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?

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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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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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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.

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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" »

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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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?

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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.

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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.

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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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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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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.

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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.

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Here's our initial take on MercadoLibre's (NASDAQ: MELI) fiscal 2025 first-quarter financial report.

Key Metrics

Fantastic Results Throughout the Business

In the first quarter of 2025, MercadoLibre beat expectations on both the top and bottom lines. And throughout the business, all of the key numbers looked very strong. On MercadoLibre's e-commerce marketplace, $13.3 billion in gross merchandise volume was achieved, and the number of items sold on the platform was 28% higher than the comparable quarter a year ago.

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One particularly impressive statistic is that while marketplace sales declined a bit compared with the seasonally strong fourth quarter, growth in the number of unique active buyers on the platform accelerated sequentially -- for the fifth quarter in a row. There are now 25% more active buyers on the marketplace than there were a year ago.

The Mercado Pago fintech side was even more impressive, with total payment volume soaring 43% year over year and the credit portfolio reaching $7.8 billion, a 75% annualized growth rate. There are now 64.3 million active monthly users on the fintech platform, compared with less than 50 million a year ago. The company's credit card business was especially strong, with 111% growth in credit card receivables compared with a year ago.

Profitability looked incredibly strong as well. Operating margin improved by 70 basis points year over year to 12.9%, and net margin expanded by 40 basis points. Free cash flow was slightly negative for the quarter, but it's important to note that this is because of aggressive investment in the business (especially funding the growth of the fintech platform) and not because of anything wrong with the business itself.

Immediate Market Reaction

Not surprisingly, the initial reaction to MercadoLibre's results was overwhelmingly positive. About 10 minutes after the earnings report was released on Wednesday, MercadoLibre's stock price was higher by about 9%. If this move holds, it will be a fresh all-time high for the commerce leader.

It's worth mentioning that this move is before the company's earnings call, which was scheduled for 5 p.m. EDT on the date of the earnings release. Management's commentary could certainly move the stock in one direction or the other.

What to Watch

As mentioned, the first quarter is seasonally weak, so for the company to produce such positive surprises on both revenue and earnings is great to see. The credit portfolio (especially the credit card business) could still have massive growth potential in the quarters ahead, and it will be interesting to see what commentary management has about the extremely promising MELI+ subscription business and its advertising platform.

MercadoLibre's ad revenue grew 50% year over year in the first quarter, but the company just launched the Mercado Play app for smart TVs at the end of the first quarter, so it will be interesting to see if that gives the ad business even more traction.

Helpful Resources

• Full earnings report
• Investor relations page

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

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

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 $303,566!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $37,207!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $623,103!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, available when you join Stock Advisor, and there may not be another chance like this anytime soon.

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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.

Banking disruptor SoFi Technologies (NASDAQ: SOFI) has grown at an impressive pace in roughly four years since it became a publicly traded company. The company's membership base has more than tripled since the end of 2021, SoFi's banking platform has grown from zero at the start of 2022 to more than $27 billion in consumer deposits today, and its adjusted EBITDA in 2024 was about 23 times what it was just three years prior.

Image source: Getty Images.

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Even after this fantastic growth, SoFi remains a relatively small financial institution. It is currently the 63rd largest U.S. bank by assets, according to Federal Reserve data. Not only does it have tons of room to grow its customer base and relationships, but there are also some extremely promising growth drivers that investors should know about.

Is SoFi ready to jump to the next level?

In the first quarter of 2025, SoFi grew its revenue by 33% year-over-year, posted its highest earnings per share yet, and added about 800,000 new members – the most it has ever added in a single quarter.

However, 10.9 million members still gives the company tons of room to grow, and management is doubling down on its brand awareness efforts. As one example to show how small SoFi still is, consider that online financial institution Discover (NYSE: DFS) has about 300 million open accounts.

There are some particularly interesting potential catalysts to keep an eye on:

• The average SoFi member has just 1.4 products with the company. A product is something like a bank account, loan, or credit card. The focus has understandably been on growing the membership base, but this has created massive potential to cross-sell products and services to existing members.
• SoFi is rapidly scaling its third-party loan origination platform, which requires none of its own capital but generates a low-risk, high-margin stream of fee income.
• SoFi's core lending business is personal loans, but its student loan and home loan originations increased by 58% and 54%, respectively, in the most recent quarter. If interest rates start to fall, the home loan segment could be a particularly interesting opportunity, especially when it comes to refinancing, as Americans are sitting on more home equity than ever before.

These are just a few examples. But the point is that there are some big catalysts that could help SoFi continue to grow its business and become more profitable in the coming years.

Can SoFi stock produce life-changing wealth?

With a valuation of 2.9 times tangible book value and about 50 times forward earnings as of this writing, SoFi is not exactly a cheap bank stock. However, considering its momentum and high net interest margin, SoFi could be a massive home run if it can deliver on its growth strategy.

SoFi's management has previously stated that its goal is to grow to the point where it is a top 10 financial institution.

For context, the 10th largest commercial bank in the United States today is TD Bank (NYSE: TD), which has about $373 billion in domestic assets. SoFi has $37.7 billion in total assets, so it would need to grow tenfold in size to break into the top 10 list. (Note: TD is roughly one-tenth the size of the largest U.S. bank, JPMorgan Chase.)

If SoFi were to achieve such scale, the business would probably be a highly valued one. For one thing, SoFi is rapidly building out the asset-light parts of its business, such as the third-party loan platform, and these could conceivably scale to a large size as well. Plus, the nature of SoFi's loan portfolio as well as its low cost structure gives it the potential for a higher return on assets than the typical bank. In fact, every single one of the 10 largest U.S. banks is primarily branch- or office-based.

In other words, if SoFi were to increase tenfold in size, in terms of assets, it would probably command a higher valuation than the other large U.S. banks. Therefore, if management can achieve its goal and reach a top 10 position within the next decade or two, its stock could potentially produce life-changing wealth for investors.

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

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JPMorgan Chase is an advertising partner of Motley Fool Money. Discover Financial Services is an advertising partner of Motley Fool Money. Matt Frankel has positions in SoFi Technologies. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

If you're 73 or older, you are required to start taking withdrawals from your tax-deferred retirement accounts, such as traditional IRAs and 401(k)s. These withdrawals are known as required minimum distributions, or RMDs.

Specifically, if you turn 73 during 2025, you're required to take your first RMD by April 1, 2026. However, subsequent RMDs must be taken by Dec. 31 of each year, so it can be smart not to wait until the last minute. If you take your first RMD in early 2026, you'll be required to take another by the end of that year, and withdrawing this much money can have significant tax implications.

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It's generally a smart idea to take your first RMD during the calendar year in which you turn 73.

Image source: Getty Images.

How much do you need to withdraw for your 2025 RMD?

Fortunately, the RMD formula is rather simple, and you only need two pieces of information:

• First, you'll need your retirement account balance at the end of the previous year (so, as of Dec. 31, 2024).
• Second, you'll need the appropriate life expectancy factor for your age, which you can find in IRS-published tables. Most people use the Uniform Lifetime Table, unless your spouse is over 10 years younger than you and is the sole beneficiary of your retirement accounts. (You can find them here.)

To calculate your RMD, simply divide the account balance by the life expectancy factor.

Let's see how this works. We'll say that you had a $1 million balance in your 401(k) at the end of 2024, and that you'll turn 77 years old in 2025. This corresponds to a life expectancy factor of 22.9, according to the Uniform Lifetime Table.

Dividing $1 million by 22.9 gives you a 2025 RMD of $43,668. You can take this out as a lump sum, or incrementally throughout the year.

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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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Warren Buffett regularly provides investing wisdom through his annual letters to Berkshire Hathaway shareholders, his TV interviews, and through the occasional newspaper editorial. And as you might expect from someone who has an outstanding track record of beating the market during stock market downturns, many of Buffett's quotes are excellent advice to use during corrections like the one we're in now.

5 Great Warren Buffett quotes for a stock market correction

Without further delay, here are some great Warren Buffett quotes to keep in mind when the market gets turbulent.

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1. "Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble."

Historically, stocks go up more than they go down. The average bull market since 1932 lasted nearly five years, while the average bear market lasts just 1.5 years. And the sharpest stock market drops last just days or weeks in many cases – just look at the chart of the initial COVID-19 crash:

^SPX data by YCharts

The massive plunge in the 2-day period after President Trump's reciprocal tariff announcement is another example.

One good strategy is to keep some cash on the sidelines so you can pounce on opportunities like these. It can certainly be scary when they're happening, but how many people wish they had bought more stocks in March 2020, or in 2008 when the financial crisis first started?

2. "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."

This is a Buffett quote that applies regardless of whether we're in a stock market correction or not, but it can be especially apparent during turbulent times why Buffett said it. Great businesses with leading market shares, stable cash flow, and excellent leadership tend to hold up better during market downturns. It's also a smart idea to brush up on some value investing principles that can help you separate the wonderful companies from everything else.

This quote also applies when bargain-seeking during downturns. Buying a tried-and-true market leader at 15% below its high can be a smarter move than buying an unprofitable business for a 30% discount.

3. "Price is what you pay. Value is what you get."

If a stock on your radar is down for no other reason than the overall market or sector is weak, or because of some temporary economic factor like higher interest rates, it can be a great time to buy. But if a stock's price is down because something in its business weakened, it can be wise to stay away.

For example, many of the best-performing stocks of the initial artificial intelligence (AI) boom are now trading for less than half of their recent highs. But it isn't for no reason – it's because we're seeing significant softening in demand for data center space and other AI infrastructure.

In other words, not every stock that is trading for a lower price in a downturn is a true bargain.

4. "Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be a more productive than energy devoted to patching leaks."

It's never a good idea to sell a stock just because it went down. But if a decline in a stock's price is accompanied by a change in your investment thesis, it could be a good idea to sell and move on, not to throw more money at it because it looks cheap. An example in the current market environment might be a stock that could be especially vulnerable to China tariffs. Or if a recession comes, a cyclical business that is highly dependent on discretionary spending could be one to take a closer look at.

Of course, not all stocks that fall in these two categories necessarily need to be sold. But the point is that if your investment thesis is busted, it can be a perfectly good reason to move on – regardless of how cheap a stock looks after a decline.

5. "The most important quality for an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd."

When we see our friends making money hand-over-fist in stocks, it's human nature to want to put all our money in as well. And when everyone else is panicking and selling stocks, it's our instinct to sell before things get any worse. It's common knowledge that the central goal of investing is to buy low and sell high, but our emotions try to make us do the exact opposite.

What Buffett is saying here is to trust your own analysis and research, not what your friends, or some market commentator on TV is telling you to do. By purchasing shares of great businesses at fair prices and holding them for as long as they remain great businesses, stock market corrections are your friend as a long-term investor.

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To say that SoFi (NASDAQ: SOFI) has shown impressive momentum in the few years since it went public would be an understatement. In the three-year period including 2022, 2023, and 2024, SoFi's membership base nearly tripled, and its bank grew from $0 in deposits (it got its banking charter in early 2022) to nearly $26 billion.

There are plenty of impressive numbers throughout SoFi's results that are important to watch. The growth in its third-party lending platform, as well as the progress made by the Galileo technology platform are two big examples.

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However, there's one unconventional metric that is especially important for SoFi's success, especially when it comes to growing its bottom line.

SoFi's productivity loop

One metric that SoFi reports with its earnings is the ratio of financial services products to loans in its ecosystem. Financial services products include SoFi's bank accounts, investment accounts, and credit cards.

SoFi aims to create what it calls a "financial services productivity loop," and growth in the financial services side of its business is the main way it plans to get there.

Here's how this metric has evolved over time:

Data source: SoFi.

Here's why this is important. SoFi's customer acquisition costs have been high for some time. It regularly offers bonuses of $300 or more for members referring someone for personal loans, for example.

However, a larger proportion of financial services customers means that SoFi has more of a natural marketing funnel to cross-sell loan products to its existing customers. Right now, with high economic uncertainty and elevated interest rates, demand for consumer loans (especially mortgages) is low. But as this changes, a high ratio of financial services customers sets the company up to take advantage of loan opportunities in a more efficient manner.

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 $566,035!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $629,519!*

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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.

Real estate investment trusts, or REITs, aren't well known for their volatility, and as a group, they tend to be more resilient than the typical S&P 500 company during tough times.

We're seeing this during the recent market downturn. The S&P 500 is down by roughly 12% as of this writing, since President Trump's tariff plan was announced, but the real estate sector is down by less than 10%.

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However, one of the most rock-solid companies in the real estate sector has taken quite a beating. Industrial real estate giant Prologis (NYSE: PLD) has fallen by 17% since the tariffs were announced, and although there are certainly some valid concerns, the fact remains that this is a rock-solid REIT with a bright future, currently trading at a discount.

Prologis and tariffs

Prologis is the largest real estate investment trust in the world and specializes in logistics real estate. Think warehouses, distribution centers, and similar properties. In all, the company owns nearly 5,900 properties with a total of 1.3 billion square feet in 20 countries around the world.

As you might expect, Amazon.com (NASDAQ: AMZN) is the largest tenant, and other major Prologis customers include Walmart (NYSE: WMT), UPS (NYSE: UPS), Home Depot (NYSE: HD), and many other major retailers and logistics companies that are household names to most Americans.

To be fair, there are certainly some tariff concerns. Many of Prologis' major tenants import a lot of the products they sell (Amazon is certainly in this category), and there are concerns that demand for logistics properties could temporarily soften. As CEO Hamid Moghadam recently said, "In the interim, tariffs are inflationary and growth-reducing." But long-term, if tariffs lead to more domestic manufacturing, it could be a net benefit for Prologis, as U.S. businesses would need more logistics space. But to be clear, in the short term, tariffs are almost definitely a negative for the business.

Reasons to take a closer look

There are a few good reasons why Prologis could be a steal at the current price. For one thing, the business entered 2025 with strong momentum, with 10% year-over-year growth in funds from operations (FFO -- the real estate version of "earnings") in the fourth quarter and generally strong leasing activity.

Furthermore, industrial property values have declined in recent years because of falling demand and higher interest rates. At first, this might sound like a reason not to buy. But CEO Hamid Moghadam recently said that he sees the market near an "inflection point," and falling interest rates could cause these trends to sharply reverse course. With the latest expectation of four 0.25% Federal Reserve rate cuts in 2025, according to the CME FedWatch tool, there could be a nice tailwind coming.

With e-commerce accounting for 56% of all retail sales growth in the United States last year and expected demand for 250 million to 350 million square feet of new logistics space over the next five years because of e-commerce, there could be a strong environment for several years.

The company is also doing a great job of creating shareholder value through development and expects to spend $5 billion in 2025 alone. With $7.4 billion in liquidity and access to cheaper capital than peers thanks to its excellent balance sheet, the company has the financial flexibility to pursue opportunities as they arise.

Prologis also has a lot of embedded rent growth, as industrial rental rates soared during the pandemic years, and there are a lot of older leases that are yet to reset to the current market rents. In the fourth quarter of 2024, Prologis reported cash rent increases of 40.1% on new and renewal leases, and this elevated rent growth should continue for the next few years.

Last but certainly not least, Prologis has been quietly, but aggressively, getting into the data center real estate space, and sees a massive opportunity to scale.

Lots of upside potential

After the recent decline, Prologis trades for a historically low valuation of just 16 times its 2025 FFO guidance. And at the current price, the stock has a 4.3% dividend yield as well as a fantastic track record of raising its payout. In fact, the FactSet consensus estimates Prologis' net asset value at $125 per share, about 34% above the current stock price.

As mentioned, there are certainly some legitimate tariff concerns for a company whose primary business is leasing an international network of distribution centers. However, this business will be just fine over the long run, and we should have more clarity about how the tariff plans could affect the company's results when it reports earnings on April 16. But even before we see the latest numbers, Prologis has jumped toward the top of my buy list in the stock market downturn.

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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 and Prologis. The Motley Fool has positions in and recommends Amazon, Home Depot, Prologis, and Walmart. The Motley Fool recommends United Parcel Service and recommends the following options: long January 2026 $90 calls on Prologis. The Motley Fool has a disclosure policy.

There is a lot more to Social Security than the retirement benefits that tens of millions of retired workers receive every month. One extremely important part of the program is known as Social Security spousal benefits.

Spousal benefits can provide much-needed retirement income to married couples where one spouse was the primary earner. This is most common in situations where one spouse was a stay-at-home parent, but they can also apply in cases where one spouse was a high earner and the other worked part-time or earned comparatively little throughout their working life.

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Depending on the specific circumstances, a spousal benefit can be as high as one-half of the higher-earning spouse's full retirement benefit (formally known as their "primary insurance amount"). This means that if your spouse has a primary insurance amount of $2,500 per month based on their own work record, your spousal benefit can be as much as $1,250.

Qualifying for spousal benefits

Although the formula used to calculate Social Security benefits can be a bit complicated, the qualifications are not. This is true for spousal benefits as well. To collect a Social Security spousal benefit, there are three specific criteria that need to be met.

Image source: Getty Images.

1. Your spouse collects a retirement benefit

First and foremost, the central requirement of a spousal benefit is that the higher-earning spouse is actively collecting their own Social Security retirement benefit. Even if you've reached your full retirement age (more on that in a bit), you can't collect a spousal benefit until the primary-earning spouse applies for their own benefit.

It's also worth noting that even divorced spouses could potentially qualify for benefits, as long as the marriage lasted for at least 10 years.

2. You are at least 62 or have a child

To collect a spousal benefit, assuming the primary earner is collecting their own benefit, you need to meet one of two requirements:

• You must be age 62 or older
• You have a qualifying child under 16 or who receives Social Security disability benefits

Although you can get a spousal benefit as early as age 62, it will be permanently reduced if you start receiving it before full retirement age. For Social Security purposes, full retirement age is 67 for those born in 1960 or later. If you have reached full retirement age when you start collecting a spousal benefit, it will be equal to your spouse's primary insurance amount, regardless of how old they are when they start Social Security. But if not, your benefit can be reduced by as much as 35%, depending on how early you claim.

However, if you have a qualifying child (defined earlier in this section), the spousal benefit is not reduced for early retirement.

3. You don't qualify for a larger benefit on your own work record

Finally, when you apply for Social Security, the SSA will look at your own work record and see how much you would qualify for individually, if anything. And you'll get your own benefit or a spousal benefit, whichever is higher.

To be perfectly clear, a spousal benefit is paid instead of an individual Social Security retirement benefit, not in addition to it.

A valuable part of many couples' retirement strategy

As of the latest data, 1.86 million spouses of retired workers get a benefit, with an average monthly amount of $932 -- or approximately $11,200 of annual, inflation-protected retirement income.

The bottom line is that Social Security spousal benefits provide much-needed retirement income for married couples, and as long as one spouse qualifies for Social Security benefits with their own work record, qualification for spousal benefits is straightforward.

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Ever since President Donald Trump announced his tariff plan, there's been no shortage of stocks that are trading for a big discount to their previous highs. This includes some of the most rock-solid brands in the world.

I've been gradually taking advantage of opportunities to add to my favorite long-term investments during this turbulent time. Although it's entirely possible for the stock market to remain volatile for a while, it looks like an excellent time to add shares of industry-leading companies like Walt Disney (NYSE: DIS) and Starbucks (NASDAQ: SBUX), and that's exactly what I did recently.

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An incredible brand that isn't going anywhere

Walt Disney struggled in the post-pandemic years to bring its streaming business to profitability and also may have priced its theme parks and related add-ons a bit too aggressively, without investing nearly enough in improving the customer experience. However, returning CEO Bob Iger has done a great job of setting Disney on the right path, focusing on efficiency and prioritizing investment in the cash-machine theme parks.

In the most recent quarter, Disney's revenue climbed by 5% against a tough comparable with the previous holiday season. Operating income and adjusted earnings per share grew by 31% and 44%, respectively, due to management's focus on efficiency, and the streaming business is now nicely profitable.

After the recent market declines, Disney is trading for its lowest price-to-sales multiple (P/S) since the financial crisis and is nearly 30% below its recent high. While it isn't immune to the tariff concerns (more on that in a bit), this could be a great entry point in this amazing business for long-term investors.

For the current fiscal year, management foresees about $15 billion in operating cash flow and $3 billion in buybacks. If the company's plan to invest $60 billion in its parks over a decade pays off, there could be significant growth in the years to come.

A second chance to get "Back to Starbucks"

Starbucks rallied sharply in August 2024 when Brian Niccol was announced as the coffee brand's new CEO. However, the stock has now fallen by 30% in just over a month and trades for its lowest share price since before Niccol's hiring.

Niccol has made some big moves to set Starbucks on the path to turning around its sluggish growth, a plan he has called "Back to Starbucks." Just to name a few, the company has simplified its menu, focused on dramatically cutting wait times, and taken steps to improve the in-café experience. So far, the results have been promising.

The company's latest earnings surpassed analyst expectations, although comparable sales fell slightly year over year. However -- and this is a very important point -- virtually all key customer-related metrics improved on a sequential (quarter-over-quarter) basis.

In the near term, margins have been pressured by some of the investments Niccol and his team have been making. But there's also a lot the company has done that isn't reflected in the results just yet, and this is still the relatively early stages of the turnaround.

SBUX PS Ratio data by YCharts.

After the recent decline, Starbucks trades for a historically low price-to-sales ratio. If the company's turnaround efforts reinvigorate growth (and margins improve), the current price could be a bargain for long-term investors.

Not immune to tariff risks

To be perfectly clear, both of these stocks are down for good reasons. Both have significant exposure to China, and if the trade war due to the tariffs escalates between the U.S. and China, it could certainly weigh on their results. This is especially true with Starbucks, which has nearly 7,600 stores in China -- about 19% of the company's total.

They are also both cyclical businesses, for the most part, and depend on the ability and willingness of consumers to spend money. If the tariffs trigger inflation and/or a recession, both companies could see consumers pull back on discretionary purchases.

As a long-term investor, I think both of these companies are looking very attractive. I plan to hold both stocks for years (maybe decades). During that period, recessions will come and go. But both are excellent businesses that should be able to steadily grow over the years, and investors who buy at the current depressed prices could do quite well.

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Matt Frankel has positions in Starbucks and Walt Disney. The Motley Fool has positions in and recommends Starbucks and Walt Disney. The Motley Fool has a disclosure policy.