Money Management

The stock market trounced CDs in recent years. Read on to find out the best place to put your money and when. [[{“value”:”

There are many great options for investors looking to earn money. One option that’s gained in popularity lately is opening a certificate of deposit (CD). Some CD rates pay annual percentage yields (APYs) of more than 5%, but is a CD the best place to grow your money? Probably not.

Here’s how much a 5% CD would have earned you over the past two years compared to the stock market’s gains.

The stock market trounced CDs

Let’s assume that two years ago, you put $5,000 into CD earning 5% APY, and another $5,000 went into your brokerage account to buy a low-cost index fund that tracked the S&P 500. Here’s what your earnings would like from both of those investments:

Two-year earnings from CD: $512.50Two-year earnings from S&P 500: $1,662.93

In short, investing in the stock market would have earned you three times more money over the past two years. This is based on an index fund that tracked the S&P 500 over the past two years, with a total gain of about 30% since May 2022, including stock dividends.

Of course, this is just one example of the market’s past performance. But in general, it shows the massive earnings potential of investing in stocks versus CDs.

While owning stocks always comes with some uncertainty, the historic annual rate of return for the S&P 500 since its inception in 1957 is about 10.2%. If you’re patient and have time to let your money grow, there are no investments comparable to stocks for earning potential.

The downside to investing in stocks

Stock values tend to be volatile. For example, the same index fund that gained nearly 30% over the past two years was down by more than 18% in 2022. That means that if you had invested your money in May 2022, you would have needed a lot of patience to see your investment begin to grow.

This is one of the key reasons why some people choose a CD. CDs can be a great option if you’re looking for a (mostly) guaranteed return without the risk.

If you leave your money in the CD for the entire term, you’ll earn the advertised APY. However, if you take your money out early, you’ll usually be charged 90 days of simple interest on CDs with terms of two years or less. The penalty fee increases to 180 days of simple interest on CD terms longer than two years.

How to decide between stocks or a CD

One way to decide between these options is to ask yourself two questions:

What’s my investment timeframe?What’s the goal for my money?

If you’re 20 years away from retirement, stocks are probably the best place for your money because you have a long investment timeframe. With that amount of time, you’ll be able to ride out the market’s volatility and likely see your investment make significant (though not guaranteed!) gains.

On the other hand, if you’re currently retired and just want some of your money to outpace the inflation rate, then a CD is probably a better choice. You can earn a guaranteed rate (as long as you keep your money in the CD for the entire term) and get all of your money back at the end of the term.

Everyone’s investing goals and timeframes are different, so weighing all options before deciding is a good idea. And if you’re going to take a while choosing, open a high-yield savings account and throw your money in there first. You’ll have easy access to it when you want it, and many of these accounts will pay you 5% interest right now while you’re mulling over your decision.

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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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Teslas can be a good EV option for some drivers. Read on to learn how to save big on your next electrified ride. [[{“value”:”

Sales of electric vehicles have spiked over the past few years. New model releases and the expansion of charging networks are helping to entice first-time EV buyers.

Teslas are still among the some of most in-demand electric vehicles (EVs). However, EV prices have gone up significantly over the past few years, so how can you save money on a purchase? Here are three ways to trim $7,500 off your Tesla purchase.

1. Get the full tax credit

The IRS’s EV tax credit is the easiest way to save $7,500 on your Tesla purchase. The credit can be applied instantly to the price of eligible Teslas (more on that below), saving you up to $7,500 off the purchase price.

To be eligible for the tax credit, your modified adjusted gross income (AGI) can’t exceed $300,000 for married couples, $225,000 for heads of household, or $150,000 for all other tax filers.

There are also restrictions on which EVs meet the tax credit requirements. Here’s which Tesla models are currently eligible for the entire $7,500 credit:

2024 Tesla Model 3 Performance2024 Tesla Model Y2024 Model X

2. Buy a used Tesla

Used Teslas are cheaper than ever. The car shopping platform CoPilot says the average cost of a used Tesla is down 36% from last year to $31,800. That means buying a used Tesla right now costs about $17,900 less.

You can lower your used Tesla price even further by taking advantage of the IRS’s used EV tax credit. The IRS offers tax credits for 30% of the cost of a used EV up to $4,000.

Not all used Teslas qualify for the credit, but the ones that do need to meet these requirements:

The vehicle must be purchased from a dealerThe sales sale price has to be $25,000 or lessThe model year must be two years prior to the current calendar year

I did a quick search on Carvana and found plenty of used Teslas that matched the used EV tax credit criteria. After factoring in the credit, the sales price of at least one used Tesla Model S would be about $19,590.

3. Repair and maintenance costs

Consumer Reports recently compared the maintenance and repair costs of more than 30 car companies and found that Tesla ranked first as the least expensive to maintain. Maintenance and repairs cost just $580 for the first year and totaled only $4,035 over 10 years.

On the other hand, many luxury vehicles had some of the highest repair and maintenance costs. If you bought a Tesla rather than a vehicle from a top luxury brand, you could potentially save more than $7,500 over 10 years.

Here are five luxury car brands’ maintenance and repair costs over 10 years, and how much more expensive their costs are compared to owning a Tesla:

BMW: $9,500 ($5,465 more expensive)Audi: $9,890 ($5,855 more expensive)Mercedes-Benz: $10,525 ($6,490 more expensive)Porsche: $14,090 ($10,055 more expensive)Land Rover: $19,250 ($15,215 more expensive)

One more way to save money on a Tesla

While choosing the right Tesla model at a price you can afford is the most important part of the car-buying process, the next step could save you thousands of dollars in the long run: Buying car insurance.

EV insurance generally costs more than insurance for gas-powered vehicles because of their expensive battery packs and added complexity for electrical system repairs. Unfortunately, Teslas are some of the most expensive electric vehicles to insure.

That’s why it’s important to shop around and compare rates from different companies when buying EV car insurance. Considering that you’re on the hunt for a Tesla bargain anyway, you might want to consider getting a few quotes for cheap car insurance while looking for deals.

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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.Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.

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There’s a simple formula you can use to determine whether an Executive membership at Costco makes sense. Here’s what you need to know. [[{“value”:”

Some people join Costco for the savings on groceries and household essentials. Others join Costco to save big on one-off purchases, like laptops, furniture, and appliances.

Costco currently offers two membership tiers. The basic tier costs $60 a year, while the Executive membership costs $120 a year.

At first, you might think that it’s silly to pay double for a Costco membership. But you should know that the Executive membership gives you 2% cash back on your Costco purchases. So if you do enough shopping, the Executive membership makes sense. In fact, there’s a super-easy way to calculate whether an Executive membership at Costco is right for you.

Will you spend more than $3,000 a year at Costco?

If you typically spend more than $3,000 a year on Costco purchases, or if you anticipate spending more than $3,000, then you should keep or upgrade to an Executive membership. Why is $3,000 the magic number? It’s simple.

The cost to upgrade from a basic Costco membership to an Executive membership is $60. And $60 is 2% of $3,000. So if you spend exactly $3,000 at Costco during the year, you’ll get exactly $60 back, which pays for your Executive membership upgrade — only then you’ve shelled out the extra money upfront. But once your spending exceeds $3,000, the Executive membership pays off.

Granted, if you only spend $3,100 a year at Costco, your financial upside with the Executive membership will be limited. In that case, you’re getting $62 back, which means that when you subtract the $60 upgrade cost, you’re benefiting to the tune of a whopping $2. (Granted, that $2 is enough to buy you a hot dog and soda combo from the Costco food court and bring home some change, but still.)

However, let’s say you spend $4,000 a year at Costco. Your Executive membership will give you $80 back, so you’re coming out ahead $20. That could help buy groceries for the week or simply give you a little extra spending money.

Think about larger purchases when making your choice

If you’re someone who shops at Costco every week, then there’s a good chance an Executive membership will make financial sense. If your Costco visits are less frequent, you may need to crunch the numbers more carefully to determine whether you’re likely to exceed $3,000 in spending for the year.

But in the course of running those numbers, keep larger purchases on your radar, since some of the ones on your list may be items you can turn to Costco for. You may, for example, be looking to replace your patio furniture in the coming year. Buying a $1,000 set from Costco makes it more likely that you’ll end up spending more than $3,000.

Similarly, if you’re planning a vacation, you may decide to use a Costco travel package. That could potentially push you over the $3,000 threshold alone.

It’s good to know how much spending it takes to make an Executive membership at Costco worth the money. But also, don’t stress the decision too much.

If you don’t end up spending enough to make back your $60 upgrade fee, you can downgrade to a basic membership and Costco will refund you the difference to make you whole on that $60. So don’t sweat it if your initial calculations end up being a bit off.

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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Having multiple bank accounts has advantages, like increased FDIC insurance coverage, but also comes with risks. Learn how to open multiple accounts wisely. [[{“value”:”

Opening a new bank account has never been simpler, with online and mobile applications putting it at your fingertips. The ease of opening new accounts, coupled with generous bank offers and higher APYs, might make you wonder how many accounts you should reasonably maintain. After all, when you open a new account, you disclose sensitive information, like your Social Security number. At what point are you spreading yourself too thin by having accounts at multiple institutions?

Truth is, having multiple bank accounts could either distribute risk or increase it, depending on how well you can manage your accounts simultaneously. If you’re thinking about maintaining multiple accounts, let’s take a look at how you can do it prudently.

The pros of having multiple bank accounts

Having multiple bank accounts can help you manage your finances, capture great interest rates, increase accessibility to your funds, and help you separate financial goals. At the very least, splitting your finances into a savings and checking account will earmark your money from the start for either monthly spending or ongoing savings. This gives your money purpose and could prevent you from digging into your savings at a time when you don’t need to use it.

Of course, when we talk about multiple bank accounts, we’re often referring to having similar accounts at different banks, such as two or three high-yield savings accounts. This, too, can help you manage your money, especially if you give each account a purpose. For example, my household uses one savings account for our emergency fund, another savings account for traveling, and a third savings account as a collect-all for other purchases (like surfboards or online classes).

We could keep these accounts at one bank. Some banks, in fact, let you open multiple savings accounts for free and designate them with whatever purpose you want. But we don’t do this because we want different features for each account, features that not one bank offers all at once. For example, our emergency fund is at a big national bank with lots of ATMs, which gives us peace of mind knowing we can withdraw money whenever we need it. Our travel fund is in an online savings account with a 5.25% APY, while the third is also an online savings account, but at an institution that gave us a welcome bonus for opening it.

Another advantage to having multiple accounts is to increase your FDIC or NCUA insurance. These two agencies will insure up to $250,000 per depositor, per eligible account. If you have, say, $500,000, dividing it evenly across two accounts would guarantee the full amount of your savings is returned to you should both banks fail.

The cons of having multiple bank accounts

The hardest part of having multiple accounts is keeping track of them. This is especially true if you have two or more accounts at different financial institutions. While banking apps make it easy to check your accounts on your phone, it’s not always feasible to check accounts daily. This difficulty is compounded if you don’t save log-in credentials automatically, as you’ll have to remember different usernames and corresponding passwords for each account.

Another downside is increased risk of fraud. By spreading your money across multiple institutions, you could increase the chance of a compromised account. Though it’s rare, it’s certainly not to be taken lightly. Additionally, if these accounts have monthly service fees, you might be better off consolidating into one to reduce the cost or meet requirements to waive the fee.

If you do end up choosing to open multiple accounts, a budgeting app could help you manage them all efficiently. Many budgeting apps let you consolidate bank accounts into one central hub, allowing you to monitor transactions, avoid overdrafts, and stay on top of suspicious activity. Check out our list of best budgeting apps, or choose a bank that lets you link external accounts to its mobile app, like U.S. Bank.

On the whole, having multiple bank accounts can help you combine the best features of different accounts, while also covering more of your savings with FDIC or NCUA insurance. The downside is that having too many accounts at once could lead to mismanagement or open you up to a compromise of sensitive information. It’s not a bad idea to have more than one bank account, just be sure you manage them together and don’t neglect one for a long 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.The Motley Fool has positions in and recommends U.S. Bancorp. The Motley Fool has a disclosure policy.

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I cut my homeowners insurance bill by 25%. Check out some shopping tips you can use to save, too. [[{“value”:”

If you’ve noticed your homeowners insurance premiums rising in recent years, you aren’t alone. The average homeowners insurance premium in the United States increased by more than 11% in 2023, according to S&P Global, and this is on top of an above-average increase in 2022. In some states, the increases have been far greater.

Many homeowners rarely shop around for coverage after they obtain a policy. I’m guilty of this myself, assuming the recent rate increases I’ve seen have been simply a result of market conditions. But my hand was recently forced, as the homeowners insurance provider I’ve been using since I bought a house in Central Florida in 2021 decided it would no longer offer coverage in the Sunshine State.

To put it mildly, I had a case of reverse sticker shock when I obtained some new quotes. Here’s how much I was able to save on my homeowners insurance premium by obtaining a new policy and some steps you can take if you haven’t shopped for insurance in quite some time.

Here’s how much I saved by switching

I won’t keep you in suspense. For my policy that ran from May 2023 until just recently, my annual premium was $4,230. My new policy, which just went into effect this month, has the exact same level of coverage and deductibles, and has a premium of $3,189. That’s an annual savings of $1,041, which is 25% less than my old premium.

Like most lenders, mine only conducts an escrow analysis once a year, and mine happened a few months ago, so this won’t result in immediate savings. But when my annual escrow review happens in 2025, I should get a one-time rebate since I’m currently making payments based on my old premium, a lower monthly mortgage payment, or (ideally) both.

Tips to get the best deal on your homeowners insurance

By far, the number one way to (potentially) save money on homeowners insurance is to shop around. It’s relatively easy to obtain quotes from the best home insurance companies, and you might be surprised at how much you can save. Yes, the switching process can be a bit of a hassle (you have to let your mortgage lender know, for example, since it’s typically paid by escrow), but if you can save hundreds or even thousands of dollars per year on your insurance, it can be well worth it.

Another tip is to periodically review your coverage and deductibles. Now, it’s never a good idea to skimp on coverage, but it can be a good idea to review your policy to make sure you aren’t paying for too much. And if your deductible is relatively low, raising it to a higher (but still affordable) level can result in significant savings.

The bottom line

To be clear, I’m not saying that you should necessarily shop around for homeowners insurance every year when your policy is getting set to renew. But every so often, it can be worth the time it takes to get a couple of quotes to make sure the rate you’re paying is appropriate for the coverage you need.

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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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Are you planning to book an economy class flight soon? Don’t settle for any airline. Find out which airlines offer the best economy class experience. [[{“value”:”

Traveling is a lot of fun, but some expenses, like airfare, can take up a significant portion of your vacation budget. You can better honor your budget by opting for economy class tickets. But which airlines are best for flying in coach? Let’s take a closer look at the top airlines for economy class.

Best airline for value: Southwest Airlines

Southwest is known for charging minimal fees, which can be a win if you’re a traveler who books economy class airfare tickets. The airline doesn’t charge change or cancellation fees as long as you cancel your flight at least 10 minutes before the scheduled departure.

Southwest also allows every flier to bring two checked bags for free. Extra bag fees can add up, especially when traveling with companions. These additional perks can provide value to travelers.

Here’s one pro tip I’d like to share if you’re working with a limited budget: Try to buy your airfare during one of Southwest’s sales. The carrier runs sales several times a year. This strategic move could help you keep more money in your checking account.

Best airline for basic economy: American Airlines

Basic economy tickets are the most affordable economy tickets available. However, this fare has more restrictions. However, it can be a great option if you need to buy airfare without racking up an expensive credit card bill.

American Airlines is the winner for this category. Compared to other U.S.-based airlines, the carrier includes more perks with its basic economy fare. For example, you can bring a personal item and a carry-on bag. United fliers with a basic economy ticket can’t bring a carry-on bag for free on most domestic routes.

Finally, you can earn AAdvantage miles when flying on a basic economy ticket. You’ll earn fewer miles than flying on a main cabin ticket, but will still get rewarded. Review the restrictions before booking basic economy tickets with American Airlines for the best success.

Best airline for seat comfort when flying economy: JetBlue Airways

Flying on an economy ticket is almost always more affordable than flying on a premium-class ticket. But it’s not exactly the most comfortable experience. But if you’re selective about which airline you fly with, you can improve your comfort and overall travel experience.

When comparing U.S.-based carriers, JetBlue stands out as a winner in terms of seat comfort. The airline offers basic economy tickets (Blue Basic) and economy tickets (Blue), so there are options for low-cost fares.

A recent study from Upgraded Points found that JetBlue has an average seat pitch of 32.3 inches — earning a top spot above all other major U.S. carriers. The exact seat pitch and legroom vary by plane, so you’ll want to review these details before you book a ticket. The tool aeroLOPA is excellent for viewing accurate seat maps for each carrier’s fleet.

JetBlue has Even More Space seats available for an additional fee if you want to improve your comfort more by selecting a seat with more legroom — up to 38 inches. But only upgrade your seat if it fits your budget. It’s not worthwhile to go into debt for more legroom.

Consider your needs and budget before buying airfare

If you need to buy airfare for an upcoming trip, booking economy class is an excellent strategy to avoid overspending. However, keep in mind that not all airlines are created equal.

Some airlines may be a better choice if you prefer a value-packed experience or greater comfort. Consider your budget and travel needs before booking a flight so you can choose an ideal airline. It’s also smart to carefully review the terms before booking a ticket.

Consider the best payment method to use at checkout, too. Using one of the best travel credit cards could allow you to earn valuable rewards on your spending. You can redeem your rewards for nearly free travel in the future.

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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.Natasha Gabrielle has no position in any of the stocks mentioned. The Motley Fool recommends Southwest Airlines. The Motley Fool has a disclosure policy.

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