Key Points

• Most states don’t tax Social Security benefits at all.

• Of those that do, the policies vary significantly.

• On the federal level, some seniors are about to get a new tax break.

• The $23,760 Social Security bonus most retirees completely overlook ›

One of the most common questions I get asked from older friends and relatives is, "Will I have to pay taxes on my Social Security benefits?"

The short answer is "maybe." Some retirees have to pay federal income tax on a portion of their Social Security benefits, depending on their income level. However, the exact amount of tax you'll end up paying on your Social Security benefits depends not just on your income level, but where you live.

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The good news is that most states don't tax Social Security benefits at all. In more than 80% of all U.S. states, Social Security income is completely exempt from any state income taxes.

In this article, we'll take a closer look at the states that don't tax Social Security, the few states that still do, and a new tax break seniors are about to get that will help offset any tax burden.

Image source: Getty Images.

The 41 states that don't tax Social Security benefits

First, let's get to the list you've been waiting for. If you live in one of these 41 states (or D.C.), you won't pay any state income tax on your Social Security benefits in 2025.

• Alabama
• Alaska
• Arizona
• Arkansas
• California
• Delaware
• Florida
• Georgia
• Hawaii
• Idaho
• Illinois
• Indiana
• Iowa
• Kansas
• Kentucky
• Louisiana
• Maine
• Maryland
• Massachusetts
• Michigan
• Mississippi
• Missouri
• Nebraska
• Nevada
• New Hampshire
• New Jersey
• New York
• North Carolina
• North Dakota
• Ohio
• Oklahoma
• Oregon
• Pennsylvania
• South Carolina
• South Dakota
• Tennessee
• Texas
• Virginia
• Washington
• Wisconsin
• Washington, D.C.
• Wyoming

Note that this list has two types of states. There are those that don't have a state income tax at all, like Florida, and those that have provisions in their tax code that specifically exclude Social Security income (or all retirement income, in some cases).

The states that have Social Security income tax

There are only nine states that still tax Social Security benefits in 2025, and in alphabetical order, they are:

• Colorado
• Connecticut
• Minnesota
• Montana
• New Mexico
• Rhode Island
• Utah
• Vermont
• West Virginia

There are a couple of key points to know, if your state is on this list.

First, the number of states that don't tax Social Security has increased in recent years and is likely to continue to do so. In fact, 2025 is the last year that West Virginia is going to tax Social Security.

Second, each of these states has its own tax framework for Social Security benefits, and they generally only apply to either higher-income households (significantly higher than the federal taxation thresholds) or to certain age groups, like Social Security beneficiaries under 65.

A special tax break for seniors

As a final thought, regardless of what state you live in, it's important to know that a special tax break is going into effect for tax years 2025 through 2028. President Trump campaigned on the elimination of taxes on Social Security altogether, but that isn't happening. However, the recent tax and spending plan included a senior bonus that should significantly lower any Social Security tax burden, especially on middle-income retirees.

The short version is that if you're 65 or older, you can qualify for a tax deduction of as much as $6,000 per person (so married couples can get twice that amount). It begins to phase out above income levels of $75,000 (single) and $150,000 (married), but if you qualify, you can use the deduction regardless of whether you choose to itemize on your tax return.

To be sure, this isn't likely to completely eliminate tax on Social Security benefits for many retirees, but it is certainly a valuable tax break worth knowing.

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Key Points

• Small-cap stocks have dramatically underperformed large caps recently.

• There could be some excellent tailwinds for small caps in the coming years.

• Whatever happens, a leveraged ETF is usually a losing strategy to bet on a long-term trend.

• 10 stocks we like better than Vanguard Russell 2000 ETF ›

Throughout most of recent history, small-cap stocks have dramatically underperformed their large-cap counterparts. Over the past 10 years, the Vanguard Russell 2000 ETF (NASDAQ: VTWO) that tracks the popular small-cap index has delivered a 106% total return to investors, compared with 257% from the large-cap Vanguard S&P 500 ETF (NYSEMKT: VOO).

Small-cap stocks have also underperformed over the past five years, the past three years, and pretty much any other multiyear time interval over the past decade. And so far in 2025, the S&P 500 has outperformed the Russell 2000 by more than seven percentage points.

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To be sure, there are some good reasons for this. For one thing, we've had two interest rate increase cycles in the past decade, and the benchmark federal funds rate is 400 basis points higher than it was a decade ago. Generally speaking, rising rates can be a drag on all stocks, but disproportionately affect small caps. Plus, the surge in artificial intelligence investment and the strong performance of mega-ap tech stocks has fueled the S&P 500's outperformance for years.

Having said that, there are good reasons to think now could be a great time to add small-cap exposure to your portfolio. First, although the timing is uncertain, most experts agree that the likely direction of interest rates will be downward over the next few years. Second, there's a massive valuation gap between small-cap and large-cap stocks right now, and small caps are looking rather cheap.

Image source: Getty Images.

1 ETF to invest in small caps now

I've been buying shares of several ETFs in 2025, but the one I've been buying most aggressively is the Vanguard Russell 2000 ETF that I mentioned earlier.

If you aren't familiar, the Russell 2000 is the most widely followed small-cap index and invests in 2,000 different companies. It's a weighted index, but no stock makes up more than 1% of the assets, so it's nicely diversified. And like most Vanguard funds, it's a very cost-effective way to invest, with a low 0.07% expense ratio.

In a nutshell, the Vanguard Russell 2000 ETF is a great way to track the performance of U.S. small-cap stocks over time.

1 ETF to be cautious about

If investing in the Russell 2000 is a good idea, investing in an ETF that delivers three times its performance is even better, right? Well, not exactly.

The Direxion Daily Small Cap Bull 3X Shares ETF (NYSEMKT: TNA) aims to deliver three times the daily returns of the Russell 2000. So if the index rises by 1% tomorrow, this ETF should rise by about 3%.

However, it's important to note that the key word is daily. This ETF is not designed to triple the long-term performance of the Russell 2000. And without turning this into a math lesson, the mathematics of daily leveraged returns aren't favorable for long-term investors. As I mentioned earlier, the Vanguard Russell 2000 ETF has delivered a 106% total return over the past decade. During the same period, the Direxion Daily Small Cap Bull 3X Shares ETF produced a negative 15% total return.

Of course, during a short-term bull run, this ETF could be a good performer. In full disclosure, I bought a small position in it after the initial reciprocal tariff announcement sent small-cap stocks plunging in April, but only to hold for a short period. And although I have both of these ETFs in my portfolio, I have roughly 20 times the amount invested in the unlevered Vanguard Russell 2000 ETF.

The bottom line is that leveraged ETFs can be useful to take advantage of short-term mispricings, but are generally not suitable for long-term investments. To be clear, I believe that there's an excellent opportunity in small caps right now, but a simple, low-cost index fund like the Vanguard Russell 2000 ETF is the best way to capitalize on it for the next several years.

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Matt Frankel has positions in Direxion Shares ETF Trust-Direxion Daily Small Cap Bull 3x Shares, Vanguard Russell 2000 ETF, and Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.

Key Points

• The TSLY ETF is a YieldMax product that uses options strategies to generate income from Tesla stock.

• As of the latest information, the ETF yields more than 100%.

• There’s a lot more to consider than just the yield before you decide to invest.

Many ETFs have come onto the market recently that use various options strategies to boost income. For example, some ETFs use covered call strategies to produce yields of 10% or more for investors from relatively low-paying portfolios of stocks.

YieldMax ETFs take this idea to the next level, using aggressive strategies to, as the name suggests, maximize yield. It's not uncommon for YieldMax ETFs to have dividend yields of 30%, 40%, or much higher in some cases.

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One extreme example is the YieldMax Tesla Option Income Strategy ETF (NYSEMKT: TSLY), which uses call option strategies on Tesla (NASDAQ: TSLA) stock to produce a high level of monthly income. In fact, based on the past 12 months of dividends, the ETF has a dividend yield of about 127%.

Of course, if something sounds too good to be true, that's usually the case. If there was an ETF that produced a sustainable three-digit yield and was likely to do so for the foreseeable future, we'd all be scrambling to buy shares. But in this case, there are quite a few caveats and important things to know before you consider investing.

Image source: Getty Images.

How the TSLY ETF works

It might surprise you to learn that the majority of the YieldMax Tesla Option Income Strategy ETF's assets are in U.S. Treasuries. It uses these as collateral to buy and sell options on the stock, which are typically near the current share price. For example, the largest non-Treasury position in the portfolio is July 2025 call options with a $340 strike price. Some of the positions are long, some are short (meaning the ETF sold options), and there are some put options in the portfolio as well.

The general goal with the options positions is to create the highest stream of income relative to the risk level as possible.

Risk factors to consider

There are two big risk factors to consider. First, and less significant, is the inconsistency of the monthly dividend payments you'll get. Over the past 12 months, the distributions from this ETF have been as high as $1.29 or as low as $0.40.

The bigger issue is that the stock price itself has a downward bias over time. In short, if the price of Tesla stock goes up, the ETF's options strategies severely limit the upside potential. On the other hand, if the stock falls, it can result in large losses. In fact, since the YieldMax Tesla Option Income Strategy ETF was formed in late 2022, Tesla stock has risen by 92%. Shares of this ETF have fallen by 78%, and there's even been a reverse split along the way.

Of course, even with a modestly declining share price, an ETF like this can still be a winner. In other words, if the ETF declines by say, 30%, but pays a 100%-plus yield, it's still a great investment. But that hasn't been the case. In fact, including dividends, this ETF has generated a 26% total return for investors since its 2022 inception. That's 52 percentage points worse than if you had simply bought Tesla stock and held on to it.

Is the TSLY ETF right for you?

In a nutshell, YieldMax ETFs produce the best total returns compared with simply buying the underlying stock in times when the stock is mostly flat for an extended period, without any massive price swings. And if you look at virtually any chart of Tesla's historic stock performance, you'll see that doesn't really describe its typical price action.

The bottom line is that if you think Tesla stock is going to be stuck in a narrow price range for a while, the YieldMax Tesla Option Income Strategy ETF could be a good way to play it. Just be aware that this and other YieldMax ETFs aren't magical income instruments and are more likely than not to produce underperforming total returns over time.

Should you invest $1,000 in Tidal Trust II - YieldMax Tsla Option Income Strategy ETF right now?

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Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $692,914!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $963,866!*

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

Key Points

• Berkshire Hathaway is the only nontechnology company with a trillion-dollar market cap.

• Bank of America could benefit from favorable bank industry tailwinds.

• AMD could have a massive growth opportunity thanks to artificial intelligence (AI) and other major tech trends.

Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) is the largest company in the stock market not in the technology sector. As of this writing, the conglomerate led by Warren Buffett had a market cap of about $1.05 trillion -- a tremendous accomplishment for a business built on value investing principles and long-term compounding.

There are nine members of the trillion-dollar club in the U.S. stock market right now (Berkshire is No. 9). But it's safe to say that over the next decade, there will likely be many companies that achieve a 13-figure valuation.

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For many, doing so wouldn't be too much of a stretch. For example, Walmart and Visa currently have valuations of $776 billion and $675 billion, respectively, so both could get to $1 trillion over the next decade with even modest annualized returns.

Image source: The Motley Fool.

On the other hand, there are some that I think have an excellent chance of getting there through excellent stock performance. Here are two in particular that would need to deliver multibagger returns to investors in order to join the trillion-dollar club, and that I feel have a strong chance of getting there.

A great environment for banking?

Bank of America (NYSE: BAC) has a $353 billion market cap today, and is one of the largest banks in the world. To achieve a $1.05 trillion market cap like Berkshire has, it would require the stock to average about an 11% annual gain over the next decade.

This is certainly within the realm of possibilities, as I feel the conditions for the banking industry will be generally favorable -- at least for the next few years. Most economists predict that the general direction of interest rates will be lower over the coming years, and this should help boost loan demand and reduce deposit costs. Plus, the Trump administration is not only likely to generally loosen regulations going forward, but also campaigned on a 15% corporate tax rate, which would be a big benefit to Bank of America's bottom line.

CEO Brian Moynihan and his team have done an excellent job of embracing modern banking technology and creating a more efficient operation, and the bank's overall efficiency and return on assets (ROA) is likely to trend in the right direction as a result. In short, a combination of excellent leadership and favorable economic and political conditions could certainly lead to a trillion-dollar valuation.

One caveat is that Bank of America is one of the larger stock positions in Berkshire's portfolio, so if it performs well, it would also have the effect of raising Berkshire's market value. But even so, if the economic environment cooperates, Bank of America is a well-run institution and could certainly deliver excellent returns over the next decade.

An excellent track record of outperformance

Advanced Micro Devices (NASDAQ: AMD), better known simply as AMD, has performed quite well over the past few months, rebounding sharply from the April lows. But I think it's just getting started. The chipmaker has a current market cap of $233 billion, so it would need a roughly 16% annual gain over the next decade to reach Berkshire's $1.05 trillion. And I think it has an excellent shot of getting there.

AMD often gets ignored by investors because it is a distant second place to Nvidia when it comes to the high-momentum data center GPU market. But there are a few things to keep in mind.

For one thing, the data center accelerator market is a massive and fast-growing one, expected to reach $240 billion in global sales volume by 2030. So, even if AMD can boost its market share by just a few percentage points, it would be a big win for the company's top line.

It's also important to realize that while data center chips are the fastest-growing part of the business right now, there's a lot more that AMD does. For one thing, it has steadily been taking share from Intel in the PC and laptop processor market. It also makes chips for autonomous vehicles, an area expected to grow rapidly over the next decade or so.

Ever since CEO Lisa Su took the reins in late 2014, it has been a mistake to bet against AMD. During her tenure, AMD has delivered a staggering 4,180% gain for investors (about 40% annualized). While I don't exactly think that performance level will repeat itself, it wouldn't need to for AMD to reach a trillion-dollar valuation.

Will these two companies join the trillion-dollar club?

To be clear, I'm predicting both of these companies will have a higher market cap in 10 years than Berkshire Hathaway does today. Assuming Berkshire delivers 10% annualized returns over the next decade, which would be historically low for the conglomerate, it would have a market cap of about $2.7 trillion a decade from now, which obviously would be less likely for both of these companies to achieve (but it wouldn't be impossible).

The key point is that both Bank of America and AMD have fantastic leadership and a high probability of an excellent growth environment over the next decade. Of course, there's a lot that would need to go well for either to achieve a trillion-dollar valuation within the next decade, but the risk-reward dynamics of both stocks look excellent right now.

Should you invest $1,000 in Bank of America right now?

Before you buy stock in Bank of America, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Bank of America wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $697,627!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $939,655!*

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*Stock Advisor returns as of June 30, 2025

Bank of America is an advertising partner of Motley Fool Money. Matt Frankel has positions in Advanced Micro Devices, Bank of America, and Berkshire Hathaway. The Motley Fool has positions in and recommends Advanced Micro Devices, Bank of America, Berkshire Hathaway, Intel, Nvidia, Visa, and Walmart. The Motley Fool recommends the following options: short August 2025 $24 calls on Intel. The Motley Fool has a disclosure policy.

After a nearly two-year hiatus from the cryptocurrency industry, banking and finance app SoFi (NASDAQ: SOFI) recently announced that it will be getting back into the crypto market, and in an even bigger way than before.

SoFi made two specific announcements. First, it reported the return of crypto trading to its app -- a service it had offered until late 2023. Second, the bank announced that it would leverage the capabilities of cryptocurrency and blockchain technology to facilitate rapid international money transfers. And perhaps most importantly, SoFi called this the "first of many planned crypto and blockchain innovations across [their] products and services." Both of these newly announced capabilities are expected to launch later in 2025.

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When it comes to cross-border money transfers, the goal is to create a more seamless and low-cost experience than currently exists in the market. And with the return of crypto trading, SoFi's goal is to gradually expand the platform, including offering stablecoins, allowing members to borrow against cryptocurrencies, and introducing staking features.

Image source: Getty Images.

The goal is to equip the SoFi app with more financial service capabilities than any other app. But will crypto and its related capabilities become a major revenue driver that will move the stock?

This isn't SoFi's first crypto venture

To clarify, SoFi used to offer cryptocurrency trading in its app but closed it down a few years ago, mainly due to potential regulatory issues involving chartered banks providing cryptocurrency services to customers. This is also why you generally haven't seen any major banks roll out cryptocurrency trading platforms of their own.

Specifically, SoFi became a bank in January 2022, and as part of the approval process, it was forced to refrain from engaging in any cryptocurrency-related activities without specific approval from the Office of the Comptroller of the Currency (OCC).

However, SoFi says that clarification provided by the OCC recently makes it practical for nationally chartered banks to "provide crypto custody and execution services on behalf of customers, hold dollar deposits serving as reserves backing stablecoins in certain circumstances, engage in certain stablecoin activities to facilitate payment transactions, and more."

Will it be a needle-mover for SoFi stock?

On the one hand, it's important to point out that back in 2023, when it shut down crypto trading, SoFi specifically said that it wasn't a material part of its business. On the other hand, it's fair to say that interest in cryptocurrency trading has once again surged in popularity since SoFi shut down its original cryptocurrency platform in late 2023.

It's unclear how SoFi's crypto trading pricing will be structured, but it will likely make money through either a percentage-based transaction fee or a spread between the buy and sell prices of each digital asset.

To be clear, I don't see crypto trading becoming one of the company's major revenue streams anytime soon. But adding this feature to its ecosystem could make SoFi's platform more attractive to potential customers interested in crypto, who may also become banking customers, loan customers, and so forth.

The bigger news is likely the ability to send money internationally in a fully automated and low-cost manner directly through the SoFi app. While this is technically a crypto-enabled feature, it will likely appeal to a broader group than just cryptocurrency fans, as the transactions will be initiated in U.S. dollars. And this would be a unique feature among finance apps. With over $90 billion in international transfers sent annually from the U.S., a better way to do it could be a major draw.

SoFi's customer base is growing quickly. It added more than 800,000 members during the first quarter alone, an all-time high for the company. If adding cryptocurrency trading and related services can help keep this growth going -- or even accelerate it -- it could be a big win for investors.

Should you invest $1,000 in SoFi Technologies right now?

Before you buy stock in SoFi Technologies, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and SoFi Technologies wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $713,547!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $966,931!*

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*Stock Advisor returns as of June 23, 2025

Matt Frankel has positions in SoFi Technologies. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Advanced Micro Devices (NASDAQ: AMD), better known simply as AMD, is often overlooked by investors, as it has a distant second-place market share to leading chipmaker Nvidia (NASDAQ: NVDA) in the AI-fueled data center accelerator market.

There are several reasons why AMD stock should be on your radar right now. CEO Lisa Su has established a long track record of outperforming expectations. The company's recent data center chips are gaining impressive traction. And AMD has been steadily taking PC market share from long-time leader Intel (NASDAQ: INTC) for years.

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However, the biggest reason why it's not too late to buy AMD right now is because of the long-tailed growth potential in some of its core markets.

Image source: Getty Images.

AMD's market growth

Here are a few projections for AMD's core markets from reputable analytical firms:

• Data center capital expenditure is expected to roughly double over the next three years, and according to Grand View Research; the data center accelerator market is expected to grow from about $34 billion in revenue last year to $166 billion by 2030.
• The gaming GPU market is estimated to be a $5 billion opportunity today, but is expected to more than 6x in size by 2030, according to Mordor Intelligence.
• The automotive GPU market is expected to be a $45 billion market by 2030, according to Virtue Market Research, a 33% annualized growth rate.
• Overall, the global GPU market (which is only one type of chip AMD makes) is expected to grow from $62 billion in 2024 to over $460 billion by 2032, a 29% annualized growth rate.

The bottom line is that even if AMD simply maintains its current market share, revenue growth could be extremely strong for the foreseeable future.

Should you invest $1,000 in Advanced Micro Devices right now?

Before you buy stock in Advanced Micro Devices, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Advanced Micro Devices wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $713,547!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $966,931!*

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*Stock Advisor returns as of June 23, 2025

Matt Frankel has positions in Advanced Micro Devices. The Motley Fool has positions in and recommends Advanced Micro Devices, Intel, and Nvidia. The Motley Fool recommends the following options: short August 2025 $24 calls on Intel. The Motley Fool has a disclosure policy.

Here's our initial take on Carnival's (NYSE: CCL) financial report.

Key Metrics

Carnival's Results Show Strong Cruise Demand

The short version is that Carnival's fiscal second-quarter results look very strong and represent the company's highest second-quarter revenue ever. On the headlines, both revenue and earnings surpassed analysts' expectations, and by a significant margin. In fact, net income beat Carnival's own guidance by $185 million, and management specifically called out higher ticket prices and higher onboard spending as catalysts.

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Beyond the headlines, virtually every metric is at a record high or looks extremely impressive. For example, adjusted EBITDA was up by 26% year over year to an all-time high, and operating margin improved by 500 basis points and is now significantly above where it was before the pandemic-era disruption.

Carnival also made significant progress on its balance sheet (debt management has been a focus in recent years). It prepaid some of its debt maturing in 2026 and refinanced the remainder at a lower rate, reducing interest expense. Thanks to debt reduction and strong business performance, Carnival's net debt-to-adjusted EBITDA ratio fell from 4.1x to 3.7x sequentially.

Looking ahead, advanced bookings remain near an all-time high, and Carnival's customer deposits (for future trips) reached a record level of $8.5 billion. Management expects costs to rise slightly in the third fiscal quarter due to expenses involved with the highly anticipated opening of its Celebration Key private destination but calls for adjusted net income to rise by "over 40%" for the full fiscal year. Full-year adjusted EPS guidance calls for a range of $1.83 to $1.97 per share, which is one penny more than expected at the midpoint.

Immediate Market Reaction

Not surprisingly, the immediate market reaction to Carnival's earnings report was a rather strong one. Shortly after the opening bell, Carnival was higher by more than 9% on the announcement.

However, it's worth noting that this reaction came before Carnival's conference call, which is scheduled for 10 a.m. on the same morning (Tuesday).

What to Watch

First, it's worth noting that the cruise industry is a very seasonal business. It makes the most money when kids are out of school and families have the ability to travel. So the fiscal third quarter (June, July, and August) is much stronger than the two we've already seen this year. In fact, in the company's third fiscal quarter of 2024, revenue was 33% higher than the next-busiest period. Carnival is calling for $1.90 in full-year adjusted EPS, based on the midpoint of its guidance range, with nearly 70% of that expected to come from the third quarter alone. So to call the company's next earnings report important would be an understatement.

Second, Carnival Cruise Line recently disappointed many of its loyal cruisers with the announcement of a new loyalty program. Of course, when airlines, hotels, etc. change their loyalty programs, there are almost always some people who are unhappy with it, but it's rare to see a virtually universal negative reception like Carnival just got. So one thing I'll be watching is whether some of Carnival's loyal cruisers start booking trips on competing lines more often.

Helpful Resources

• Full earnings report
• Investor relations page

Should you invest $1,000 in Carnival Corp. right now?

Before you buy stock in Carnival Corp., consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Carnival Corp. wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $676,023!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $883,692!*

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See the 10 stocks »

*Stock Advisor returns as of June 23, 2025

Matt Frankel has no position in any of the stocks mentioned. The Motley Fool recommends Carnival Corp. The Motley Fool has a disclosure policy.

The Vanguard S&P 500 ETF (NYSEMKT: VOO), also known by its ticker symbol VOO, is one of the most popular funds in the world. Including Vanguard's mutual fund version of the same index fund, investors have $1.4 trillion in assets invested in it.

As the name suggests, this is an index fund that tracks the benchmark S&P 500 (SNPINDEX: ^GSPC) over time. In other words, if the S&P 500 produces a 20% total return for investors over the next two years, this ETF should do the same, net of fees.

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Speaking of fees, as a Vanguard ETF, the investment expenses of this index fund are extremely low. It has an expense ratio of just 0.03%, which means that for every $1,000 in assets, your annual investment cost will be just $0.30, which will be reflected in the fund's performance over time.

Image source: Getty Images.

The Vanguard S&P 500 ETF is generally thought of as an excellent "core" investment for a stock portfolio. And in full disclosure, I own shares of it in my own retirement portfolio. But if I were to put new money to work today, I may choose to go in a slightly different direction and buy shares of a similar ETF that has one big difference.

My biggest problem with the Vanguard S&P 500 ETF

To be clear, the Vanguard S&P 500 ETF is a great index fund. If you're simply looking for a low-cost way to match the stock market's performance over time, it could be an excellent addition to your portfolio.

My biggest issue with investing in the S&P 500 is that it has become rather top-heavy in recent years. With the emergence of trillion-dollar tech companies, the S&P 500 is weighted so that well over one-third of its performance is derived from the 10 largest components.

In a nutshell, an S&P 500 index fund has increasingly become a bet on the largest few dozen U.S. companies, and has become less of a broad, diversified way of getting stock market exposure.

An S&P 500 ETF that does things a little differently

If I were putting new money to work today, I would take a closer look at the Invesco S&P 500 Equal Weight ETF (NYSEMKT: RSP). It invests in the same 500 companies you'll find in the portfolio of the Vanguard S&P 500 ETF, but with one key difference.

Instead of allocating assets based on the size of each component, it invests an equal amount in all 500 companies. Of course, there are day-to-day fluctuations, but there's about 0.2% of the fund's assets invested at any given time. This means that smaller components of the S&P 500 like Dollar General carry the same weight as megacaps like Microsoft.

The equal-weight fund does have a somewhat higher 0.20% expense ratio, but this is still on the lower end for a unique ETF.

As mentioned, there's absolutely nothing wrong with a traditional S&P 500 index fund. But if you're not too much of a fan of having your investment's performance largely dependent on just a few companies, this equal-weight counterpart could be worth a closer look.

Should you invest $1,000 in Invesco S&P 500 Equal Weight ETF right now?

Before you buy stock in Invesco S&P 500 Equal Weight ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Invesco S&P 500 Equal Weight ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $659,171!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $891,722!*

Now, it’s worth noting Stock Advisor’s total average return is 995% — a market-crushing outperformance compared to 172% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 9, 2025

Matt Frankel has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Microsoft and Vanguard S&P 500 ETF. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Here's our initial take on Kroger's (NYSE: KR) fiscal 2025 first-quarter financial report.

Key Metrics

Strong Earnings, but Uncertainty Remains

In the first quarter, Kroger reported solid earnings, although revenue fell short of expectations. The grocery giant reported $1.49 in earnings per share, three cents ahead of analysts' consensus, but sales came in just modestly short of estimates (although same-store sales excluding fuel purchases grew by 3.2% year over year).

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E-commerce sales were a particularly bright spot, up 15% year over year and becoming more of a part of the company's business. It will be very interesting to keep an eye on this metric going forward.

Speaking of going forward, Kroger reaffirmed most of its guidance, including its expectation for full-year EPS in the range of $4.60 to $4.80. Analysts expected to see $4.76, so at the midpoint, management's guidance range is a little weak, especially considering that Kroger beat earnings estimates in the first quarter. On the other hand, Kroger raised its same-store sales guidance (which it refers to as "identical sales without fuel"), so it's fair to say that guidance is a mixed bag.

Management also provided some key updates on Kroger's capital allocation strategy, specifically saying that it expects to not only maintain, but increase its dividend over time. The company also addressed its $5 billion accelerated share repurchase program, which started in the fourth quarter of last year, stating that it expects it to be complete "no later than" the third quarter.

Immediate Market Reaction

The initial market reaction to Kroger's earnings report was rather neutral. As of 8:15 a.m. EDT, about 15 minutes after the announcement, Kroger stock was up by less than 0.5%. This isn't too surprising, considering the mixed results with revenue, earnings, and forward-looking guidance.

However, it's worth noting that this reaction was before management's quarterly earnings call, which was scheduled for later on the same morning. Depending on the comments made, the stock could definitely react one way or another.

What to Watch

In CFO David Kennerley's comments, he specifically called out the uncertain macroeconomic environment as the reason why Kroger didn't raise its guidance for earnings, free cash flow, and other key metrics even though it beat expectations in the first quarter. Tariffs are a key factor to keep an eye on (Kroger sells a lot of products not made here), but it's generally important to realize that there's a lot that is outside of the company's control that can result in better- or worse-than-expected earnings as 2025 goes on.

Helpful Resources

• Full earnings report
• Investor relations page
• Additional coverage: Where Will Kroger Stock Be in 1 Year?

Should you invest $1,000 in Kroger right now?

Before you buy stock in Kroger, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Kroger wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $659,171!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $891,722!*

Now, it’s worth noting Stock Advisor’s total average return is 995% — a market-crushing outperformance compared to 172% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 9, 2025

Matt Frankel has no position in any of the stocks mentioned. The Motley Fool recommends Kroger. The Motley Fool has a disclosure policy.

SiriusXM Holdings (NASDAQ: SIRI) isn't exactly an investor favorite right now, and it's easy to see why. The satellite radio leader's subscriber base peaked in 2019 and isn't heading in the right direction, with a decrease of about 303,000 self-pay subscribers in the first quarter of 2025 alone. Plus, revenue has been falling recently, down by about 3% year over year in 2024. Profitability is also heading in the wrong direction, with free cash slow down by about 33% over the past two full years.

With the stock down by more than 60% since the beginning of last year, it doesn't seem investors have much faith in the company, either.

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However, I have a bit of a contrarian take here. SiriusXM is a highly profitable business right now, and management isn't exactly sitting around doing nothing. With an extremely low valuation, now could be a smart time to take a closer look. In fact, I predict that over the next five years, SiriusXM will beat the S&P 500's total returns.

Image source: Getty Images.

A more efficient operation

The first phase of SiriusXM's turnaround plan was mainly focused on cost reduction, and after a couple of years, the company has done a great job in this area. In the first quarter, Sirius reported a year-over-year 19% decline in sales and marketing expenses, and a 15% decline in product and technology costs.

Between 2023 and 2024, SiriusXM achieved about $350 million in gross savings, and aims to reach $200 million in run rate savings by the end of 2025, and to continue to lower expenses in subsequent years. For example, satellite capital expenditures are estimated to be about $220 million this year, but less than half of that in 2026, which should greatly boost free cash flow generation.

Lots of opportunities to grow revenue

The cost-cutting initiatives have been impressive, but that's only one side of the turnaround efforts. In simple terms, it doesn't matter how efficient the company gets if it can't return to growth.

SiriusXM sees the ability to grow free cash flow to about $1.5 billion annually in the near term, which would be about 50% more than the current level. And there are several different initiatives that could help it get there.

For one thing, the company is getting a little more creative about the ways it sells subscriptions. Historically, SiriusXM would simply give new vehicle buyers a short trial, and hope they'd subscribe when it expires. This is certainly still part of it, but SiriusXM is trying several other ways to jump-start subscriber growth.

As an example, the company recently launched a three-year dealer-sold subscription as a new vehicle option and is seeing strong interest so far.

Although the automotive subscriber segment is the focus of the business, SiriusXM is also putting effort into boosting non-vehicle subscriptions, especially through bundles. It recently announced a new bundle of SiriusXM's All Access and the Fox Nation streaming service in app-only form for just $11.99 per month.

Advertising is another major opportunity that is starting to gain some serious traction. For example, SiriusXM recently rolled out a free ad-supported version of its service in certain new vehicles. Although Pandora, owned by SiriusXM, mainly uses an advertising revenue model, SiriusXM only gets 2.5% of its revenue from ads. In-car advertising is a largely untapped opportunity for SiriusXM at this point, but could potentially grow into a billion-dollar revenue stream.

Advertising is a major focus for SiriusXM right now, and if it can become a significant revenue driver, it would likely be a big win for shareholders. The company is doing a great job of investing in ad technology and recently partnered with AI company Narrativ to allow brands to produce high-quality ads in a cost-effective and scalable way.

A cheap stock with high total return potential

As I mentioned, the market isn't showing much faith in SiriusXM's turnaround plan. In fact, the stock trades for just over seven times forward earnings, despite excellent profitability and expected free cash flow growth in 2025. Not only that, but the company pays a generous dividend, with a yield of about 5% as of this writing, which is well covered by the company's earnings. Plus, the company started buying back stock in late 2024 and continues to do so, which could also help drive total returns.

To sum it up, while there's quite a bit of execution risk, SiriusXM has a solid plan, and is making all the right moves to capitalize on its opportunities. I recently added shares to my portfolio and believe this will be a market-beating stock over the next five years.

Should you invest $1,000 in Sirius XM right now?

Before you buy stock in Sirius XM, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Sirius XM wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $658,297!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $883,386!*

Now, it’s worth noting Stock Advisor’s total average return is 992% — a market-crushing outperformance compared to 172% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 9, 2025

Matt Frankel has positions in Sirius XM. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

If you qualify for Social Security retirement benefits, you can choose to start receiving your monthly payments as early as age 62. However, if you start collecting Social Security before you reach full retirement age, you'll be penalized.

The reduced benefit is by far the biggest drawback of claiming Social Security early. There are certainly some good reasons for doing so, but it's still important to understand the financial implications of your age when you choose to apply for benefits.

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Image source: Getty Images.

When do you get your full Social Security retirement benefit?

Full retirement age for Social Security depends on the year you were born, but for most people reading this, it is 67 years old. This full retirement age applies to all American workers born in 1960 or later. Here's what it is for other workers who are at or around Social Security claiming age right now:

Data source: Social Security Administration.

To be clear, this is the age at which you would get your full, unreduced, Social Security benefit based on your work record. It is not the age of Medicare eligibility (that's 65), or other retirement-related financial issues such as being able to withdraw from retirement accounts.

What happens if you start Social Security early?

You can claim Social Security as early as age 62, but if you start collecting benefits before reaching full retirement age, your monthly payments will be permanently reduced.

The magnitude of the reduction depends on how early you start. And there are two rules.

• For every year you claim early, up to three years, your benefit will be reduced by 6 2/3%.
• For every year beyond three years, your benefit will be reduced by 5%.

So, if your full retirement age is 67, this means that your benefit reduction would look like this at different claiming ages:

Data sources: Social Security Administration, author's calculations.

A couple of notes:

• These percentages are prorated month by month. In other words, if you start Social Security at 62 years and 1 month, it would result in a slightly higher benefit than you'd get at 62.
• The reduction percentages are slightly different for spousal benefits.

It's also worth noting that if you wait until after reaching full retirement age, your benefit will be permanently increased at a rate of 8% per year, until as late as age 70. So if your full retirement age is 67, that means your benefit could grow by as much as 24% if you decide to wait.

Is it ever a good idea to start Social Security early?

Even with a reduction for early retirement, there can still be some valid reasons for claiming Social Security early. There are some obvious reasons -- you need the money, for example -- but some aren't so obvious.

For example, did you know that if you collect Social Security retirement and still have a child living at home, the child may also be able to get a benefit based on your work record? If this applies to you, it can certainly be worth starting benefits before full retirement age in some cases.

Your health and family history is another big factor to consider. If you're in relatively poor health when you reach your 60s, it can be to your financial benefit to start Social Security as soon as you can.

The bottom line is that the reduction for early retirement is certainly a factor in when you should claim Social Security, but it isn't the only factor to consider.

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If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income.

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View the "Social Security secrets" »

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As always, The Motley Fool cannot and does not provide personalized investing or financial advice. This information is for informational and educational purposes only and is not a substitute for professional financial advice. Always seek the guidance of a qualified financial advisor for any questions regarding your personal financial situation. If you'd like to submit your question for feedback, you can do so here.

Recently, a user on Reddit (NYSE: RDDT) posed an important financial question about the best ways to put cash to work. Specifically, the question read as follows:

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$80k cash in the bank, what should I do?
byu/Exciting-Wrap-7582 inpersonalfinance

Unfortunately, there's no perfect answer, especially without more details about the commenter's personal financial situation. Although I can't offer personal advice, here are a few things to think about that could help point you on the right track, from the perspective of a Certified Financial Planner® professional.

Consider your near-term financial goals

First, let's address one of the options: continuing to save more money.

I generally advise that the stock market is no place for money that you'll need within the next five years. So if the reason you have so much cash is for a relatively near-term financial goal, such as paying for your kids' tuition, renovating your kitchen, and so on, the best answer is probably "keep saving."

Many people with near-term goals still believe that the best bet is to pay down the mortgage, with the plan of simply pulling out equity at some point. But there's no guarantee that there will be a reasonable interest rate available when you need the money, and it's important to realize that obtaining a home equity loan or cash-out refinancing isn't free -- there are considerable closing costs involved.

Image source: Getty Images.

Investing vs. paying down your mortgage

There's a solid mathematical argument in favor of investing instead of paying down a mortgage.

Over the long term, an S&P 500 index fund has historically produced 10% annualized returns over long periods, and even an age-appropriate mix of stocks and bonds can be reasonably expected to generate 7%-8% total returns over the long term.

Of course, one major component of the decision is the specific details of your mortgage. For example, if you locked in a 30-year mortgage rate of 2.75% in 2021, it's a much clearer mathematical argument than if you have a 7% rate.

There are also other factors to consider, and a big one is mortgage insurance, which you are likely to pay if you put less than 20% down when you purchase your home. Unless you used a VA loan, or some other specialized loan, mortgage insurance can cost thousands of dollars every year. If putting $80,000 in cash (or whatever amount you have available) allows you to drop mortgage insurance and saves you hundreds of dollars per month, it could help swing the pendulum in the favor of paying down your mortgage.

As a general guideline, if your mortgage interest rate is several percentage points lower than what you can reasonably expect from investing the money, investing is generally how I'd go. If it's a relatively small difference, it's a little tougher.

It's also considering your age and proximity to retirement. One common goal to help keep expenses low is to pay off a home completely before leaving the workforce, and if this is the case, it can certainly make sense to accelerate your mortgage repayment.

Consider your own peace of mind

It's important to mention that the best move for you might go beyond mathematics and logic. Some people simply sleep better at night if they have less debt. If getting out of debt is a goal for you, paying down your mortgage can be the best decision, even if you have a mortgage with a low interest rate.

Another consideration is that some people simply feel better with a large cash cushion in the bank. The point is that whatever the math says, it's important to take your own mental well-being into consideration.

As a final thought, if you do choose to keep the money in cash in savings, that doesn't mean you can't generate any returns on it. There are some excellent high-yield savings accounts offered by top-notch financial institutions that are paying interest rates in the 3%-4% range as of this writing. With a large amount of cash, simply finding the best savings account could result in thousands of dollars of extra income each year.

The $23,760 Social Security bonus most retirees completely overlook

If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income.

One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these strategies.

View the "Social Security secrets" »

Matt Frankel 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.

Once you reach a certain age, you are required to start withdrawing money from certain retirement accounts. This is known as required minimum distributions, or RMDs, and is an important concept for retirees to know, especially those who are approaching their 70s with no immediate plans to take any money out of their retirement savings.

With that in mind, here's a primer on RMD rules: what accounts have RMDs, when you need to start withdrawing money, how much to take out, and more.

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Image source: Getty Images.

Which accounts are subject to RMDs?

The short explanation is that retirement plans for which you received a tax break for your contributions are subject to RMD requirements. These are also referred to as pre-tax retirement accounts.

This includes, but is not limited to:

• Traditional IRAs
• SEP-IRAs (non-Roth)
• SIMPLE IRAs (non-Roth)
• Most 401(k) plans
• Most 403(b) plans
• Most 457 plans
• Thrift Savings Plans

The general idea of RMDs is that these accounts are tax-deferred, not tax-free. The government gave you a tax deduction for your contributions but eventually wants its cut of the money. And that's where RMDs come in. At some point you have to start taking money, which will be taxable income, out of the account.

Any Roth accounts, including Roth 401(k) and others, are not subject to RMD rules. Contributions to Roth accounts are not tax-deductible when they're made, but qualifying withdrawals are not taxable, and therefore the IRS doesn't care when you take the money out.

How RMDs work

Fortunately, the RMD rules are pretty straightforward. There are two different RMD rules that are important to understand: when they start, and how much you'll need to take out each year.

First, the age at which you must start taking RMDs has increased in recent years. Now, you need to take your first RMD when you turn 73. You can withdraw your first RMD as late as April 1 of the year after you turn 73, and subsequent RMDs must be taken by Dec. 31 each year thereafter.

However, I'd caution you to think twice about waiting until the last minute to take your first RMD. Think of it this way. If you take your 73-year-old RMD on April 1 of the following year, you'd still have to take your 74-year-old RMD by the end of the same calendar year. That's two years' worth of taxable withdrawals taking place within the same year. There could certainly be good reasons for doing this but be aware that the "double RMD" this would create could potentially bump you into a higher marginal tax bracket.

How much is your RMD?

You can calculate your RMD easily, if you know what to use. You'll need two pieces of information:

• Your account balance as of Dec. 31 of the prior year. You can usually use your year-end statement to find this.
• Your life expectancy factor, as published in IRS tables, which can be found here (in Appendix B). Most people will use the Uniform Lifetime Table, unless your sole beneficiary is your spouse who is more than 10 years younger than you. In that case, you'd use the Joint and Last Survivor Life Expectancy table.

To calculate your RMD each year, you'd simply divide your year-end account balance by the appropriate life expectancy factor.

For example, if you are turning 75 in 2025 and your 401(k) balance was $700,000 at the end of last year, you'd use a factor of 24.6 from the Uniform Lifetime Table. Dividing the two numbers shows an RMD of $28,455, which must be withdrawn by the end of the year.

What to do if you don't need the money

First, if you don't need the money, you should still take your RMDs each year. The penalties for not taking an RMD are rather harsh.

Of course, if you don't need the money to fund your lifestyle in retirement, it's certainly a good problem to have. And there are several things you can consider doing with the money that are more effective strategies that simply not taking your RMD and eating the penalty.

For example, you could simply put the money into your regular brokerage account, and you can even buy the same investments you sold to complete your RMD if you want. You may be able to even transfer assets directly from your pre-tax retirement account to a taxable brokerage account to fulfil your RMD requirement. Or, you could donate the money to charity to avoid the tax sting of an unneeded RMD, and there are several strategies retirees could use. A qualified charitable distribution, or QCD, can be especially effective.

The bottom line is that you should absolutely take your RMD, even if you don't need the money. There are several ways to put the money to work, either for you or for the causes you care about.

The $23,760 Social Security bonus most retirees completely overlook

If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income.

One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these strategies.

View the "Social Security secrets" »

The Motley Fool has a disclosure policy.

Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) has been one of the more interesting stock market stories of 2025. When the S&P 500 briefly plunged into bear market territory in April after the president's reciprocal tariff announcements, Berkshire held up quite well. In fact, Berkshire's stock reached a fresh all-time high a few weeks later and as of early May was one of the best-performing large cap stocks in the market.

However, at Berkshire Hathaway's annual meeting, legendary investor and CEO Warren Buffett dropped a bombshell on investors and announced that he intends to step down at the end of the year. In just over a month since that time, Berkshire has lost more than 10% of its market value.

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Historically, a 10% correction in Berkshire Hathaway stock has been an excellent time to buy. However, this time looks a little different. For one thing, even after falling 10%, Berkshire is still beating the S&P 500 over the past year. Second, is Berkshire a good buy even without Warren Buffet?

There are two things to unpack here:

• Can Berkshire still be a great investment in the post-Warren Buffett era?
• With a valuation of more than $1 trillion, even after a 10% decline, is Berkshire attractively valued as a business?

To be sure, these are somewhat a matter of opinion. But let's try to answer both of these questions.

Image source: Getty Images.

What changes when Buffett steps down?

First, it's important to acknowledge that there's a lot that won't change when Buffett steps down. Just to name a few key points:

• Each of Berkshire's subsidiary businesses has its own management team, and there's very little oversight from Berkshire's corporate office.
• After Buffett steps down, new CEO Greg Abel will still oversee the company's non-insurance operations, and Vice Chairman Ajit Jain will still preside over the insurance businesses.
• Investment managers Ted Weschler and Todd Combs will still help allocate money in the stock portfolio.
• Buffett is planning to remain in an executive chairman role, so he still has significant influence.

Arguably, the biggest changes will be that Greg Abel, not Buffett, will have final say over what the company does with its nearly $350 billion cash stockpile, and Buffett won't be picking stocks in the portfolio.

However, I'd push back on the fact that these will be major changes. Abel knows Buffett's capital deployment strategies better than anyone and will use the same general investment framework in place now. And with the stock portfolio, Weschler and Combs have established an excellent track record. In fact, one of them was initially responsible for Berkshire's Apple (NASDAQ: AAPL) investment -- its most successful of all time.

Berkshire's valuation (short version)

There are three main parts of Berkshire Hathaway: its operating businesses, its stock portfolio, and its cash. The latter two are very straightforward to value.

As of the latest information, Berkshire has about $348 billion in cash and short-term investments, and its stock portfolio has a market value of $279.4 billion. Subtracting these from its market cap of $1.049 trillion shows that the company's operating businesses are valued at $421.6 billion.

Over the past four quarters, excluding investment income, Berkshire's operating profit has been about $33 billion. This means that Berkshire's businesses are trading for an exceptionally low valuation of less than 13 times earnings despite being a largely recession-resistant collection of companies with reliable cash flow.

Of course, this valuation is a bit of an oversimplification. Berkshire's subsidiaries are a diverse collection of different industries, growth rates, and business dynamics, and looking at the price-to-earnings (P/E) multiple for any investment is just one piece of the valuation puzzle. But the point is that despite its trillion-dollar valuation, Berkshire isn't as expensive of a stock as you might assume.

The bottom line

At a share price of about $488 as I'm writing this, Berkshire isn't as attractive as it was a year ago when its share price was 20% lower. But there are some good reasons for the strong performance, and the reality is that the business isn't going to change as much as you might think after Buffett steps down, and a 11% decline in the stock seems to be a bit of an overreaction. After all, Buffett turns 95 this year, so although the announcement was unexpected, the fact that he won't be at the helm much longer really shouldn't be a surprise.

Berkshire Hathaway is one of my largest stock investments and one I've added to many times over the decade or so I've held it. I have absolutely no plans to sell a single share, and although I have no clue what Berkshire's stock price will do over the coming weeks or months, there's a solid case to be made that this is a buying opportunity for long-term investors.

Should you invest $1,000 in Berkshire Hathaway right now?

Before you buy stock in Berkshire Hathaway, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Berkshire Hathaway wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $657,871!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $875,479!*

Now, it’s worth noting Stock Advisor’s total average return is 998% — a market-crushing outperformance compared to 174% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

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*Stock Advisor returns as of June 9, 2025

Matt Frankel has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway. The Motley Fool has a disclosure policy.

There are some excellent artificial intelligence (AI) stocks you can buy right now. However, my favorite -- and largest AI play in my own portfolio -- is Amazon (NASDAQ: AMZN).

To be sure, there are a lot of reasons why I like Amazon as a long-term investment. E-commerce still represents less than one-fifth of all U.S. retail, and there's massive international expansion potential for the business, just to name a few pluses. But the No. 1 reason I love the stock is Amazon Web Services (AWS) and its potential to drive profits higher over the next decade.

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Image source: Getty Images.

Why AWS could be a massive catalyst

AWS makes up less than 20% of Amazon's revenue, but it's the fastest-growing, most profitable part of the company. Despite accounting for less than one-fifth of sales, as noted, AWS was responsible for 63% of the company's operating income in the first quarter.

However, this could be just the beginning. The global cloud computing market is expected to roughly triple in size by 2030, compared with 2024 levels. Assuming AWS simply maintains its current market share, this means that AWS revenue could rise from $107.6 billion in 2024 to about $342 billion in 2030.

If Amazon can maintain its current operating margin for AWS (it's likely the margin will improve as the business scales), this would result in about $87 billion in additional annual operating income just from AWS. This alone would likely drive excellent stock returns -- and that's on top of any value added through profit increases from the retail side.

Should you invest $1,000 in Amazon right now?

Before you buy stock in Amazon, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Amazon wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $657,871!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $875,479!*

Now, it’s worth noting Stock Advisor’s total average return is 998% — a market-crushing outperformance compared to 174% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 9, 2025

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Matt Frankel has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.

Realty Income (NYSE: O) has a strong performance history over the long run, with cumulative returns since its 1994 IPO that have handily outpaced the S&P 500 (SNPINDEX: ^GSPC). However, over the past decade, the net lease real estate investment trust, or REIT, has significantly underperformed the broader market.

Of course, some of this has been due to the surge in megacap tech stocks largely fueling the S&P 500's performance during that time. But even so, a 108% total return in a decade (about 7.6% annualized) is lower than long-term investors tend to hope for from their stock investments.

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Having said that, Realty Income hasn't underperformed due to anything being wrong with the business itself. Its properties are still generating predictable, growing income streams. Management is still finding ways to invest billions in capital per year into new investments. And the company's bottom line continues to grow, allowing management to keep increasing the dividend, with the current streak standing at 111 consecutive quarterly dividend raises.

Image source: Getty Images.

Realty Income's business is doing well

As of the first quarter, Realty Income owns 15,627 properties, and about 73% of its rental income comes from retail tenants. Portfolio occupancy was 98.5%, and although nearly 200 leases matured, Realty Income managed to recapture about 104% of the prior rent. Adjusted funds from operations (AFFO), the best metric for real estate "earnings," grew by 3% year over year despite the difficult interest rate environment.

During the quarter, Realty Income managed to deploy $1.4 billion in acquisitions at an average initial yield of 7.5%, and about 60% of new investment activity was in Europe. Management expects to spend a total of $4 billion this year on investments, and it wouldn't be surprising to see the actual total be more. Because of its excellent corporate credit, Realty Income recently issued new debt at a 5.125% interest rate, so the economics of acquiring new properties still make a lot of sense.

Also, keep in mind that Realty Income is designed to perform well, no matter what the economy or stock market does. Tenants are on long-term, triple net leases, which are great for revenue visibility and have gradual increases built in. Cash flow has been extremely stable in a variety of environments -- in fact, even in the initial wave of the COVID-19 pandemic in 2020 (when many of its tenants literally couldn't operate), Realty Income's occupancy never declined by even one percentage point from prior highs.

Where will Realty Income stock be in five years?

Where Realty Income's stock will be in five years will largely depend on the interest rate environment. I mentioned that the company has produced mildly disappointing returns over the past decade, but we've had not one but two rising-rate environments in that time, and the benchmark federal funds rate is more than 400 basis points higher than it was a decade ago.

Therefore, if interest rates generally gravitate lower over the next few years and are significantly lower in five years than they are now, Realty Income's stock is likely to outperform the broader market. On the other hand, if the interest rate environment is comparable to where it is now, or rates end up moving higher, the opposite could be true, and we could see the same thing we've seen in recent years: total returns that are still in the mid-to-high single digits, but lower than the overall market.

However, regardless of what interest rates do, I feel far more confident in predicting where Realty Income's business will be in five years than its stock price. In all likelihood, the company's portfolio will remain more than 98% occupied, and the portfolio will continue to grow, with several billion dollars invested each year. After all, there is a multitrillion-dollar investable universe of properties in the company's target verticals.

I also foresee European properties making up a significantly higher percentage of the total five years from now. And I also believe that regardless of what the stock price does, Realty Income's dividend will be about 20% higher than it is now, as it has historically grown by about 4% annually.

Realty Income has been one of my largest investments for more than a decade, and it's one I plan to keep for decades to come. I'm confident that the stock will produce excellent total returns between now and when I plan to retire in about 20 years, during which time we should see several different interest rate environments. However, any given five-year period is much less certain.

Should you invest $1,000 in Realty Income right now?

Before you buy stock in Realty Income, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Realty Income wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $657,871!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $875,479!*

Now, it’s worth noting Stock Advisor’s total average return is 998% — a market-crushing outperformance compared to 174% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 9, 2025

Matt Frankel has positions in Realty Income. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.

It's fair to say that investor demand for long-awaited IPOs is back. Online banking company Chime (NASDAQ: CHYM) finally went public after years of stagnation in the fintech IPO pipeline, and to call it a successful public debut would be a bit of an understatement.

Not only did Chime price its IPO at $27 per share, which was already higher than the expected range of $24 to $26, but the stock skyrocketed right out of the gate. Chime stock climbed to nearly $45 per share on its IPO day before retreating a bit, but at the closing bell, Chime was 37% higher than its initial share price.

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Even so, this values Chime at about $16 billion, which is significantly lower than the company's peak private valuation of $25 billion, which occurred in 2021. After such strong interest in the company's debut, is this fintech worth a closer look right now for long-term investors?

Image source: Getty Images.

Chime: The quick version

Chime is a financial technology, or fintech, company that provides banking and financial services to Americans, targeting households earning $100,000 per year or less. The majority of Chime customers use the company as their primary banking relationship, and the average customer does more than 55 transactions every month.

The company has an active user base of 8.6 million customers, and this number was 23% higher year over year in the first quarter.

One sharp contrast between Chime and traditional banks is how the company makes its money. Its main revenue stream is interchange fees (small, percentage-based fees when customers use a debit or credit card issued by Chime), and its members generated $115.2 billion in purchase volume last year. Chime is actually the sixth-largest issuer of debit cards in the United States by purchase volume -- an impressive accomplishment. It's very important to note that Chime is not a bank. It partners with several FDIC-member banks to offer bank accounts to its members, but because it is not a bank, it doesn't have the typical bank's revenue stream (like interest income from loans, for example).

In the most recent quarter, Chime reported 32% year-over-year revenue growth to $518.7 million. And it's important to realize that the company is profitable, with $12.9 million in net income -- not a massive profit margin, but profitable nonetheless. And it's worth noting that Chime has a fantastic 88% gross margin (in 2024), so there's tremendous potential to increase the bottom line as the business scales.

One potential negative (and we've seen this with other fintech companies) is customer acquisition cost. Chime spent a total of $1.4 billion on marketing during the three-year period from 2022-2024. This could be a wise investment if it ultimately results in billions in profits over the long run, but that remains a big "if" for the time being. As the platform continues to grow, marketing needs should decline as a percentage of revenue, but for now it's a bit elevated.

How big could Chime get?

As mentioned, Chime's target demographic is Americans who earn up to $100,000 per year, a group the company claims includes about 196 million Americans representing a $86 billion revenue opportunity. Chime's current customer base represents about 4% of this potential customer base.

Not only that, but Chime thinks its addressable opportunity can ultimately be about five times this amount ($426 billion) as the platform scales and the company rolls out additional products and services.

Of course, investing in IPOs is risky. As mentioned, Chime increased by 37% on its first trading day, but it could easily go in the other direction, or the stock could remain volatile for some time.

Having said that, it's clear that Chime's financial solutions are resonating with its target user base. If the company can keep executing on its growth strategy while simultaneously improving bottom-line profitability, it could be a big win for investors who got in at these levels. But be aware that the stock (even if things go well for the business) is likely to be volatile for the first few months at a minimum, and if the business shows any signs of weakness, it could drop quickly.

The bottom line is that Chime could be worth a look for risk-tolerant investors, but it would be wise to limit your position size if you choose to invest and average into a position over time.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 998%* — a market-crushing outperformance compared to 174% for the S&P 500.

They just revealed what they believe are the 10 best stocks for investors to buy right now, available when you join Stock Advisor.

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Matt Frankel 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.

Nearly 70 million people in the United States collect Social Security benefits, and more than a trillion dollars is paid to these beneficiaries every year. In this video, I'll discuss the most recent data about the average Social Security benefit, and how you could potentially make yours even higher.

*Stock prices used were the morning prices of May 15, 2025. The video was published on May 16, 2025.

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The $22,924 Social Security bonus most retirees completely overlook

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The Motley Fool has a disclosure policy. Matthew Frankel is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through their link they will earn some extra money that supports their channel. Their opinions remain their own and are unaffected by The Motley Fool.

The Social Security Administration, or SSA, recently announced that Social Security cards are going digital this summer -- well, sort of. In this video, Certified Financial Planner® Matt Frankel discusses what we know, and what we don't.

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The $22,924 Social Security bonus most retirees completely overlook

If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income.

One easy trick could pay you as much as $22,924 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these strategies.

View the "Social Security secrets" »

The Motley Fool has a disclosure policy.

Matthew Frankel is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through their link they will earn some extra money that supports their channel. Their opinions remain their own and are unaffected by The Motley Fool.

To say that MercadoLibre (NASDAQ: MELI) has started 2025 on a strong note would be a major understatement. We're just over four months into the year, and the Latin America commerce giant has already gained 42%.

MercadoLibre was already a large investment in my portfolio, but after this year's move, it is now my largest stock position of all. But despite this fact, I'm still tempted to buy more, even at the current share price.

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Here's a rundown of why MercadoLibre has performed so well, what could take the company to the next level, and why I don't necessarily think MercadoLibre is an "expensive" stock.

Image source: Getty Images.

Two consecutive strong earnings reports

To be fair, MercadoLibre had fallen quite a bit in the latter months of 2024, as its third-quarter earnings report last year gave investors concerns about the company's profitability. So, it started 2024 significantly off its prior highs.

However, MercadoLibre has since posted two excellent earnings reports back to back, which has caused the stock to completely reverse course.

First, the company's fourth-quarter report (released in late February) showed fantastic revenue growth in the crucial holiday quarter and completely alleviated investors' concerns about its margins. Both the e-commerce and fintech sides of the business performed incredibly well.

The recently released first-quarter 2025 earnings results were even more encouraging. The e-commerce marketplace sold 28% more items than the same quarter last year, and on the fintech side, total payment volume (TPV) was 43% higher year over year. MercadoLibre's credit portfolio (credit cards, loans, etc.) grew by a staggering 75% to $7.8 billion.

On the bottom line, MercadoLibre's operating margin expanded by 70 basis points compared with the first quarter of 2024, and net margin increased by 40 basis points. Now, MercadoLibre did post slightly negative free cash flow for the quarter, but this was due to aggressive investment in fintech funding and the build-out of the logistics platform, two major drivers of growth.

Future growth catalysts

For starters, I don't think the core e-commerce marketplace and Mercado Pago payment platform are close to being mature businesses just yet. E-commerce and cashless payment adoption are still in the relatively early stages in some of the company's key markets.

However, there are some particularly exciting parts of the business that could help take MercadoLibre to the next level. Just to name a few:

• The credit portfolio is growing rapidly, but is still rather small compared to the opportunity. Credit cards in particular could be a big opportunity, as they make up just $3.3 billion of the credit portfolio today. In Brazil, the company's biggest market, credit card adoption rates have tripled since 2019 but are still rather low. Brazil has the 26th-highest credit card penetration rate in the world, with the majority of adults not having one. And it has the highest credit card adoption of MercadoLibre's markets.
• The MELI+ subscription business (similar to Amazon Prime) is still relatively young and was recently revamped to create a more affordable tier.
• Advertising is a massive opportunity to create high-margin revenue. MercadoLibre's ad revenue grew by 50% year over year in the first quarter, and the company just launched its Mercado Play app for smart TVs, which should greatly expand the available ad inventory.

Despite the massive upside movement, MercadoLibre could still be a great long-term investment from here and doesn't necessarily look expensive. In fact, with the company's profitability improvements, MercadoLibre trades for a significantly lower P/E ratio than it did a year ago.

Not only is the stock "cheaper" than it was a year ago, but key growth rates are accelerating. For example, total payment volume growth in the first quarter of 2024 was 35%, eight percentage points slower than it is now, plus profit margins were significantly narrower.

The bottom line is that it would be a mistake to consider MercadoLibre expensive just because it's near an all-time high. To the contrary, it looks like a significantly better value today in most ways than at most points in the past couple of years.

Don’t miss this second chance at a potentially lucrative opportunity

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On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $304,370!*
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Matt Frankel has positions in MercadoLibre. The Motley Fool has positions in and recommends MercadoLibre. The Motley Fool has a disclosure policy.