Money Management

The best CDs earn you half of what the stock market offers. Find out whether you should invest in the market instead. [[{“value”:”

Interest rates are higher than they’ve been in years. There’s no guarantee they’ll remain elevated for long — which is what makes certificates of deposits (CDs) such popular investments right now. A CD locks in rates. Even if rates plummet overall, you get high returns for up to five years.

But there’s a catch. The best CDs right now offer as much as 5.00% APY. That’s over 10 times better than the current average savings account APY of 0.46%. But when you take a step back and look at alternatives, a 5.00% APY still underperforms other investment types.

Chances are, you won’t get rich by investing in CDs. The question is, is 5.00% good enough, or should you put your money elsewhere?

CDs benefit retirees, short-term savings, and diversified portfolios

CDs won’t make you rich, but they can lock in safe returns. Say you’re a retiree with $50,000 to invest. If you put $50,000 into a 1-year CD with a 5.00% APY, you’d have $2,500 more when your CD term expires, even if rates have gone down since.

CDs are safe places to store short-term savings. The Federal Deposit Insurance Corporation (FDIC) insures most CDs for $250,000 per accountholder per bank, so the U.S. government has your back even if your bank goes bankrupt or otherwise fails.

While CDs don’t earn much by themselves, it’s totally reasonable to include them in a diversified portfolio. Even if you plan on investing for another 30 years, putting some of your money in a CD can provide you with peace of mind when the stock market goes wild.

Put your money in alternatives to earn the highest returns

Two profitable alternatives to certificates of deposit are the stock market and real estate.

The stock market has returned an average of 10% per year over the last 50 years. Historically, it’s performed better than the highest-earning CDs today. The catch is diversified portfolios typically perform the best, and they do so over decade-long periods. It takes time to profit from stock investments.

The real estate market has offered strong historical returns. Real estate investment trusts (REITs) have returned an average of 12.7% annually from 1972 to 2023. That beats the stock market handily over 20- and 50-year periods. It’s worth looking into to earn the highest returns.

CDs vs. the stock market over ten years

Let’s compare CD vs. stock market returns over 10 years. Here’s what you would earn:

You can earn much more from the stock market than from CDs. The catch is that growth isn’t steady. Some years are choppy, and you may be tempted to panic sell. Panic selling is bad; you typically lose money, and the stock market has historically recovered from losses.

If you can stomach this kind of volatility, it may be worth looking into online stock brokers. Many will let you buy stocks without paying fees. You can easily diversify your investments by tossing money into the S&P 500.

If volatility makes you queasy or stability for the short term is a priority, a CD with a high rate could be a great investment. Avoid the stock market and invest in alternatives. You’ll be glad you did.

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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.Cole Tretheway has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Increasing your credit limits can help your credit score. Learn the best way to boost your cards’ limits. [[{“value”:”

A credit limit is the maximum you can borrow on a credit card. For example, if your credit card has a credit limit of $5,000, you could borrow up to that amount, but no higher. While credit limits are assigned upfront when you’re approved for a new card, you might have good reasons to want to increase them, such as when planning for a large purchase. Likewise, since credit utilization makes up a large chunk of your credit score, increasing your total credit limits could also help your credit score.

While sometimes credit card companies automatically increase your credit limits as a reward for paying your bills on time, you could initiate the process yourself. It’s actually pretty simple, but its success might depend on one important factor — your household income.

Annual income plays a vital role in your card’s credit limits

Credit card companies generally give increased credit limits to users who they deem low risk. If you use your credit card frequently and pay your bills in full and on time, a credit card company might not mind letting you borrow more, since you’ve proven you can pay it back. But if you’ve missed a few payments in the past, the same company might feel hesitant to grant your request for higher limits, especially if you’re currently carrying a large balance.

That said, one way to improve the chances of getting a credit limit increase is to have undergone a change to your annual income. If it’s been a few years since you’ve applied for your credit card, your annual income may have increased significantly without any corresponding change to your credit limits. Unless you inform your credit card company of your new income level, it might not even be aware that it has increased.

If that’s the case, getting a credit limit increase might be as simple as updating the salary on your credit card account. You can typically do this online or within the card issuer’s mobile app. In fact, I’ve requested credit limit increases on all three of my credit cards within their mobile apps and was granted approval instantly. If you can’t request a credit limit increase online, you could also call your credit card company and ask for an increase over the phone.

A new credit card might come with increased limits

Another way to increase your overall credit limits is to apply for a new credit card. While this will result in a hard inquiry on your credit report, your credit score could still benefit if your credit utilization subsequently improves. You might even want to check out the best high limit credit cards to see if you qualify for higher-than average limits.

All in all, if your annual income has increased and your housing or rent payment has stayed the same, you have a good chance of getting a credit limit increase. Either way, it doesn’t hurt to try it. Look at your card’s mobile app to see if you can do this instantly or call the number on the back of your card to start the process over the phone.

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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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Want to save more money, make smarter investments, or get out of debt? See which types of financial advice are most in-demand from Gen Z — and where to get it. [[{“value”:”

Every generation of young adults has to deal with a lot of big changes in their lives as they start careers, pay bills, and enter the “real world” of adulthood. Gen Z is the youngest generation in the workforce today, and they are facing a few special challenges. This generation has been hit hard by COVID-19, rising interest rates, and high housing costs, and often feels gloomy about their future prospects to save enough money to retire.

But the good news is: Gen Zers are also getting proactive about looking for good financial advice and information. A recent survey from Citizens Bank showed which types of financial advice are most in-demand from Gen Zers.

Let’s look at which financial advice Gen Z wants most — and how to get it.

1. Budgeting advice (55% of Gen Z)

The Citizens Bank survey found that 55% of Gen Zers would like to get budgeting advice to help meet their financial goals. Some young people are getting budgeting ideas and inspiration from TikTok and other social media, like the much-discussed “loud budgeting” trend.

TikTok budgeting advice is actually pretty useful sometimes. But another idea for easy budgeting help is to sign up for a budgeting app. The best budgeting apps can help you easily track your spending, see where your money goes, and make better-informed decisions about how to spend and save.

2. Investment advice (52% of Gen Z)

If you’re already saving for retirement, you might wonder how to invest your 401(k) money. More than half (52%) of Gen Zers surveyed said they would like to get investment advice. Investing can be complicated and risky. This is one area in particular where you should beware of the advice you see on TikTok. If someone in a viral video is giving you aggressive sales pitches for buying stocks, that’s not likely going to be a winning plan for your long-term wealth.

Where should Gen Z look for investment advice? Start by keeping it simple. If you’re in the early stages of your career and don’t have much money saved yet for retirement, that’s OK! Use a target date retirement fund (if you have access to one) to invest automatically in a diversified mix of stocks and bonds based on your age.

If you have enough money invested to afford financial advisory services, look for a fiduciary financial advisor like a Certified Financial PlannerTM. “Fiduciary” means that these people are not just selling you something — they have a professional ethical standard to act in your financial best interest. Some major brokerages, robo-advisors, and investment firms also offer low-cost access to financial advisors.

3. Managing spending habits (50% of Gen Z)

In a time of high inflation, at a stage of life when it’s fun and important to go out and spend time with friends, Gen Zers often feel pressured to spend “too much” on socializing, restaurant meals, and expensive travel. Half of Gen Zers surveyed said they would love to get financial advice for managing their spending habits. This Gen Z urge to control their spending can also be seen in the “cash stuffing” trend on TikTok.

But you don’t have to shift to a cash-only lifestyle to manage your spending. Another option is to use banks that offer special sub-accounts for saving and spending goals. Ally Bank has “spending buckets” so you can move money within your checking account for specific purposes. SoFi Checking and Savings accounts also offer a similar feature called “Vaults.”

It feels good to know you have enough money ready to spend on a vacation, your monthly rent or car payment, or any other purpose. This can help you spend more confidently — and save along the way.

4. Savings analysis (44% of Gen Z)

44% of Gen Zers told Citizens Bank they would love to see advice about “savings analysis.” Knowing how much to save (and if you’re on track for big goals) can be empowering! Do any of these savings questions sound familiar to you?

“Am I saving enough for retirement?””How long until I have enough saved for a vacation?””If I save $75 more per month, how much will I have in two years?”

Some banks, like Ally, offer free smart savings tools to help you calculate and visualize your savings progress. The best budgeting apps can also help you allocate money toward specific financial goals. Or you can use The Motley Fool’s Foolish Calculators to see how your savings can grow — for an emergency fund or retirement.

5. Debt management advice (33%)

Many young adults are at the very early days of their working lives and not yet making much money. When you’re young, it can be all too easy to overextend financially and end up with credit card debt. Debt management advice was mentioned by 33% of Gen Zers in the survey as a type of financial help they would love to get.

One of the best ways to get out of credit card debt is to use a debt payoff app. These apps can show you how much you’re spending, how to find more room in your budget to put extra money towards paying off debt, and which debt payoff strategy to use to accelerate your progress.

If you’re in serious debt and having trouble making payments, you might need a higher level of help. Consider talking with a nonprofit credit counseling agency.

Bottom line

It’s good that Gen Zers are reaching out for financial advice. There are many useful budgeting apps, built-in bank account features, and reputable services available to help you save, invest, and spend more wisely.

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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.Citigroup is an advertising partner of The Ascent, a Motley Fool company. Ally is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy.

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Shopping for a new car in 2024? You can get a big discount with new (or used) EV tax credits. See a few other perks of owning an EV instead of a hybrid. [[{“value”:”

If you’re shopping for a new car in 2024, you might be interested in comparing the benefits of electric vehicles (EVs) vs. hybrid cars. Electric vehicles have been hyped and criticized recently, with some people feeling that EVs are overpriced or too hard to charge. Other people might have heard of EV tax credits, but feel skeptical that they can actually qualify. Some people might have range anxiety about EV batteries, and prefer to buy a hybrid car they can refuel at any gas station.

Let’s cut through the fog of misunderstanding. It’s true that hybrid cars can be cheaper than EVs, and they run on simple old-fashioned gasoline. But owning an EV over a hybrid can give you a few special perks that not everyone might realize.

Here are a few reasons to buy an EV instead of a hybrid car.

1. You can cut your carbon emissions by 78%

The world is getting hotter. Weather patterns are becoming more extreme, from wildfires to hurricanes to deadly heat waves. If you want to fight climate change, owning an EV over a hybrid can help strike the biggest blow against carbon emissions.

According to U.S. Department of Energy data, owning an all-electric vehicle (EV) will reduce the carbon emissions of your driving by 78% compared to a regular gas-powered car. Owning a hybrid is also a good move for the climate, as it reduces your carbon emissions by 45% compared to a standard car. But owning an EV is an even bigger, stronger statement about how willing you are to do your part to fight climate change.

2. EV tax credits (new or used) are easy to get

Hybrid cars don’t qualify for EV tax credits. But if you buy a fully electric vehicle (EV), or a plug-in hybrid vehicle (PHEV), you really can get EV tax credits of up to $7,500 for a new car, or up to $4,000 for a used car.

It’s true that there are some restrictions and bureaucratic hoops to jump through. To get the full $7,500 new EV tax credit, your car needs to have been assembled in North America, and the EV battery parts need to be sourced from certain countries. Not every well-known EV make and model qualifies for the full $7,500 of new EV tax credits.

But when you consider that EV prices have come down in the past few months, and you add that extra discount from the EV tax credits, there might be some good bargains out there — especially for used EVs. EV tax credits are also easy to process. You can talk with the car dealership to see if your vehicle qualifies, and you can receive the tax credit as an immediate discount when you buy the car. Some other terms apply; your household income must be below a certain level to qualify for EV tax credits.

Learn more about EV tax credits at FuelEconomy.gov.

3. You can refuel your EV at home

If you have a garage or easily accessible plug at your home, you can charge your EV overnight. For many average drivers who don’t have long commutes or who don’t need to drive long distances, just charging your EV at home from a standard household outlet could be enough power to keep your car fueled.

I own a plug-in hybrid electric vehicle (PHEV) that, like an EV, can charge from a standard household outlet inside my garage. The thrill of fueling my car…with my HOUSE… has not yet worn off. I love the convenience and cost savings that comes from recharging my car at home. I rarely have to buy gas for my PHEV. But with a fully electric vehicle, you are liberated from the gas pump forever!

And another benefit of EVs is that they don’t require oil changes. You don’t have to pay for those, or certain other annual maintenance costs that you’d get from a gas-powered car. EVs can save you an average of $1,074 per year on gas, and $600 per year on maintenance.

Year after year as the planet gets hotter, the idea of no longer burning gas or using oil feels more and more attractive to me. It’s true that EVs are not “free” to fuel — you still have to pay for added electricity costs when charging EVs from home, and many public charging stations require payment. But by not buying gas, you can make a big difference in no longer contributing to the climate crisis with your everyday driving

Bottom line

Buying an EV instead of a hybrid car is not the right financial move for everyone. The price of EVs is often higher than the price of hybrids, and EV auto insurance is not likely to be cheaper than hybrid car insurance. Shop around for cheap car insurance before you get your heart set on a new vehicle — whether it’s electric or hybrid.

But if you have room in your budget to pay for car insurance, and you don’t mind paying a bit more for a car that never burns gas, owning an EV over a hybrid can be a good move. Being an EV owner can give you peace of mind that you’re helping reduce carbon emissions more quickly.

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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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