible, too. Here are some interesting rental trends:

Cars and other forms of transportPower toolsIT equipmentStorage space

Make sure the equipment you’re renting is in good condition, and be aware of any legal or liability issues. For example, you may need specialized insurance to cover yourself against loss, theft, or accidents.

2. Online courses

If you have specialized knowledge — especially something that connects to your small business — consider sharing your expertise through an online course. Not only could this translate to an extra stream of revenue, but it can also act as a marketing tool.

For example, a wine shop might create an online course in wine tasting. Students who get to know you through your course may also stop in to talk in person, join wine-tasting events, and become part of your community.

On the downside, it takes time to create and market an online course. You’ll need to map out the content, record videos, and write any supplementary materials. The dramatic growth in online courses means there’s a lot of help out there in terms of both creation and marketing. Some platforms (like Udemy) take a percentage of your revenue, while others charge a fixed fee.

Be prepared to put effort into marketing too. Top customer relationship management (CRM) software can help you automate common tasks and create an effective sales funnel. Even then, don’t underestimate the work you’ll need to put in to make this an effective source of extra income.

3. Get creative with on-demand printing

Printing technology has evolved rapidly, making it easier than ever to generate prints, cups, t-shirts, tote bags, and more. If you have some skill with graphic design and a bit of imagination, print-on-demand services can open up a world of opportunities.

With on-demand printing, you only need to make the product when someone orders it. Even better? You can put your products on a platform such as Etsy and have a print-on-demand service like Printful send the item directly to the customer. It’s a low-risk way to build online sales, without the risk of being stuck with piles of unsold products.

You can get started pretty quickly, though it is worth exploring different models to find one that’s right for you. For example, it may make sense to start your own online store if you’re familiar with building a website. If not, you might want to pay a higher commission to a site that will do everything for you.

4. Putting your money to work

A more traditional source of passive income is to buy assets that generate returns. If you have a lump sum to invest, there are various ways you can put it to work for you. Think about how much risk you’re willing to take, how much time you’re able to spend researching and managing your investments, and when you might need the money.

Dividend stocks are a popular choice, because they make regular payouts and the shares themselves may also increase in value over time. Index funds and ETFs can help you build a diversified portfolio without having to buy each asset individually. Fixed-income investments such as bonds can generate a reliable income stream. Right now, CDs and savings accounts are paying high returns, which may make them a useful tool in the short term.

Passive income can still take time

I’ve heard people say that passive income is like making money while you’re asleep. If that were true, we’d all spend more time sleeping and less time working. Don’t underestimate the time and money involved in developing and managing alternative revenue sources. The extra income may be useful, but if it means less time for your core activities, it could prove counterproductive.

The trick to building passive income is to work smartly. The smoother the processes, the higher the work-to-profit ratio will be. Whatever route you choose, consider using a business checking account or business credit card to separate your business activities. It will make it much easier to track your business spending and keep your accounts in order.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

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.Emma Newbery has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Etsy. The Motley Fool has a disclosure policy.

“}]] Read More 

It’s easy to bust your budget in the summer. Read on to find out how to save big on summer plans at Costco. [[{“value”:”

Our family likes to enjoy baseball games, trips to the beach, and local events over the summer, which means it’s easy for me to overspend this time of year. But with inflation still elevated and my natural tendency to want to save money, I try to balance out some of those spending impulses. One way to make it easier is to shop at Costco.

Whatever your plans are this season, here’s how a Costco membership could save you $50 or more on your summer fun.

1. Backyard relaxation

Savings: $300

I bought some patio furniture from Amazon during the pandemic. While it’s holding up fine, it’s not as comfortable as I’d like. Now that I have a Costco membership, I’ve been browsing the outdoor furniture lately.

I recently came across a six-piece outdoor seating set, with a sofa, two club chairs, two ottomans, and a coffee table, for $2,499.99 — $300 off the original price! That’s more money than I want to spend, but for a large outdoor dining set, that’s a significant savings equal to five years of the annual $60 membership fee.

2. A grillmaster’s dream

Savings: $200

Last year, I bought a used gas grill after months of searching local social media for a good one. It took a lot of effort to find the one I wanted for the right price and close to where I live.

If I had a Costco membership at the time, I would have saved money and a lot of time. Right now, a top-of-the-line Weber Genesis II gas grill is on Costco’s website for $1,149.99, which is $200 off the original price.

And if you’re looking for something cheaper, Costco has the Broil King Baron 440C for $629.99, which is $200 cheaper than the original price.

3. Summer vacation to Disney

Savings: $200 to $300

I took my kids to Disney World a few years ago and we had the time of our lives. But anyone who’s been to Disney knows that the costs can easily start adding up. A Disney vacation can quickly become a budget buster between airline tickets, park tickets, hotel rooms, food, and transportation.

But booking a Disney vacation package through Costco Travel could save $200 in instant savings when you choose a Value or Moderate Disney hotel, like Disney’s Pop Century or Coronado Springs Resort Hotels. Choose a Deluxe or Deluxe Villa Disney resort, like the Riviera or BoardWalk Villas, and you’ll save $300 off your hotel cost.

Booking a Disney vacation through Costco Travel also gets you other perks, like early access to the parks and complimentary standard parking at all Disney World theme parks and Disney Springs.

4. Tickets to the ballpark

Savings: $60 or more

I’m taking my kids to their first Phillies baseball game in Philadelphia in a few weeks, and I’m excited for them to see the park. But I have to admit I experienced sticker shock when I was shopping for tickets.

I didn’t find Phillies tickets when I searched Costco, but there were 15 MLB teams with discounted tickets. For example, a set of two Yankees tickets for the 200-section main level costs just $99 and comes with a $30 food voucher.

I priced similar tickets on SeatGeek at $160.76. With the added food voucher, the Costco MLB tickets will save you more than $90.

5. Airline tickets out of town

Savings: $50 or more

One of the best deals Costco offers its members is the ability to buy airline gift cards at a steep discount. For example, Costco members can buy a $500 Southwest Airlines gift card for just $449.99.

Better yet, Costco sometimes offers a larger discount on the gift cards. I recently spied the Southwest gift card for just $429.99 — over $70 off!

Whether you’re creating a backyard oasis, catching a baseball game, or heading out of town on vacation, you can save significant cash shopping at Costco this summer. I’m tempted to start pricing out a trip to Disney myself. See, I told you it’s easy for me to overspend during the summer.

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.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Costco Wholesale. The Motley Fool recommends Southwest Airlines. The Motley Fool has a disclosure policy.

“}]] Read More 

Bank account bonuses can pay a few hundred dollars, so why not open multiple accounts in a row? Here’s why this move is risky. [[{“value”:”

The best bank sign-up bonuses can give you hundreds of dollars for opening a new checking account or savings account. Some people might wonder: What if I just open lots of bank accounts, and get lots of money? This strategy is called “bank account churning.”

While legal, it can be risky. Chasing after bank bonuses by opening multiple accounts in a row can help put more money in your pocket, but it might hurt you in other ways.

Let’s look at a few reasons why you should be cautious when pursuing bank sign-up bonuses.

You could lose your bank account bonus

Here’s a typical churning strategy. Let’s say that a bank is offering a $200 bonus for new savings accounts, but you have to deposit a minimum of $10,000 for three months. Let’s say you put the money in — and you leave the money alone for 2.5 months. But then you see another bank offering a $300 savings account bonus. You want that one too. So you pull your $10,000 out and put it into the new bank to try to get a new bonus.

Do you see the problem? You didn’t leave your $10,000 deposited for the full three months that you promised. You’re not going to get that first $200 bonus. Some banks also have fine print in their deposit agreements that say you have to leave your money deposited or your account open for a minimum amount of time after receiving the bonus. For example, some might ask for six months of leaving your account open and in good standing.

If you fail to uphold the deposit agreement you made with the bank, you could lose whatever bonus you were expecting to get. Banks could decide to freeze your account or claw back your sign-up bonus if you close your account too soon. Read the fine print for what it takes to not just “get” your bank bonus, but “keep” your bank bonus.

You could hurt your reputation on ChexSystems

Banks might get suspicious if you’re opening too many bank accounts too fast. Especially if you fail to uphold your deposit agreement and end up having an account closed involuntarily, you could get flagged by bank reporting agency ChexSystems. Banks use it to file reports about customers who have trouble following account rules and maintaining accounts — it’s kind of like a credit bureau for bank accounts.

You definitely do not want negative items on your ChexSystems report, but account churning can lead to this. Here are a few examples of negative items that ChexSystems tracks:

Involuntary account closures: This could happen if you don’t manage your new “bonus” bank accounts properly.Number of accounts applied for recently: Account churning might put you at higher risk for this.Unpaid negative balances: Are you keeping track of how much money is in your various “bonus” accounts?

In a worst-case scenario, if you have a bad ChexSystems report, you might not be able to open new bank accounts. Opening a new bank account is not automatic; banks have to approve you, and a bank can deny you if it believes you’re a risky customer or you won’t keep your promises. Getting a few hundred dollars from a one-time bank account bonus is not worth a bad banking reputation.

Account churning takes time and energy

Here’s the other problem with bank account churning to chase bank bonuses: it’s a lot of work! You might have to spend a few hours opening new accounts, changing your direct deposits, worrying about minimum balances, watching deadlines, and otherwise managing the process. Bank account bonuses aren’t really free — they take effort!

Switching up all your direct deposits and monitoring your bank account information across multiple institutions might not be worth your time and effort. Especially if you make a mistake and end up risking a bad report on ChexSystems. Wouldn’t you rather choose a different side hustle? And many savings account bonuses aren’t a very good deal — just put your cash in one of the best savings accounts and go enjoy your life.

Bottom line

With so many banks competing for your deposits, it might be tempting to try “bank account churning” as a strategy to make extra money by opening multiple accounts at different banks. But account churning can be risky. You could lose your bank account bonus, incur extra fees, and even lose your ability to open new bank accounts in the future.

Don’t let a few hundred dollars trip you up and hurt your financial reputation. Bank account bonuses can be fun, but the best savings and money market accounts will typically give you a better return on your money — and your time.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

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.

“}]] Read More 

Freelancing can feel financially unstable, but budgeting tricks and a checking account buffer can help. Read on to learn more money tips. [[{“value”:”

When I started freelancing, I had no idea how to weather the dramatic ups and downs of my income. And for the first year, I was almost always stressed out about money. But after seven years of experience, I’ve picked up a lot of tools and techniques to make this lifestyle work for me.

Here are my top four tips for freelancers looking to improve their finances and stress less about money.

1. Keep a checking account buffer

Freelance income can be somewhat erratic, depending on your setup and client base. If I wasn’t staying on top of my checking account, where important payments like rent and utilities are deducted, I could easily run into a negative balance. That’s why I have a checking account buffer. It’s an amount that I keep in that account and never have the intention of touching, just in case there’s a delay in payment from a client.

To find your buffer, add your biggest monthly expense plus any other expenses you’d have to pay within the amount of time it would take to transfer money into your checking account

If, for example, your emergency fund is kept in a separate account that would take three business days to transfer money from, you’d want to include any charges that would fall during that time period outside of your largest monthly expense. For example, if your rent is $1,500 a month, and you have a $500 loan payment that’s due a few days before that, your buffer should be $2,000. It’ll give you time to move money around when you need to.

2. Project your annual income

Paying taxes quarterly is, unfortunately, necessary for freelancers. Although tax payments can be painful, you need to know how much money you need to pay to avoid a much bigger headache later on. That means you have to understand how much money you’re likely to earn that year, which can be a difficult task as a freelancer whose income may fluctuate. That’s where tax software comes in handy. Depending on the one you choose, you can take your existing earnings and project those out to understand your annual income as well as your quarterly tax payments to avoid penalties come April.

You should review your tax requirements quarterly. After all, if your situation changes later in the year, that could greatly affect your tax payments. (It’s also worth noting that you can make monthly payments toward your taxes instead of saving those up for each quarterly deadline. Just make sure you write down the dates and amounts so you’ll have an easier time filing.)

3. Save income spikes to weather the lows

A freelancer’s income can fluctuate a lot depending on many factors, including gaining or losing clients, taking time off, and opting to work more. That means when you have a great month and make more than you need, it’s a good idea to save at least some of that extra cash so you’ll have that amount to fall back on for slower months. And, at least in my experience, there are always slower months you can’t quite predict because of external factors, like having a client run out of budget in the third quarter.

Bonus tip: I aim to limit each of my clients to 20% of my income. That way, if I do lose one, I’m not out a huge percentage of my earnings. Plus, I can avoid taking on more debt to stay afloat until I find my next client.

4. Budget a month ahead

Having a freelance business can feel a lot like performing on a trapeze without a net, especially if you’re constantly battling to make sure your monthly expenses are taken care of.

One of the best things I ever did for my personal finances was to make sure the money that was coming in this month wasn’t actually needed until next month. That meant saving up one month’s worth of necessary expenses (which can be added to a checking account buffer). This way, anything that landed in my bank account could be more easily applied to the next month’s expenses, giving me time to make adjustments to my workload if needed.

Freelancing can be complicated — but if done strategically, it can provide financial stability. You just have to know how to leverage this unique style of working to find those opportunities.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

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.

“}]] Read More 

First-time home buyers can withdraw from their IRAs early without penalty. Learn how this could backfire down the road. [[{“value”:”

Money in your IRA accounts serves a special purpose — to help you build a nest egg for retirement. To that end, the IRS gives IRA account holders outstanding tax advantages, such as tax-deferred investment gains and tax deductions on all or part of your contributions. Given these tax benefits, the IRS also imposes steep penalties to those who tap their IRA before age 59 1/2 — a 10% early withdrawal penalty, plus inclusion of that withdrawal into your taxable income.

However, the IRS does allow exceptions to this early withdrawal rule. One is for first-time home buyers. First-time home buyers can withdraw up to $10,000 from their IRAs without penalty. This applies on a per-person basis, too, so a couple could technically tap into $20,000 of their IRAs penalty free. That’s almost a 5% down payment on a $407,600 home — the median existing-home sale price in April 2024, according to the National Association of Realtors.

Dipping into your IRA early to buy your first home might be tempting, especially if you’ve struggling to put aside funds for a down payment, However, it can come with some long-term consequences, which could seriously set back your retirement plans.

Consider the opportunity costs before raiding your IRA

When you withdraw from your IRA early, you’re not only taking the money that’s there. You’re also depriving that money of the chance to grow. In fact, depending on how much you withdraw, you could be leaving hundreds of thousands of dollars on the table.

The money in your IRA will be invested in securities, like stocks or funds. Your portfolio’s lifetime returns will depend on the securities you invest in, but it’s not unreasonable to see average returns of 10% if you stay invested in an S&P 500 fund for a long period. In fact, the stock market has averaged about 10% over the past 50 years (before inflation) as measured by the S&P 500. While the stock market’s returns will swing widely each year, sticking with it for a long period will help you balance out the lows with highs.

Let’s say you’re 35, and you and your partner have $20,000 in two separate IRA accounts. If you were to keep this invested in the stock market, an average annual return of 10% would grow your balance to about $350,000 after 30 years. Under similar conditions, you could grow it to about $562,000 after 35 years, $905,000 after 40 years, and $1.4 million after 45 years. That’s a lot of growth for a relatively small initial deposit, not to mention tax free for those who hold it in an IRA.

If you can, avoid early IRA withdrawals

Of course, no retirement advice is one size fits all. If you already understand the consequences of raiding your IRA accounts, but believe by doing so you will help your financial situation, by all means — do what you think is best for your household.

However, if eagerness is taking precedence over wisdom, if you’re not in the best position to buy a house but really want to be, it might be best to leave the IRA off the table. Even if it means delaying homeownership, it could also mean retiring earlier, something you’ll be grateful for many decades down the road.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

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.

“}]] Read More