The retail giant also highlighted its commitment to creating an easy and convenient checkout experience for customers, with credit and debit cards, “buy now, pay later” services and the Target Circle membership program, which applies deals automatically at checkout.

Target, which has almost 2000 stores across the U.S., follows in the footsteps of Aldi and Whole Foods Market in officially ditching checks. And although they’re still accepted by retailers including Walmart, Macy’s and Kohl’s, it’s now increasingly unlikely you’ll see anyone pulling out their checkbook in store.

Who’s still writing personal checks?

According to data from YouGov Profiles, only 9% of Americans said they still use checks when making a purchase in-store. Cash is the most commonly used form of payment, with 67% of those surveyed saying they prefer handing over bills and coins. 

Debit cards (42% using chip and 35% swipe) and credit cards (35% using chip and 26% swipe) are the next most popular methods, while contactless payments are closing in, with 17% usage.

However, a February 2024 survey from GOBankingRates found that while writing checks may be less popular than it used to be, 54% of Americans still wrote a check in the past year. According to the data, 15% of Americans wrote a few checks a month, 17% wrote less than six checks, 17% wrote a check once a month and 4% wrote more than 12 checks.

Unsurprisingly, the survey results highlighted the link between age and use of checks. Many Americans in the 55 and over age group said they still write a few checks a month — with 15% in the 55 to 64 age group and 22% in the 65+ age group reporting this.

In contrast, 46% of those ages 18 to 24 hadn’t written a check in the past year, along with 51% of those aged 25 to 34, 51% of those aged 35 to 44 and 50% of those 45 to 54.

Making the case for personal checks

According to Fifth Third Bank, “certain payments are likely to be better suited to checks over digital payment alternatives, especially for people with spotty internet access.” 

The bank’s website states: “The most common transactions involving checks are for rent, utilities, taxes and other payments to the government, payments to contractors, gifts to charities, payments for healthcare, and education expenses such as tuition payments.”

“Many people also still use checks instead of cash to give monetary gifts,” it adds. “It’s a more secure form of payment, especially if mailing a card.”

That’s reassuring for kids. While grandparents may no longer be able to use their checkbooks in their local grocery store, at the very least, they’re still handy for sending birthday money in the mail.

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Prices fell in June for the first time in almost two years. Headline CPI declined 0.1% month-over-month, for the first drop in 23 months, according to the U.S. Bureau of Labor Statistics. Economists forecast inflation to increase by 0.1% vs May. On an annual basis, CPI rose 3.0% in June – down from 3.4% the prior month – to beat estimates for a 3.1% gain. 

Core CPI, which excludes food and energy costs, likewise surprised to the downside, rising just 0.1% in June vs the previous month. Forecasts called for a 0.2% increase.

Fed Chair Jerome Powell and the Federal Open Market Committee (FOMC) are looking for sustained evidence that inflation is decisively headed toward its long-term target of 2% before they move to cut the federal funds rate from a 23-year high. The latest CPI report adds a dovish data point to the Fed's deliberations on interest rates, experts say.

"Better than expected inflation readings in many key sectors should allow the Fed to start talking about adjusting policy in July and potentially allow the Fed to act in September," says George Mateyo, chief investment officer at Key Wealth. "In particular, housing, which has been elevated, showed some moderation. That said, we still see the Fed wanting to gain further confidence before cutting aggressively unless stress materializes in the labor market." 

As of July 11, futures traders assigned an 86% probability to the first quarter-point cut coming in September, up from 70% a day ago, according to CME Group's FedWatch Tool. 

With the June CPI report now a matter of record, we turned to economists, strategists and other experts for their thoughts on what the data means for markets, macroeconomics and monetary policy going forward. Please see a selection of their commentary, sometimes edited for brevity or clarity, below.

Expert takes on the CPI report

"The CPI report showed that prices for the consumer are slowing. The headline CPI month over month reported that prices actually fell for the first time in 23 months to -0.1%. This was lower than the forecasted 0.1%. This will be welcome news for the Fed although Chairman Powell did indicate in his remarks to Congress on Tuesday that there are risks to both sides of the economy. On the one hand we have the threat of inflation, which up to now has been the main point of focus for banks around the world including the Fed. On the other hand, with interest rates now on the restrictive side the Fed has to be careful not to stave off growth and push the economy into a recession." – Pete Tibbles, senior vice president, foreign exchange, financial risk management at BOK Financial

"The inflation print today appears to prove the hot data to start the year was mostly an outlier. It appears we've resumed the disinflationary trend lower – great news for the Fed. As economic data continues to slow, the implications are passing through to cost measures (and to the labor market where the unemployment rate is drifting higher). We imagine the Fed speak will turn more dovish, and the more promising data all but guarantees a September cut. We honestly wouldn't be surprised if the Fed went ahead with a quarter-point cut in July." – John Luke Tyner, portfolio manager at Aptus Capital Advisors

"Widespread disinflation; the Fed will cut soon. June's CPI data bring more evidence of broad-based disinflation, giving the Fed the green light to ease multiple times this year. Prices for core services ex-rents were unchanged for the second straight month. Looking ahead, the foundations remain in place for CPI inflation to drop further in the second half of this year. Labor market slack is building, dragging on wage growth and new rent increases, while retailers' margins are under mounting pressure from increasingly budget-conscious consumers. The CPI data will not stand in the way of the FOMC cutting interest rates quickly later this year in response to a faltering labor market. We continue to expect 1.25 percentage points of easing this year, beginning in September with a quarter-point cut. The sooner the better." – Ian Shepherdson, chairman and chief economist at Pantheon Macroeconomics

"Jerome Powell did his best Kobe Bryant impression this week, proclaiming the 'job's not finished' on inflation. But this CPI print below expectations will make the calls of the September doves pretty impossible to ignore. With the labor market no longer considered a source of inflationary pressure, markets will likely turn to employment data, where any softening will likely crank the volume up on September noise. Wake me up when it ends." – Dann Ryan, managing partner at Sincerus Advisory

"This report supports that we're getting close to the onset of Fed rate cuts. The risk narrative has become better balanced between inflation and a growth slowdown, and the June data showed a normalizing labor market and cooling price pressures. The soft landing remains in sight. For investors who are still feeling cozy holding onto excess cash, this should prompt consideration of whether that still makes sense. The case for extending duration is strengthening, and we see potential for stocks to continue making new record highs in the year ahead. Now, the focus shifts to earnings season to validate that optimism." – Elyse Ausenbaugh, head of investment strategy at J.P. Morgan Wealth Management

"Part of the reason for this decline in inflation was that household consumption, construction spending and the services sector inflation came in below analysts' expectations. Another area to note is rents – the cost of rent rose just 0.3% in June. This is the smallest increase in almost three years. As per Jerome Powell’s last Fed minutes, he needed to see more encouraging economic data before rate cuts are enacted. In a reversal of prior comments, he recognized that the economy is slowing, and he appears to be setting up for a September rate cut. Although it appears a September rate cut is more likely, we still have two more inflation prints prior to the September Fed meeting – anything can happen, and the Fed is closely monitoring the situation." – Robert Conzo, CEO and managing director at The Wealth Alliance

"Today's CPI report is a good scenario for the Fed and could help change Fed Chair Powell's perspective. Remember that just yesterday Powell testified he believes inflation is receding, but he was reluctant to say it’s moving substantially down toward the Fed’s 2% goal, but this CPI could change all that. The 3.3% core reading was the smallest since April 2021, and the so-called super core inflation – core services less shelter – was the lowest level in nearly three years. The June CPI report should give the committee confidence that the disinflation narrative is tracking and that rate cuts should begin in September." – Ivan Gruhl, co-chief investment officer at Avantax

"Today's data provide a welcome indication to the Fed that inflation is indeed coming down after several hot monthly numbers at the start of the year. Despite today's favorable CPI report, a rate cut at the Fed's meeting on July 31 remains unlikely. In the absence of a meaningful uptick in inflation in July or August, we would anticipate a rate cut at the September meeting. Overall, we see an economy that is weakening but not in imminent risk of recession. Today's report should be supportive of both equities and bonds." – David Royal, chief financial and investment officer at Thrivent

"June headline prices fell for the first time in over two years due to declines in energy and vehicles prices and substantial cooling in shelter price increase. This is great news when combined with last week's report on labor market moderation to consider more relaxation on monetary policy than anticipated. The federal funds rate dot plot from the June summary of Projections indicates that the Federal Open Market Committee (FOMC) members are split on one or two rate cuts this year. If the trend in inflation in the previous two months continues, the likelihood of having two rate cuts this year increases." – Dawit Kebede, senior economist at America's Credit Unions

"This morning's inflation report was much better than expected, showing a decline in headline inflation driven by lower energy costs. Core inflation also posted its smallest monthly gain since August 2021, helped by a slowdown in shelter growth and lower auto prices. While CPI readings remain high relative to the Fed's 2% target, they have come down sharply and are moving in the right direction. Overall, it's a very positive report for the Fed, which increases the likelihood of rate cuts in the second half of the year, with the September FOMC meeting firmly in play." – Mike Cornacchioli, senior vice president for investment strategy at Citizens Private Wealth 

"Powell has been very careful to leave the Fed's options open when it comes to rate decisions. He refuses to give any indication whether there could be future cuts or even hikes but has been clear that he wants to see more good data to strengthen the Fed's confidence that inflation is making its way to 2% before deciding to cut rates. I feel the print this morning would be considered good data even by Powell's standards. In addition to the data this morning we've been some cooling in the labor market, the tightness of which has been another hurdle that Powell has mentioned in the past, so when taken together the odds of future rate cuts become more realistic. The Fed doesn't rely just on the CPI report but should be indicative of a larger disinflation narrative when Core PCE, the Fed's preferred gauge, comes out on July 26. There are still two more inflation and jobs reports before the next meeting in September but should the disinflation progress stay on its current path there is a real possibility for multiple cuts in the latter part of the year rather than the one that was previously being priced in." – Clayton Allison, portfolio manager at Prime Capital Investment Advisors

"Investors have waited for a long time for shelter to soften and they got it in June. Given rising inventories in housing, this sizable component of the price index is finally starting to give the Fed what it needs to see for rate cuts. Goldilocks is here and a September cut looks more likely than ever." – David Russell, global head of market strategy at TradeStation

"Combined with the weaker than expected June jobs report, today's inflation reading builds a stronger case for a Fed rate cut in the coming months. It remains unlikely that the Fed will move at its meeting later this month, but if the dual trends of a weakening labor market and lower inflation continue, it will likely put the first rate cut in years firmly on the table for the FOMC's September gathering." – Eric Merlis, managing director and co-head of global markets at Citizens

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Your goal should be two guarantees: high yield to maturity and full recovery of principal. Neither is assured using index-based exchange-traded funds. An actively managed, go-anywhere fund from an ace manager such as Baird, Fidelity or Pimco will out-return the indexes over the years, but there is near-term price risk if managers mistime bets or if hostile reports on jobs or inflation or another trading signal rips into bond values. 

If your choices are limited within a 401(k) or other retirement plan, choose a short or ultra-short bond fund option, if possible. If not, stay with cash for now. The inverted yield curve, with short-term yields the highest, remains your friend and makes cash profitable and safe.

Looking ahead at bonds

But if you suspect cash yields will drift down and want to lock in the current rates without near-term price risk, my preference would be to infuse some dollars into individual bonds or into target-maturity funds or ETFs, such as Invesco BulletShares or iShares iBonds ETFs. If you have an account with Schwab, Fidelity or E*Trade, it is neither difficult nor costly to research, compare and buy single bonds. Then you, and not a fund manager or the Federal Reserve, control how much and when you get paid and the timing of repayment of the principal.

Normally the best method is to ladder maturities, arranging for parts (rungs) to mature in succeeding quarters or years so you both cement the best yields along the curve and know you will have money to roll over at specific times. You can use Treasuries, high-quality corporate, bank or utility bonds, municipals, high-yield bonds, or a mix of all of them. You can even request a brokerage’s bond platform to set it up for you.

I went to Schwab’s tool to ladder either Treasuries or certificates of deposit. Given the rate-curve inversion, one-year ladders have higher average yields than longer ones. A step stool of T-bills of three, six, nine and 12 months pays an average 5.25% to maturity; use CDs and you get 5.45% (as of May 31). A five-year ladder works out to 4.76% for Treasuries or 4.98% for CDs.

To beat that, of course, you can buy corporate bonds at a spread of one to two percentage points above Treasuries. If you navigate the bond listings, you can ladder one- through five-year BBB-rated bonds for an average 6% yield to maturity; I could recently order a five-step triple-B assembly from Synchrony Bank, Boeing, Ares Capital, Blue Owl and Boston Properties with an average yield to maturity of 5.98%, with none below 5.82%. It’s possible those bonds might flop around in value, but if your plan is to keep them to the end, that doesn’t matter — even if, say, Boeing were to be downgraded to junk status.

Or, you could use a mélange of BulletShares investment-grade, target-maturity corporate ETFs dated 2025 through 2029 for an average 5.3% — less than a BBB ladder due to its A and AA holdings. BulletShares charge just 0.1% and pay monthly, as oppsed to the semiannual interest payments from individual bonds. What matters either way is that you can roll over the principal on your own terms.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here. 

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The asset the most American retail investors hold onto is cash, according to a survey of 10,000 retail investors released recently by eToro. About 76% of American retail investors hold cash assets, well ahead of the 49% of respondents holding domestically listed stocks and nearly double the 40% of respondents holding domestic bonds.

More investors may be "leaning into cash assets for a solid risk-free return" because interest rates have been so high for so long, eToro U.S. investment analyst Bret Kenwell said in a statement. High interest rates present opportunities in safe investments like high-yield savings accounts, certificate of deposit (CD) accounts or Treasury bills, which have been offering yields above 5%. But, depending on a person's needs, investors holding onto more cash could be missing out.

Even the high rates you can currently earn in the various types of savings accounts or fixed income investments cannot compare to the more than 16% gain on the S&P 500 index year-to-date in 2024, not including dividends, which investors can gain access to through low-cost exchange-traded funds (ETFs). This has been an especially strong year so far, but even historically, the stock market has an average annual return of about 10%. 

Many people may have been scared off of investing in the stock market in recent years due to volatility during the pandemic era and fears of a recession. However, thus far, that fear has not been realized, and signs indicate there is still room for optimism. 

So while people have been playing it safe and getting decent returns in cash in recent times (hopefully, if they're using tools like CDs and high-yield savings accounts, rather than just parking it in a checking account), they could have been getting even bigger returns in the stock market. Plus, it doesn't take active day trading or smart stock picks to succeed: You could easily use ETFs to see big returns, and you don't need a lot of extra money to begin investing. 

How much of your investments should be in cash?

Keeping savings or investments in cash is wise for a few reasons, but it should be done thoughtfully. 

If you're trying to figure out how much cash you need, you should consider your more immediate needs as well as your emergency fund. Emergency funds should generally be kept in cash for ease of access; it can be held in a high-yield savings account, for example, where you can withdraw any amount at any time, so you can use it penalty-free when an emergency comes up. Experts generally recommend keeping three to six months' of basic living expenses in an emergency fund. 

Cash is also king if you have expected expenses coming up in the next 12 months. Say, for example, you're planning to take a big vacation in eight months. In that case, much like with an emergency fund, you want to have your money in an accessible place. In this example, you could invest in a three-month Treasury bill or CD, so it can make a good return before you need it for that trip. 

If, instead, you put that money into the stock market and needed to use it within a year, you would be subject to higher capital gains taxes. Because the stock market has more volatility than cash investments, you could also risk having to sell a position at a lower point if you are in need of cash to pay for something. 

Get started investing with ETFs

As mentioned, ETFs are an easy way to garner stock market returns. 

ETFs "hold a collection of stocks and bonds in a single fund," Kiplinger contributing writer Will Ashworth explains in a piece about how to invest in ETFs. “Unlike mutual funds, they are bought and sold on stock exchanges, can be traded anytime the exchange is open, and you can start your ETF investing even if all you have to invest is $50.”

ETFs also generally carry lower expense ratios than mutual funds. All of these reasons make ETFs a great option for beginner investors just getting started or those looking to move out of cash and into equities.

The most popular ETFs include S&P 500 ETFs, such as the ultra-popular SPDR S&P 500 ETF Trust (SPY) – the largest exchange-traded fund in the market. It tracks the Standard & Poor's 500 Index, which consists of 500 large, predominantly U.S-domiciled companies that trade on the major American exchanges. By owning this ETF, you effectively own the S&P 500's performance, so if it rises, your investment will also rise. 

SPY is currently trading around $550, but with plenty of brokerages selling commission-free fractional shares, you don't necessarily need that much to get started. Besides, there are plenty of ETFs on the market, including many at much lower costs. You can see Kiplinger's best ETFs to buy for some more options. 

If you're looking for the best returns, especially over a longer timeframe, historically, stocks should be in your portfolio. Keep in mind, though, that there are some times when you should avoid putting too many eggs in that basket, like if you will need money within a short timeframe for a large purpose or for retirement purposes and can't risk potential short-term volatility. 

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U.S. nonfarm payrolls increased by 206,000 last month, the Bureau of Labor Statistics said Friday, or essentially in line with economists' forecast for the creation of 200,000 jobs. Additionally, the blowout May jobs report was revised lower to 218,000 new hires from the 272,000 previously reported.

The unemployment rate, which is derived from a separate survey, ticked up to 4.1% in June from 4% the prior month. Economists forecast the unemployment rate, which is at half-century lows, to remain unchanged.

In another dovish development for rate policy, wage pressures remained static month-over-month. Average hourly earnings increased 0.3% – or the same rate reported in May – to match economists' forecast.

"Under the surface of the stronger-than-expected headline nonfarm payroll gain, this was a soft employment report that bolsters the case for a September rate cut from the Fed," writes Scott Anderson, chief U.S. economist at BMO Capital Markets. "We now have definitive evidence of U.S. labor market cooling with a somewhat alarming rise in the unemployment rate in recent months that should give policymakers 'more confidence' that consumer inflation will soon return to the 2.0% target on a sustainable basis."

Market participants are eagerly awaiting the Fed's first quarter-point cut, which will bring interest rates down from a 23-year high. Although the Federal Open Market Committee (FOMC) signaled just one cut this year at the Fed's June meeting, a slowing labor market and easing wage pressures have increased the odds of the central bank turning more dovish over the next couple of months.

As of July 5, futures traders assigned a 71% probability to the FOMC enacting its first cut in September, up from 58% a week ago, according to CME Group's FedWatch Tool. Meanwhile, the probability of the first cut coming in December dropped to 23% from 31% a week ago. 

With the June jobs report now a matter of record, we turned to economists, strategists and other experts for their thoughts on what the data means for markets, macroeconomics and monetary policy going forward. Please see a selection of their commentary, sometimes edited for brevity or clarity, below.

June jobs report: The experts weigh in

"Today's jobs report is welcome news for the Fed, as it shows continued signs of softening in the labor market and supports other signs of a slowing economy.  The rise in the unemployment rate to 4.1%, the highest since November 2021, and the downward revisions of 111,000 jobs for April point to a slowing jobs market, and the data reinforces the probability of a first rate cut in September." – Ivan Gruhl, co-chief investment officer at Avantax

"Combined with a number of weaker economic data points recently, today's jobs report should give the Fed reason to increase its focus on the employment side of its dual mandate. While it is especially difficult to predict what the Fed will do in advance of the election, this morning's data could increase the likelihood of a rate cut as soon as the September meeting. A labor market that is loosening but still solid, combined with impending rate cuts, could provide a backdrop for continued strength in the equity market." – David Royal, chief financial and investment officer at Thrivent

"On net, the job market looks considerably cooler in the June report than in May, and the unemployment rate at 4.1% is above where the median Fed policymaker projected it at year-end when they compiled economic projections last month. The June jobs report was pretty good. The unemployment rate edged higher, but isn't high by historical comparison. And wage growth continues to outpace inflation. The labor market's cooling trend is quite clear. If inflation holds in its recent range, the Fed is likely to make an initial rate cut at the following decision, in September." – Bill Adams, chief economist at Comerica Bank

"Despite the unemployment rate ticking up to 4.1%, it is only about half-a-percent higher than its historic low last year, continuing to show the resilience of the U.S. economy. Given this month marks the one-year anniversary of the last rate hike, we would expect tighter conditions to be having a more drastic effect on the consumer and labor market. Given this strength, the Fed is likely to continue its patient approach to rate cutting." – Ben Vaske, senior investment strategist at Orion Portfolio Solutions

"The jobs numbers were modestly below expectations when factoring in the revisions but are still indicative of a healthy labor market. This report absolutely keeps the probability of a September rate cut on the table. This still seems like the most likely outcome. This keeps the upcoming inflation data in the driver's seat for determining the timing of the first cut. This NFP data will neither cause the Fed to take a September cut off the table or force them to cut rates in September even if the inflation data does not continue to show moderation that we have seen recently. Signs of continued moderation of economic growth and the labor market will likely be a positive for equities and high-yield bonds in, at least, the short run. The market's pricing of two cuts in 2024 seems very reasonable." – Greg Wilensky, head of U.S. fixed income and portfolio manager at Janus Henderson Investors

"The latest jobs report is sure to cause fireworks between hawks and doves at the Fed. On the one hand, the labor market continues to cool, enabling the Fed to remain focused on inflation, raising the potential for its first rate cut in September should prices follow suit. On the other hand, the cadence of cooling is accelerating and could pose downside risks to a soft landing for the economy at large." – Noah Yosif, chief economist at the American Staffing Association

"Weakening in private payroll growth points to multiple rate cuts in the second half. Private payroll growth likely will slow even further over the coming months. The trend in jobless claims has continued to deteriorate in recent weeks, hiring and hiring intentions indicators remain depressed, job openings are back to pre-Covid norms, and households have become more fearful that unemployment will rise. Extremely high real interest rates, alongside slowing sales growth, will force more businesses over the coming months to squeeze staffing costs. In addition, the flattening in state and local government revenues over the last year suggests that growth in government payrolls will slow in the second half. Accordingly, we continue to expect growth in total payrolls to drop below 100,000 before the end of Q3 and think that investors are seriously underestimating how quickly the Fed will pivot to reducing rates. After a quarter-point cut in September, we continue to look for half-point easings at both the November and December meetings." – Ian Shepherdson, chairman and chief economist at Pantheon Macroeconomics

"Today's jobs report shows a slight softening in the pace and strength of employment despite the solid headline number. This report does not add urgency to the case for a July Fed rate cut. The market will likely respond to the increase in the unemployment rate to 4.1%, which is above the Fed's year-end projection of 4%." – Eric Merlis, managing director and co-head of global markets at Citizens

"The weaker cyclical categories like manufacturing and temp jobs show demand for labor is slowing. We also had higher unemployment rates and negative revisions. The job market is bending without yet breaking, which boosts the argument for rate cuts. Things are not too hot and not too cold. Goldilocks is here and September is in play." – David Russell, global head of market strategy at TradeStation

"The labor market remains strong, even as unemployment hit 4% last month for the first time since January of 2022. Despite downward revisions in previous reports regarding the number of new hires, job growth continues to beat expectations. Given this continued strength, we don't expect the Federal Reserve to consider cutting rates until at least November, especially since inflation, while easing, is still sticky above the Fed's 2% target level." – Joe Gaffoglio, president of Mutual of America Capital Management

"Following a strong jobs report in June, the July report shows continued strength in the labor market driven by increases in government, healthcare and social assistance. This data, combined with the JOLTs report released on Tuesday (8.1 million job openings and 1.2 job openings per job seeker), supports the narrative of a balancing labor market and moderating wage growth expectations." – Patrick Connell, partner and industry sector head at Aon

"The increase in the unemployment rate, especially for those with at least a Bachelor's degree, suggests a modest cooling of the labor market. So far, we don't see apocalyptic signs within the labor market, but investors should be wary when the labor market is supported by government payrolls. The downward revisions to the previous two months is consistent with an economic slowdown. We should expect more rhetoric out of the Fed about labor market conditions and the importance of keeping policy appropriate for their dual mandate." – Jeffrey Roach, chief economist at LPL Financial

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The interest rate for federal undergraduate student loans disbursed between July 1, 2024, and June 30, 2025, will be 6.53%, the highest rate in 16 years. The rate for federal Parent PLUS loans, which parents can take out to cover the cost of a child’s college attendance, will jump to 9.08%, a 33-year high. 

Interest rates for federal student loans are adjusted annually, based on the high yield of the last 10-year Treasury auction in May. The rate is fixed for the life of the loan, even if overall interest rates decline. However, because rates are fixed, outstanding federal student loans won’t be affected. For example, if you took out a federal student loan between July 1, 2023, and June 30, 2024, your rate will remain at 5.5%

Private student loans

As college costs continue to rise, the rate increase will make it even more difficult for families to pay for college. Although loans from private lenders may offer more-competitive rates, they’re available only to students who have a co-signer with excellent credit, says Mark Kantrowitz, author of How to Appeal for More College Financial Aid. Plus, parents who co-sign are on the hook if the primary borrower defaults, and their credit history could suffer if the borrower misses or makes late payments. 

In addition, private student loans typically lack many important features of federal student loans, including deferment, income-based repayment and loan forgiveness, Kantrowitz says.

Limit your debt

A better strategy for both students and their parents is to limit debt as much as possible. Students who stay within the thresholds for federal student loans are unlikely to overborrow, Kantrowitz says. In 2024, the maximum an undergraduate dependent student can borrow in subsidized and unsubsidized federal student loans is $5,500 for the first year, $6,500 for the second year, and $7,500 for the third year and beyond; the total limit on borrowing is $31,000.

If that’s insufficient to cover college costs, parents can take out PLUS loans up to the total cost of a child’s attendance, but that doesn’t mean it’s a good idea — especially at current interest rates. Kantrowitz recommends that parents limit total borrowing for all of their children’s college education to the amount of their annual income. If you plan to retire in 10 years or less, you should borrow proportionately less — half of your annual income if you plan to retire in five years, for example, he says. 

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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That’s a lot of money on hot dogs and potato salad. But don’t worry, you actually don’t have to spend a fortune to keep your guests happy and full. Many grocery chains across the country are offering deals and discounts on cookout staples — like hot dogs and potato chips — to make July Fourth grocery shopping a bit easier on your wallet. 

One deal in particular that stands out is Walmart’s Summer Cookout Basket. With it, you can feed a party of eight for under $50. The basket, which includes 18 classic cookout items, costs just $45.43 before tax, a little under $6 per person. 

But is it a good deal? Or just a well-designed marketing tactic? We compared similar products from both Publix and Kroger to see if Walmart's Fourth of July cookout basket gets you more bang for your buck, as well as to identify items that you can get cheaper from somewhere else. Here's what we found. 

Fourth of July cookout basics

After comparing prices per item, Walmart came out as the cheapest option for Fourth of July cookout essentials, costing just $45.43 (pre-tax). If you shopped at Kroger you'd pay almost $10 more ($55.10) and if you filled up your cart at Publix, you could expect to pay almost $25 more ($69.54) than you would at Walmart. And that includes any additional coupons, sales or BOGO promotions both Kroger and Publix offered. Keep in mind that for all stores, additional pick-up, shipping or delivery fees may apply.

Another plus side to Walmart's deal? You don't have to search for each item individually (like we did sourcing these prices). Just follow the link, hit "add all to cart" and checkout. On the other hand, if you have some extra time, you could strategically shop at all three stores to get the cheapest option for each individual item. For example, you could forgo the watermelon and hot dogs from Walmart and buy them at Kroger, which will save you a couple of dollars.

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The federal funds rate remains between 5.25% and 5.50%, and those long-anticipated cuts continue to be pushed back. This has left investors with important decisions about how to best manage their savings during an extended period of higher rates.

Those savings are substantial. In 2022, the median American household held $8,000 in cash in transaction accounts (regular checking or savings). A modest figure by some measures, but consider that the mean household held $62,000 in transaction accounts during that same calendar year. For households with individuals age 65 to 74, the amount was over $100,000.

Savers holding this cash in traditional savings accounts are seeing minimal returns; as of May 2024, the average savings account is paying 0.45% interest, according to the FDIC. In fact, with inflation still hovering above 3%, the value of such accounts is actually falling in relative terms.

What are the alternatives?

Assessing alternatives to savings accounts

Last year, I wrote about five places to put cash outside of a normal bank account. In this high-rate environment, savers continue to have a unique opportunity to maximize their cash holdings. There is a range of options to choose from: brokerage accounts, money market mutual funds (MMMFs), certificates of deposit (CDs) and Treasury bills, to name a few.

When deciding where to hold cash, investors should consider three key factors: rate of return, security and liquidity. Here’s a closer look at each:

Rate of return. One important question investors should ask is: What kind of return will I see on my money? The baseline goal should be to protect the value of cash by finding yields that keep up with inflation. With higher interest rates, those opportunities are ample, and many options even outpace inflation.

Security. Investors also want to ensure their cash is secure. The FDIC insures standard savings accounts up to $250,000 in the event of a bank failure. Bank failures are rare, but as we saw last year, higher interest rates and other macroeconomic factors put additional financial pressure on balance sheets, leading to a number of notable collapses.

The tradeoff for balance protection in a savings account is typically lower yields. Meanwhile, popular higher-yield options, such as money market mutual funds (MMMFs) or Treasury bills, are not FDIC-protected.

However, there are ways to earn higher returns without sacrificing peace of mind; high-yield brokerage accounts can offer competitive interest rates and provide access to FDIC insurance. Some brokerages also provide access to FDIC insurance beyond the standard $250,000 limit by working with partner banks to layer protections.

Liquidity. Finally, how available is the cash when it needs to be accessed? Some high-yield savings options also limit the number of withdrawals you can make in a month. An investor who buys Treasury bills, for instance, must wait for them to mature before the funds become available, or sell them in the secondary market, introducing risk to the principal.

Cash invested in money market mutual funds is far more liquid, but there is still a settlement period. It can take two business days to transfer funds to a bank account. In an emergency, that might be longer than someone is willing to wait. Certain money market funds also have what’s called a liquidity gate, which allows the fund manager to prevent large outflows — potentially locking up cash when it’s needed most.

High-yield brokerage accounts, on the other hand, can offer same-day transfers. Savers concerned about liquidity may sleep better with cash more immediately accessible.

Navigating elevated interest rates

Understanding how to make the most of cash is especially important given the latest interest rate projections. Investors should prepare for a “higher for longer” environment where interest rates remain elevated moving forward. According to the CME FedWatch Tool, which calculates probabilities of rate changes, the most likely outcome is one to two rate cuts in the next year.

With deeper cuts unlikely for some time, savvy investors will take advantage of these higher rates to preserve and grow their savings. As they do so, rate of return, security and liquidity should remain top of mind when managing cash holdings.

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If you’re saving for a specific goal (in other words, something more concrete than just a bigger portfolio), you’ve already taken a crucial step toward success, says Daniel Crosby, author of several books on behavioral finance, including the forth- coming The Soul of Wealth. Research shows that “investors who tie their financial lives to a why — to a purpose other than just investment performance — save more and are dramatically less likely to sell in bear markets,” he says. “They report greater life satisfaction. They have more fun.” 

Crosby is serious about the fun part. Successful investors must be disciplined and patient, he says. One way to motivate yourself to stay on your long-term track is to “take a moment to really celebrate your investing victories” along the way.

To help you make it to your own celebrations, we asked investors who recently achieved one of their investing goals to share their stories. As you’ll see, they used different investing strategies, and they made some mistakes. But with learning, perseverance and sometimes a little luck, they are now enjoying their investing wins. 

Patricia: Invest stocks for kids' homes

When she was in her early forties, Patricia Savu decided to start saving up so that she could eventually help her daughters buy homes. That was a challenge for Savu, who worked as a chemist for 3M. She had a PhD in chemistry but didn’t know much about finance. “My father didn’t think that was the kind of thing girls should know about,” explains the 71-year-old retiree. 

Early in her working life, she stinted on contributions to her workplace 401(k) plan. But more than 10 years into her career, she started reading copies of the Wall Street Journal that a colleague had been leaving in the break room. As she read about the benefits of portfolio diversification, she began to worry that the outsize stake in 3M stock she had accumulated, thanks to annual option grants, made her family’s finances too dependent on the fate of one company. 

By that time, she was vested in the company pension, and she had upped her 401(k) contributions (invested in broad market funds) to the maximum. So for her house fund she started a habit of regularly cashing in her stock options to diversify into technology companies that her husband, an electrical engineer, admired, such as Apple, Amazon.com and Google (now Alphabet). 

Those stocks did so well that Savu became a fan of tech and growth-oriented stocks in general, although she’s a little leery of current valuations. Over time, she broadened her tech portfolio by adding low-cost exchange-traded funds such as Fidelity Nasdaq Composite Index and Technology Select Sector SPDR. (Those funds have both returned an annual average of more than 16% over the past 15 years.) 

Last year, when her younger daughter got married and started looking for houses near Savu and her husband in St. Paul, the parents realized they could afford more than a down payment. The tech-heavy house fund had done so well they could cash out $420,000 and buy outright the home her daughter’s family chose — and still leave at least an equal amount for their other daughter. Savu owns the property, and her daughter and son-in-law pay a well-below-market rent into a dedicated account to cover taxes, insurance and maintenance. 

Savu’s daughter will inherit the home, as well as whatever is left in the rent account, when Savu has passed on. Meanwhile, the house is much bigger and nicer than one her daughter would have been able to afford on her own. 

“It makes me feel good to be able to do this for her,” Savu says. “You always hear about people buying and holding. But you have to have an exit strategy if you want your investments to have an impact,” she says. 

STRATEGY: Diversify beyond company stock. 

Myles: Invest in interests to fund entrepreneurial goals

Myles Gage, 30, says he was a “sneakerhead” during his later years as a student at the Ariel Community Academy, a K–8 public school on the south side of Chicago. He loved learning about finance at the school, which was cofounded by the mutual fund company Ariel Investments. He joined the junior board of directors of the school’s investment club, which manages a portfolio of $20,000 for each class year. At year-end, the graduating students divide half of the fund’s profits among them. 

When Gage was 12, to get him thinking about his future and build a college tuition fund, his mother made him combine his two passions: Whenever he spent money saved up from birthdays to buy a new pair of Nikes, he had to buy a share of the company’s stock, too. 

He was soon buying Apple shares because he loved his iPod. And he bought a few shares in other firms he admired, such as Tesla, and companies he thought served crucial functions, such as healthcare company Johnson & Johnson. Gage, who got to meet Warren Buffett as a kid, says, “I was following Warren Buffett’s advice: Own businesses of quality, that you spend your own money with, that you would want to own forever.” 

Scholarships and loans paid for his finance degree from the University of Illinois, so Gage rededicated his investment fund to support an entrepreneurial dream. He and a friend wanted to start a company that would help youngsters learn about finance. 

In early 2019, just before his 25th birthday, Gage quit his day job as a banker and started using his investment fund to pay his living expenses while he helped build the business. He liquidated almost all of his portfolio, by then worth $45,000. He figures he put in about $8,000 into the portfolio, and he says it benefited from especially strong returns from Nike, Apple, Tesla and Johnson & Johnson. 

Cashing in the stocks (and even selling some of his beloved collector Nikes) to invest in his business “was totally worth it,” he says. His company, Rapunzl, which sells personal finance curricula to schools and offers a free stock trading game app, is growing. 

When he’s presenting an investing lesson to students, Gage likes to point to students wearing Nike shoes and say, “Thank you. You are paying me, because I own Nike stock.” That often makes an impact. “Once they understand they could be putting that money in their own pockets, a light goes on,” and they get enthusiastic about investing, he says — just like he did. 

STRATEGY: Buy what you know. 

Michael: Save for children's tuition

When his older daughter was six years old, Michael Hirsch, now 51, decided it was time to start saving for her and her sister’s college expenses. Though he was living in Southern California at the time, his fee-only financial adviser, Delia Fernandez, recommended that Hirsch start a tax-advantaged 529 college-savings account with Nebraska’s NEST program because it offers low-fee options managed by respected fund managers such as Vanguard. (Parents can use the money from any state’s 529 to pay for any accredited college.) 

To make sure they reached their goal, Hirsch and his wife automated their investing as much as possible. They set up twice-monthly automatic withdrawals from their checking account. And they chose age-based funds that would automatically rebalance and transition to safer investments as each child’s college enrollment date neared. 

As that time approached for their elder daughter, Fernandez pointed out that Hirsch had built up enough in other liquid savings that he could afford to take more risks with his college fund, in hopes of realizing a little extra growth. The Hirsches increased the 529’s stock allocation, shifting money into Vanguard stock index funds. With the regular contributions and extra deposits from bonuses or other windfalls, Hirsch says he has contributed about $80,000 for each girl. The accounts’ combined total peaked at about $215,000 before withdrawals began. 

With scholarships, his daughters’ summer jobs and the 529s, Hirsch figures they can now fully fund both daughters’ college expenses — especially since his youngest daughter expects to attend an in-state public school in their new home state of Washington. Setting aside that money early on “did hurt at first,” Hirsch says. “But when you don’t have that money in your account, you don’t even think about it after a while.” 

And it has been worth it. “My university experience was so important to shaping who I am today, and the same was true for my wife,” Hirsch says. “Knowing that we are able to provide that foundational and impactful experience for our kids means everything to us.” 

STRATEGY: Make saving automatic. 

Mike: Build a portfolio for retirement

For the first 35 years of his working life as an attorney and Washington, D.C., lobbyist Mike House, 78, funneled his retirement savings into what he thought were safe bond funds in a Fidelity account. “I am very conservative in my investing outlook,” he says. “I thought the money was really safe in bonds.” 

But as he and his wife, Gina Rigby-House, started to plan for retirement, House began to realize how paltry the returns on the bonds were. He feared he might not be on track to do the kind of traveling and charitable activities he had hoped to do in retirement. So House sought the help of a financial adviser. “I know how to do my job and make money. I don’t know how to invest money,” he says. 

A business associate recommended Ted Shanahan, founder of Blueprint Financial Group in Reston, Va. Shanahan explained that House was so focused on ensuring the return of his principal that his investments had exposed him to other risks, especially the loss of buying power due to inflation. 

It took some persuading, but eventually Shanahan maneuvered House’s portfolio into a well-diversified basket of investments that has ranged between 60% and 70% stocks. The new portfolio averages an annual return of more than 6% — more than double the return on House’s original bond portfolio. 

House, semiretired for five years, now has an eight-figure net worth that enables him and his wife to follow their passions. He still does some consulting, but the couple are preparing to move back to their home state of Alabama. 

Their investments give them the time to do volunteer work for their alma mater, the University of Alabama law school, and enable them to afford frequent trips to see family across the country as well as some bucket-list European vacations. Says House, “It’s a lot of fun.” 

STRATEGY: Consult a pro.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here. 

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Here's a comparison of two popular self-employed retirement savings plans: the solo 401(k) and the SEP IRA. See which option is right for your business and retirement planning needs. 

SEP IRAs: What is a SEP IRA and how much can you contribute?

A Simplified Employee Pension IRA (SEP IRA) is a retirement account for anyone who is self-employed, owns a business or earns freelance income. A big advantage for small businesses is the low overhead; SEP IRAs do not have the same start-up and operating costs as a conventional retirement plan.

SEP IRAs are available for a variety of small-business types, including sole proprietorships, partnerships, limited liability companies, S corporations and C corporations.  You don’t even technically need to have an established business to open a SEP IRA. Anyone who has self-employed income can open a SEP IRA, including freelancers and gig workers who aren’t considered employees.

Who can contribute:  An eligible employee, including a self-employed person, is an individual who meets all the following requirements: has reached age 21, has worked for the employer in at least three of the last five years and received at least $750 in compensation for 2024. 

Maximum Contribution: The maximum amount an employer or self-employed person can contribute to a SEP IRA for 2024 is the lesser of $69,000 in 2024, or up to 25% of compensation or net self-employment earnings, with a $345,000 limit on compensation that can be used to factor the contribution. 

Contribution deadline: Contributions must be made by the tax filing deadline or extension of the employer's return.

How to open a SEP IRA: A SEP IRA can be opened at many online brokers. You can set up a SEP for a year as late as the due date (including extensions) of your business income tax return for the year you want to establish the plan. You can establish and fund a plan for tax year 2024 up until your income tax filing deadline in 2025. 

Tax treatment. Contributions are tax-deductible, including those made to employee accounts. You can deduct the lesser of your contributions or 25% of compensation, subject to the compensation cap ($345,000 in 2024). If you’re self-employed, your deduction is capped at 25% of your net self-employment income.

Calculating contribution limits for a SEP IRA plan

If the IRS considers the employees eligible to participate in the plan, an employer must contribute on their behalf, and those contributions must be an equal percentage of compensation to their own. This rule requiring equal contributions as a percentage of compensation is why a SEP IRA is generally best for self-employed people or small-business owners with few or no employees.  

For 2024, employer contributions to an employee's SEP-IRA cannot exceed the lesser of $69,000 or 25% of the employee's compensation or net self-employment earnings, with a $345,000 limit on compensation that can be used to factor in the contribution. In this context, net self-employment income is net profit less half of your self-employment taxes paid and your SEP contribution.

Elective salary deferrals and catch-up contributions are not permitted in SEP plans.

Solo 401(k): What is a solo 401(k) and how much can you contribute? 

One may be the loneliest number, but it can pay off with a solo 401(k); it is similar to a standard 401(k) except that you are the only person in the plan, with some exceptions.

A one-participant 401(k) plan is sometimes called a solo 401(k), solo-k, uni-k or a one-participant k. This plan isn't new and it has the same rules and requirements as any other 401(k) plan. What is different is that this 401(k) plan covers a business owner with no employees, or that person and his/her spouse. 

Who can contribute: A self-employed business owner with no employees or a gig worker participating in an employer’s 401(k) who also has a side business. 

Maximum Contribution: The maximum amount a self-employed individual can contribute to a solo 401(k) for 2024 not counting catch-up contributions for those age 50 and over, cannot exceed $69,000 for 2024. Individuals 50 and older can add an extra $6,500 per year in "catch-up" contributions, bringing the total to $75,500. Whether you're permitted to contribute the maximum, though, will be determined by your self-employment income.

Contribution deadline: Contributions must be made by the tax filing deadline or extension of the employer's return.

How to open a solo 401(k): A solo 401(k) can be opened through most online brokers and requires a valid Employer Identification Number (EIN). Once the plan balance is $250,000 or more, you must file an annual report on Form 5500-SF with the IRS at the end of a given year. 

Calculating contribution limits in a one-participant 401(k) plan

Business owners can legally 'double-dip' and make contributions as an employee and employer to a solo 401(k) plan. The owner can contribute both elective deferrals and the employee nonelective contribution to their solo 401(k).

• Elective deferrals up to 100% of compensation (“earned income” in the case of a self-employed individual) up to the annual contribution limit of $23,000 in 2024. 
• Employer nonelective contributions up to 25% of compensation as defined by the plan, or for self-employed individuals up to 25% of net earnings. 

Computing the limit for nonelective contributions is simple. When figuring the contribution limit, compensation is your “earned income,” which is defined as net earnings from self-employment after deducting both one-half of your self-employment tax and contributions for yourself. 

The limit on compensation that can be used to factor your contribution is $345,000 in 2024.

SEP IRA vs. solo 401(k) — which is better?

At first glance, these plans may seem similar. But dig down into the weeds, and you'll find differences that could add up over the years. The solo 401(k) plan might be a better fit for side hustlers or part-time gig workers since you can borrow from the plan if you get in a jam, you can save at a faster rate, and you can invest in a company's 401(k) plan if you also have a regular job. On the other hand, if there's any possibility you might hire an employee, a SEP IRA is a better bet.

Why a SEP IRA may be the better choice:

Easier to administer: SEP IRAs have the same contribution limits but no annual reporting to the IRS. 

Flexibility: You don't have to commit to contributing every year. You can reduce contributions in lean years and increase contributions when profits are up. 

Optional Roth feature is allowed. The Secure Act 2.0 allows employers to offer a Roth feature but is not required to do so. You are now able to designate Roth treatment to SEP contributions. This change is recent and there are still many issues that need clarification. 

Why a solo 401(k) may be the better choice:

Self-employed people may be able to save more in a solo 401(k) than they can in a SEP IRA. Solo 401(k)s let you make both employee and employer contributions, meaning you can contribute up to $23,000 for 2024 (or $30,500 if you're 50 or older) as an employee, even if that is 100% of your self-employed earnings for the year, and you can also contribute 20% of your net self-employment income. Your total contributions can't exceed your self-employment income for the year, up to a total of $69,000 for both types of contributions (or $75,500 if age 50 or older).

Maximize your savings opportunities: If you work for a company with a retirement plan and have a freelance income, contribute to both. But keep in mind that if you’re side-gigging, employee 401(k) limits apply by person, rather than by plan. That means if you’re also participating in a 401(k) at your day job, the limit applies to contributions across all plans, not each individual plan.

Tax advantages: You can opt for the traditional 401(k), and take a deduction for contributions and reduce your income. The alternative is the Roth solo 401(k), which offers no initial tax break but allows you to take distributions in retirement tax-free.

Choosing between a traditional or Roth solo 401(k) is part guess work. In general, a Roth is a better option if you expect your income to be higher in retirement and/or you expect tax liability to be higher in the future. You should take the deduction now if you think your income will go down in retirement, or you expect tax liabilities to remain the same or lower.

Don't forget to factor in how your income in retirement will impact if you are subject to the income related monthly adjustment amount (IRMAA) for Medicare Parts B and D. Distributions from Roth accounts are generally not considered taxable income and don't affect your IRMAA liability. 

Spousal exception to the no employee rule: A spouse can be added to the solo 401k plan whether they act as a W-2 employee, or an owner in the business. This effectively doubles your solo 401k contribution limits for your household. Your spouse can either open their own solo 401k plan separate from yours, or get added to your existing plan with separate bank and brokerage accounts.

Bottom line

You can't go wrong investing in a SEP IRA or solo 401(k). They both offer tax-deferred growth and an opportunity to make Roth contributions. Contribution limits for both types of accounts are generous and neither creates a large administrative burden. 

The solo 401(k) would be my choice if I had no employees. The ability to make catch-up contributions gives this account a slightly higher contribution limit and you can add your spouse, if their participation meets IRS requirements, and double your maximum contributions. 

A SEP IRA has many of the great features of a solo 401(k) and allows employees to participate making it a great option for small business owners. The ability to lower or forgo contributions when profits are down gives an employer more flexibility to respond to market conditions. 

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