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.

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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.

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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.

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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.

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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?

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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.

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