So Long Yodlee

After being a long-time user of Yodlee's Account Aggregation service, I have decided to give up trying to make it work with my finances. In the past, I have used MSN Money (which uses Yodlee) to track my finances online. But, I have several reasons why I'm about to abandon Yodlee:

1) Not all banks participate in Yodlee. This is annoying because it constantly leaves a hole in my financial picture. Most notably, I have significant holdings at Countrywide Bank, and at a credit union that are not participants in Yodlee's services.

2) Ongoing concerns about security and "Secure Sign On" problems make Yodlee potentially less secure than before. For reference, secure sign on is a multi-screen login feature that an increasing number of banks are now using. Typically you are shown a previously chosen picture and personal phrase during login. In addition to typing your password, the bank will then ask you to answer one or more confirmation questions for added security. These are personal questions that the user previously provided answers for.

In order to get Yodlee to work with these new security measures, you would have to store the answers to each one of these questions with Yodlee. Some examples of these questions are "What is your father's middle name?" and "What is the name of your first school?" If Yodlee's security was ever compromised, fixing the problem might not be as straightforward as changing your login name or password. An attacker could potentially build a database of information based on how you answered these questions for different banks, and more easily assume your identity.

3) Duplicate accounts are not handled well. At TD Ameritrade, my wife and I each have a login which allows us to access our individual accounts and the one joint account that we share. This account is double counted by Yodlee. To add to this confusion, the two "different" accounts may each show a different account value, depending on when the data for each login was updated. Yodlee has not provided a way to eliminate this double counting.

4) Extraneous accounts are an annoyance. I have a couple of accounts that I closed years ago, but are still associated with an existing bank login. These accounts shows up as extraneous zero balance accounts. I cannot delete a single account from Yodlee without deleting all of my accounts at the same bank. This extraneous information is definitely annoying.

5) In a previous post about account aggregation, I mentioned issues with Yodlee double counting the cash balances in my TD Ameritrade accounts. That post attracted the attention of Yodlee's senior VP Peter Hazlehurst who personally contacted me about these issues. Interestingly, immediately after I posted that article, I received a large number of visitors from a Yodlee domain located in India. I presume that Yodlee's customer service folks are based there. To make a long story short, some of my issues were indeed corrected. But as you can see by this post, several other problems are still not fully resolved. If Yodlee approached me again about helping them to resolve their issues, I think that I would decline the invitation. I don't intend to become a beta test site for Yodlee's software.

In one of the comments on my last post about Yodlee, Moneymonk said that "there is no perfect software [when] it comes to personal finance." She is correct there. I'm going back to the only way I know how to get a complete picture of our finances. I am again using an Excel spreadsheet to manually enter and track my financial balances.

DC

Predicting Stock Market Direction

Wouldn't we all like to have some insight into where the stock market is going? I am often asked if I know what the stock market will do. I would be the first to admit that I am not a psychic in that regard. But, I have known for some time that there are ways to predict the direction of the stock market. And no, I am not selling you some get rich scheme. These predictive insights come from the stock futures markets.

The Chicago Mercantile Exchange (CME) trades stock market futures contracts. Specifically these futures contracts are for the S&P 500 and Nasdaq 100. You can often get an idea of how the stock market will do in early trading. The prediction that the CME tells you gets more accurate as you get closer to the opening of the stock markets.

The CME website has a page that shows Globex Flash Quotes. These are quotes for indices. Because of the global nature of the Globex, quotes are often available after hours, and before the market opening. In the example above, large-valued red numbers for the S&P and Nasdaq futures portend a down day in the stock market. Green numbers would predict an up day. However, I will warn you that these "predictions" are only really accurate for about the first half-hour or so of trading. I am sure that you've seen it happen many times where the stock market opens up in the beginning and ends significantly lower. Or the stock market drops in the early minutes of trading, only to recover significantly before the end of the day.

Other places to look for a predictions of the stock market are in the International Market indices. These indices tell you how the overseas markets are doing. If the markets in Asia and in Europe have had a down day, it is likely that the US markets will follow suit.

As a side note here, my DW and I had the opportunity to visit the CME several years ago (before we were married) when we were visiting Chicago. Sadly, however, the CME visitor gallery where you can view traders on the floor of the exchange has closed to visitors since September 2001.

DC

The Backward Investor

Would you rather make 21% in a year on your investment or lose 18% in a year on your investments? Believe it or not there is a subset of investors who would rather lose 18% than gain 21% on their investments. Let me clarify. The Standard and Poors (S&P) 500 index went down 23.37% (excluding dividends) in 2002. In 2003, the S&P 500 gained 26.38%. There is a subset of investors who strive to "beat the S&P 500." This perverse group of people would be thrilled to have lost 18% of their money in 2002 because they would have beaten the S&P 500 by over 5%. (If you didn't invest in the stock market at all and ended up with a 0% return, you would have beaten the S&P 500 by 23% in 2002.) In either case, I didn't exactly see many people celebrating their investment portfolios at the time.

By contrast, These same folks would be bummed out to make only 21% on their investments in 2003 because they would have underperformed the S&P 500 by more than 5%. I don't know about you, but I would happy to make 21% in a year on my investments, and would feel ashamed to have lost 18% in my investments. The truth be told, I used to compare my stock performance against the S&P. I don't do that anymore, after I saw how ridiculous that comparison can be. This reminds me of the "keeping up with the Joneses" comparison in personal finance. My advice is not to constantly compare your portfolio performance with the S&P, Nasdaq, or your neighbors. Instead, strive to improve your own position year over year.

DC

This article was originally published on September 23, 2006. It is being republished today.

Misc. 401(k) Plan Facts

I've come up with a short list of miscellaneous facts about 401(k) plans that are not so commonly known. As always, I'm not an expert, so you might want to contact a tax professional for clarification.

1) Company stock: when you take a distribution, you can take a distribution of stock shares, and pay ordinary income tax on your cost basis. You can hold these shares outside of the 401(k) until you sell your company stock shares. You will then pay taxes only at the lower capital gains rate on the amount gained.

2) 401(k) plans are qualified plans that afford you greater legal protections than a rollover IRA. Of course, this only comes into play only if you are sued later in life.

3) 401(k) plans have a fiduciary duty to invest your money. What this means is that the 401(k) administrators need to select appropriate investment choices for you. This is not the case with an IRA.

4) Contributions to 401(k) plans are indexed to inflation beginning in 2007. In 2001, Congress passed the Economic Growth and Tax Relief Reconciliation Act that set forth a schedule for the increases in 401(k) contribution limits. Through 2006, this was $1000 per year. From 2007 onward, the contributions are indexed to inflation (known as a cost-of-living adjustment) rounded to $500 increments. The small increase for this year is because the inflation rate is low. For 2007, the current contribution limit is $15,500.

5) In-service distributions: You don't need to quit your job in order roll money from your 401(k) into an IRA. Companies don't advertise this fact, but in most cases you can request an "in-service distribution" and roll that into an IRA while you are still working there. You will need to read through the company 401(k) plan documents to find the details for your plan.

DC

TD Ameritrade Courtesy Fill Notifications

On my original Ameritrade account, there is an option to receive fill notifications. For those not familiar with the term, a "courtesy fill notification" is notice from the broker that one of your stock orders has gone through. This can be either by Email, phone, or fax, and there is no extra charge for this service. The choice to select a fill notification is found under "Communications" on the "General" tab of the "My Profile" page. And you can get to "My Profile" by selecting "Portfolio & Accounts". In my case, I have the broker call me (through their automated phone system) whenever a trade has been executed. There was a time when a real person would call to notify you of your trade, but that seem like a thing of the past now.

I think that this is a useful feature on my Ameritrade account, but I don't see this same option in the TD Ameritrade accounts that were converted over from TD Waterhouse. I am assuming that you cannot get automatic fill notifications if you had a Waterhouse account. Has anybody else been able to setup courtesy fill notifications from their former Waterhouse account?

DC

Countrywide Bank Update

I have two updates to my post about Countrywide Bank. First of all Countrywide has increased it SavingsLink interest rate to 5.5%, with a $10,000 minimum account balance. Considering that many Certificates of Deposits (CDs) don't even pay that much, this interest rate is quite impressive.

I mentioned that SavingsLink accounts have to be linked to a savings or checking account at another financial institution for you to access your money. At the time of my post, Countrywide only allowed one linked account at a time. Furthermore, the process of linking and unlinking accounts is cumbersome. So, the other update is that recently received an Email from Countrywide saying that they've increased the number of external linked accounts to 5. Though I haven't yet tried adding more accounts, this improvement should take away some of the pain of transferring funds between Countrywide and other banks.

Lastly, a reader of PFStock expressed some concern about Countrywide Financial (NYSE: CFC), the parent company of Countrywide Bank. CFC stock has been buffeted over the past year by sub-prime concerns. Indeed, CFC is down over 50% from its 52-week high. And, I do understand the reader's concern. But actually, because Countrywide Bank is FDIC insured, this is not something that depositors need to worry about as long as they stay within the FDIC insurance limits.

DC

Link Exchange

You can have your blog listed for FREE at PFStock. I am looking to add more blogs to my blogroll. If you have a bona fide personal finance blog, please Email me (my contact information is listed in the sidebar) about exchanging links. Note that I do not currently link to commercial, real estate, or multi-level marketing blogs.

Only personal finance blogs that are written by individual bloggers on a not-for-profit basis qualify for a free listing in the blogroll. Blogs and websites that do not qualify for a free listing may inquire about the low advertising rates offered for PFStock sponsors.

DC

Business 2.0 = Fortune 1.0

I just received my last issue of Business 2.0 magazine. This post is a follow-up to my article about Business 2.0 going out of business. A note on the cover of the magazine answers my question about what will happen to the issues remaining in my subscription that have already been paid for. They will substitute one copy of Fortune magazine for every 2 paid copies of Business 2.0 remaining. There is also an option to request a refund if you are not happy with receiving Fortune as a substitute.

DC

NetBank Closes Down

As of Friday (September 28) NetBank has been closed down, and the FDIC has now taken over the bank. According to the FDIC, "No advance notice is given to the public when a financial institution is closed." However, I have written extensively about NetBank, and readers of PFStock would have been given full advanced warning that NetBank was on the brink of closure.

To summarize the current situation, depositors with less than $100,000 at NetBank have their deposits fully insured by the FDIC, and their accounts will be transfered to to ING DIRECT. Depositors with over $100,000 may have a portion of their funds that are uninsured, and will lose half of the uninsured amount. Investors in NetBank stock should fully expect to lose ALL of their money. NetBank is essentially bankrupt at this point and stock investors do not usually recover any funds.

PFStock's coverage of NetBank began over a year ago on September 20, 2006, when I posted here that I was about to begin the process of withdrawing my money from NetBank and close my account with them. In that post, Sayonara NetBank, I referred to this process as "evacuating my money." There and in subsequent posts on PFStock, I cited deteriorating financial conditions at NetBank as one of my prime reasons for closing out my account. At that time, I conceded that NetBank was not likely to be forced into bankruptcy, but was wrong.

Over the course of the last year, financial results at NetBank continued to deteriorate. The company eliminated its dividend, and later ousted its CEO in October 2006. Even before this event, I had speculated that something fishy was going on at NetBank. And, I asserted that NetBank could no longer remain competitive with other banks in its online market space.

After a set of staggering losses, NetBank's independent auditor resigned. The stock was eventually delisted from Nasdaq, after it fell well below $1. In May 2007, NetBank made an agreement to sell a substantial portion of its remaining assets to privately held EverBank. This deal was supposed to have been completed by July, but it recently fell through. As recently as my September 10 posting, I speculated that the EverBank deal was in serious jeopardy. With the collapse of this deal, it became obvious that NetBank had exhausted all of its options, and was only be a matter of time before NetBank would be forced by government regulators to liquidate.

The NetBank bankruptcy saga has been an interesting ride. But as the story is nearing an end, this may likely be my last post about NetBank.

Further reading:

NetBank Continued 9/10/2007
NetBank Again 8/5/2007
NetBank's Demise 5/22/2007
The Decline and Fall of Internet-only Banks 12/1/2006
Unprofitable and Unstable, NetBank Ousts its CEO 10/3/2006
More on NetBank 10/2/2006
Sayonara NetBank 9/20/2006

DC

MS Money Plus (2008) System Requirements

A while back, I posted an article about issues that I was having with Microsoft Money 2004. I have the 2007 version of MS Money, and found it to be generally good, but there are a few features that are missing. For example, you can more easily switch between investments in the 2004 version. There is a drop-down box that allows you to quickly view any securities that you've entered into MS Money, but this feature doesn’t exist in the 2007 version. Also, the 2007 version of Money only runs under Windows XP Service Pack 2 (SP2) or Windows Vista.

For 2008, Microsoft has renamed their financial software as "Microsoft Money Plus". Have you seen the system requirements? Again, you need to be running either Windows XP Service Pack 2 (SP2) or Windows Vista.

Looking at the box for MS Money Plus (Deluxe version), I was actually shocked by the system requirement to run the software under Windows Vista. For PCs running Windows XP, the minimum requirements are quite reasonable: a Pentium II 300-MHz or faster processor (or compatible), and 128 MB of RAM.

However, for those with PCs running Windows Vista, the requirements are much more demanding: a Pentium (or compatible) 1 gigahertz (GHz) or faster 32-bit (x86) or 64-bit (x64) processor, and a whopping 1 GB of RAM.

I’m starting to question why the requirements are so drastically different for Windows Vista versus the same software running under Windows XP. Is Vista version of MS Money Plus so phenomenally superior to Windows XP? Is there anybody who has the software that can give some insight as to what the main differences are between the two software versions?

DC

Business 2.0 Is Out Of Business

I previously mentioned that I subscribe to Business 2.0 magazine. I've had a subscription off and on since the magazine's first issue. The parent company of Business 2.0, Time Warner, is pulling the plug on the magazine. I believe that the October 2007 issue of Business 2.0 will be its last.

I know that they are no longer offering new subscriptions to Business 2.0. However, I wonder what will happen to the issues that I've already paid for... Will they offer a refund, or substitute another financial magazine like Money or Fortune? So far, I haven't heard anything about plans for current Business 2.0 subscribers.

DC

Cosmetic Changes at Sun Microsystems

I own shares in Sun Microsystems. Sun has recently made a couple of largely cosmetic changes to its stock. First of all, Sun has changed their stock ticker symbol from SUNW to JAVA. They put out a press release giving a few reasons for this change. The truth is that this change is mostly cosmetic. But I did have to manually change the stock ticker symbol in Microsoft Money and other records that I use to keep track of my cost basis. I also occasionally read the message boards at Yahoo Finance, and noticed that Yahoo has not yet setup a message board under Sun's new ticker symbol: JAVA.

Another largely cosmetic change is that Sun Microsystems will ask its shareholders to authorize a 1 for 4 reverse stock split at its Annual Meeting of Stockholders on November 8, 2007. This won't affect most shareholders, other than having to remember to correctly account for the change in their tax basis. As an example, suppose that a shareholder has 1000 shares of JAVA and it trades at $6 before the reverse split. After the split, this person would own 250 shares that are trading around $24. In either case, the total value of the stock holdings is the same, and the cost basis doesn't really change. However, an issue that might come up is if one ends up with a fractional share after the reverse split (i.e. one doesn't own a multiple of 4 shares of stock). In this case, the balance of the fractional shares will be paid out in cash. This, albeit small, transaction might end up being a taxable event for shareholders.

For years, I have used Sun Microsystems computers for my work, designing semiconductor chips. I remembered that the original stock symbol (SUNW) stands for Stanford University Network Workstation. But, I haven't heard it called that since I was in college.

DC

TD Ameritrade Spam Frustrations

I write about TD Ameritrade so much that I've considered calling my blog "The Unofficial TD Ameritrade Blog". Anyway, I am still receiving spam at my Ameritrade and Waterhouse Email addresses. It is getting very frustrating. In a previous post on the topic, I mentioned how I use a unique Email address for my Ameritrade accounts. What is particularly frustrating is that now many of these spam messages are making it through my spam filter.

I know that I am not the first person to write about getting SPAM at my Ameritrade Email address, as it has been reported by other PF bloggers. I created a unique Email address for my Ameritrade account through Yahoo's "AddressGuard" feature. The only entity that knows my Ameritrade Email address is Ameritrade itself. However, I have been getting spam at this address. Whenever this happens, I change my Email address to a new one, and delete the old Email address.

This has happened at least four or five times already (I lost count). However, it is the first time that the Email address that I used for Waterhouse has been compromised. I currently receive similar spam at both my Ameritrade and Waterhouse Email addresses. I have also been getting correspondence from other bloggers who are experiencing the same issue with TD Ameritrade.

Through my site meter, I have some insight about who reads my blog. I can confirm that employees of TD Ameritrade read my blog regularly, and that they are very much aware of the spam issue. The site meter typically shows Ameritrade employees as accessing my blog from either Nebraska, New York, or New Jersey. In some cases, employees of TD Ameritrade have been specifically searching for "Ameritrade spam" on the web. However, these readers have never responded to any posting that I've made; the silence from TD Ameritrade employees is deafening. Perhaps TD Ameritrade has a policy of not allowing its employees to comment in public forums.

In any case, I hope that TD Ameritrade gets it act together soon. They really need to plug up the holes in their security.

DC

NetBank Continued...

By now, I thought that I would be finished writing about the demise of NetBank. On May 21st, NetBank announced that it was selling a substantial portion of what remaining assets it has to privately held EverBank. At that time, I noted in my posting that when this sale closes, NetBank, as you know it, would be no more. According to the parties involved, this deal between NetBank and EverBank was supposed to be completed in late June or early July, resulting in the conversion of NetBank accounts to EverBank. However, June, July, and even August have passed without any further word on the state of the conversion. Then this notice appeared on the NetBank website:

NetBank is still actively working to transfer its deposit relationships to EverBank, an award-winning national financial services provider with an exceptional value proposition. When we announced our agreement with EverBank in May, we expected to first complete the sale of other bank investments to have the means necessary to meet the terms of the EverBank agreement. The sale of these investments is taking longer than originally anticipated.

Is the NetBank/EverBank deal in jeopardy? Apparently NetBank was not able to come up with the means to live up to their part of the deal. This is what else the NetBank site says:

EverBank remains interested in acquiring NetBank customers, and we continue to believe our customers would be well served by EverBank. If we consummate the EverBank agreement, we will let our customers know what to expect from an account conversion standpoint as early as possible. If the agreement is not consummated, NetBank expects to pursue another partner for its deposit relationships based on direction it received from its primary regulator.

I think that the key word here is "if". What does it mean to NetBank account holders? Mainly that your money may be in a state of limbo for a while longer. However, for NetBank (OTC: NBTK.PK) stock holders, your money is pretty much already lost, as I have said before. Note that NetBank is no longer listed on the Nasdaq, but now trades as a pink sheet stock.

DC

My First eBay Experience

Recently, I opened an eBay account and started bidding on items. Let me take a step backward for those who are not familiar with how eBay works. Before I opened an eBay account, I setup an account on PayPal which is like a bank account that you use to pay for eBay items. While it is not entirely necessary, most sellers on eBay prefer PayPal. One can also pay with a credit card, but PayPal is the entity that handles the transaction. So, I figured that I would have to end up opening a PayPal account anyway.

I was in the market to buy a Hewlett Packard 92274A (74A) toner cartridge for my 13 year old HP LaserJet 4MP printer. For the record, a new one of these replacement cartridges cost about $90 retail. On eBay I saw that they could be had for a lot cheaper, especially those that are designated as remanufactured cartridges. My first 4 or 5 attempts to buy a cartridge didn't meet with much success as I was outbid (sometimes at the very last minute) by somebody else. Up until this point, I had been bidding on cartridges one at a time. Frustrated by my lack of success, I started putting in bids on multiple items at once, hoping that I might be able to get one of them. To make a long story short, my bidding now became too successful, and I ended up winning two toner cartridges from the same seller. This is where the fun began.

I immediately tried to contact the seller to see if he would be willing to combine the shipping charges since most sellers do that when you win multiple auctions. There was no reply to my Emails after a couple of days. I then contacted eBay to see if I could get the seller's phone number. This is when I found out that his telephone was disconnected! Not a great first experience. So, I informed eBay, and they also could not confirm his contact information. For reference, when this happens eBay restricts the member's activities until the outdated contact information is corrected. I eventually got this updated info. So finally after several days, I did make contact with the seller, and he was willing to knock a few dollars off of the shipping. I then made my payment through PayPal.

What happened next was that I think the seller went on vacation or something. Again, there was no response to my Emails. *sigh* After another week or so, I made contact again, and he informed me that my goods had already been shipped. So, then it was up to UPS to deliver the goods. This also seemed to take forever, but in reality it took about 8 days.

In the end, about 3 weeks after the saga began (with setting up a PayPal account), I completed my first eBay purchase. This experience is certainly the opposite of when you just go into a store and walk out with the product you want. I did end up saving quite a bit over the $90+ I would have paid at say Office Depot. But, I wonder if it was worth the hassle. Since I consider this purchase from eBay a learning experience, I would say that it is interesting to learn how the mechanics of the system work. My new toner cartridge is now in my old printer, and I have one more cartridge to spare. These cartridges last me about 2 years each, so I'm set for a while.

I think I'll go looking for something else to buy now.

DC

Update on Office Depot Rebates

On April 27, I wrote about my experiences with Office Depot rebates. I did finally get all of my rebates, but not before a very long waiting period. I usually have good success with rebate offers for products that I buy. I estimate that I participate in maybe two dozen rebates a year, and have not had any problem 80-90% of the time. However, over the past year, I have sent in three rebates for products that I bought at Office Depot and had a problem receiving each one. If a problem happens with receiving a rebate, I usually consider it a fluke or coincidence. But since I had a problem three times in a row with the same retailer, I think that this is more than just a coincidence.

In each case, my rebate got "stuck" in their system. I waited almost half a year for a rebate on blank DVD media that I bought the day after Thanksgiving. I have talked to their customer service (at Web-Rebates.com), and they said that they would try to "expedite" the rebate. Most of the time, the rebate showed up as in the "Required Validation Period" in their online tracking system. In any case, Office Depot is now officially off my list of places of where I will shop for rebate items. Curiously, I have not had problems with other retailers who also use "Web-Rebates.com" for rebate submissions.

I have also heard from other readers who had the same problem with Office Depot rebates. In one case, a reader spent a great deal of effort, but it still took over 6 months to get the rebate check. That person no longer trusts Office Depot and immediately went to a bank to cash the $20 check, for fear that it would bounce. Does anybody else have a similar experience with Office Depot?

DC

Countrywide Bank SavingsLink

On PFStock, I have posted extensively about my experiences with NetBank. I have found a replacement for the funds that I withdrew from NetBank when I closed my account with them. The winner is ... Countrywide Bank.

Recently, I opened a SavingsLink account at Countrywide Bank. The highlights are that they pay 5.25% APY interest if you have more that $10k, and 5.4% APY if you have over $50k. The interest rate drops to 4.0% APY if your balance is below $10k. The account itself works like an ING or iGo savings account. If you are not familiar with these, the SavingsLink account is an online only account that must be linked to a regular savings or checking account that you have at another institution. This is pretty much the only practical way to transfer funds in or out.

Countrywide Bank actually has a branch within walking distance of my home. But unlike most regular banks, the branch doesn't have an ATM and a prominently displayed sign says that they don't have any cash in the branch. When I asked the asked the sole employee of this office how to make a deposit, he showed me a deposit envelope, which was actually a Federal Express envelope. Apparently if you give them a check, they will send by overnight mail to Texas where the deposit is processed. Countrywide did send me a few postage paid deposit envelopes, but I assume that the FedEx method would be faster.

The SavingsLink account doesn't come with either checks or an ATM card. So, most transactions have to go through your linked account. SavingsLink only allows one linked account at a time, and the process of linking an account is cumbersome. Countrywide Bank uses what is known as "trial deposits". When you request that they link an external account to your Countrywide Bank account, they will make two random deposits (of less than $1.00 each) to your external account and ask you to verify the amounts that were deposited. This is to assure that you are actually the owner of the external account, and this process usually takes 2-3 days to complete. One other little hassle is that deposits are subject to a 10 business day hold. This basically means that you won't be able to withdrawal any deposit for a period of two weeks.

In spite of a few hassles to setup a Countrywide SavingsLink account, their interest rates are much better than at NetBank. Indeed, the 5.4% APY rate is better than the vast majority of bank savings accounts available.

DC

This article was originally published on May 1, 2007. It is being republished today due to previous posting problems.

Bankruptcy and IVAs

In a discussion with one of the sponsors of PFStock, the topic of an Individual Voluntary Arrangement (IVA) was brought up. I was not familiar with IVAs, so I decided to do a little research into the topic. In the United Kingdom, when a person declares bankruptcy, the details of the bankruptcy are advertised in the local press.

Due to the Insolvency Act of 1986, individuals in the United Kingdom have an alternative if they wish to avoid bankruptcy. This option, called an Individual Voluntary Arrangement (IVA) , is an agreement between a debtor and creditors. The debtor agrees to pay a monthly sum, usually for 5 years, to their creditors through this arrangement. This sum is divided up between the creditors, who accept the sum in settlement of the amount owed.

The monthly payment is based on one's income and expenditure. In general, more than 75% (in value) of the creditors must agree in order for the IVA to be approved. A standing order authority (usually a company) will be set up to handle the payments.

An IVA might be suitable for people who cannot pay their debts. To read more about IVAs, I suggest the following website: Debt Advice Trust. The Debt Advice Trust is a not-for-profit charity in the UK with the aim of helping people get out of debt by giving free, impartial advice. The site has a forum and lots of in-depth FAQs on debt and staying debt-free.

Brokerage Survey Results

The results of PFStock's first brokerage survey are in. TD Ameritrade is the most popular brokerage among PFStock readers with 80% of the votes. The next most popular brokerage is SogoInvest with 20% of the votes. Thank you to all that voted.

In the latest poll, PFStock asks how much of your banking do you do online? Personally I do most, but not all, of my banking online. This leads to a lot of frustration when the bank website goes down. For example, yesterday when I got ready to pay a bunch bills on the Washington Mutual (WaMu) website, I got the following error message "Our site is temporarily unavailable due to a scheduled technology upgrade." So in the meanwhile, my bills are lined up next to the computer, waiting for WaMu's website to come back to life...

Please vote using the poll in the right sidebar.

DC

TD Ameritrade Online Documents

It seems that TD Ameritrade is having some issues with its online documents. For a while, my July online statements were not available online. The TD Ameritrade website had this notice regarding "July Statement Availability":

Electronic Statements for July are currently unavailable for some clients. We are working to make them available as soon as possible. We apologize for any inconvenience. If you have further questions please contact Client Services.

But a larger issue for me is that I am missing several of my trade confirmations from the May-June 2007 time frame. These are trade confirmations that were previously listed under the "History & Statements" tab, but mysteriously disappeared sometime last week. A couple of Emails and a call to TD Ameritrade APEX customer service assured me that they are "aware of the problem and expect to have this issue resolved quickly." Well, it has been more that a week and my trade confirmations have not yet reappeared.

Banks and brokerages encourage their clients to agree to online delivery of account documents in part because it saves them money in the form of printing and mailing costs. I don't know about you, but when I agree to the arrangement of having my documents kept online, I also expect to be able to access them whenever I want. TD Ameritrade is only one example, as I think that most people who bank online can describe a situation where they were unable to access the online system because it was "down for maintenance" or "undergoing system enhancements". Is it any wonder that many people are still hesitant to do all of their banking online?

Also, I thought that I would update readers on my TD Ameritrade Warning that the brokerage would start to charge for monthly paper statements. They recently posted the following information about "Former TD Waterhouse clients receiving paper statements":

Most former TD Waterhouse clients who received paper statements in their old accounts will now receive paper statements on a quarterly basis in their TD AMERITRADE account. There is no fee for quarterly paper statements. Statements are also available in electronic or monthly paper formats. Electronic statements are free, monthly paper statements are available for a $2 monthly fee (free for Apex clients). To change how often you receive statements or the format you receive them in, login to your account and go to My Profile (under Portfolio & Accounts), then select Statements (located in the Communication section) and click the "edit" link.

Since I'm an Apex client, I get my monthly paper statements delivered for free. I did notice that the new TD Ameritrade statements take about two weeks longer to arrive versus the old TD Waterhouse statements, which came quickly. However, if they I did charge me for statements, I would probably opt for only quarterly statements.

DC

AOL Time Warner Settlement

A couple weeks ago, I received a class action settlement check for some AOL Time Warner stock that I purchased a long time ago. In fact, the purchases of stock go back as far as 1999. To make a long story short, this settlement stems from the botched merger of America Online and Time Warner in which investors lost a lot of money. Time Warner currently trades on the NYSE as symbol TWX. Of course, the check that I received is much less than the amount that I lost trading the stock.

I filled in and mailed the proof of claim form for the AOL Time Warner class action settlement over a year and a half ago. Usually, these types of settlements are handled by a firm called Gilardi and Co. This is the first time I ever received a settlement check, and I've already figured out that these matters can take a long time. Has anybody else received a settlement for securities litigation? Do you know how one is supposed to report this on their taxes?

DC

NetBank Again

On the morning of September 20, 2006, I posted here that I was about to begin the process of withdrawing my money from NetBank and close my account with them. In that post, Sayonara NetBank, I referred to this process as "evacuating my money." There and in subsequent posts on PFStock, I cited deteriorating financial conditions at NetBank as one of my prime reasons for closing out my account. Even then, I conceded that NetBank was not likely to be forced into bankruptcy, but in the event that they did declare bankruptcy, it would be a hassle for depositors to get their funds back from the FDIC.

Let's take a look back over the last ten months at NetBank (Nasdaq: NTBK). On September 20th, the stock closed at $6.10. Today, NTBK trades at a mere $0.22 (and is on the verge of being delisted). And, NTBK recently reached an all-time low of $0.18 (a 97% decline). This decline is not surprising considering NetBank's deteriorating financials. From NetBank's previous press releases and other information available at their website, we can clearly see a series of quarterly losses over the past year. And early last year, NetBank stopped paying its shareholder dividend saying that they needed "to protect the company's capital base and tangible book value from further erosion."

Then on October 3rd, NetBank announced that it would be replacing its CEO. Even before this event, I had speculated that something fishy was going on at NetBank. A worst-case scenario could be that NetBank customers would need to recover their funds from the FDIC if NetBank becomes insolvent. However, I noted that while this is certainly possible, it is not the most likely case. Nevertheless, I asserted that NetBank could no longer remain competitive with other banks in its market space.

According to a more recent NTBK press release dated February 21, 2007, NetBank recorded a net loss of $202 million or $4.36 per share for 2006. This loss of $4.36 per share over the 12-month period is absolutely staggering when you consider that the entire company is only valued at $0.22 a share. Unfortunately, what is really lacking from NetBank's report is any type of good news. To further exacerbate the already existing problems, NTBK has received a notice from the Nasdaq Stock Market that the company's common stock is subject to delisting. NetBank has been delinquent in its regulatory filings because its former independent auditor resigned as of November 9, 2006. Since then, NTBK has been having difficulty bringing a new auditor on board. Again, this cannot be construed as good news.

And, the other shoe dropped on May 21st. NetBank announced that it is selling a substantial portion of what remaining assets it has to privately held EverBank. Here are a couple of statements from the NTBK press release:

The company has been under extreme financial pressure for more than a year due to a difficult mortgage origination market, a flat yield curve environment and other factors. These pressures have resulted in large operating losses that have significantly reduced the company's capital position and prompted heightened regulatory oversight.

And:

Regulators have been increasingly concerned about the bank's capital and earnings trends and advised management to find an alternative immediately that covered all of the bank's deposit obligations.

Doesn't this seem to imply that the aforementioned "regulators" forced NetBank to essentially liquidate its remaining assets in order to protect depositors' money? And the NTBK stock price has reacted very negatively to these developments.

So, what is left of NetBank? According to NetBank CEO, Steven F. Herbert, "Our remaining businesses will include our mortgage servicing operation, along with our retail prime mortgage franchise, Market Street Mortgage." My interpretation is that there won't be anything left of the online banking operation, after EverBank takes its share. So substantially I can say that as you and I know it, the online bank, NetBank is no more!

Further reading:
The Decline and Fall of Internet-only Banks
Unprofitable and Unstable, NetBank Ousts its CEO
More on NetBank
NetBank's Demise

DC

This article was originally published on April 15, 2007. It is being republished today due to previous posting problems. It has been updated.

Money Market Choices for TD Ameritrade

The series of posts that I made about my experiences with TD Ameritrade have been very popular at PFStock. Perhaps the most popular of my posts was the one where I exposed Ameritrade's "Hidden" cash sweep account. I have recently come across another cash (money market) option for TD Ameritrade account holders. This is another fund offered through "The Reserve" (website: ther.com).

The fund is called the Reserve Yield Plus Fund Class R (symbol: RYPQX), and is classified by The Reserve as an "enhanced cash fund". Currently, this fund pays in the neighborhood of 5.4% APY. This rate is much better than the default TD Ameritrade cash option which puts you in a sweep account that pays less than 1% interest.

However, unlike the other Reserve funds (offered through Ameritrade's Total Asset Plan) that I've talked about before, this fund is not available as a sweep option which automatically places your uninvested cash into a money market account. Instead it is traded like a No-Transaction Fee (NTF) mutual fund. You would need to put in a mutual fund order each time that you want to buy or sell the fund.

Now I have a few questions for my readers. Has anybody invested in this type of enhanced cash fund before? Do you need to report each mutual fund sale (each time you take money out of the fund) as a broker transaction on Schedule D of your tax return? Presumably, the fund tries to maintain a $1/share valuation, and each transaction would represent $0 in capital gains. And, does anybody know if TD Ameritrade would count each NTF transaction toward qualification for their premier (or APEX) trading status?

I suppose that I would be remiss if I didn't add that The Reserve Yield Plus Fund contains the following disclaimer:
This Fund is not a money market fund. Achievement of the Fund’s objectives cannot be assured. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund. Yields may vary.

Since the first time that I mentioned the Reserve Yield Plus Fund, I discovered that cash you have in RYPQX is not counted as funds available for trading by TD Ameritrade. Arguably funds held in RYPQX can be considered as cash, but not as "available cash" for the purpose of trading. TD Ameritrade only counts the cash sweep balance here. What this means is that if you want to buy a new stock and don't have enough money in your cash sweep, you will have to sell RYPQX before placing an order.

I think that TD Ameritrade made this process unnecessarily cumbersome. Because RYPQX trades like a mutual fund, there is a 1 day settlement period on funds. For stocks, the settlement date is 3 days later. So in theory, one should be able to execute a stock trade and then later liquidate enough fund holdings to cover the trade in time for settlement. However, the new TD Ameritrade website will not allow you to even enter an order if it thinks you don't have enough in your cash sweep. By my memory, the former Waterhouse website did not have this particular restriction on placing stock trades.

DC

This article was originally published April 11, 2007 . It is being republished because of previous posting problems. It has been updated.

Welcome to the New PFStock

I have finally gotten around to updating my blog template, and resolving the issues that I had with Internet Explorer 7 and the new Blogger Beta. I have tried to keep the same color scheme as the original PFStock. However, I have changed the underlying template. One interesting feature of my new template is that the blog post pane will resize itself depending on the size of the browser window. Also, it is much easier for me to add (or remove) list items on the side bar using the new Blogger template. For example, updating the blogroll or sponsors section is much easier than before.

This reminds me that I am still looking to add more blogs to my blogroll. If you have a bona fide personal finance blog, please Email me (my contact information is listed in the sidebar) about exchanging links. Note that I do not currently link to commercial, real estate, or multi-level marketing blogs. However, you are welcome to contact me about advertising rates for the sponsors section.

After Google converted PFStock to Blogger Beta, I had experienced some problems with the RSS feed. As a result, my readership at PFStock dropped. For the record, the correct RSS feed for PFStock posts is now http://pfstock.blogspot.com/feeds/posts/default or http://pfstock.blogspot.com/feeds/posts/default?alt=rss and http://pfstock.blogspot.com/feeds/comments/default for comments. Because of this and a few other posting problems, I plan to republish some of my blog posts that readers may have missed.

Lastly, I wanted to mention the addition of polls to PFStock. Currently, I am asking readers to vote on which brokerage they use. So far, TD Ameritrade is the most popular brokerage among PFStock readers. This is not surprising since I do tend to write a lot about that broker. Anyway, if you haven't voted yet, please try to get your vote in before the poll closes.

DC

MSN Money Fiasco

MSN Money has recently "upgraded" its online account services. According to their website, MSN Money’s banking services have been updated to improve the online banking experience. This can be described in one word: fiasco! I logged into MSN to find that nearly all of my bank and brokerage accounts had little red exclamation points next to them. These exclamation points mean that the login information for each of these accounts needs to be updated.

It might be acceptable if I only had to re-enter the new updated information. But in most cases, I had to go through the whole process as if I were adding a new account. Then I have to delete the old account. I have to repeat this process as many times as I have accounts. So far, this task has already taken me hours, and I'm not even half way done.

Great job, Microsoft!

DC

Update on Discover Card

I mentioned getting cash back at supermarkets when using a Discover Card. By choosing cash back (also known as cash over) as a option during checkout, this works out as a nice interest-free loan. I pay off the card every month, and it saves me a trip to the ATM. I even said that I earn cashback on the cash back since it goes on my statement as being a purchase. Well, I guess that it couldn't last forever.

My last Discover Card statement had two supermarket transactions, that say "cashover $50". They now separate out the "cash over" part from the "purchases" part of the transaction. I am no longer earning a cashback bonus on the cash over amount. Oh well. At least it still saves me a trip to the ATM.

Again, I do not recommend this strategy to people who run a balance on their credit card, and end up paying interest charges on the cash over amount.

DC

Whole Foods Recommendation Withdrawn

In the past, I made a stock recommendation to buy Whole Foods Market Inc (Nasdaq: WFMI). However, due to recent events involving the CEO of Whole Foods, PFStock is withdrawing its recommendation of Whole Foods (WFMI). To make a long story short, Whole Foods CEO John Mackey has admitted to making anonymous comments about Whole Foods and its competitors on Yahoo Finance. Using the Yahoo user ID "rahodeb," Mackey had posted negative comments about a competitor, Wild Oats Markets Inc (Nasdaq: OATS). These comments were made prior to Whole Foods' offer to acquire Wild Oats.

This type of behavior is simply not appropriate for a CEO-level employee. As a direct result of Mackey's reckless judgment, Whole Foods is now the subject of a Securities and Exchange Commission (SEC) inquiry. Needless to say, this is not good news. Due to these recent developments, I cannot recommend WFMI to anybody.

DC

TD Ameritrade's Cost Basis Tool

I had previously mentioned that TD Ameritrade has added a gain/loss tracking tool called GainsKeeper to their website. I have used GainsKeeper before, and I believe that it can be very helpful to keep track of investment cost basis. However, there are a few obstacles to their new tool.

For me, GainsKeeper didn't have any cost basis information for investments that I bought before 2003. I had to go through a process known as "baselining" to tell the online tool what I originally paid for my stocks and mutual funds. For the most part, this process is straightforward if you have your cost basis handy. However, if a stock or fund has undergone a stock split, spinoff, or merger, it can get very confusing. For example, I had a mutual fund that was merged into another one, and I had to manually figure out the cost basis, and update it in GainsKeeper.

TD Ameritrade uses this GainsKeeper cost basis information to figure the Unrealized Gain (Loss) on your monthly statement. If it doesn't know what you paid, it shows "NP" for the Average Cost, and leaves the gain amount blank. On the other hand, I noticed that the GainsKeeper cost basis doesn't seem to be reflected on the "Balances & Positions" page. New trades are almost immediately reflected here. This leads me to conclude that TD Ameritrade uses two different sources for the cost basis data. The fact that they do this can lead to confusion.

Going forward, I think that GainsKeeper has the potential to provide accurate cost basis information at a glance. But, I do have a wishlist of improvements to GainsKeeper that I think would be easy to make. First of all, I would like to see a bigger font size; my eyes are not what they used to be. I'd like to see green and red colors used to indicate a gain or a loss. Another improvement would be for GainsKeeper to flag securities that could potentially trigger a wash sale if you buy or sell. Currently, GainsKeeper divides all gains into long and short term, giving you a subtotal for each. How about adding a line that gives you the total gain too? Lastly, I found that if you make a trade during the day, GainsKeeper doesn't reflect that trade until the next day. This could be updated in real-time.

DC

Interest Compounded Continuously

Have you heard of the concept of continuous compounding? This is a question that I posed a while back while commenting on a post at My Money Blog. In that post, the author, Jonathan asked the question if it matters whether interest is compounded monthly or daily. The answer was that it doesn't make much difference.

In Jonathan's post, he included the following example of a $10,000, 1-Year CD paying 5% APR (Annual Percentage Rate). He then went on to calculate the amount of money you would end up with after one year of compounding.

At this point, some readers might like to review my post about how to calculate APY on a bank account, as the following math is similar. For an account that is compounded monthly, you will have the following after one year:

$10,000 x (1 + .05/12)¹² = $10511.62

And if this amount is compounded daily, you would end of with this amount:

$10,000 x (1 + .05/365)³⁶⁵ = $10,512.67

In other words, you'd end up with $1.05 more by compounding daily versus compounding monthly.

I have always held that it is best to compare the Annual Percentage Yield (APY) for deposit accounts, rather than Annual Percentage Rate (APR). And, the author agrees with this sentiment.

But getting back to the original question, what about continuous interest compounding? This is not compounded daily, hourly, every minute, or every second, but continuously. Many people (erroneously) believe that if they could have their savings compound continuously, then they would have an infinite amount of money. However, taking the formula above, in the limit that the 365 goes to infinity (continuous compounding), the formula results in this one:

$10,000 x exp(.05) = $10,512.71

…or about 4 cents more than compounded daily. Note: This formula uses the e^x key on a scientific or financial calculator.

In reality, no bank offers continuous compounding. But if it did, you would probably realize that it was certainly an advertising gimmick because even continuous compounding doesn't make much of a difference.

DC

New E*TRADE Offerings

A few months ago, E*TRADE announced that they will soon be offering global trading. According to their website, you will be able to trade stocks in six global markets: Canada, France, Germany, Hong Kong, Japan, and the United Kingdom. And, you'll be able to hedge U.S. dollar exposure with five global currencies. While I think that this is interesting, I personally believe that investing in individual foreign stocks is too risky for most U.S. based investors. I will and have invested in foreign mutual funds and ETFs, though. Actually, this notice has been on the E*TRADE website for a while, and I'm still waiting for them to implement the feature.

I had mentioned before that E*TRADE is one brokerage that I use which offers IPOs. The other broker that offers IPOs is TD Ameritrade (i.e. the broker formerly known as Waterhouse, not to be confused with the broker formerly known as Ameritrade which does not offer IPOs). Of course, to add to this confusion, all former Waterhouse accounts have now been merged into TD Ameritrade, which doesn't offer online access to IPOs. One of the E*TRADE IPOs that I was recently allocated shares in is Interactive Brokers (Nasdaq: IBKR).

One new thing that I recently noticed on E*TRADE's IPO Center page is "structured products." The one I was looking into was BNP Paribas 3.75 Year 100% Principal Protected Notes. These are bonds that mature on December 30, 2010. Unlike a regular bond the return on these bonds are linked to the quarterly averaged performance of the S&P 500 Index and have a minimum return of 5%.

That caught my eye! You get the performance of the stock market with no downside risk. I did a little more investigating, and it seems that the word average above is key. Assuming that the S&P goes up like a straight line (don't we wish), you won't be receiving the return of the stock market, but the Average Index Performance of the S&P 500 value during the term. The bond prospectus goes on to define the Average Index Performance by a somewhat intricate formula where they value the S&P every three months, and take the average value of the index during the term of the bond. Suffice it to say that the return in this case might be significantly less than the actual S&P performance. On the other hand, if the stock market goes down, you are assured that you will at least receive the 5%. And that is the other catch... The 5% is over the term of the bond, and not an annualized return. For the mathematically challenged here, this works out to the equivalent of about a 1.3% nominal annual rate.

It is clever wording on the part of the offering party here. In essence you can't really lose money on the investment, but you might not make as much as you would in either an index fund (if the stock market goes up) or a regular bond fund (if the market goes down). I can see that the worst case is that you get stuck with the 5% return (1.3% annually). The best case would be if the stock market goes up over the next 4 years, but tanks during the last year.

DC

Account Aggregation

I had written that I was having some trouble with two sites (MSN Money, and Smith Barney) that aggregate my account balances. For my TD Ameritrade accounts, MSN Money double counts my cash holdings, and Smith Barney doesn't count them at all. The account aggregation service is powered by a company called Yodlee. Unfortunately, there are other problems with Yodlee.

Some banks are now using a system called "Secure Sign On" to log you in. The secure sign on feature uses a multi-screen login that will typically show you a picture and personal phrase that you previously chose. In addition to typing your password, the bank will then ask you to answer one or more confirmation questions for added security. These are personal questions that you previously provided answers for. This is what one bank says about using this sign on procedure in conjunction with account aggregation services like Yodlee.

Account aggregation lets you see the information from all your online accounts on one website. The firm operating the account aggregation service logs in as you and uses your security information to get your information for you. [With] Secure Sign On, these services may not work with the user ID and password you provided them because Secure Sign On uses a multi-page signon process. Confirmation questions and cookies are also used as additional security information.

For a long time, I was largely satisfied with the account aggregation service that sites powered by Yodlee provided. However, my satisfaction has now been replaced with skepticism about Yodlee.

A person claiming to be Peter Hazlehurst (senior vice president of product development at Yodlee) posted a comment in response to one of my posts. In this post, I mentioned the account aggregation problems that I was having with TD Ameritrade. I sent a message to what I believe was his Email address. Although he offered to help debug the problems, I never received any response to my message. While I cannot verify that this person actually wrote the response, I can confirm that Yodlee employees do visit and read my blog.

Of all my accounts, the majority of them have some sort of issue with the Yodlee's account aggregation scheme. Another issue that I've seen is that with some 401(k) plans, the individual funds are listed as "unknown" securities because Yodlee doesn't know the symbols to these funds. And I also remember one instance, where the money fund symbol was replaced with an "X". Money funds are supposed to have retain a value of $1 per share. But, Yodlee was substituting the value for stock symbol "X" (United States Steel Corp.). Suddenly, I appeared to have millions of dollars in my 401(k) plan.

What is the value of a service that claims to give you a complete picture of your finances when much of your account information is missing or inaccurate? At best, this is a big hassle. Lastly, others have expressed security concerns that Yodlee needs to have your user IDs and passwords on record as part of their service. I hadn't really considered this a problem before, but it is certainly something for me to think about.

PF Stock

Glendale Federal's Squirrels Club

I remember opening my first bank account when I was about 7 years old. It was at a bank called Glendale Federal Savings, at the corner of 25th Avenue and Geary Boulevard in San Francisco. They offered a special account for children called the Squirrels Club account. The club would send a newsletter every few months and gave me a bank for saving coins in. The newsletters featured squirrels as cartoon characters with the head squirrel named Filbert. The materials included games, puzzles, and tips on such things as saving money. The educational part of the newsletter would explain things like interest compounding. I believe that the Squirrels Club was run by an association of different savings and loans.

I was a Squirrels Club member until I was 12 years old. After that, my account was changed to a regular savings account. Looking back, I think that it is a pity that more banks don't offer this type of club for young savers. The educational material that they offered really formed the foundation of how I think about money today as an adult. Actually, the Squirrels Club still exists in a different incarnation. This was the only information that I could find on the Internet.

As far as Glendale Federal is concerned, it went through different incarnations in its history. I think that they changed the name once to West Coast Federal Savings, and then back to Glendale Federal. In the late 1990s, they advertised that as a small bank, they were able to give superior customer service. This was largely a true statement. That was before things started to change.

Glendale Federal was acquired by California Federal Savings which was for the most part acceptable. Then CalFed was finally bought by Citibank. So, what was to me a small bank with good customer service was replaced with one of the biggest, most impersonal banks in the country.

Does anybody know of any youth savings accounts that are similar to Glendale Federal Savings's Squirrels Club? This post was originally published on September 16, 2006. It is being republished today because I am still in search of a youth saving account.

PF Stock

I'm Famous

Yesterday, I found that my blog has been mentioned on a website called Credit Card Lowdown. They posted a list of "The 100 Most Inspirational Personal Finance Turnaround Stories Online". I am number 89 on the list. Please have a look.

PF Stock

Template Fixed -- Kinda

A comment left for my last post suggested that I add space to the top margin of the blog template. This is to fix the issue of the title being cutoff and unreadable under Internet Explorer 7 (IE7). The blog now looks fine under IE7, and the title is not cutoff. My blog also looks fine in Firefox. But, when viewed in IE6, there is an additional blank space at the top. Nevertheless, I consider this to be a good workaround since there isn't any unreadable text, but I am still considering switching to a new template altogether.

PF Stock

It's Not That Easy Being Green

Is it written somewhere that a financial blog has to be green in color? I read a post by Smarty of Growing Money where he notes that Citibank uses green in its website. Referring to his own blog, he said that bright green is his color of choice and is used widely in his website theme. The color green could be used to represent the color of money (in the United States), which is appropriate for a personal finance blog. When looking at stock screen, green is often used to represent a gain or profit. However, the color green also represents one of the deadly sins; hence the phrase "green with envy."

I have mentioned that I am considering changing my blog's template from this current green one "Son of Moto". See Blogger Beta Strikes PFStock. The main reason for my change is because the title is cut off in Internet Explorer 7. A few other PF blogs that I've noticed with the same title issue under IE7 are Moomin Valley, Penny Foolish, and My Wealth Builder.

I haven't decided if I will keep the green color in my updated template. But, I am considering other color schemes. Does anybody have any input on this topic?

PF Stock

Microsoft Money Issues

I have recently been having problems downloading transactions from TD Ameritrade to Microsoft Money 2004. One of my computers has this older version of MS Money installed on it. I use the Deluxe version of MS Money. After attempting to update my brokerage account, I get an error message saying that "There is a problem with the data received from this online provider."

For years, I have been using Microsoft Money with TD Ameritrade and its predecessor, Waterhouse Securities. This new error only occurs in the "Waterhouse" accounts that were recently transfered to TD Ameritrade. This problem doesn't seem to happen with my original Ameritrade accounts, or with E*TRADE.

On the other hand, I have purchased a new copy of MS Money Deluxe almost every year since 2002, and I haven't seen the same downloading problem with the current 2007 version of MS Money. I will also note that I received a notification from Microsoft saying that they will soon discontinue supporting updates to Money 2004. Their policy is to discontinue updates three years after the introduction of a product. This is obviously a way for Microsoft to force its customers to upgrade, and pay for new software.

There are a few things that I think are better in Money 2004 than in the new Money 2007. For example, you can more easily switch from viewing one investment to another in the 2004 version. There is a drop-down box with the names of all of the securities that you entered into money. This feature doesn't exist in the 2007 version. Also, the latest version of Money only runs under Windows XP Service Pack 2 (SP2) or Windows Vista.

PFStock

Annoying Magazine Ads

You know the ads that I'm talking about. When you read a magazine, it will open up to the page with the advertisement. The ads make it hard for you to stay on the page that you're actually reading. And they're so big that they get in the way of everything else. They're the ones that are printed on heavy paper or cardboard, and sometimes have elements that stick out from the page. They are held in place with a rubbery glue. And when you finally remove the ad, it leaves a sticky residue that resembles a booger.

Whenever I encounter one of these ads, I tear it out and throw it away, almost as soon as I see it. I suppose this is not the advertisers original intent. But, I guess that it serves them right for being so obnoxious with their advertising. Recently, Philips ran an ad like this, and I found myself repeated tearing out the same ad from my Money, SmartMoney, and Business 2.0 Magazines.

PF Stock

More on the TD Ameritrade Switchover

I had a couple of other notes about the switchover of TD Waterhouse clients to the new TD Ameritrade website. I needed to change login information for Microsoft Money, Quicken, and my online account aggregation sites (which are powered by Yodlee).

MS Money and Quicken never did display the correct account balance information for TD Waterhouse, so this is nothing new. On the other hand, I also use MSN Money and a Smith Barney account (powered by Yodlee). In the case of MSN Money, its seems to double count my cash balance, listing cash as both an "unknown" security and then again in the cash section. Smith Barney drops the cash amount altogether, thus under reporting my account balances. Does anybody else experience these issues with account aggregation?

As far as MS Money and Quicken (I use both) are concerned, there were a bunch of extraneous transactions caused by the changeover. On the TD Ameritrade website, these are listed as "TRANSFER OF SECURITY OR OPTION IN" and are dated 05/14/2007. In MS Money, these are listed as a series of "Remove Shares" and "Add Shares" transactions. Because the number of shares added and removed are equal, these transactions cancel out. But I had to mark both transactions as void to retain my original purchase dates and cost basis information.

Another big change at TD Ameritrade is the addition of a gain/loss tracking tool provided by GainsKeeper. I have used GainsKeeper before, and I believe that it can be very helpful to keep track of the cost basis of investments. However, the first obstacle for me is that GainsKeeper doesn't have any cost basis information for investments I bought before 2003 or so. I had to go through a process known as "baselining" to tell the online tool what I originally paid for my stocks and mutual funds. For the most part, this process is straightforward if you have your cost basis handy. However, if a stock or fund has undergone a stock split, spinoff, or merger, it can get very confusing. For example, I have 0.001 shares of T ROWE PRICE EQUITY INDEX (symbol: PREIX) that I don't know the cost basis for! This was originally the TD Waterhouse 500 Index that got merged into T. Rowe Price. When I was finally done updating and correcting the cost basis, I noticed that these updates don't seem to be reflected on the "Balances & Positions" page. There must be two different sources for cost basis data, which can be confusing.

In addition to the Streamer Suite of online tools, the new TD Ameritrade website also includes a couple of tools that you can download (and install on your computer). These are StrategyDesk and Advanced Analyzer. I have experimented a little with StrategyDesk which is designed to help you find a successful trading strategy. I have not installed Advanced Analyzer yet.

Lastly, for my money market fund which is officially called the "TDAM Money Market Portfolio – Investor Class," the symbol that TD Ameritrade uses changed from CMFMZ to 9ZZZTD109. I'm not sure about the reason for this change.

PF Stock

NetBank's Demise

PFStock has helped to chronicle the ongoing demise of the online bank NetBank. In my first posting (Sayonara NetBank) dated September 20, 2006, I stated that I was beginning the process of "evacuating my money" from NetBank. In subsequent posts on PFStock, I cited deteriorating financial conditions at NetBank as my prime reasons for closing out my account. Although I conceded that NetBank was not likely to be forced into bankruptcy, I felt that it would be a hassle for depositors to get their funds back from the FDIC.

In my more recent post, on April 15th (NetBank Revisited), I advised any of my readers that still owned shares of NetBank (Nasdaq: NTBK) to get out, even though the NTBK shares then trading at $1.74 per share seemed cheap at the time. Quoting myself:

For NTBK shareholders, I think that there are better investments out there. Taking a loss may be a difficult thing, but so is watching your remaining investment dwindle to practically nothing.

Yesterday (May 21st), the other shoe dropped. NetBank announced that it is selling a substantial portion of what remaining assets it has to privately held EverBank. Here are a couple of statements from the NTBK press release:

The company has been under extreme financial pressure for more than a year due to a difficult mortgage origination market, a flat yield curve environment and other factors. These pressures have resulted in large operating losses that have significantly reduced the company's capital position and prompted heightened regulatory oversight.

And:

Regulators have been increasingly concerned about the bank's capital and earnings trends and advised management to find an alternative immediately that covered all of the bank's deposit obligations.

Doesn't this seem to imply that the aforementioned "regulators" forced NetBank to essentially liquidate its remaining assets in order to protect depositors' money? And the NTBK stock price has reacted very negatively to these developments. On Friday, May 18th, NTBK closed at 1.75, and it closed Monday at 0.59 (a stunning 66% one-day decline).

So, what is left of NetBank? According to NetBank CEO, Steven F. Herbert, "Our remaining businesses will include our mortgage servicing operation, along with our retail prime mortgage franchise, Market Street Mortgage." My interpretation is that there won't be anything left of the online banking operation, after EverBank takes its share. So substantially I can say that as you and I know it, the online bank, NetBank is no more!

NOTE: On May 12th PFStock received an anonymous comment that said, "Stay tuned for more on NetBank. There might even be some big news this coming week." (See Obsession Tagged.) I know for a fact that NetBank employees regularly read this blog, but I was not able to ascertain the identity of the commenter. Nevertheless, it is clear now that this event is what the anonymous reader was referring to.

I don't know if there is really much more to say about the NetBank situation, other than, "I told you so".

For further reading:
NetBank Revisited
The Decline and Fall of Internet-only Banks
Unprofitable and Unstable, NetBank Ousts its CEO
More on NetBank
Sayonara NetBank

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TD Ameritrade Update and a Warning

PFStock has helped to chronicle the travails of Ameritrade as it swallows up the brokerage formerly known as Waterhouse Securities. This past week, the assimilation was completed. For former Waterhouse customers, we have been switched to Ameritrade's new web site. I had previously described this upgraded web site in the post: Ameritrade's Unimpressive Site Upgrade.

For long-time Waterhouse customers, like myself, this is a significant changeover. Notices have been posted on the TD Ameritrade on the website indicating that the brokerage firm is experienced a very high volume of calls to customer service. Presumably, this is due to a great many former Waterhouse customers who are, at best, confused by the new web site.

Before I continue with what is becoming a long post, I will now issue the warning that is mentioned in the title of this post. Here is my warning about he the new website:

If you formerly received paper statements from Waterhouse, the new TD Ameritrade will now charge you $2 per month for paper statements, unless you are an Apex client.

This notice was incorporated in the many reams of paper that TD Ameritrade sent out to its clients. In case you missed the change, I am letting you know now.

From my perspective, I am finally an Apex client at TD Ameritrade. However, by the arcane system that TD Ameritrade uses, my DW is not considered an Apex client. Although we (as a household) have more than double the required assets for Apex access, there is less than $100,000 in my wife's combined accounts, so they don't count her as Apex.

TD Ameritrade has been touting such features as Trade Triggers, which the new site has. They also now offer conditional orders. I use Standard and Poors (S&P) stock reports extensively for my personal research. And TD Ameritrade allows customers to access S&P reports for most companies. Typically, these S&P stock reports are 8 pages long. There are some other improvements to the site including the very good Streamer Suite of online investment tools. There is also the new Command Center 2.0, and StrategyDesk.

However on the downside, the new TD Ameritrade website does not give access to IPOs. And currently, customers cannot access the cost basis information for their investments. My general opinion is that customer service at TD Ameritrade is lacking unless you are able to make friends with a representative at a local branch office. In that case, you can call your representative with your issues, and have them do battle with their own customer service department.

As I described in my previous post, the new stock screener is still hard to use. I had trouble figuring out how to use the Ameritrade stock screener, so I've abandoned it and will instead use the free stock screener from Yahoo Finance. And I am still receiving spam at my Ameritrade Email address. In a previous post on the topic, I mentioned how I use a unique Email address for my Ameritrade account. This is accomplished through Yahoo's "AddressGuard" feature.

Lastly, I want to remind readers that better choices exist for the TD Ameritrade's money market (cash sweep) account. Typically, these fund options pay 4-5% APY while if you let let TD Ameritrade assign you to the default FDIC-insured sweep account, you will earn as little as 0.1% interest on your money.

For information on money market (cash sweep) funds, see this post: Ameritrade's "Hidden" Cash Sweep Account.

For information about enhanced cash funds which pay about 5.4% APY, see this post: Money Market Fund Options for TD Ameritrade. By the way, the symbol for this fund is RYPQX and it is offered through The Reserve.

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Blogger Beta Strikes PFStock

I've been resisting the move to the new Blogger Beta for as long as I could. However last month, Google automatically changed my blog over to Blogger Beta. Now, some blog elements no longer display correctly, especially when using Microsoft Internet Explorer 7 (IE7). Most notably, I noticed that the title "DC's Personal Finance and Stock Investing Blog" has been cut off by the blogger bar.










I am not alone. There are several other PF blogs that have some sort of display issue after having changed to the new Blogger version. A few blogs that I've noticed with significant problems in IE7 are Retiring Early, Growing Money, Money Monk, and Moomin Valley. To these blog owners: if you aren't aware of the problems with your blog, I can Email you a screen capture of what it looks like under IE7.

All new PC computers come with Internet Explorer 7 installed, and about one quarter of my blog readers currently use IE7. This number is should rise in time, as people upgrade their computers and software. So, what should I do? I am considering either modifying the existing template for PFStock, or going to a new one all together. Since I have used the same template since I first started PFStock, it might well be time for an update. I'm looking for a template that looks more modern than this one called "Son of Moto". Does anybody have a suggestion?

One other thing that Blogger Beta changed is the URL for PFStock's RSS feed. The URL is now http://pfstock.blogspot.com/feeds/posts/default. I have had to update a couple of my external RSS readers to point to this new site feed. I hope that my readers were able to update their feeds. Either that, or they might think that I've been on an extended vacation.

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Obsession Tagged

My blog has been tagged by Moneymonk in this game of obsession tag that is going around the blogosphere. I suppose that it is an invitation for me to list out my obsessions for the world to see...

My obsessions:
1) My wife and family are my first and most important obsession. As it should be, this has been more of a constant in my life, rather than just a temporary obsession. My dear wife, by the way, is often referred to as "my DW" on this blog. I recently remarked to a fellow blogger that my DW prohibits me from publicly disclosing detailed financial information or our net worth on the blog. For the sake of our marriage, this rule has stuck.

2) Gadgets, electronic or otherwise would constitute another main obsession. One example of a gadget I have is the Oregon Scientific wireless weather station that I bought a while ago. It has a radio-controlled (atomic) clock with alarm and electroluminescent backlight, indoor and outdoor (wireless) temperature and humidity sensors, a built-in barometer with altitude adjustment, and a weather trend indicator. Is that gadgety enough for you?

3) That investing and finance are among my obsessions shouldn't surprise my readers. I even started this blog to write about it. Recently, I have been more obsessed with IPOs. Other obsessive topics that I've written about include the brokerage Ameritrade and the online bank NetBank.

4) Tracking readers of my blog could be considered an obsession. Through the site meter I have been tracking my visitors' locations, what they are reading, and oftentimes what they were searching for. Sorry that I recently turned off the site meter statistics for public viewing. As I have grown as a blogger, I now consider these stats to be proprietary information.

5) The last and most recent obsession is trying to determining who started this whole game of obsession tag! As far as I can tell, I have tracked it back to a 20-year old in girl in Malaysia named Jessica whose blog, the Undeniable Beauty, was nominated for an award as the "Most Obnoxious Blogger".

So who is left to tag? I pick Smarty of Growing Money, Frugal of My 1st Million at 33, Kira of Penny Foolish, Blunt Money, and 2million.

PF Stock

Sponsored Post: Payday Loans

Payday lenders fill an important niche that is not served by traditional banks. In an ideal society, everybody would be on top of their finances, and there wouldn't be a need for payday lenders. But reality is not consistent with this utopia, as the majority of us have gotten a little bit behind on bills at some point.

National Payday offers cash advance loans that basically use your next paycheck as collateral. A payday loan is an option to consider if you find yourself in a short-term bind and in need of money. If, for example, your car breaks down or you encounter an unexpected expense, a payday loan could definitely assist you. Obtaining a payday loan is relatively easy. The online application takes only a few minutes to complete. According to National Payday, most no credit check loans are approved within 24 hours.

National Payday's FAQ does a lot to explain the process of applying for a loan. A checking account and a steady job are the main prerequisites to apply. To explain how the loan works, suppose you were to borrow $300 from the payday lender. The lender then transfers this money to your checking account, and expects to be repaid this amount plus a 25% fee ($75 on a $300 loan) when you receive your next paycheck. National Payday currently has a special offer for first time borrowers: you will get your first loan for free, if the full balance is paid by the due date.

I would advise borrowers to read National Payday's disclosure statement before applying for a loan. Understand that, in some cases, the effective annual percentage rate (APR) on the loan can be the equivalent of several hundred percent. Payday loans are designed to help you through a short-term credit need and are not meant for long-term borrowing. If used correctly a payday loan can help tide you over to the next payday.

Interactive Brokers and the OpenIPO

I've written about buying IPOs as one of my investment strategies. This past week, I was allocated shares in the Interactive Brokers (Nasdaq: IBKR) IPO. Interactive Brokers is an electronic brokerage that allows direct access for trading stocks, options, futures, bonds, and currency instruments (forex) in worldwide markets. Unlike a traditional IPO where the offer price is determined exclusively by the underwriters, this IPO used a Dutch auction to price its shares. The process is known as an OpenIPO. IBKR is underwritten by WR Hambrecht + Co. which developed the OpenIPO process.

The Dutch auction process is a little bit complex to explain. Instead, I am copying the following text from the Interactive Brokers' prospectus:

• Bidders may submit bids through the placement agents or participating dealers.
• Potential investors may bid any price for the shares, including a price above or below the projected price range on the cover of this prospectus.
• Once the auction closes, the placement agents will determine the highest price that will sell all of the shares offered. This is the clearing price and is the maximum price at which the shares will be sold. The clearing price, and therefore the actual offering price, could be higher or lower than the projected price range on the cover of this prospectus.
• We may choose to sell shares at the auction-set clearing price or we may choose to sell the shares at a lower offering price, taking into account additional factors.
• Bidders that submit valid bids at or above the offering price will receive, at a minimum, a prorated amount of shares for which they bid.

In an article posted on MarketWatch, I was able to determine that the "clearing price" described above was $33. The IPO managers then made the decision to price IBKR at $30.01 per share. And yes, there is a difference between $30.01 and $30 per share! I've heard from some people who put in bids at $30, but won't be allocated any shares because they are a penny short. Not surprisingly, the $33 clearing price is approximately the price where IBKR started trading.

For me, I put in an order for 800 shares (at $31 and above) through E*TRADE, but was allocated only 400 shares. My broker's policy is to do a random allocation when there aren't enough shares to go around. Thus, I received the "prorated amount" described above. Now I wonder if any individual got allocated more than 500 shares of IBKR in total.

Regarding Dutch auctions, if we remember back to the Google (Nasdaq: GOOG) IPO in August 2004, the "clearing price" was widely believed to be around $100/share. But the IPO managers for Google made the decision to issue the IPO at $85 -- below the clearing price. This was to guarantee a $15/share pop for Google at the open. The IPO itself priced "below range," so I considered it an uninteresting IPO, at the time. In retrospect, I was very wrong about it.

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PFStock's First Sponsor

I am happy to announce that PFStock has its first official sponsor. The sponsoring site, Thrifty Scot (website: www.thriftyscot.co.uk) contains general money saving and financial advice. The Thrifty Scot is based in the United Kingdom, so understandably, many of its articles focus on financial institutions in Great Britain.

The Thrifty Scot is a good source of information about loans, and consolidating debt to reduce monthly payments. There is also information about mortgages and credit cards. I have personally used the site, and found it to be useful. The Thrifty Scot focuses more on loans and finance, while PFStock also concerns itself with stock investing and trading.

Nevertheless, the site is constantly updated with informative news articles. The Thrifty Scot may be based in Scotland (UK), but it provides a lot of great information that is of international relevance. At the same time, PFStock's growing readership is becoming more international in nature as the number of visitors from overseas have been steadily increasing. PFStock welcomes The Thrifty Scot as a site sponsor.

Coutrywide Bank SavingsLink Account

On PFStock, I have posted extensively about my experiences with NetBank. I have found a replacement for the funds that I withdrew from NetBank when I closed my account with them. The winner is ... Countrywide Bank.

Recently, I opened a SavingsLink account at Countrywide Bank. The highlights are that they pay 5.25% APY interest if you have more that $10k, and 5.4% APY if you have over $50k. The interest rate drops to 4.0% APY if your balance is below $10k. The account itself works like an ING or iGo savings account. If you are not familiar with these, the SavingLink account is an online only account that must be linked to a regular savings or checking account that you have at another institution. This is pretty much the only practical way to transfer funds in or out.

Countrywide Bank actually has a branch within walking distance of my home. But unlike most regular banks, the branch doesn't have an ATM and a prominently displayed sign says that they don't have any cash in the branch. When I asked the asked the sole employee of this office how to make a deposit, he showed me a deposit envelope, which was actually a Federal Express envelope. Apparently if you give them a check, they will send by overnight mail to Texas where the deposit is processed. Countrywide did send me a few postage paid deposit envelopes, but I assume that the FedEx method would be faster.

The SavingsLink account doesn't come with either checks or an ATM card. So, most transactions have to go through your linked account. SavingsLink only allows one linked account at a time, and the process of linking an account is cumbersome. Countrywide Bank uses what is known as "trial deposits". When you request that they link an external account to your Countrywide Bank account, they will make two random deposits (of less than $1.00 each) to your external account and ask you to verify the amounts that were deposited. This is to assure that you are actually the owner of the external account, and this process usually takes 2-3 days to complete. One other little hassle is that deposits are subject to a 10 business day hold. This basically means that you won't be able to withdrawal any deposit for a period of two weeks.

In spite of a few hassles to setup a Countrywide SavingsLink account, their interest rates are much better than at NetBank. Indeed, the 5.4% APY rate is better than the vast majority of bank savings accounts available.

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