Money Management

Investing your tax refund instead of spending it could turn it into a huge sum of money. Read on to learn more. [[{“value”:”

At this point, the 2024 tax season is thankfully in many people’s rearview mirrors. And hopefully, you’ve either gotten your tax refund already or are expecting it to arrive any day now.

As of early May, the average tax refund issued this year was $2,864. That number could still change as late tax returns trickle in, or as people who requested extensions submit their documentation. But all told, the typical refund recipient today is looking at a pretty large sum of money.

If you’re due a refund, you may be inclined to spend that money on something fun. But here’s why investing it could be a much better bet.

Set yourself up with a ton of money

You may be inclined to put your tax refund into a savings account or certificate of deposit (CD), since rates for these products are very favorable right now. That’s not a bad plan if you need money for an emergency fund or if you’re saving up for a short-term goal. But otherwise, investing your tax refund really makes the most sense.

Over the past 50 years, the stock market has delivered an average annual return of 10%. That accounts for years of solid performance as well as extended slumps. If you put a $2,864 refund into the stock market today and leave that money alone for the next 40 years, you could end up with more than $129,000 to your name. That’s a gain of roughly $126,000 without having to lift a finger.

If you’re new to investing, you may be thinking, “How am I going to put together a portfolio of stocks that gives me a 10% return?” Good news — you don’t have to. If buying stocks individually is outside your comfort zone, you can buy shares of an S&P 500 ETF, or exchange-traded fund, instead. That basically means you’re investing in the broad stock market without having to choose certain stocks over others.

READ MORE: Best ETF Brokers

Make sure your near-term needs are taken care of first

Investing your tax refund in stocks could make you very wealthy over time. But before you put that refund into stocks, make certain you’re all set as far as your near-term needs go.

If you don’t have enough money in emergency savings to cover three months of essential bills in the event of a layoff, then you should put your refund into the bank instead of investing it. That way, you won’t be forced into immediate debt should you lose your job or encounter some unplanned expenses your regular paycheck can’t cover.

Similarly, let’s say you have a $2,800 credit card balance hanging over your head with a whopping 24% APY attached to it. For each day you carry that balance forward, you’re racking up more interest. So if you have a $2,864 refund coming your way, you can wipe out that balance and spare yourself the cost and stress of continuing to have interest accrue.

It’s easy to see why you may be inclined to spend your tax refund on something fun. But if you’re set with emergency savings and don’t have high-interest debt in your name, then your best bet is probably to invest that money and enjoy a massive payday down the road.

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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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Costco has long been one of my favorite stores. But an experience in 2020 made me an even more loyal member. Read on to see what happened. [[{“value”:”

At this point, I’ve been shopping at Costco for roughly 18 years (which also means I’ve been living in the suburbs for roughly 18 years — yikes). And while my shopping needs at Costco have evolved throughout the years, it’s long been a favorite store of mine.

One of the reasons I like shopping at Costco so much is the store’s commitment to customer service. When I buy products from Costco, I get the reassurance that if a given purchase doesn’t work out, I’m not out the money.

But a few years ago, Costco really went above and beyond for me on the customer service front. And that only reaffirmed my love of the store.

Helping me through a travel-related snafu

In early 2020, I booked a cruise vacation for my family. It was a trip we’d spent years saving up for, and we booked through Costco Travel because we were able to snag a great deal on the package we wanted.

Well, you can probably imagine what happened next. Just a few weeks after booking our cruise, the world shut down due to COVID-19. And not shockingly, we were informed that our summer vacation was not going to happen.

Now you’d think things would’ve been pretty simple from there. Since our cruise was canceled, we were entitled to a full refund.

But at the time, the cruise industry was in shambles. Cruise lines were overwhelmed with calls from customers wanting their money back, and due to financial constraints, many cruise lines were delaying refunds or paying them out in installments. There was also the concern that some cruise lines would be forced into bankruptcy — and that customers like us would lose our money through no fault of our own.

When I tried calling the cruise line we’d booked with myself to follow up on my refund, I had no luck. I couldn’t reach a live person without waiting on hold for hours. And the one time I did get to speak to someone, I got nowhere. All they could tell me was that they were doing their best to issue refunds and that I’d get my money eventually. When you’re talking about thousands of dollars, that’s not very comforting.

Then I realized I could have Costco intervene on my behalf, so I reached out. Within weeks, I got a call back from a Costco Travel customer service representative saying that my money was on its way and that my refund was being issued in full. They took the time to solve the problem for me so I didn’t have to waste hours, or days, following up. Since back then I was juggling a full-time job and remote learning for my kids, that was a huge source of relief.

A reason to love Costco even more

The experience I had with Costco Travel wasn’t the first positive one in my history of being a Costco member. But it truly made me feel valued as a customer. And from that point on, I pledged to remain a loyal member of the store — even if the cost of doing so increases.

My Executive membership at Costco costs $120 a year. With it, I enjoy savings on a host of products year-round and 2% cash back on my Costco purchases. But I also get the peace of mind of knowing that customer service has my back.

So if you’re on the fence about joining Costco, know that you’re probably not going to have the same customer service experience at any other store. And if you’re thinking of booking travel through Costco, know that it pays to do so not just for the potential savings, but for the help you’ll be privy to should things end up not going your way.

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.

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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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Want to buy an affordable car in 2024? Here are 20 vehicles that score highly when it comes to insurance and fuel costs. [[{“value”:”

The past few years have seen skyrocketing prices for car insurance and many other products and services. But there’s one big sign of hope on the horizon for shoppers: cars are getting cheaper in 2024.

As of April 2024, according to Kelley Blue Book, new car prices were at their lowest levels in two years, and used car prices were down 4% from the previous year. If you’ve been thinking about buying a new (or “new to you”) vehicle this year, you might be car shopping at a good time.

But car insurance and gasoline, along with other costs of car ownership, still aren’t cheap. Before you go to a car dealership, start doing research into the cheapest cars to own.

Let’s look at a few recent reports about the cheapest cars to own — not just based on one day’s sticker price at the dealership lot, but for years to come.

Zutobi’s cheapest cars for car insurance + gas in 2024

Zutobi, a driver’s education platform, recently published its “2024 Cost-Effective Cars Report” with a list of “cheapest cars to run.” Based on the vehicles’ average cost of gas and car insurance for one year, here are Zutobi’s top picks for cheapest cars to own.

Top ten cheapest cars to own: Gasoline plus car insurance

Honda Fit (2018) — $5,348 (one year of car insurance plus fuel)Hyundai Accent — $5,468Honda Civic — $5,480Mini Cooper Convertible — $5,543Toyota Yaris (2020) — $5,615Toyota RAV4 — $5,618Toyota Corolla — $5,627Nissan Rogue — $5,654Honda CR-V — $5,656Subaru Forester — $5,656

Many of these vehicles are small (“subcompact”) models, but some are midsize SUVs like the Toyota RAV4 and Honda CR-V. You don’t have to drive a tiny car to save money on gas and car insurance.

Top ten cheapest electric vehicles: Car insurance plus fuel

What if you want to save even more money on gas, by buying an electric vehicle? Some car shoppers wonder if EVs really save you money compared to a regular gas-powered car. After all, EV prices are sometimes higher than regular cars (although EV prices have been coming down in the past several months).

But you still have to pay for EV car insurance (which can be expensive), and charging your EV is not “free” for most drivers. Unless you live in a home that’s powered 100% by solar panels and you only charge your EV at home or at free public charging stations, you’ll need to spend some money on EV charging.

But if you choose the right EV, you can get cheaper car insurance and reduce your overall costs of ownership. Zutobi’s study found that these 10 EVs have cheaper car insurance and fuel costs than any of the 10 cheapest gas-powered vehicles:

Nissan Leaf — $3,626 (one year of EV charging costs plus EV car insurance)Ford Mustang Mach E — $3,626Hyundai Kona Electric — $3,641Chevrolet Bolt EUV — $3,654Hyundai Ioniq 5 — $3,694Audi Q4 e-tron — $3,830Tesla Model Y — $4,247Tesla Model 3 — $4,432Porsche Taycan 4 — $4,582Tesla Model S — $5,318

On average, the 10 cheapest EVs cost about $4,065 per year ($339 per month) to charge and buy car insurance, vs. $5,567 per year ($464) for fueling and insuring gas-powered cars. That’s an annual savings of $1,502.

Saving money on car insurance and gas is good. But if you want to know the total cost of car ownership of an EV or any other car, you have to look at the purchase price, the depreciation (how much the value of the car decreases after you buy it), and other costs like financing (if you get an auto loan), maintenance, and repairs.

There’s a free website that can help you with that: Kelley Blue Book (kbb.com).

Kelley Blue Book five-year cost to own

The best way to understand which are the cheapest cars to own is to look at the total picture of car ownership costs over several years. Hopefully, you’re going to drive your newly-purchased car for at least a few years, and during that time there will be several costs: car insurance, depreciation, and more.

Kelley Blue Book publishes annual research on this. Check out the latest Kelley Blue Book “5-Year Cost to Own” data for a breakdown of various cars, SUVs, trucks, and auto brands that score highly for low cost of ownership.

Bottom line

Before you shop for a car, consider the total cost of car ownership — not just for a monthly payment or for one year of car insurance, but for several years into the future. The cheapest EVs can save you money on gas, but your total cost of ownership might be lower with a hybrid car. Use Kelley Blue Book (kbb.com) for detailed research on car prices and to see which auto brands and models rank highest as long-term cheap cars to own.

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

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Costco offers great deals on apparel. But read on to see why now’s not necessarily a great time to buy summer clothing. [[{“value”:”

Although many people primarily use Costco as a source of low-cost groceries and household essentials, the warehouse club giant sells a host of products, from electronics to toys to bedding. You may even decide to stock up on children’s clothing at Costco due to the great deals it offers.

Meanwhile, as summer approaches, you may be eager to load up on things like shorts, swimwear, and more for your kids. Right now, Costco has a number of great deals going on kids’ clothing, including:

A Lands’ End two-piece swim bottom and rash guard set for $14.99A Speedo one-piece swimsuit for $14.99A Pekkle Kids four-pack of shorts for $16.99A two-pack of Adidas youth t-shirts for $21.99

But while you may be inclined to buy your summer clothing now, waiting could pay off big time. Here’s why.

You may pay a lot less after the season

As is the case with many retail establishments, at Costco, you can often save money on apparel by buying it after the season it’s meant for has passed. So if you wait until later in the summer or the very beginning of fall to buy summer clothing for your kids at Costco (or elsewhere), you may find it marked down considerably.

Of course, you may be thinking, “But if I wait until after the summer to buy clothes for my kids, they won’t have enough stuff in the coming weeks.” And that’s valid. But there may be ways to get your hands on the items you need for the upcoming summer without to breaking the bank.

How to stock up for summer affordably

The frustrating thing about spending money on kids’ clothing is that they tend to outgrow it fairly quickly. It’s one thing to invest in a quality pair of jeans that might last you, as an adult, a good number of years. It’s another thing to plunk down $25 for a pair of kids’ jeans that may not even last nine months before your child requires the next size up.

That’s why you may want to limit what you spend on clothing for your kids. But if you need more items for the coming summer, here are some low-cost (or free) ways to get them.

Shop at secondhand stores or thrift shops. Many of the items you’ll find in these stores are perfectly good quality and stain-free.Ask friends and neighbors for hand-me-downs, or post on your town’s social media page and see if any local parents have items in your kids’ sizes they’re looking to clear out.Convert outgrown pants to shorts. If you’re handy and have access to a sewing machine, this is a great way to salvage pants your child can’t wear anymore anyway.

The cost of clothing for kids can eat into your budget even if you’re buying it from an inexpensive retailer like Costco. So it’s best to do what you can to save as much as possible.

If you do decide to buy summer clothing at Costco in the coming weeks, aim to make your purchases at a store rather than online. You’ll often get a lower price when you shop in person.

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.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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Airfare can be expensive. Read on to see how you can save thanks to Costco. [[{“value”:”

Traveling by airplane has the potential to be an expensive prospect. Just the other day, I was looking at flights from the NYC area to Austin, Texas, for a random Tuesday in July, and lo and behold, my cheapest option was almost $800 for a round-trip. No thanks.

Now, the good news is that there are steps you can take to save money on airfare. These include:

Traveling at off-peak timesUsing travel reward credit cards that include perks like free checked bagsCashing in air milesSnagging a generous credit card sign-up bonus

But if you’re a Costco member and you tend to fly with Southwest Airlines pretty often, there’s a money-saving deal available right now that you do not want to pass up.

Instant savings on your next flight

Costco is well-known for its selection of bulk groceries and household essentials. And there can be some huge savings by stocking up on things like paper towels, pantry staples, and produce.

But one area where you can really save big at Costco is gift cards. Costco sells gift cards below their face value, so there’s always a good deal to be had — it’s just a matter of how much of a good deal you’re talking about.

Meanwhile, right now, Costco is selling a $500 Southwest Airlines electronic gift card for $449.99. So if you’re planning to fly Southwest, it pays to snag this deal while it’s available, because you’re guaranteed to shave $50 off of the cost of your flight.

Of course, there are some rules to follow. First, this gift card is not refundable, so before you buy it, make sure you can really use it. You should also know that a maximum of three Southwest Airlines gift cards can be applied per passenger on each reservation.

Also, Costco members are limited to five of these gift cards maximum. And while that’s a lot of money to shell out, you could also save yourself $250 on future flights. Since these gift cards don’t expire, if you can afford to lay out the money, it could make sense to load up.

Other ways to save as a Southwest passenger

Costco’s gift card offer is a great deal if you fly Southwest a lot. In fact, it might pay to get a membership for the express purpose of snagging this deal. If you pay $60 for a basic membership but buy two $500 gift cards for $450 apiece, you’ll more than make up your membership fee.

If you’re not a Costco member, you can use Southwest’s Low Fare Calendar to see which flights in the coming weeks are most competitively priced. This makes a lot of sense if you have flexibility in your schedule.

You can also forgo Southwest’s Earlybird Check-In, which gives you an earlier boarding position and a better chance to snag the seat you want. For a short flight, getting stuck in a lousy seat may not be such a big deal, and it could shave a little money off of your costs.

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.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool recommends Southwest Airlines. The Motley Fool has a disclosure policy.

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Both can be good options for your money. Read on to find out why savings accounts may have the advantage. [[{“value”:”

There’s an ongoing debate these days about whether it’s better to put your money into a certificate of deposit (CD) or a high-yield savings account. Let me say right off the bat that you probably can’t go too wrong with either choice.

Both accounts offer a high annual percentage yield (APY) and are FDIC insured, making them safe places to keep cash.

But there are some key differences. Let’s take a look at a few of them, and why I personally think high-yield savings accounts are better for most people.

Why CDs make sense

There’s a strong case for high-yield CDs. Many of them have APYs of 5.00% or higher, and you can choose a term length that suits you, like 12 months or even several years (though right now, generally the longer the term you choose, the lower the APY you’ll be able to snag).

Here are some of the benefits of CDs:

The APY rate is fixed for the length of the CDYou can choose how long your CD term length isAs long as you leave your money in the account, your returns are guaranteed

Those are significant benefits of CDs, but they come with a few caveats. First, you’ll only earn the full APY if you leave your money in the CD for the entire term length. Take it out early, and you could face a penalty of 90 days of simple interest for CDs under two years or 180 days of interest for CDs with longer terms.

Paying a penalty effectively lowers your APY. For example, let’s assume you put $5,000 into a 12-month CD that pays a 5.00% APY but then withdraw the money early for a house repair. You’d pay about $60 in penalties, and your effective APY would drop to 2.50%.

The second drawback is that your money is locked away for a set time. This rigid approach to money management doesn’t exactly align with life’s ups and downs and the unexpected financial expenses that come with them.

Still, if you can commit to locking up your money in a CD for the entire term, earning a guaranteed APY is a good option for some people.

Why a high-yield savings account makes sense

Like with CDs, there are some good reasons to choose a high-yield savings account. Here are some of the best ones:

They don’t have term lengthsThere aren’t any fees for taking your money outYou can withdraw or add money as you please

All of the above benefits share one thing in common: flexibility. High-yield savings accounts are a popular option because there are few to no restrictions on how much you can put into the account, how much you can withdraw, or when you can access it.

But there are some disadvantages, too. Namely, a high-yield savings account’s APY can change. If the Federal Reserve lowers interest rates later this year, your account’s APY could fall along with it.

Still, a savings account’s flexibility, paired with its high yield, make it a fantastic option for most people.

I think savings accounts are a better choice

I’ve tried to make the case for CDs and savings accounts here, but at the end of the day, I’d choose the savings account almost every time.

I personally think most people will benefit from the flexibility. Life happens, and most people can’t afford to have thousands of dollars tied up for any extended period.

Sure, a CD guarantees your rate, but that benefit is lost if you use the CD for an emergency expense, like a home or car repair. That’s why I think a high-yield savings account works best for most people. So, trade some potential APY adjustments for a whole lot of financial flexibility and get yourself a high-yield savings account.

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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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