Money Management

I bought a policy nearly a decade ago, despite the low risk of needing to use it. Keep reading to learn why it’s best to buy insurance at a young age. [[{“value”:”

First of all, the title of this article makes it sound like 33 is a young age to get life insurance. It’s not. If you’re married or have children or anticipate either of those major life milestones happening in the not-too-distant future, there’s a good chance you need life insurance, even if you’re still in your 20s.

In my case, my first child was born when I was 33 years old. I set the life insurance application process in motion and had coverage in place before I was even back at work from paternity leave.

In fact, the only reason I waited until 33 and didn’t get coverage until we had children was because I previously had a modest insurance policy through work and my wife’s salary was roughly the same as mine. And although we got married when I was 31, we weren’t 100% sure we were going to have children. In short, without kids to pay for, and with virtually no debt at the time, if something unfortunate had happened to me, my wife would have been okay financially. But having kids changed that.

When should you get life insurance?

There are two big reasons to get life insurance. First and foremost, you can make sure your loved ones are taken care of financially in case anything happens to you. Second, if you die and have debts, you don’t want your spouse or kids to “inherit” those debts, which generally must be paid out of your estate before your assets can be distributed to your next of kin. So, the short answer is that once you are married, and especially if you have children, you should consider life insurance.

If you’re single with no dependents, there’s a solid case to be made that you don’t necessarily need life insurance. But if you anticipate your situation changing at some point, keep in mind that the younger you are, the easier and cheaper life insurance is to obtain.

For example, let’s say that you want a $500,000, 20-year term life insurance policy and that you’re a male non-smoker in good health. The average cost for this type of policy is $225 per year if you obtain coverage at age 30. At age 40, it’s more than 50% higher.

What type of life insurance should you get?

There are many different companies that offer life insurance, and most have several products with different names. But most life insurance policies fall into two different categories — term and whole life.

The short explanation is to think of term life insurance as temporary coverage. If you buy a 20-year term life insurance policy and you die within the 20-year period, your beneficiaries will get paid. If you don’t, the policy will expire and won’t have any value. Whole life insurance, as the name implies, covers you for your entire lifetime. Plus, whole life policies build up cash value over time. The caveat is that whole life insurance premiums are much higher than you’ll pay for comparable term life coverage.

In most cases, I’m a fan of term life insurance. That’s what I have and it’s what I’ve advised most clients over the years to get. Most people don’t need life insurance past a certain point (when you’re retired, kids are out of the house, etc.). Plus, if you want to build cash value, you can take the difference you’d pay in premiums and simply invest it in low-cost index funds.

To be clear, this isn’t meant to be personal financial advice for you. A smart idea would be to contact a Certified Financial Planner™ and set up a brief consultation, as they’ll be required to give advice that is in your best interest (as opposed to an insurance salesperson, who earns a commission based on what they sell you).

The bottom line is that although the likelihood of something happening to you when you’re young is relatively low, you still want to make sure that your loved ones are protected in case it does. A financial planner can be an excellent resource to let you know if you need life insurance, how much you should have, and what the best type of insurance is for you.

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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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CDs are paying 5.00% right now, but you could earn 10% via another investment. Find out why you may still want a CD anyway. [[{“value”:”

The yields paid by certificates of deposit (CDs) are pretty impressive right now. The Ascent has a long list of CDs paying above 5.00%, all of which are FDIC insured, so there’s no risk when you put money into them.

Earning 5.00% on your money without taking a chance of loss is a good deal. But there’s another pretty safe investment that could pay you double that amount.

But despite the better return on investment (ROI) offered by another investment type, there are times when you should stick with opening a CD. Here’s why.

This investment could pay you double what a CD does, but it’s not right for everyone

If you’re looking to minimize risk and maximize returns, an S&P 500 index fund is a pretty good bet — and a pretty great alternative to CDs.

The S&P 500 is a financial index that tracks around 500 large U.S. companies. It has consistently produced 10% average annual returns. That’s about double what even the most competitive CDs are paying. And no one who has invested in an S&P 500 fund for a period of 20 or more years has ever lost money, no matter how poorly timed their investments.

There are S&P 500 index funds that make investing easy. They tend to have low expense ratios because they just track the performance of the financial index. You can open a brokerage account today and invest in one in minutes, often with no minimum investment required. And you may want to — in some situations.

A CD could still be a better investment for some people

Earning 10% is no doubt better than earning 5.00%. And since the S&P 500 has a pretty consistent track record, you aren’t taking on a huge risk when you buy it.

Despite that, some people are actually still better off investing in a CD. Here’s why. The S&P presents limited risk over the long haul. But in the short term, you could definitely lose money. Just look at the table below that shows the recent performance of this index.

As you can see, if you had a shorter investing timeline and bought in at the wrong times, you’d have definitely lost money if you needed to sell after a year or two to access your funds.

When you buy a CD, you don’t take that risk. So, if you have an investing timeline of around five years or less, a CD is a better bet despite the lower maximum ROI. You can open a CD right now that offers you returns upward of 5.00% and that requires you to lock up your funds only for a few years or a few months. Less than 10%, but still pretty good.

Let’s say you have some cash you’ll need in a year. You can’t afford to risk putting it into the market, but you can open a 12-month CD paying a competitive rate as high as 5.25%. You’ll definitely earn the promised ROI and won’t take a chance of losing your money (unless you break your CD term early and the penalty assessed is more than you’ve earned in interest to that point).

Is opening a CD right for you?

Here’s the bottom line. If you have money you won’t need for five years or more, open a brokerage account today. If you plan to buy an S&P 500 fund, you should open one of the best brokerage accounts for ETFs so you can invest with no commission fees.

If you have money you can tie up for between a few months and five years, then open a CD. The Ascent regularly tracks CDs with the best rates, so check out the offerings and choose one with a term that works for you.

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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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Finding good furniture is hard. Read on to find out which discount membership club has the best furniture deals. [[{“value”:”

Costco and Sam’s Club are well-known among budget-conscious shoppers, but many people also use the membership clubs for their furniture needs.

Buying furniture can be a gamble, even when you’re able to find something you like and there are good reviews for it. So which is the better store to buy furniture at? Let’s look at a few aspects of these discount membership clubs to see which is the best option.

Furniture quality

Winner: Costco

According to Consumer Reports, Costco’s furniture quality scores high among reviewers, achieving a 4 out of 5 rating. Sam’s Club scored slightly lower, with a 3 out of 5 rating.

Clarks.com says Costco’s furniture quality is very high, and it has a track record of customer satisfaction. Based on these two evaluations, Costco appears to have a slight edge over Sam’s Club in this category.

While there are other ways to measure quality, Consumer Reports’ rating is likely the most comprehensive, so Costco wins in this category.

Delivery

Winner: Sam’s Club

If you buy furniture on Costco’s website, the price includes delivery. For example, a leather couch I found on the site recently is listed for $1,899 and says delivery, set up, and packaging removal are included. But there’s no delivery option if you buy Costco furniture in the store, meaning you’ll have to figure out how to get a heavy couch into a truck and back to your home yourself.

Meanwhile, Sam’s Club offers delivery for both in-store and online furniture purchases. Some furniture can be delivered for free, while some larger pieces may have a fee. The company says it uses GoShare to deliver furniture.

With Sam’s Club offering a delivery service for in-store furniture purchases, it wins this category.

Returns

Winner: Tie

Costco is well-known for its generous return policy, even for furniture. You may have heard about the woman who recently returned a used sofa after the company’s two-year return policy was up.

While that’s an extreme example (that I don’t recommend trying!), it shows just how good Costco’s return policy is. You can get a full refund on furniture, and Costco may even pick up large items from your home at no additional charge.

Sam’s Club also has a generous return policy. Most items can be returned at any time. While there are some restrictions, like electronics and appliances, Sam’s Club doesn’t list any limits on the returns section of its website for furniture.

Warranty

Winner: Tie

I did a quick online search and found some furniture brands sold at Costco with limited warranties. These were mainly the same types of warranties you’d expect when buying products at any retailer.

Sam’s Club offers furniture-specific warranties you can buy through Allstate. The five-year protection plans cost $10 to $130, depending on the price of your furniture. It covers accidental damage and stains by either repairing or replacing the item.

It’s also worth mentioning that both companies have a 100% satisfaction guarantee for the items they sell, including furniture. So, if you aren’t satisfied with your furniture, you should feel confident that you’ll be able to get a full refund.

Result: Both stores are great for furniture

Based on the above criteria, Sam’s Club and Costco are both great places to buy furniture.

But if you need a clear winner, you may want to consider that Consumer Reports ranked Costco second in overall satisfaction on its online furniture retailer list, while Sam’s Club was ranked sixth out of 17.

Ultimately, most shoppers probably already have a preference for which store they shop at, regardless of the furniture options. And with generous return policies, members of these discount warehouse clubs can likely find something they want at a good price without worrying about whether they’ll get their money’s worth.

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.Chris Neiger 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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Most Americans pay for multiple streaming services. Here are the most common warning signs that you should cut back on yours. [[{“value”:”

If you’re like most Americans, you probably have multiple streaming services. Gone are the days when streaming just meant Netflix, and you could get it for $8 per month.

Now there’s Disney+. Max. Peacock. Apple TV+. Paramount+. Whoever comes up with the names for these services, please, enough with the plus signs.

According to The Motley Fool’s State of Streaming survey, 10% of Americans don’t even know how much they pay for streaming services. Even though these generally don’t cost much individually, they can add up if you have too many of them. Here are a few warning signs to watch out for.

1. You’re paying for services you’re not using

The danger with subscription services is that you keep getting charged until you cancel them. And people don’t always cancel services they’ve stopped using. Sometimes they forget. Or they figure that it will have something else they want to watch in the future.

There’s no reason to pay for a streaming service you’re not using. Even if you think you’ll want to use it again later, a cancellation doesn’t need to be forever. You can always resubscribe.

Do the occasional streaming audit to see if you’re paying for services you don’t need anymore. If you’re on the fence about one, consider a temporary cancellation. Cancel it for now to see if you miss it or if you’re fine without it.

2. You’re experiencing “streaming overload”

Having a lot of options isn’t necessarily a good thing. I’m reminded of that every time I go to one of those restaurants with a menu that seemingly never ends. It’s nice to have some options, but eventually, you reach a tipping point where it becomes overwhelming.

A 2022 Nielsen report found that about half of streaming users in the United States had reached that point of “streaming overload.” There are so many services, and so much content across those services, that it’s hard to pick something to watch.

If you often find yourself doing more scrolling than watching, it may be time to take a break from a few streaming services. Pick one or two services with shows you really want to watch and ditch the rest for the time being.

3. Paying the fees is making it harder to reach your financial goals

Paying for several streaming services is fine if you’re in a good financial position. If you’re not carrying any balances on your credit cards, and you’re saving and investing 20% of your income every month, then your streaming costs probably aren’t a big deal.

But if you’re having trouble reaching your financial goals, then it’s worth taking a closer look at how much you spend on streaming. For example, if you’re trying to get out of credit card debt, spending $120 per month on streaming wouldn’t be the best idea. If you cut those costs in half, you’d have an extra $60 per month to put toward your credit card balances, which would help you pay them down much more quickly.

Streaming services are rarely anyone’s biggest monthly expense, but they can end up costing you more money than you realize. If any of those warning signs rang a bell for you, go through your current subscriptions and see which ones you could do without. There could be at least one or two you don’t need, and canceling them is an easy way to save money every month.

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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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Decisions you make in your 20s have a huge impact on the rest of your life. Learn about the money moves you should avoid during this decade. [[{“value”:”

Your 20s are an exciting and challenging time. You’re in the early stages of adulthood, which means taking on more responsibilities. One of those responsibilities is managing your money.

Pretty much everyone makes their fair share of financial mistakes. It’s normal, and at this age, you have plenty of time to fix them and bounce back. But some bad decisions can have a long-lasting impact, so you should do your best to avoid them.

1. Not saving for retirement

I realize that retirement probably isn’t the first thing on your mind. When I was starting out in my career, I’d have to keep myself from rolling my eyes every time some older adult talked to me about saving for retirement.

And now that I’m a little older (just a little), I wish I’d gotten serious about my retirement savings sooner.

Here’s a change of perspective that helped me a lot: Don’t look at it as saving for retirement when you’re old. Look at it as saving enough that you can retire when you want. In my case, I heard about the early retirement movement and how some people were retiring at 50 or younger. I realized that saving is what gives you the freedom to retire on your terms.

Even if you can’t save much, try to save some amount of money. It could be $50 per month in a 401(k) or an individual retirement account (IRA). The earlier you start, the more your savings will be able to grow.

2. Being too strict about your spending

People in their 20s generally don’t save too much money, but there are exceptions. High achiever types sometimes keep their expenses to a minimum and save heavily.

Even though saving money is a good habit, it is possible to take it too far. If you never go out with your friends or travel anywhere because you want to keep your costs down, that’s not healthy. And you could end up regretting it later in life.

Managing money well means having a balance between being responsible and enjoying life. You need to use some of your income to pay your bills, and you should contribute to a savings account and retirement fund. But also set aside some fun money that you can spend on yourself.

3. Getting complacent about your income

As a young adult, you’re in the early stages of your career. You don’t have much experience yet, and you may be earning an entry-level salary. That’s normal. What’s important is that your starting salary isn’t your permanent salary.

Increasing your income is one of the most impactful money moves you can make, and your 20s are the perfect time for it. You’re only scratching the surface of your earning potential. But some people miss out on hundreds of thousands of dollars throughout their careers, because they get complacent about their income.

Here are a few ways to get proactive about earning more:

Become a top performer at your job. More productive people have a better chance of moving up.Talk to management about opportunities for a promotion or raise. Ask what performance metrics you need to reach for a pay increase, and see if there are higher-paying positions that you’re well-suited for.Keep your resume updated and look for new jobs regularly. Switching jobs is often the best way to get big pay increases.

4. Going into credit card debt

Credit card debt is a normal part of life in the United States. Consumers have $1.129 trillion in total credit card debt. Because it’s normalized, many people see it as no big deal, but it’s actually very costly.

Now, a credit card can be a useful financial tool. If you pay the bill on time and don’t charge too much, that can build your credit score. The best credit cards also have lots of other perks, such as cash back or travel rewards.

But you’ll get into trouble if you use a credit card to buy things you can’t afford. Even though you can borrow money with credit cards, it’s not a good idea. They charge extremely high interest rates, with the average being over 20% right now. The safest way to use credit cards is to only use them for purchases you can afford and pay your bill in full every month, so you don’t get charged any interest.

The money moves you make in your 20s can either set you up for success or make your life more difficult later. If you avoid these common mistakes, you’ll be on the right track.

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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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