I have recently figured out how to embed videos into my blog thanks to the folks at INO.com (pronounced "I know"). This video is about the Standard & Poor's 500. More specifically, it is about the battle between the Bulls and the Bears, and analyzes whether the S&P 500 and the general stock market will move up or down. INO.com uses Trade Triangle technology for technical price analysis of the stock market. You can view this video without leaving PFStock.
This short video talks about the price movements of the S&P 500 over the past couple months. The presenter, Adam Hewison, shares his views on the stock market. I think you'll find this video technically interesting as well as educational.
When I viewed the video, I noticed that it appears a bit grainy unless you view it in full-screen mode. The embedded video also seems to slow down the loading of blog pages slightly. So, I'll try not to publish more than one video at a time. Please Email me, or leave a comment if you have any difficulty viewing the video. At the end of the video, you can click on the video for a Free Email Trading Course offer. I encourage you to sign up for this since it is free.
Disclaimer: I am an affiliate and member of INO.com. Although I have been able to make money using their MarketClub product, no guarantees can be made. All investments involve risks, so please consider your objectives wisely before investing.
DC
Tuesday, August 10, 2010
Thursday, August 5, 2010
Pay The Early Withdrawal Penalty?
When you hear the term "Penalty" as in Early Withdrawal Penalty, do you automatically recoil thinking that if you have to pay a penalty that you have done something wrong, something bad? I am here to tell you that one alternative to keeping your cash in a low-yielding money market account or short-term CD is to get a long-term, 5-year CD now. Then "pay the penalty" if you need to withdraw the money, or find a better interest rate later.
I recently opened a 5-year Ally Bank High Yield CD
that yields 2.94% APY. Some people may think that it is not a good idea to lock in such a mediocre interest rate for 5 years since only a couple years ago, these interest rates were in the range of 4-5% or higher. However, the rate currently being offered by Ally is much better than any short-term CD or money market available.
The second part of the equation is that Ally Bank charges an early withdrawal penalty of 60-days simple interest if you close your account prematurely. I did some research and found that this is one of the lowest early withdrawal penalties available.
If CD or money market rates go back up to the 4-5% range, I intend to close my CD account, pay the penalty, and establish a new account at the higher rate. I already did some back-of-the-envelope calculations that show I would be much better off doing that even after having to pay an early withdrawal penalty.
Let's take a quick example of a $10,000 CD and for simplicity, round off the interest rate to 3% instead of the 2.94% offered. Assume that you deposit the $10,000 in a 5-year CD, but have to withdraw your money after a year to handle an emergency. At 3% simple interest, you will earn $300 before the penalty. Sixty days of interest equals about $50. So your actual return for the year would be $250, or 2.5%. Even with the penalty, the 5-year CD beats out the typical rate on a 1-year CD (which currently yields about 1.5%) by a wide margin. Another point is that the $50 penalty is tax-deductible as an above the line deduction. (This is line item #30 "Penalty on early withdrawal of savings" on form 1040).
The main risk of a long-term CDs is the chance that interest rates will rise and you’re committed to the lower rate until the CD matures. But with a small early withdrawal penalty, if rates rise significantly, you can still consider withdrawing the money, paying the penalty, and putting the money back into another account with a higher interest rate.
Disclaimer: The example provided here is for illustrative purposes only. I am not providing tax or investment advice. I encourages readers to consult with a tax adviser if they have specific questions about how to deduct early withdrawal penalties on their taxes.
DC
I recently opened a 5-year Ally Bank High Yield CD
The second part of the equation is that Ally Bank charges an early withdrawal penalty of 60-days simple interest if you close your account prematurely. I did some research and found that this is one of the lowest early withdrawal penalties available.
If CD or money market rates go back up to the 4-5% range, I intend to close my CD account, pay the penalty, and establish a new account at the higher rate. I already did some back-of-the-envelope calculations that show I would be much better off doing that even after having to pay an early withdrawal penalty.
Let's take a quick example of a $10,000 CD and for simplicity, round off the interest rate to 3% instead of the 2.94% offered. Assume that you deposit the $10,000 in a 5-year CD, but have to withdraw your money after a year to handle an emergency. At 3% simple interest, you will earn $300 before the penalty. Sixty days of interest equals about $50. So your actual return for the year would be $250, or 2.5%. Even with the penalty, the 5-year CD beats out the typical rate on a 1-year CD (which currently yields about 1.5%) by a wide margin. Another point is that the $50 penalty is tax-deductible as an above the line deduction. (This is line item #30 "Penalty on early withdrawal of savings" on form 1040).
The main risk of a long-term CDs is the chance that interest rates will rise and you’re committed to the lower rate until the CD matures. But with a small early withdrawal penalty, if rates rise significantly, you can still consider withdrawing the money, paying the penalty, and putting the money back into another account with a higher interest rate.
Disclaimer: The example provided here is for illustrative purposes only. I am not providing tax or investment advice. I encourages readers to consult with a tax adviser if they have specific questions about how to deduct early withdrawal penalties on their taxes.
DC
Wednesday, July 28, 2010
Guest Post: 7 Keys to Smart Stock Investment
Have you been contemplating lately to make money by trading in the stock market? Are you aware of the fact that thousands of people have filed for bankruptcy after suffering huge losses in the stock market? Are you sure your knowledge of how the market functions is good enough to give you a great return on your investment? If you really want to maximize your trading opportunities for maximum gains, then read on to know how you can go about achieving it.
About the Author
This guest post was written by "Jack Reed". He writes on various financial topics with a special focus on bankruptcy. If you are interested in writing a guest post, please contact PF Stock at the Email address listed in the sidebar.
- Plan: Many investors do the mistake of jumping into the investment market without even having a clue as to what they want to accomplish from it. This is the worst mistake you can make. Sit down and plan. Prepare a strategy and ask yourself what you want to achieve with your investment plan. Do you want to buy a car by the end of this year or a house after 5 years? Planning out this way and being clear about your goals helps you to plan effectively.
- Do extensive research: You should identify the industries which are losers today but are posed to return handsome investments in the long run. Be aware that the companies which are doing well today may altogether be left behind in the investment race tomorrow. The market is volatile and the losers of today might provide you with great returns once the economy turns around.
- Begin with small investments: It is advisable to start of your investment career by investing small. If you start off with big investments and lose it immediately, it might put you off stock investing for life. Learning the basics and gathering experience is vital to increase your confidence in the investment market.
- Diversify: An effective strategy in building a long term investment plan is to opt for a combination of investment options. Just going for an arbitrary collection of stocks will not be very beneficial. The idea is to find a combination of investments which will help you to achieve your financial goals. Spread your investments to lower the risks involved. This will help you create an unsinkable portfolio!
- Wait for the right time: Timing is everything in the stock market. To maximize your returns, you should know how long you should hold on to your investment before selling them. It can make the difference between earning and losing money.
- Seek advice from a stockbroker: Stockbrokers are experienced and can help you out with valuable advice with your investment plans. However, they charge fees and it’s up to you whether you want to seek their advice.
- Never risk more than what you can afford to lose: The most important advice is never to risk more money than what you can afford to lose. People are tempted to invest beyond their means if the potential investment seems safe. This is a mistake, there is always a risk involved and it’s better to always be prepared for it.
About the Author
This guest post was written by "Jack Reed". He writes on various financial topics with a special focus on bankruptcy. If you are interested in writing a guest post, please contact PF Stock at the Email address listed in the sidebar.
Friday, July 16, 2010
Money Market Rates 7/10
Here are the latest money market interest rates of the banks that I've been tracking on my blog. Note that these rates are sorted by APY, and represent institutions that I have accounts at, or have otherwise mentioned in my blog:
1.35% Discover Bank Online Savings
1.29% Ally Bank Online Savings
1.10% HSBCAdvance Online Savings
1.10% ING Direct Orange Savings
1.04% Shorebank Direct Online Savings
0.80% Citibank Ultimate Savings
0.65% Western FCU Money Market
0.50% Chase Premier Savings
0.30% E*TRADE Complete Savings
0.15% PayPal Money Market*
NOTES: *The PayPal Money Market fund is NOT FDIC insured.
Rates are believed to be accurate as of 7/15/10. I did not include banks that had special, or introductory rates in the list because they are not ongoing interest rates. I am also not including non-liquid accounts such as CD's in the list.
This month, Discover Bank Online Savings has the highest interest rate of the banks that I'm tracking. So, there is the latest list. Please let me know if you know of any higher interest rates.
DC
1.35% Discover Bank Online Savings
1.29% Ally Bank Online Savings
1.10% HSBCAdvance Online Savings
1.10% ING Direct Orange Savings
1.04% Shorebank Direct Online Savings
0.80% Citibank Ultimate Savings
0.65% Western FCU Money Market
0.50% Chase Premier Savings
0.30% E*TRADE Complete Savings
0.15% PayPal Money Market*
NOTES: *The PayPal Money Market fund is NOT FDIC insured.
Rates are believed to be accurate as of 7/15/10. I did not include banks that had special, or introductory rates in the list because they are not ongoing interest rates. I am also not including non-liquid accounts such as CD's in the list.
This month, Discover Bank Online Savings has the highest interest rate of the banks that I'm tracking. So, there is the latest list. Please let me know if you know of any higher interest rates.
DC
Wednesday, July 7, 2010
Tesla Motors: A Broken IPO
Shares of electric car maker Tesla Motors (Nasdaq: TSLA) began trading last Tuesday, June 29 after the stock's initial public offering (IPO) at $17 per share. Tesla's shares rose 40 percent on their first day of trading, and peaked as high as $30.42 on Wednesday. The hype surrounding a new IPO is usually the main driving force behind a rapid run up such as this one.
However five trading days after its IPO, things seem to be turning around for Tesla Motors. Yesterday, July 6th, Tesla dropped over $3 to close at $16 and change ($16.11 to be specific). This closing price is below its initial $17 offering price. Traders call an IPO that has dropped below its initial offering price a "broken IPO". So, Tesla is now a broken IPO.
On this blog, I have written about buying IPOs before. While getting into an IPO can be a way to make money quickly, I have warned that not all IPOs go up in price. A point that I will again underscore is that buying an IPO can involve significant risk! This is certainly appears to be the case with Telsa.
Disclosure: I do not own any interest in Tesla Motors.
DC
However five trading days after its IPO, things seem to be turning around for Tesla Motors. Yesterday, July 6th, Tesla dropped over $3 to close at $16 and change ($16.11 to be specific). This closing price is below its initial $17 offering price. Traders call an IPO that has dropped below its initial offering price a "broken IPO". So, Tesla is now a broken IPO.
On this blog, I have written about buying IPOs before. While getting into an IPO can be a way to make money quickly, I have warned that not all IPOs go up in price. A point that I will again underscore is that buying an IPO can involve significant risk! This is certainly appears to be the case with Telsa.
Disclosure: I do not own any interest in Tesla Motors.
DC
Thursday, July 1, 2010
Annual Income and Net Worth
The single most popular post that I've ever written for PFStock is my Net Worth Update post. This post has several tables listing median networth versus age and annual income. I found that most people are searching for hard data that compares how they are doing compared to others, especially those who are the same age with a similar income.
For a while now, I've had an annual income poll in the sidebar of PFStock that asks readers to respond to the question: "How much do you make?" So far there have been 93 responses. In constructing this poll, I deliberately set the income ranges to correspond with the income ranges for the CNN Money website. This table tells you the median net worth for people that fall into each income category. Here are the latest data from the sidebar poll:
CNN Money: Net worth by income and percentage of PFStock readers within each income range.
Note that the percentages do not add up to 100% due to rounding. From these statistics, I found it interesting that a large percentage of my readers fall into the higher income categories. Approximately 70% of PFStock readers have an income greater than $75,000 per year. Does anybody want to share their insights on this statement?
Given that I have the median net worth for each income category and the percentage of readers that fall within each category, it would be tempting for me to calculate the "average median net worth for PFStock readers" based on the CNN data. But, what value could such a data point possibly provide? Nevertheless I will throw caution to the wind and and let you know that using an Excel spreadsheet of these data I have calculated that the average median networth for PFStock readers is $532,050.27.
This result corresponds well with the other poll that I have on PFStock: What is your net worth? Again, I was surprised that a large percentage of readers fall within the higher net worth categories, with more than one-half of all readers reporting a networth of more than $500,000. If you haven't already, please participate in the polls in the PFStock sidebar, and I will update the information periodically.
Here are some interesting related posts:
Annual Income Survey (2/10)
How much do you make? (4/09)
Net Worth Update (8/09)
Net Worth Comparison (6/08)
Are You Wealthy? (3/08)
Calculating Net Worth (9/06)
DC
For a while now, I've had an annual income poll in the sidebar of PFStock that asks readers to respond to the question: "How much do you make?" So far there have been 93 responses. In constructing this poll, I deliberately set the income ranges to correspond with the income ranges for the CNN Money website. This table tells you the median net worth for people that fall into each income category. Here are the latest data from the sidebar poll:
CNN Money: Net worth by income and percentage of PFStock readers within each income range.
| Annual Income | Median Net Worth | % of PFStock Readers |
| less than $25k | $1,250 | 4% |
| $25k-$49k | $34,375 | 13% |
| $50k-$74k | $168,500 | 9% |
| $75k-$124k | $301,475 | 34% |
| $125k-$149k | $644,100 | 3% |
| $150k and higher | $1,122,900 | 34% |
Note that the percentages do not add up to 100% due to rounding. From these statistics, I found it interesting that a large percentage of my readers fall into the higher income categories. Approximately 70% of PFStock readers have an income greater than $75,000 per year. Does anybody want to share their insights on this statement?
Given that I have the median net worth for each income category and the percentage of readers that fall within each category, it would be tempting for me to calculate the "average median net worth for PFStock readers" based on the CNN data. But, what value could such a data point possibly provide? Nevertheless I will throw caution to the wind and and let you know that using an Excel spreadsheet of these data I have calculated that the average median networth for PFStock readers is $532,050.27.
This result corresponds well with the other poll that I have on PFStock: What is your net worth? Again, I was surprised that a large percentage of readers fall within the higher net worth categories, with more than one-half of all readers reporting a networth of more than $500,000. If you haven't already, please participate in the polls in the PFStock sidebar, and I will update the information periodically.
Here are some interesting related posts:
Annual Income Survey (2/10)
How much do you make? (4/09)
Net Worth Update (8/09)
Net Worth Comparison (6/08)
Are You Wealthy? (3/08)
Calculating Net Worth (9/06)
DC
Thursday, June 17, 2010
$628.65 Check From E*TRADE Class Action Settlement
The other day, I opened up my mail and was surprised to discover a $628.65 check from a class action settlement. This arose out of allegations that E*TRADE recorded telephone calls without notifying the other party that they are being recorded.
For some background, in September of last year, I received an Email asking if received any telephone calls from E*TRADE during the period from September 3, 2003, to May 22, 2009. If I did then E*TRADE illegally recorded my conversation, and I could be eligible for a settlement of up to $5,000 if I filed a claim with the attorneys for the case of Greenberg v. E*TRADE.
I explicitly remember that I did receive at least one call from E*TRADE in 2007 after I asked for information about certain bonds (Principal Protected Notes) that they were offering to sell. These bonds were described in a post I wrote 3 years ago about New E*TRADE Offerings. For the record, I never did buy the bonds, but a broker called me to explain how the offering works.
Getting back to the class action, I was a little bit skeptical, but I completed the online claim form anyway. It only took a few minutes to fill in. I also remember reading some forum posts where several people expressed their skepticism that this was even a legitimate class action. In this forum, one poster even quipped that consumers might receive only $7.46 after waiting 4 years. Several people on the forum believed that this may be a scam that probably wasn't worth the trouble.
To make a long story short, E*TRADE did settle this case, and paid out $7.5 million. Of that, the lawyers took nearly $2 million, and the rest of the money was divided among the claimants. Based on the payment amount, I speculate there were probably around 10,000 completed claims. Anyway, this is an unexpected windfall for me.
I have also read that only people in California were entitled to the full $628.65. People in other states are supposed to receive one-fifth of that amount or $125.73. So, did anybody else receive a check from this settlement?
DC
For some background, in September of last year, I received an Email asking if received any telephone calls from E*TRADE during the period from September 3, 2003, to May 22, 2009. If I did then E*TRADE illegally recorded my conversation, and I could be eligible for a settlement of up to $5,000 if I filed a claim with the attorneys for the case of Greenberg v. E*TRADE.
I explicitly remember that I did receive at least one call from E*TRADE in 2007 after I asked for information about certain bonds (Principal Protected Notes) that they were offering to sell. These bonds were described in a post I wrote 3 years ago about New E*TRADE Offerings. For the record, I never did buy the bonds, but a broker called me to explain how the offering works.
Getting back to the class action, I was a little bit skeptical, but I completed the online claim form anyway. It only took a few minutes to fill in. I also remember reading some forum posts where several people expressed their skepticism that this was even a legitimate class action. In this forum, one poster even quipped that consumers might receive only $7.46 after waiting 4 years. Several people on the forum believed that this may be a scam that probably wasn't worth the trouble.
To make a long story short, E*TRADE did settle this case, and paid out $7.5 million. Of that, the lawyers took nearly $2 million, and the rest of the money was divided among the claimants. Based on the payment amount, I speculate there were probably around 10,000 completed claims. Anyway, this is an unexpected windfall for me.
I have also read that only people in California were entitled to the full $628.65. People in other states are supposed to receive one-fifth of that amount or $125.73. So, did anybody else receive a check from this settlement?
DC
Thursday, June 10, 2010
Free Flash Drives Received
In the past, I've written about receiving free USB flash drives at various conferences that I've attended. I have been searching the Internet to see if I could also find websites that offer USB flash drives freebies. For reference, a USB (Universal Serial Bus) flash drive is a portable computer memory that plugs into a computer USB port and can be used like a miniature hard disk. Also known as thumb drives, they were once considered a novelty among computer enthusiasts. But nowadays, USB flash drives can often be purchased in many locations, including drug and discount stores.
In my post about fake USB flash drives, I mentioned finding a few websites that claim to offer USB flash drive freebies. But in most cases, the websites were outdated, or that particular offer has expired. I didn't want to send my readers on a wild goose chase, so I haven't published any of those unconfirmed offers.
Now, I am happy to report that I have received a couple of free USB flash drive from legitimate offers. And, I want to share this information with my readers. The first flash drive I received is from MicroCenter. You can get one for signing up for their CENTERewards program. A link to their offer is here:
http://www.microcenter.com/images/at_the_stores/rewards.program/rewards.052709.pdf
This offer is for a 4GB Micro Center Flash Drive or a 4GB SD (SDHC) memory card. Although the form is available online, you have to actually go to a Micro Center store to claim the flash drive. So, that might not work out for everybody. I have received the actual drive, and can confirm that it is of good quality.
When I went to Micro Center to pick up my flash drive, they happened to be out of their own brand of 4Gb flash drives. They substituted this Kingston DataTraveler 4 GB USB Flash Drive instead.
I received my second flash drive by requesting program information from Columbia College. This college offers online course and have several campuses throughout the United States. I requested the flash drive through this link:
http://www.ccis.edu/offices/marketing/landing_pages/more/
It took a long while to receive my flash drive; I requested this drive in March 2010, and received it in June. When I first heard about the offer, I noticed that the page above didn't have any mention of the free flash drive. However, I did receive this Email in early March that confirmed a flash drive would be on its way:
Then in late May, I got another Email saying:
After about three months, I finally received my drive in early June. In my post, about promotional USB flash drives, I mentioned a type of drive that shows up as two different drives when you plug it into a computer. One of the partitions on the Columbia College flash drive is identified by the computer as a CD ROM drive, and it contains an Autorun script that loads the Columbia college viewbook, which is a PDF file that gives an overview of their programs. The second partition looks and behaves like a regular USB flash drive. The total capacity of the the drive is 2GB.
So, these are two legitimate free USB drive offers. Does anybody else know of any other free USB offers? Can anybody report on the successes (or failures) that they've had?
DC
In my post about fake USB flash drives, I mentioned finding a few websites that claim to offer USB flash drive freebies. But in most cases, the websites were outdated, or that particular offer has expired. I didn't want to send my readers on a wild goose chase, so I haven't published any of those unconfirmed offers.
Now, I am happy to report that I have received a couple of free USB flash drive from legitimate offers. And, I want to share this information with my readers. The first flash drive I received is from MicroCenter. You can get one for signing up for their CENTERewards program. A link to their offer is here:
http://www.microcenter.com/images/at_the_stores/rewards.program/rewards.052709.pdf
This offer is for a 4GB Micro Center Flash Drive or a 4GB SD (SDHC) memory card. Although the form is available online, you have to actually go to a Micro Center store to claim the flash drive. So, that might not work out for everybody. I have received the actual drive, and can confirm that it is of good quality.
When I went to Micro Center to pick up my flash drive, they happened to be out of their own brand of 4Gb flash drives. They substituted this Kingston DataTraveler 4 GB USB Flash Drive
instead.I received my second flash drive by requesting program information from Columbia College. This college offers online course and have several campuses throughout the United States. I requested the flash drive through this link:
http://www.ccis.edu/offices/marketing/landing_pages/more/
It took a long while to receive my flash drive; I requested this drive in March 2010, and received it in June. When I first heard about the offer, I noticed that the page above didn't have any mention of the free flash drive. However, I did receive this Email in early March that confirmed a flash drive would be on its way:
Congratulations on taking the first step toward getting more out of your life! Soon you will receive a USB flash drive that is preloaded with a viewbook detailing what Columbia College offers, including testimonials from current students and alumni. So keep an eye on your mailbox for a package from us.
Then in late May, I got another Email saying:
We just wanted to let you know to keep an eye on your mailbox for the information you requested a few weeks ago from Columbia College. As promised, you’ll be receiving a free USB flash drive that is preloaded with the Columbia College viewbook. We apologize for the delay, but there was an overwhelming response — apparently, you are not alone in your desire to get more out of life.
After about three months, I finally received my drive in early June. In my post, about promotional USB flash drives, I mentioned a type of drive that shows up as two different drives when you plug it into a computer. One of the partitions on the Columbia College flash drive is identified by the computer as a CD ROM drive, and it contains an Autorun script that loads the Columbia college viewbook, which is a PDF file that gives an overview of their programs. The second partition looks and behaves like a regular USB flash drive. The total capacity of the the drive is 2GB.
So, these are two legitimate free USB drive offers. Does anybody else know of any other free USB offers? Can anybody report on the successes (or failures) that they've had?
DC
Sunday, June 6, 2010
PFBlogs.org is Down for Maintenance?
I use a website called PFBlogs.org both for reading other personal finance (PF) blogs, and for publishing the PFStock site RSS feed, so that more readers can find my posts. Over the past several days, I've noticed the following message when I have tried to go to that site:
Has anybody else taken note of the outage? Usually when this happens, the site comes back online within an hour or so. I suspect that it is not really down for maintenance, and that some larger problem exists with the site. I have noticed a less traffic to PFStock these days.
Another larger question that I would like to ask is what other personal finance aggregation sites do people use? I am starting to go into PF Blog withdrawal these days.
DC
pfblogs.org is down for maintenance.
Has anybody else taken note of the outage? Usually when this happens, the site comes back online within an hour or so. I suspect that it is not really down for maintenance, and that some larger problem exists with the site. I have noticed a less traffic to PFStock these days.
Another larger question that I would like to ask is what other personal finance aggregation sites do people use? I am starting to go into PF Blog withdrawal these days.
DC
Thursday, June 3, 2010
Money Market Rates 6/10
Here are the latest money market interest rates of the banks that I've been tracking on my blog. Note that these rates are sorted by APY, and represent institutions that I have accounts at, or have otherwise mentioned in my blog:
1.35% Discover Bank Online Savings
1.29% Ally Bank Online Savings
1.10% HSBCAdvance Online Savings
1.10% ING Direct Orange Savings
1.06% Shorebank Direct Online Savings
0.80% Citibank Ultimate Savings
0.65% Western FCU Money Market
0.50% Chase Plus Savings
0.40% E*TRADE Complete Savings
0.12% PayPal Money Market*
NOTES: *The PayPal Money Market fund is NOT FDIC insured.
Rates are believed to be accurate as of 6/2/10. I did not include banks that had special, or introductory rates in the list because they are not ongoing interest rates. I am also not including non-liquid accounts such as CD's in the list.
Discover Bank Online Savings currently has the highest interest rate of the banks that I'm tracking. Umbrellabank, which was a division of New South Federal Savings Bank was closed by the FDIC in December. The assets were transferred to Beal Bank and I have closed my accounts with them.
So, there is the latest list. Please let me know if you know of any higher interest rates.
DC
1.35% Discover Bank Online Savings
1.29% Ally Bank Online Savings
1.10% HSBCAdvance Online Savings
1.10% ING Direct Orange Savings
1.06% Shorebank Direct Online Savings
0.80% Citibank Ultimate Savings
0.65% Western FCU Money Market
0.50% Chase Plus Savings
0.40% E*TRADE Complete Savings
0.12% PayPal Money Market*
NOTES: *The PayPal Money Market fund is NOT FDIC insured.
Rates are believed to be accurate as of 6/2/10. I did not include banks that had special, or introductory rates in the list because they are not ongoing interest rates. I am also not including non-liquid accounts such as CD's in the list.
Discover Bank Online Savings currently has the highest interest rate of the banks that I'm tracking. Umbrellabank, which was a division of New South Federal Savings Bank was closed by the FDIC in December. The assets were transferred to Beal Bank and I have closed my accounts with them.
So, there is the latest list. Please let me know if you know of any higher interest rates.
DC
Friday, May 28, 2010
Blogroll Update
I have recently cleaned out and updated my Blogroll (Blog List) in the sidebar. Blogs are sorted with the most recently updated blog at the top. I regularly read posts in my blog list, and I like that I can quickly tell which blogs have been recently updated.
I am removing Retiring Early and Finance Puzzle from the Blog list because they appear to be dead blogs. I have also added a "Links" page which is directly below the PFStock header. This page contains blogs that don't have a traditional blogroll. These blogs have been moved to the Links page: Moneymonk, Growing Money, and Saving to Invest. Realm of Prosperity has inexplicably removed its link to PFStock, so I am deleting this blog from my list.
Being listed in the PFStock blog list can be a benefit, especially to new PF bloggers. Once listed on the blog list, your blog will be linked from every page PFStock has published since 2006. That will translate to hundreds of links to your blog.
You can have your blog listed for FREE at PFStock, if you have a bona fide personal finance blog. Please Email me (my contact information is listed in the sidebar) about exchanging links. Since I regularly read posts from blogs in my blog list, this would automatically increase your readership. 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 blog list. Blogs and websites that do not qualify for a free listing may inquire about the advertising rates offered for PFStock sponsors.
DC
I am removing Retiring Early and Finance Puzzle from the Blog list because they appear to be dead blogs. I have also added a "Links" page which is directly below the PFStock header. This page contains blogs that don't have a traditional blogroll. These blogs have been moved to the Links page: Moneymonk, Growing Money, and Saving to Invest. Realm of Prosperity has inexplicably removed its link to PFStock, so I am deleting this blog from my list.
Being listed in the PFStock blog list can be a benefit, especially to new PF bloggers. Once listed on the blog list, your blog will be linked from every page PFStock has published since 2006. That will translate to hundreds of links to your blog.
You can have your blog listed for FREE at PFStock, if you have a bona fide personal finance blog. Please Email me (my contact information is listed in the sidebar) about exchanging links. Since I regularly read posts from blogs in my blog list, this would automatically increase your readership. 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 blog list. Blogs and websites that do not qualify for a free listing may inquire about the advertising rates offered for PFStock sponsors.
DC
Monday, May 17, 2010
Good Riddance Beal Bank
Several years ago, I opened a checking account at Umbrellabank.com. This online bank offered a checking account with a decent interest, and the bank would reimburse ATM charges if you made a withdrawal from a "foreign" ATM. I later opened a Pot O' Gold Money Market account with them, and eventually had tens of thousands of dollars at Umbrellabank.
Fast forward to December 2009, when Umbrella Bank (a division of New South Federal Savings Bank) was taken over by Beal Bank after being closed by the FDIC. At first, Beal Bank tried to reassure customers that everything was business as usual at the newly acquired bank, stating in a letter to account holders that "Your ATM/debit card will continue to work, and bill paying will work as it has in the past."
Just last month, I received a packet of material from Beal Bank essentially saying that they were eliminating all Umbrella Bank Checking accounts, and that ATM cards, bill payments and checks would no longer be honored as of May 10, 2010. This was the first time I had heard about this change.
So with less than three weeks notice, they sent me scrambling to find other places to put my money. I was especially annoyed because I used Umbrella Bank's online bill payment services. I had to setup another bank account to handle those payments. To make matters worse, it seemed that when Beal Bank eliminated online bill payments, they also eliminated online transfers, making it much harder to get your money out of Beal Bank once the conversion was completed.
Well, to make long story short, I finally got the last of my money out of Beal Bank, and I can now confidently say "Good Riddance!" to Beal Bank.
DC
Fast forward to December 2009, when Umbrella Bank (a division of New South Federal Savings Bank) was taken over by Beal Bank after being closed by the FDIC. At first, Beal Bank tried to reassure customers that everything was business as usual at the newly acquired bank, stating in a letter to account holders that "Your ATM/debit card will continue to work, and bill paying will work as it has in the past."
Just last month, I received a packet of material from Beal Bank essentially saying that they were eliminating all Umbrella Bank Checking accounts, and that ATM cards, bill payments and checks would no longer be honored as of May 10, 2010. This was the first time I had heard about this change.
So with less than three weeks notice, they sent me scrambling to find other places to put my money. I was especially annoyed because I used Umbrella Bank's online bill payment services. I had to setup another bank account to handle those payments. To make matters worse, it seemed that when Beal Bank eliminated online bill payments, they also eliminated online transfers, making it much harder to get your money out of Beal Bank once the conversion was completed.
Well, to make long story short, I finally got the last of my money out of Beal Bank, and I can now confidently say "Good Riddance!" to Beal Bank.
DC
Wednesday, May 5, 2010
Book Review: Personal Capital
I was asked to write a review of the book "Personal Capital: Foundational Concepts of Capitalism" by J.L. Eaton. The book is approximately 200 pages, and was self-published by the author through Lulu.com. The text serves as a good introduction to personal finance. In the introduction, Mr. Eaton spells this out, saying "This book is written for those who have recently joined the professional workforce after finishing college and who are just starting out in the respective careers."
The book contains five main sections covering these topics: Basic Economics, Debt, Taxes, Real Estate, and Investments. Drawing upon such works as The Millionaire Next Door by Thomas Stanley and William Danko, the author builds a case for accumulating investment assets and reducing debts. The author covers some of the most basic of economic ideas, such as The Rule of 72.
The author defines the term "Personal Capital" to represent the value of your investment assets minus all debts owed. This roughly corresponds to what most of us would refer to as Net Worth. However, he specifically excludes non-financial assets such as televisions, DVD players, laptops, desktop computers, and the like. Also excluded from Personal Capital is one’s primary residence. In addition to an extensive discussion of real estate, the author devotes a major section to the treatment of taxes. There is a lot of good information here, but one caveat that I can give is that some of the information is dated. The book was recently published (at the end of 2009), but the author often references tax rates and rules for 2008. As we all know, tax regulations are moving targets that change almost every year, so his numbers may not be current.
There is a section about securities that mostly cover bonds, and leaves only a short discussion of stocks. As the writer of a stock investing blog, I had hoped that the author would give a more detailed treatment of stocks. However, I understand that he has a broad topic to cover, and cannot get into every detail. The book is written in the style of a research paper where the author highlights the main points of each topic by drawing upon other writings. He makes generous use of footnotes throughout the book that refer to such texts as The Automatic Millionaire by David Bach, and Warren Buffet’s Letters to Berkshire Hathaway shareholders.
The general financial advice given is solid and straightforward. It should not surprise anybody with a basic understanding of personal finance. Thankfully, there are no get rich quick scams presented in this book. The author does a good job of covering a lot of material within 200 pages. Unlike popular finance authors like Robert Kiyosaki, and David Bach, Mr. Eaton hasn’t trademarked any buzzwords like "The Cashflow Quadrant". So, I don’t get the feeling that he is trying to sell me something else (like another book or audio program) when I’m reading this book.
Overall, I think that the author’s target audience may benefit from this well-written book. You are not likely to find Personal Capital at your local bookstore, but it is available through Amazon.com for $14.99. It can also be purchased as a PDF file download (ebook) from Lulu.com for only $6.
J.L. Eaton lives in Northern Virginia (near Washington DC) with his wife Marci. He maintains the Capitalism Curriculum website.
The book contains five main sections covering these topics: Basic Economics, Debt, Taxes, Real Estate, and Investments. Drawing upon such works as The Millionaire Next Door by Thomas Stanley and William Danko, the author builds a case for accumulating investment assets and reducing debts. The author covers some of the most basic of economic ideas, such as The Rule of 72.The author defines the term "Personal Capital" to represent the value of your investment assets minus all debts owed. This roughly corresponds to what most of us would refer to as Net Worth. However, he specifically excludes non-financial assets such as televisions, DVD players, laptops, desktop computers, and the like. Also excluded from Personal Capital is one’s primary residence. In addition to an extensive discussion of real estate, the author devotes a major section to the treatment of taxes. There is a lot of good information here, but one caveat that I can give is that some of the information is dated. The book was recently published (at the end of 2009), but the author often references tax rates and rules for 2008. As we all know, tax regulations are moving targets that change almost every year, so his numbers may not be current.
There is a section about securities that mostly cover bonds, and leaves only a short discussion of stocks. As the writer of a stock investing blog, I had hoped that the author would give a more detailed treatment of stocks. However, I understand that he has a broad topic to cover, and cannot get into every detail. The book is written in the style of a research paper where the author highlights the main points of each topic by drawing upon other writings. He makes generous use of footnotes throughout the book that refer to such texts as The Automatic Millionaire by David Bach, and Warren Buffet’s Letters to Berkshire Hathaway shareholders.
The general financial advice given is solid and straightforward. It should not surprise anybody with a basic understanding of personal finance. Thankfully, there are no get rich quick scams presented in this book. The author does a good job of covering a lot of material within 200 pages. Unlike popular finance authors like Robert Kiyosaki, and David Bach, Mr. Eaton hasn’t trademarked any buzzwords like "The Cashflow Quadrant". So, I don’t get the feeling that he is trying to sell me something else (like another book or audio program) when I’m reading this book.
Overall, I think that the author’s target audience may benefit from this well-written book. You are not likely to find Personal Capital at your local bookstore, but it is available through Amazon.com
for $14.99. It can also be purchased as a PDF file download (ebook) from Lulu.com for only $6.J.L. Eaton lives in Northern Virginia (near Washington DC) with his wife Marci. He maintains the Capitalism Curriculum website.
Friday, April 9, 2010
Money Market Rates 4/10
Here are the latest money market interest rates of the banks that I've been tracking on my blog. Note that these rates are sorted by APY, and represent institutions that I have accounts at, or have otherwise mentioned in my blog:
1.35% Discover Bank Online Savings
1.29% Ally Bank Online Savings
1.10% HSBCAdvance Online Savings
1.10% ING Direct Orange Savings
1.07% Shorebank Direct Online Savings
0.90% Citibank Ultimate Savings
0.65% Western FCU Money Market
0.50% Chase Premier Savings
0.40% E*TRADE Complete Savings
0.06% PayPal Money Market*
NOTES: *The PayPal Money Market fund is NOT FDIC insured.
Rates are believed to be accurate as of 4/8/10. I did not include banks that had special, or introductory rates in the list because they are not ongoing interest rates. I am also not including non-liquid accounts such as CD's in the list.
This month, I have added Discover Bank Online Savings to the list, which currently has the highest interest rate of the banks that I'm tracking. The latest bank casualty in my list of banks is Umbrellabank, which was a division of New South Federal Savings Bank. New South was closed by the FDIC in December, and the assets were transferred to Beal Bank. I will stop tracking the Pot O' Gold Money Market here.
So, there is the latest list. Please let me know if you know of any higher interest rates.
DC
1.35% Discover Bank Online Savings
1.29% Ally Bank Online Savings
1.10% HSBCAdvance Online Savings
1.10% ING Direct Orange Savings
1.07% Shorebank Direct Online Savings
0.90% Citibank Ultimate Savings
0.65% Western FCU Money Market
0.50% Chase Premier Savings
0.40% E*TRADE Complete Savings
0.06% PayPal Money Market*
NOTES: *The PayPal Money Market fund is NOT FDIC insured.
Rates are believed to be accurate as of 4/8/10. I did not include banks that had special, or introductory rates in the list because they are not ongoing interest rates. I am also not including non-liquid accounts such as CD's in the list.
This month, I have added Discover Bank Online Savings to the list, which currently has the highest interest rate of the banks that I'm tracking. The latest bank casualty in my list of banks is Umbrellabank, which was a division of New South Federal Savings Bank. New South was closed by the FDIC in December, and the assets were transferred to Beal Bank. I will stop tracking the Pot O' Gold Money Market here.
So, there is the latest list. Please let me know if you know of any higher interest rates.
DC
Monday, April 5, 2010
Two Week Free Trial of MarketClub
I hesitate to recommend a product on PFStock unless I feel that it is really worthwhile. MarketClub from INO.com, which I've mentioned before in my post MarketClub Pays for Itself, is one of those exceptional products. Now for a limited time, MarketClub is offering a 2-week free trial. This is a risk-free way to try out the powerful technical analysis tools at MarketClub -- which have earned my personal recommendation.
I don't know how long they will have this free trial offer available, but MarketClub is regularly priced at $449.00 per year. INO.com (pronounced "I know") normally offers a 30-day risk-free period, but they would ordinarily ask for your credit card number upfront. But, if you Click Here you can sign up for the free trial without giving them your credit card information. Even at full price, I feel that MarketClub is worthwhile because I've made much more than the cost of a subscription using their tools.
Anyway, there are 4 powerful trading tools available to MarketClub members that you, as a free trial member, will have access to: Smart Scan, Trade School, Chart Analysis, and Data Central. You also will have access to numerous videos from Adam Hewison, the creator of MarketClub. One other major bonus about this trial is that their, customer support team will be providing unlimited support! You can call or email MarketClub for an instant response to any question, comment or concern.
DC
I don't know how long they will have this free trial offer available, but MarketClub is regularly priced at $449.00 per year. INO.com (pronounced "I know") normally offers a 30-day risk-free period, but they would ordinarily ask for your credit card number upfront. But, if you Click Here you can sign up for the free trial without giving them your credit card information. Even at full price, I feel that MarketClub is worthwhile because I've made much more than the cost of a subscription using their tools.
Anyway, there are 4 powerful trading tools available to MarketClub members that you, as a free trial member, will have access to: Smart Scan, Trade School, Chart Analysis, and Data Central. You also will have access to numerous videos from Adam Hewison, the creator of MarketClub. One other major bonus about this trial is that their, customer support team will be providing unlimited support! You can call or email MarketClub for an instant response to any question, comment or concern.
DC
Thursday, April 1, 2010
Should You Invest in Gold?
On this blog, I haven't talked much about investing in gold or in precious metals. With the upward trend of gold prices in the last few years, I have started to consider gold as an investment. But, I've been afraid that I might be a little bit late to the party. To give me more to think about, the folks at INO.com (pronounced "I know") recently sent me an Email with a link to their video about the future of gold prices. I thought that it would be useful to re-post their message here.
Note: The views expressed are those of the original author, and do not necessarily reflect those of PFStock.
Why gold will not make new highs or lows this year
by Adam Hewison, INO.com President
Gold has had some dramatic moves in the last eighteen months and we expect it will have some equally dramatic moves in the future, but not right now.
Click Here to see Adam's 4-minute video about gold.
While I recognize that gold is one of the few commodity markets that people are really passionate about; the purpose of this article is not to take sides either with the gold bugs or those who reject the argument that gold is forever. Rather, I want to discuss my interpretation of the markets cycle.
After spot gold made an all-time high against the dollar on December 2 at $1,226.37, gold has been in retreat mode. For the for the past several months gold has been in a broad trading range, seemingly unable to move one way or another. This process has created frustration from bulls and bears alike.
Here is the dirty little secret about the gold market. It can be a horrible investment and here's why:
Gold first started trading in the 80s while I was on the floor of the Chicago Mercantile Exchange in Chicago as a member of the International Monetary Market, (IMM) which was at that time a division of the CME now the CME Group. When gold opened up the public clamored to buy into the gold futures market and guess who sold it to them? That's right it was the pros- the guys who made their living trading. As a result, gold hit an all-time high of around $850 an ounce back then and it took almost 25 years for gold to move over that level, at least in dollar terms. I don't know what your timeline is, but 25 to 30 years is an awful long time to get even again.
So what is really happening in this market?
Everyone is aware of the problems in Europe with Greece, Portugal and a host of yet to be named countries. We all know that the huge amount of money being printed, coupled with the bank failures abroad contribute to the dollars declining value. These events, in conjunction with the American governments actions, also contribute to the devaluation of the dollar. The government claims that this is beneficial to exports, but the bottom line is that the purchasing power of the American dollar continues to erode in world markets.
Based on the declining value of world currency against gold you might ask- why isn't gold trading at $2,000 or even $3,000 an ounce? What is wrong with this market? This is because a great deal of what goes into the gold market is psychological and reacts to cyclic trends driven by both psychological and economic factors.
So what does all this have to do with the price of gold now? It has everything to do with gold and nothing to do with gold.
Here is what I've been able to observe in the last several years in gold and seems to be holding true. It is something that you should pay attention to if you're interested in the next big move in the gold market.
Before gold can move higher it needs to create what I call an "energy field". The most recent energy fields in gold were between May 12, 2006 and September 20, 2007. This 17 month energy field saw gold prices oscillate between a broad trading range bound by $730.08 (upside) and $541.80 (downside). That energy field produced enough power to propel gold to the new high of $1,012.40 on March 17, 2008. This marked the first time gold exceeded, in dollar terms, the highs set in the early 80s mentioned earlier.
The energy fields I have observed for gold are taking somewhere between 17 and 18 months to complete. If the energy field holds, then the December 3rd 2009 high of $1,226.37 should remain in place for quite some time. If the same cycle remains true then the recent lows that we witnessed, at $1,050, should also remain intact as they represent the 15 to 16 month cycle low.
With the lows in place the next question becomes when is the next cyclical high in gold? Based on the existing cycle, we can expect the next major gold high in 2011.
To summarize: I expect gold to be locked in a broad trading range for the next 12 months bounded by the December 09 highs of 1,226.37 and the lows of $1,050.00. If the gold cycle holds true, we expect that gold tops the $1,226.37 marker by April or May of 2011.
On the upside we will also be looking for gold to make a nature cyclic high in October or November of 2011. It's impossible to predict the future with any degree of accuracy; however when we look at the cycles in gold this reads as a pretty good bet.
No matter what happens we expect gold will offer some great trading opportunities that investors and traders should be able to take advantage of.
Listen to Adam's technical analysis of the gold chart.
As I always discuss- in trading one should approach gold or any other market with a game plan and proper money management stops. The key to success in this decade will be an investors willingness to move in and out of asset classes such as gold and be well diversified into more than one asset class. That way you wont be left holding the bag for the next 25 years. Our World Commodity Portfolio is a good example of this approach and one I believe will serve investors well in the coming years.
--
Adam Hewison is the Co-creator of MarketClub. For a limited time, MarketClub is offering a 2-week free trial. This is a risk-free way to try out the powerful technical analysis tools at MarketClub -- which have earned my personal recommendation. For more information, see my post MarketClub Pays for Itself.
DC
Note: The views expressed are those of the original author, and do not necessarily reflect those of PFStock.
Why gold will not make new highs or lows this year
by Adam Hewison, INO.com President
Gold has had some dramatic moves in the last eighteen months and we expect it will have some equally dramatic moves in the future, but not right now.
Click Here to see Adam's 4-minute video about gold.
While I recognize that gold is one of the few commodity markets that people are really passionate about; the purpose of this article is not to take sides either with the gold bugs or those who reject the argument that gold is forever. Rather, I want to discuss my interpretation of the markets cycle.
After spot gold made an all-time high against the dollar on December 2 at $1,226.37, gold has been in retreat mode. For the for the past several months gold has been in a broad trading range, seemingly unable to move one way or another. This process has created frustration from bulls and bears alike.
Here is the dirty little secret about the gold market. It can be a horrible investment and here's why:
Gold first started trading in the 80s while I was on the floor of the Chicago Mercantile Exchange in Chicago as a member of the International Monetary Market, (IMM) which was at that time a division of the CME now the CME Group. When gold opened up the public clamored to buy into the gold futures market and guess who sold it to them? That's right it was the pros- the guys who made their living trading. As a result, gold hit an all-time high of around $850 an ounce back then and it took almost 25 years for gold to move over that level, at least in dollar terms. I don't know what your timeline is, but 25 to 30 years is an awful long time to get even again.
So what is really happening in this market?
Everyone is aware of the problems in Europe with Greece, Portugal and a host of yet to be named countries. We all know that the huge amount of money being printed, coupled with the bank failures abroad contribute to the dollars declining value. These events, in conjunction with the American governments actions, also contribute to the devaluation of the dollar. The government claims that this is beneficial to exports, but the bottom line is that the purchasing power of the American dollar continues to erode in world markets.
Based on the declining value of world currency against gold you might ask- why isn't gold trading at $2,000 or even $3,000 an ounce? What is wrong with this market? This is because a great deal of what goes into the gold market is psychological and reacts to cyclic trends driven by both psychological and economic factors.
So what does all this have to do with the price of gold now? It has everything to do with gold and nothing to do with gold.
Here is what I've been able to observe in the last several years in gold and seems to be holding true. It is something that you should pay attention to if you're interested in the next big move in the gold market.
Before gold can move higher it needs to create what I call an "energy field". The most recent energy fields in gold were between May 12, 2006 and September 20, 2007. This 17 month energy field saw gold prices oscillate between a broad trading range bound by $730.08 (upside) and $541.80 (downside). That energy field produced enough power to propel gold to the new high of $1,012.40 on March 17, 2008. This marked the first time gold exceeded, in dollar terms, the highs set in the early 80s mentioned earlier.
The energy fields I have observed for gold are taking somewhere between 17 and 18 months to complete. If the energy field holds, then the December 3rd 2009 high of $1,226.37 should remain in place for quite some time. If the same cycle remains true then the recent lows that we witnessed, at $1,050, should also remain intact as they represent the 15 to 16 month cycle low.
With the lows in place the next question becomes when is the next cyclical high in gold? Based on the existing cycle, we can expect the next major gold high in 2011.
To summarize: I expect gold to be locked in a broad trading range for the next 12 months bounded by the December 09 highs of 1,226.37 and the lows of $1,050.00. If the gold cycle holds true, we expect that gold tops the $1,226.37 marker by April or May of 2011.
On the upside we will also be looking for gold to make a nature cyclic high in October or November of 2011. It's impossible to predict the future with any degree of accuracy; however when we look at the cycles in gold this reads as a pretty good bet.
No matter what happens we expect gold will offer some great trading opportunities that investors and traders should be able to take advantage of.
Listen to Adam's technical analysis of the gold chart.
As I always discuss- in trading one should approach gold or any other market with a game plan and proper money management stops. The key to success in this decade will be an investors willingness to move in and out of asset classes such as gold and be well diversified into more than one asset class. That way you wont be left holding the bag for the next 25 years. Our World Commodity Portfolio is a good example of this approach and one I believe will serve investors well in the coming years.
--
Adam Hewison is the Co-creator of MarketClub. For a limited time, MarketClub is offering a 2-week free trial. This is a risk-free way to try out the powerful technical analysis tools at MarketClub -- which have earned my personal recommendation. For more information, see my post MarketClub Pays for Itself.
DC
Monday, March 15, 2010
How Much Does A Free TV Set Cost?
A while back, I wrote a post about receiving a free HDTV when I opened a new Certificate of Deposit (CD) account at Irwin Union Bank. Specifically, the offer was made to customers who open an 11-month CD with a minimum deposit of $20,000. At the time, the bank informed me that they would report the value of the free gift ($280) to the IRS (on a 1099 form). Since it was clear that a 1099 form would translate into additional income taxes, I knew that the free TV set was not truly free.
The TV itself is a 22 inch Toshiba model 22AV600U. It is the first HDTV that I've owned, and the picture is quite sharp compared to our old tube TVs. The new TV includes a built-in NTSC/ATSC/clear QAM tuner that can tune into both broadcast TV and cable. (It is an unadvertised fact that cable subscribers who have a clear QAM tuner can often receive unencrypted HD cable TV, without adding "digital" cable to their service.)
Anyway, how much did the "free" TV end up costing me? Our Federal marginal tax rate (aka: tax bracket) is 25%, and our California state tax bracket is 9.55%. So, the TV costs is (25% + 9.55%) * $280 = $96.74. It is not a free TV, but that is still a lot less than the retail price for a new 22" HDTV (typically about $250-300).
I deposited $20,000 in the CD for an 11-month term with an interest rate of 1.96% in July 2009. Then in September 2009, Irwin Union Bank was closed by the FDIC with its accounts and assets transferred to First Financial Bank (of Ohio). Subsequent to the Irwin Union Bank closing, the acquiring bank (First Financial) sent me a letter saying that it reduced my CD interested rate to 1.5% for the remainder of my CD's term. Ironically the FDIC says that this is all perfectly legal. However, they would let me withdraw my money from the CD without any early withdrawal penalty. And I would get to keep the free TV, too.
DC
The TV itself is a 22 inch Toshiba model 22AV600U. It is the first HDTV that I've owned, and the picture is quite sharp compared to our old tube TVs. The new TV includes a built-in NTSC/ATSC/clear QAM tuner that can tune into both broadcast TV and cable. (It is an unadvertised fact that cable subscribers who have a clear QAM tuner can often receive unencrypted HD cable TV, without adding "digital" cable to their service.)
Anyway, how much did the "free" TV end up costing me? Our Federal marginal tax rate (aka: tax bracket) is 25%, and our California state tax bracket is 9.55%. So, the TV costs is (25% + 9.55%) * $280 = $96.74. It is not a free TV, but that is still a lot less than the retail price for a new 22" HDTV (typically about $250-300).
I deposited $20,000 in the CD for an 11-month term with an interest rate of 1.96% in July 2009. Then in September 2009, Irwin Union Bank was closed by the FDIC with its accounts and assets transferred to First Financial Bank (of Ohio). Subsequent to the Irwin Union Bank closing, the acquiring bank (First Financial) sent me a letter saying that it reduced my CD interested rate to 1.5% for the remainder of my CD's term. Ironically the FDIC says that this is all perfectly legal. However, they would let me withdraw my money from the CD without any early withdrawal penalty. And I would get to keep the free TV, too.
DC
Monday, March 8, 2010
Fake USB Flash Drives
A while back, I wrote about collecting free promotional USB flash drives at various investment conferences that I've attended. I have been searching the Internet to see if I could also find websites that offer USB flash drives freebies. For reference, a USB (Universal Serial Bus) flash drive is a portable computer memory that plugs into a computer USB port and can be used like a miniature hard disk. Also known as thumb drives, they were once considered a novelty among computer enthusiasts. But nowadays, USB flash drives can often be purchased in many commonplace stores, including drug and discount stores.
Anyway, I did find a few websites that claim to offer USB flash drive freebies. In many cases, the website is outdated, and that particular offer has expired. Among the unexpired offers, I ended up submitting my mailing address and contact information to a few sites. But, I am disappointed to report that I haven't received a free USB flash drive from any of them. Can anybody report on any successes (or failures) that they've had?
In my searches on the web, I did uncover a disturbing trend: fake USB flash memory. To be clear, the flash memory itself is not fake; rather the capacity that the USB device reports to the operating system is fake. For example some people have reported purchasing a 32GB flash drive on eBay that they later found out could only store 4GB of data. To make matter worse when the real capacity of the drive is exceeded it starts to overwrite their existing data. Not surprisingly, when the end user finally realizes that they've been duped, they also learn that the eBay seller has closed shop and doesn't respond to Email messages.
As a technical matter, these unscrupulous sellers are reprogramming the USB controller chip to falsely report the capacity of the flash memory. To help detect this fake flash memory, there is a tool called h2testw that tests your USB flash drive by filling the memory with real data and trying to read back every bit of it. The tool can be be downloaded here: h2testw. This site is written in German. If you can't read it, you can click here for a translation that somewhat resembles English. The tool itself has instructions in both German (liesmich.txt) and English (readme.txt).
There is a website called SOSFakeFlash that contains a lot of helpful information about the problem of fake flash memory. It seems that much of fake flash memory sold on eBay originates from foreign sellers in Asia and Europe. However, there also appear to be domestic (U.S.) sellers who are also getting into the act. Their tactics are similar.
In my experience, I have purchased items on eBay before, such as a used DVD recorder. Regardless of the item, one suggestion that I can offer about buying items on eBay is to avoid sellers that have little feedback history, and are listing a large number of items for sale at once. These sellers are trying to make as many sales as possible before they get caught selling fraudulent goods. If it is a legitimate deal from a legitimate seller, it will still be there in the future. Also, bear in mind that the price of flash memory goes down in time (Moore's Law).
If you are a victim of this scam, I would first suggest contacting the seller. Inform them that you know that they are selling bogus flash memory, and demand a refund. If they don't respond, open a dispute on eBay that the item is not as described (e.g., I paid for a 64GB USB flash drive, but received a 4GB flash drive). I don't recommend that you claim the item is counterfeit because many of the fake flash drives out there are generic and don't represent a particular brand name (e.g., Sandisk, Sony, HP, etc.) If you make a counterfeit claim, eBay may ask for third party verification of the claim which you would have to pay for.
From my standpoint, I am glad that I haven't bought any bogus USB flash drives. All of the flash memory that I do have seems to check out fine when I run the h2testw program. But, I am curious if any of my readers have any experience with this bogus flash memory.
Note: While I was writing this post, I saw a 128GB Kingston DataTraveler 200 USB flash drive offered on eBay at the "Buy It Now" price of only $27. However, Kingston's list price for this item is $547. A few hours later, the seller had racked up hundreds of sales. And shortly after that, the listing and the seller disappeared from eBay... Doesn't that sound suspicious to you?
DC
Anyway, I did find a few websites that claim to offer USB flash drive freebies. In many cases, the website is outdated, and that particular offer has expired. Among the unexpired offers, I ended up submitting my mailing address and contact information to a few sites. But, I am disappointed to report that I haven't received a free USB flash drive from any of them. Can anybody report on any successes (or failures) that they've had?
In my searches on the web, I did uncover a disturbing trend: fake USB flash memory. To be clear, the flash memory itself is not fake; rather the capacity that the USB device reports to the operating system is fake. For example some people have reported purchasing a 32GB flash drive on eBay that they later found out could only store 4GB of data. To make matter worse when the real capacity of the drive is exceeded it starts to overwrite their existing data. Not surprisingly, when the end user finally realizes that they've been duped, they also learn that the eBay seller has closed shop and doesn't respond to Email messages.
As a technical matter, these unscrupulous sellers are reprogramming the USB controller chip to falsely report the capacity of the flash memory. To help detect this fake flash memory, there is a tool called h2testw that tests your USB flash drive by filling the memory with real data and trying to read back every bit of it. The tool can be be downloaded here: h2testw. This site is written in German. If you can't read it, you can click here for a translation that somewhat resembles English. The tool itself has instructions in both German (liesmich.txt) and English (readme.txt).
There is a website called SOSFakeFlash that contains a lot of helpful information about the problem of fake flash memory. It seems that much of fake flash memory sold on eBay originates from foreign sellers in Asia and Europe. However, there also appear to be domestic (U.S.) sellers who are also getting into the act. Their tactics are similar.
In my experience, I have purchased items on eBay before, such as a used DVD recorder. Regardless of the item, one suggestion that I can offer about buying items on eBay is to avoid sellers that have little feedback history, and are listing a large number of items for sale at once. These sellers are trying to make as many sales as possible before they get caught selling fraudulent goods. If it is a legitimate deal from a legitimate seller, it will still be there in the future. Also, bear in mind that the price of flash memory goes down in time (Moore's Law).
If you are a victim of this scam, I would first suggest contacting the seller. Inform them that you know that they are selling bogus flash memory, and demand a refund. If they don't respond, open a dispute on eBay that the item is not as described (e.g., I paid for a 64GB USB flash drive, but received a 4GB flash drive). I don't recommend that you claim the item is counterfeit because many of the fake flash drives out there are generic and don't represent a particular brand name (e.g., Sandisk, Sony, HP, etc.) If you make a counterfeit claim, eBay may ask for third party verification of the claim which you would have to pay for.
From my standpoint, I am glad that I haven't bought any bogus USB flash drives. All of the flash memory that I do have seems to check out fine when I run the h2testw program. But, I am curious if any of my readers have any experience with this bogus flash memory.
Note: While I was writing this post, I saw a 128GB Kingston DataTraveler 200 USB flash drive offered on eBay at the "Buy It Now" price of only $27. However, Kingston's list price for this item is $547. A few hours later, the seller had racked up hundreds of sales. And shortly after that, the listing and the seller disappeared from eBay... Doesn't that sound suspicious to you?
DC
Tuesday, March 2, 2010
Decoding Tax Acronyms
The PR people at TurboTax recently sent me a list of "taxcronyms". Presumably, a taxcronym is a tax acronym that many people are not familiar with. In any case, I found their blog post to contain a lot of useful information, and I have asked for permission to reproduce it on my blog. Note: The views expressed are those of the original blogger, and do not necessarily reflect those of PFStock.
Common and Complex Taxcroynms Decoded
The TurboTax Blog
By Lauren Young, TurboTax Deductionista
Anyone who has ever looked at the tax code knows about the alphabet soup of acronyms associated with taxes. In addition to the big one—IRS a.k.a. Internal Revenue Service—I’m guessing that there are more than 100 taxcronyms out there. Here’s a guide to decoding some common as well as complex tax acronyms.
AGI
Your Adjusted Gross Income is key to figuring out your taxes, but computing it can be tricky. Thankfully, TurboTax takes care of the legwork for you. The AGI includes your income, minus certain deductions such as alimony, interest for student loans and contributions to a retirement account.
AMT
The Alternative Minimum Tax was originally designed to tax the 150 most wealthy Americans back in 1969. But because the AMT was never indexed for inflation, millions of people pay it today. A temporary patch for 2009 returns sets the AMT exemption at $46,700 for single filers and $70,950 for joint filers.
Here’s how I describe the AMT: It’s a bizarre parallel tax universe in which you lose most of your valuable tax deductions, including the standard deduction along with state and local taxes. Overall, some 4 million taxpayers are expected to pay $35.5 billion in AMT in 2009, at an average of about $8,400 each, according to the Tax Policy Center.
It’s pretty hard to avoid the AMT, if you stuck in this tax trap—I know this firsthand. We’ve been paying the AMT for nearly a decade.
EIN
If you work in corporate America , your employer has a nine-digit Employer Identification Number. And this number is key to making online tax filing easy. With this number you can import your employment tax information directly into TurboTax.
EITC
The Earned Income Tax Credit is designed to give the lower-paid workers—I like to refer to them as the worker bees—a chance to lower their taxes or claim a refund. To get the credit, your income cannot exceed $13,440 if you are single and have no children. (The income threshold is $18,440 if you are married and filing with your spouse). If you fit the bill, you are eligible for a $457 credit.
Those little (or not-so-little) bundles of joy living in your home make this tax credit even more valuable. Depending on the number of children you have, the credit increases from $3,043 (one child) to $5,657 (three kids or more), But you cannot earn more than $43,279 if you are single and $48,279 if married and filing jointly with three or more qualifying kids.
Overall, the EITC was responsible for helping Americans realize $49 billion in tax credits in 2008.
FSA
A Flexible Spending Arrangement lets you save pretax money for qualified health-care services every year. They are typically a use-or-lose proposition, though, so it is important to set a careful estimate of your health-related expenses. If you end up with a lot of money left in your FSA at the end of the year, consider donating medical supplies to a local school or clinic.
HSA
As the cost of health insurance continues to climb, more employees are opting for Health Savings Accounts. These high-deductible health plans (HDHP) let employees make contributions to a savings account with pretax dollars. While your employer may or may not contribute to the account, any money you do not use can continue to grow, similar to a retirement savings plan.
For the 2009 tax year, HSA holders can deduct up to $5,950 if the account is for family coverage. And if you are 55 or older, you can add another $1,000.
IRA
An Individual Retirement Arrangement is one of the best—and simplest—ways to save for retirement, especially if you don’t have an employer-sponsored retirement savings plan. Since your savings are tax-deferred, IRAs also help reduce your overall taxable income. If you discover that you have a big tax bill, you may be able to open a traditional IRA for the corresponding tax year to minimize your financial burden. But, like everything related to taxes, there are bells and whistles.
If you are under age 50, the maximum amount you can stash in a traditional IRA for 2009 is $5,000. If you are older than 50, the contribution cap rises to $6,000. But you also have to meet certain income restrictions to get the tax benefit of an IRA. For example, if you are married filing jointly, your modified adjusted gross income must be $89,000 or less to get the maximum deduction.
IRAs come in several distinct flavors: while traditional IRAs help cut your tax bill now, it makes sense for some folks to use Roth IRAs which require you to pay your taxes upfront. In 2010, the once-restrictive rules for Roth eligibility are shifting in a big way. Here’s a rundown of the changes.
MSA
A Medical savings account is mainly used by self-employed folks or employees of small businesses along with their spouses and dependents. They are similar in scope to HSAs–you can accumulate savings for medical expenses tax-free. The money you save is portable if you change employers.
MFJ
Married couples have the option to file their taxes together or separately, but most save thousands of dollars by filing jointly (married filing jointly). That’s because filing separately disqualifies you from some of the most significant tax credits and deductions which include the EITC (above) along with valuable childcare and dependent care deductions.
MFS
While it usually makes sense for married couples to file their taxes together, there are a few exceptions to this rule-of-thumb. You’ll want to use the married filing separate tax status if your spouse is in trouble with the Feds and hasn’t paid taxes in a while. (I actually know a couple who encountered this problem. NOT good.) Married couples should also consider filing separate returns if one of you has a huge tax bill and the other could get a refund. Here’s some more information about marriage and taxes from TurboTax.
SIMPLE
In addition to traditional IRAs and Roth IRAs, there is also the Savings Incentive Match Plan for Employees. SIMPLE IRA plans are a favorite retirement savings vehicle for small businesses (100 employees or less) because they are actually fairly easy to set up. Employees and employers can make contributions to traditional IRAs, although there are limitations.
OIC
The financial crisis has left a lot of taxpayers with big bills and little financing options. An Offer in Compromise is an agreement between a taxpayer and the IRS to settle a taxpayer’s tax debt for less than the full amount owed. But the reduced equity taxpayers have in their real estate holdings may complicate the deal.
To decode more taxcronyms, check out this handy, dandy IRS tip sheet.
Monday, February 22, 2010
Annual Income Survey
In April 2009, I asked my blog readers the question: How much do you make? That is the question that many people have on their mind, but few people are willing to ask. And even fewer are willing to answer... In spite of that, my post invited readers to leave a comment revealing their annual income, as well as their age and occupation. Some readers also state their gender and geographic location.
Very few comments have been entered to date, even though readers can enter anonymous comments on PFStock. However, I recently placed a poll in the sidebar of PFStock that asks the same thing: "How much do you make?" With over 35 votes so far, the response to this poll has been much better than to my post. Here are the latest data from the sidebar poll:
Annual Income of PFStock Readers (as of 2/20/10)
(Totals do not add up to 100% due to rounding.) These statistics will give you some insight about how your income compares against other PFStock readers. It seems that the median income of my blog readers is about $100k per year. I found it interesting that one in four readers has an income over $150,000. (In fact, this number fluctuated, but is sometimes as high as one-third of all readers making more than $150k.) I wonder how the average income of PFStock readers compares to the readers of other personal finance blogs. Does anybody have any insight on that? I think that I can say that 70% of PFStock readers have an income greater than $75,000 per year.
I was surprised at how willing people were to vote in an anonymous poll. At the same time, my post did not receive such a response. Perhaps people are skeptical that their responses will be kept anonymous. Or maybe they are unwilling to spend a few minutes writing a response, while clicking a button on the poll only takes a few seconds. In any case, I encourage you to participate in the anual income poll in the sidebar, and/or leave a comment here. I want to assure you that my Blogger account does not collect Email addresses or any other personal information, if you select "Anonymous" on the comment form. To be doubly sure, you can also sign out of Blogger.
Over the years, I have found that readers are innately curious about other people's finances. This natural curiosity -- wanting to assess how one is doing compared to others -- has led me to write my most popular post of all time: Net Worth Update. Thousands of readers have seen this post, but again very few comments have been entered. In other words, people want to have a peek at others finances, but very few are willing to reveal any details of their own personal finances.
So, what should my next poll be? A poll about net worth seems to be logical choice. Please see the sidebar to participate in the new poll.
DC
Very few comments have been entered to date, even though readers can enter anonymous comments on PFStock. However, I recently placed a poll in the sidebar of PFStock that asks the same thing: "How much do you make?" With over 35 votes so far, the response to this poll has been much better than to my post. Here are the latest data from the sidebar poll:
Annual Income of PFStock Readers (as of 2/20/10)
| Annual Income | Percentage |
| less than $25k | 5% |
| $25k-$49k | 15% |
| $50k-$74k | 5% |
| $75k-$124k | 35% |
| $125k-$149k | 5% |
| $150k and higher | 33% |
(Totals do not add up to 100% due to rounding.) These statistics will give you some insight about how your income compares against other PFStock readers. It seems that the median income of my blog readers is about $100k per year. I found it interesting that one in four readers has an income over $150,000. (In fact, this number fluctuated, but is sometimes as high as one-third of all readers making more than $150k.) I wonder how the average income of PFStock readers compares to the readers of other personal finance blogs. Does anybody have any insight on that? I think that I can say that 70% of PFStock readers have an income greater than $75,000 per year.
I was surprised at how willing people were to vote in an anonymous poll. At the same time, my post did not receive such a response. Perhaps people are skeptical that their responses will be kept anonymous. Or maybe they are unwilling to spend a few minutes writing a response, while clicking a button on the poll only takes a few seconds. In any case, I encourage you to participate in the anual income poll in the sidebar, and/or leave a comment here. I want to assure you that my Blogger account does not collect Email addresses or any other personal information, if you select "Anonymous" on the comment form. To be doubly sure, you can also sign out of Blogger.
Over the years, I have found that readers are innately curious about other people's finances. This natural curiosity -- wanting to assess how one is doing compared to others -- has led me to write my most popular post of all time: Net Worth Update. Thousands of readers have seen this post, but again very few comments have been entered. In other words, people want to have a peek at others finances, but very few are willing to reveal any details of their own personal finances.
So, what should my next poll be? A poll about net worth seems to be logical choice. Please see the sidebar to participate in the new poll.
DC
Wednesday, February 17, 2010
Tax Tips Software Winner
Congratulation to Stephen Grimes, who is the winner of the H&R Block Giveaway Contest. He will be receiving a copy of H&R Block At Home Deluxe (formerly known as TaxCut) which includes tax preparation for both federal and state returns.
His tax tip was to harvest stock losses, saying "I did this a year ago near market bottom, and I will be deducting $3000 per year off my income tax for five years!!"
Here are some of the other tax tips I've received (as well as some of my own).
The contest is over now, but if you have any other good tax or money saving suggestions that you would like to share, I encourage you to leave a comment below.
If you missed out on the H&R Block At Home giveaway, I do have a couple $10 rebate coupons good through 4/15/10. The rebate is good for $10 off of an H&R Block At Home Deluxe or higher purchase from retail stores. If you are interested, Email me your mailing address. I cover the postage to send it to you, but this offer is limited to the first two responses that I get since I only have two coupons.
DC
His tax tip was to harvest stock losses, saying "I did this a year ago near market bottom, and I will be deducting $3000 per year off my income tax for five years!!"
Here are some of the other tax tips I've received (as well as some of my own).
- File your taxes for free online. Many websites offer free online filing if you meet their criteria.
- Buy a copy of J.K. Lasser's Your Income Tax or the Ernst & Young Tax Guide to help with understanding tax laws and with preparing your taxes. Better yet, check out a copy of either one from your local library for free.
- Contribute the most you can to a 401(k) plan at work.
- Read PFStock and other personal finance blogs. (I think that this contributor has his own personal finance blog.)
The contest is over now, but if you have any other good tax or money saving suggestions that you would like to share, I encourage you to leave a comment below.
If you missed out on the H&R Block At Home giveaway, I do have a couple $10 rebate coupons good through 4/15/10. The rebate is good for $10 off of an H&R Block At Home Deluxe or higher purchase from retail stores. If you are interested, Email me your mailing address. I cover the postage to send it to you, but this offer is limited to the first two responses that I get since I only have two coupons.
DC
Wednesday, February 3, 2010
Last Chance To Win Tax Software
The deadline to enter the H&R Block Giveaway Contest is approaching. This contest will end on February 12, and the winner will be drawn from among the eligible entries. To recap, the folks at H&R Block have provided me a copy of H&R Block At Home Deluxe (retail value $45) to give away to one of my lucky blog readers. H&R Block At Home was formerly known as TaxCut.
This giveaway is for a new Deluxe (Tax Year 2009) version of H&R Block At Home which includes tax preparation for both Federal & State returns. That should be adequate for most people to complete their own taxes. Although the software includes free federal e-file, you may have to pay extra if you want to also efile a state return.
I am holding a random drawing for the tax software. Based on the current number of entries, your chances of winning are still pretty good. You can enter to win by posting a comment here.
As a reminder, you will need to send me an Email message letting me know that you posted a comment. Blogger does not retain your contact information, and anonymous comments are permitted.
DC
This promotion is held in conjunction with PFStock.com.
Note: H&R Block At Home software was provided for review by H&R Block. All opinions expressed are my own.
This giveaway is for a new Deluxe (Tax Year 2009) version of H&R Block At Home which includes tax preparation for both Federal & State returns. That should be adequate for most people to complete their own taxes. Although the software includes free federal e-file, you may have to pay extra if you want to also efile a state return.
I am holding a random drawing for the tax software. Based on the current number of entries, your chances of winning are still pretty good. You can enter to win by posting a comment here.
As a reminder, you will need to send me an Email message letting me know that you posted a comment. Blogger does not retain your contact information, and anonymous comments are permitted.
DC
This promotion is held in conjunction with PFStock.com.
Note: H&R Block At Home software was provided for review by H&R Block. All opinions expressed are my own.
Saturday, January 23, 2010
H&R Block Giveaway Contest
I have decided to hold a random drawing for the software. You can have up to three chances to win the prize:
1) Any reader can post a comment below describing your best tax or money saving tip.
2) For an additional entry, web site owners can link to this post, to let other know about this contest.
3) Lastly, my fellow bloggers can add PFStock to your blogroll (must be accessible from blog's main page) for one more entry in the drawing.
There is one more step. Since Blogger does not automatically collect contact information, and I allow anonymous comments, you will need to send me an Email message letting me know that you posted a comment, created a link to my post, and/or added PFStock your blogroll. (My E-mail address is in the sidebar of my blog.)
The drawing is limited to US residents. The software requires Windows XP, Windows Vista, Windows 7, or Mac OS X 10.4.11 or greater. The winner will be randomly picked from among the qualified entries received by February 12. I will contact the winner to get their mailing address, and I'll pick up the cost of postage. (Note that the software come in a sealed retail box, but it got a little bit crushed when it was mailed to me.) Good luck to everyone who enters!
DC
This promotion is held in conjunction with PFStock.com.
Note: H&R Block At Home software was provided for review by H&R Block. All opinions expressed are my own.
Tuesday, January 19, 2010
Do You Need 60X Annual Expenses to Retire Early?
Three years ago, I published a post titled The Millionaire's Rule of Thumb which presented an often quoted formula for expected net worth based on age and income. Many readers have expressed their dissatisfaction with the formula which is attributed to the book, The Millionaire Next Door by Thomas Stanley and William Danko. I predicted that someday a reader would develop a new and improved formula.
Three years to the day after I first posted that article, a reader who goes by the name of "dunkelblau" has indeed come up with a new and improved formula! Below is summary of dunkelblau's comments taken from this post, and from my very popular Net Worth Update post. (Note: Comments have been edited.)
I don't blame you if you didn't catch that. What the reader is saying is that if you take your net worth and divide that by annual expenses, that should equal 100 minus your age. The reader refers to net worth as the "numerator" and annual expenses as the "denominator". Reading on, dunkelblau continues by saying:
So, as further clarification, another way to say this is that your net worth should equal your annual expenses times (100 minus your age):
Lets take the example of a 40 year old who has saved $1 million for retirement. If this person can reduce expenditures to $40,000 per year, a common rule of thumb is that one can live off of the $1 million saved by assuming a conservative 4% safe withdrawal rate. See Resources for Early Retirement.
However, the "new and improved" wealth formula dictates that one needs (100 - age) times annual expenses to retire. In the case of a 40 year old, that would be 60X annual expenses, or a whopping $2.4 million for this individual to retire! Conversely, this person could further reduce their spending to less than $17,000 per year in order to live off of the $1 million. No wonder people assume that early retirement is impossible! The other curious thing about this new "formula" is that as one ages, the expected net worth actually goes down if annual expenses are kept constant. The one thing that I agree with dunkelblau about is that if you follow this formula, there is little chance of outliving your savings.
Anyway, my common sense tells me to take dunkelblau's formula with a grain of salt. In my opinion, this is definitely a new formula, but where is the improvement? What do the readers think?
DC
Three years to the day after I first posted that article, a reader who goes by the name of "dunkelblau" has indeed come up with a new and improved formula! Below is summary of dunkelblau's comments taken from this post, and from my very popular Net Worth Update post. (Note: Comments have been edited.)
I agree that wealth should be measured in units of time rather than dollars -- as in how long you can holdout without any wage income. But the correct denominator is annual expenses, not annual income. You're ready to retire when your networth divided by your annual expenses reaches 100 minus your age in years.
I don't blame you if you didn't catch that. What the reader is saying is that if you take your net worth and divide that by annual expenses, that should equal 100 minus your age. The reader refers to net worth as the "numerator" and annual expenses as the "denominator". Reading on, dunkelblau continues by saying:
Investing well increases the numerator, but even investing badly still shrinks the denominator (assuming you don't borrow to invest). I think a conservative target number [for this quotient] is 100 minus your age in years. This way there's little chance of outliving your money.
So, as further clarification, another way to say this is that your net worth should equal your annual expenses times (100 minus your age):
Net Worth = Annual Expenses * (100 - age)
Lets take the example of a 40 year old who has saved $1 million for retirement. If this person can reduce expenditures to $40,000 per year, a common rule of thumb is that one can live off of the $1 million saved by assuming a conservative 4% safe withdrawal rate. See Resources for Early Retirement.
However, the "new and improved" wealth formula dictates that one needs (100 - age) times annual expenses to retire. In the case of a 40 year old, that would be 60X annual expenses, or a whopping $2.4 million for this individual to retire! Conversely, this person could further reduce their spending to less than $17,000 per year in order to live off of the $1 million. No wonder people assume that early retirement is impossible! The other curious thing about this new "formula" is that as one ages, the expected net worth actually goes down if annual expenses are kept constant. The one thing that I agree with dunkelblau about is that if you follow this formula, there is little chance of outliving your savings.
Anyway, my common sense tells me to take dunkelblau's formula with a grain of salt. In my opinion, this is definitely a new formula, but where is the improvement? What do the readers think?
DC
Monday, January 4, 2010
Update on Merck
Back in November, I wrote a post about buying Merck. I made this decision based on a stock analysis service called MarketClub. This is part of a website called INO.com (pronounced "I know") where I can research stocks, futures, or forex products. I recently used their Trade Triangle analysis to help me decide on buying Merck & Co (NYSE: MRK).
At the time of my post, Merck & Co (NYSE: MRK) was trading around $34, but it has increased significantly since my previous post. I had actually bought the stock about a month earlier than my post. Although I usually don't disclose the full details of my stock transaction on my blog, I thought that it would be instructive to share the details of this trade. For my own reference, this post will serve as a record of a trade that I got right.
Here is the summary of my trade: On 10/12/09, I bought 300 shares of MRK at 32.99. On 12/24/09, I sold 300 shares of MRK at 36.76. As I mentioned, the opening transaction was based on technical analysis done using Trade Triangles from MarketClub portion of the INO.com website. The closing transaction is due to a stop order that I placed after the stock started to move up. The idea behind a stop order is to protect gains from a potential decline in the stock price. However, volatility will sometimes cause one to be "stopped out" prematurely. That is one danger of placing a stop order.
On a percentage basis, this trade was not as successful as my investment in Bare Escentuals (NASDAQ: BARE ). Nevertheless, it still represents an 11.4% gain over the period. I don't usually compare my trades with the S&P 500 index, but I know that a lot of investors consider that to be an important measure of success. For the record, the S&P rose 4.6% over same period. The difference between my return and the S&P is 6.8%, and is referred to by some analysis as "alpha". There are entire websites that exist for the sole purpose of seeking positive alpha.
From a personal standpoint, I am always happy to rack up a good gain regardless of whether it generates a positive alpha. I also can't argue with success, and while I was at first very skeptical of technical analysis tools like Trade Triangles, I have had good success with INO.com, so I intend to continue using this technique in my investing.
DC
At the time of my post, Merck & Co (NYSE: MRK) was trading around $34, but it has increased significantly since my previous post. I had actually bought the stock about a month earlier than my post. Although I usually don't disclose the full details of my stock transaction on my blog, I thought that it would be instructive to share the details of this trade. For my own reference, this post will serve as a record of a trade that I got right.
Here is the summary of my trade: On 10/12/09, I bought 300 shares of MRK at 32.99. On 12/24/09, I sold 300 shares of MRK at 36.76. As I mentioned, the opening transaction was based on technical analysis done using Trade Triangles from MarketClub portion of the INO.com website. The closing transaction is due to a stop order that I placed after the stock started to move up. The idea behind a stop order is to protect gains from a potential decline in the stock price. However, volatility will sometimes cause one to be "stopped out" prematurely. That is one danger of placing a stop order.
On a percentage basis, this trade was not as successful as my investment in Bare Escentuals (NASDAQ: BARE ). Nevertheless, it still represents an 11.4% gain over the period. I don't usually compare my trades with the S&P 500 index, but I know that a lot of investors consider that to be an important measure of success. For the record, the S&P rose 4.6% over same period. The difference between my return and the S&P is 6.8%, and is referred to by some analysis as "alpha". There are entire websites that exist for the sole purpose of seeking positive alpha.
From a personal standpoint, I am always happy to rack up a good gain regardless of whether it generates a positive alpha. I also can't argue with success, and while I was at first very skeptical of technical analysis tools like Trade Triangles, I have had good success with INO.com, so I intend to continue using this technique in my investing.
DC
Wednesday, December 23, 2009
H&R Block At Home (formerly TaxCut)
Last week, I received a copy of H&R Block At Home (that is the new name for TaxCut) tax preparation software in the mail. I have noticed that if you register your copy of either TaxCut or TurboTax with the manufacturer, they will automatically send you a CD-ROM with their software for the following year. H&R Block did this again. If you get one of these package in the mail, don't be fooled into thinking that you are getting something for nothing. Usually, you aren't aware of the cost of the software until you insert the CD-ROM into your computer and read through the fine print. This time, H&R Block was a little more transparent about the pricing. It printed "Only $34.95" on the front of the DVD case that it came in. But, for most people the $34.95 version of the software will not be adequate for their needs. Expect to spend at least $45 if you plan on filing a state tax return.
The H&R Block At Home (formerly TaxCut) CD-ROM that I received in the mail did have a $10 rebate coupon for purchases from certain stores (specifically Amazon.com, Best Buy, Target, Office Depot, Microcenter, Staples, and Fry's Electronics). So, it usually ends up being cheaper for me to buy this tax software through a retail store rather than installing the version I received in the mail. In the past, I've noticed that some retailers offer a free movie DVD with purchase of Taxcut, so I will usually hold out until I see a similar deal.
As a side note, H&R Block used to offer a rebate for certain financial software (e.g., Microsoft Money) with the purchase of TaxCut. But, MS Money has been discontinued by Microsoft. The 2008 version (Microsoft Money Plus) was the last planned version of this financial software. (I might consider converting everything over to Intuit's Quicken in the future.)
As far as tax software is concerned, I have always used the Premium "desktop" version of the tax software, which includes the state version of the tax preparation software. This year it looks like H&R Block At Home has adopted the TurboTax naming calling their product "Deluxe" rather than Premium. An online version is available for both TurboTax and TaxCut, which I have not used. I also haven't tried using e-file yet, but I might consider it this year.
One last thing that I wanted to bring up is that TurboTax is offering to answer tax questions for free. Here is a link to the Intuit offer from TurboTax. My main criticism that I have about this offer is that it is only good until the end of January 2010. I would guess that the average person doesn't even get started with their taxes until February or March. By that time, they will be too late to take advantage of this free advice.
So, what tax software do you use?
Note to Commenters: If you represent a company such as Intuit, H&R Block, Microsoft, etc., please leave your contact information or send me an Email (my Email address is listed in the sidebar) to let me know that you left a comment. If I cannot determine that your comment is authentic, it will be deleted.
DC
The H&R Block At Home (formerly TaxCut) CD-ROM that I received in the mail did have a $10 rebate coupon for purchases from certain stores (specifically Amazon.com, Best Buy, Target, Office Depot, Microcenter, Staples, and Fry's Electronics). So, it usually ends up being cheaper for me to buy this tax software through a retail store rather than installing the version I received in the mail. In the past, I've noticed that some retailers offer a free movie DVD with purchase of Taxcut, so I will usually hold out until I see a similar deal.
As a side note, H&R Block used to offer a rebate for certain financial software (e.g., Microsoft Money) with the purchase of TaxCut. But, MS Money has been discontinued by Microsoft. The 2008 version (Microsoft Money Plus) was the last planned version of this financial software. (I might consider converting everything over to Intuit's Quicken in the future.)
As far as tax software is concerned, I have always used the Premium "desktop" version of the tax software, which includes the state version of the tax preparation software. This year it looks like H&R Block At Home has adopted the TurboTax naming calling their product "Deluxe" rather than Premium. An online version is available for both TurboTax and TaxCut, which I have not used. I also haven't tried using e-file yet, but I might consider it this year.
One last thing that I wanted to bring up is that TurboTax is offering to answer tax questions for free. Here is a link to the Intuit offer from TurboTax. My main criticism that I have about this offer is that it is only good until the end of January 2010. I would guess that the average person doesn't even get started with their taxes until February or March. By that time, they will be too late to take advantage of this free advice.
So, what tax software do you use?
Note to Commenters: If you represent a company such as Intuit, H&R Block, Microsoft, etc., please leave your contact information or send me an Email (my Email address is listed in the sidebar) to let me know that you left a comment. If I cannot determine that your comment is authentic, it will be deleted.
DC
Monday, December 14, 2009
Tax Questions Answered
It is that time of year again when you should start thinking about your 2009 taxes. I have been using computer tax software to prepare my taxes since 1996, and I plan to do so again this year. Once again, the two main contenders are TurboTax and H&R Block At Home (formerly known as TaxCut). I have not yet decided which of these software products I will use, although I have been using the H&R Block product for the last several years.
Anyway, the point of this post is to mention that TurboTax is once again offering to answer personal tax questions for free. They have IRS-Enrolled Agents and tax preparers available to help you with your tax question. To get started, you need to submit your question through their website: www.freetaxquestion.com. A tax advisor will research your question and give you a phone call to discuss your tax issue. Questions about this offer should be directed to TurboTax; contact Alexandra Cuccias (Alexandra@outcastpr.com) with any questions.
There are a couple of catches to the offer. First, it appears you that can only submit a question between the hours of 8am and 5pm PST, Monday to Friday. Second, this free offer is only valid through January 31, 2010. So, you need to be organized enough to know what tax question you want to ask before then. My criticism here is that the average person doesn't even get started with their taxes until February or March. By that time, it will be too late to take advantage of this free service. After January 31, TurboTax will charge $23.95 for this advice. In the past, H&R Block had a similar free offer, but I have not heard if they will be offering that service again this tax year
Getting back to tax preparation software, I have usually chosen TaxCut because it is generally cheaper than TurboTax. Also, I have usually been able to get a free copy of Microsoft Money Deluxe with the purchase of TaxCut. However, MS Money has been discontinued by Microsoft, and H&R Block is no longer offering any free financial software with the purchase of their tax software. Some retailers are offering a free copy of Quicken Starter Edition 2010 with the purchase of TurboTax, but that version of Quicken would be too underpowered for my circumstances.
Note to Commenters: If you represent a company such as Intuit, H&R Block, Microsoft, etc., please leave your contact information or send me an Email (my Email address is listed in the sidebar) to let me know that you left a comment. If I cannot determine that your comment is authentic, it will be deleted.
DC
Anyway, the point of this post is to mention that TurboTax is once again offering to answer personal tax questions for free. They have IRS-Enrolled Agents and tax preparers available to help you with your tax question. To get started, you need to submit your question through their website: www.freetaxquestion.com. A tax advisor will research your question and give you a phone call to discuss your tax issue. Questions about this offer should be directed to TurboTax; contact Alexandra Cuccias (Alexandra@outcastpr.com) with any questions.
There are a couple of catches to the offer. First, it appears you that can only submit a question between the hours of 8am and 5pm PST, Monday to Friday. Second, this free offer is only valid through January 31, 2010. So, you need to be organized enough to know what tax question you want to ask before then. My criticism here is that the average person doesn't even get started with their taxes until February or March. By that time, it will be too late to take advantage of this free service. After January 31, TurboTax will charge $23.95 for this advice. In the past, H&R Block had a similar free offer, but I have not heard if they will be offering that service again this tax year
Getting back to tax preparation software, I have usually chosen TaxCut because it is generally cheaper than TurboTax. Also, I have usually been able to get a free copy of Microsoft Money Deluxe with the purchase of TaxCut. However, MS Money has been discontinued by Microsoft, and H&R Block is no longer offering any free financial software with the purchase of their tax software. Some retailers are offering a free copy of Quicken Starter Edition 2010 with the purchase of TurboTax, but that version of Quicken would be too underpowered for my circumstances.
Note to Commenters: If you represent a company such as Intuit, H&R Block, Microsoft, etc., please leave your contact information or send me an Email (my Email address is listed in the sidebar) to let me know that you left a comment. If I cannot determine that your comment is authentic, it will be deleted.
DC
Friday, December 4, 2009
Money Market Rates 12/09
Here are the latest money market interest rates of the banks that I've been tracking on my blog. Note that these rates are sorted by APY, and represent institutions that I have accounts at, or have otherwise mentioned in my blog:
1.95% Shorebank Direct Online Savings
1.59% Ally Bank Online Savings
1.35% HSBCDirect Online Savings
1.30% ING Direct Orange Savings
1.15% Citibank Ultimate Money
1.15% Citibank Ultimate Savings
1.10% Umbrellabank Pot O' Gold Money Market
0.55% Western FCU Money Market
0.53% Chase Online Savings
0.50% E*TRADE Complete Savings
0.06% PayPal Money Market*
NOTES: *The PayPal Money Market fund is NOT FDIC insured.
Rates are believed to be accurate as of 12/3/09. I did not include banks that had special, or introductory rates in the list because they are not ongoing interest rates. I am also not including non-liquid accounts such as CD's in the list.
So, there is the latest list. Please let me know if you know of any higher interest rates.
DC
1.95% Shorebank Direct Online Savings
1.59% Ally Bank Online Savings
1.35% HSBCDirect Online Savings
1.30% ING Direct Orange Savings
1.15% Citibank Ultimate Money
1.15% Citibank Ultimate Savings
1.10% Umbrellabank Pot O' Gold Money Market
0.55% Western FCU Money Market
0.53% Chase Online Savings
0.50% E*TRADE Complete Savings
0.06% PayPal Money Market*
NOTES: *The PayPal Money Market fund is NOT FDIC insured.
Rates are believed to be accurate as of 12/3/09. I did not include banks that had special, or introductory rates in the list because they are not ongoing interest rates. I am also not including non-liquid accounts such as CD's in the list.
So, there is the latest list. Please let me know if you know of any higher interest rates.
DC
Thursday, November 19, 2009
Trade Triangle: Merck (MRK)
A couple months ago, I wrote about making money by using a stock analysis service called MarketClub. This is part of a website called INO.com (pronounced "I know") where I can research stocks, futures, or forex products. I recently used their Trade Triangle analysis to help me decide on buying Merck & Co (NYSE: MRK).
Over the past several months, I have been looking for individual stocks that I can get back into. I used MarketClub to get an instant analysis of Merck, and the results are shown below.
This analysis shows that Merck is now in a strong uptrend, and that this is an ideal time to buy the stock. MarketClub's Smart Scan analysis calls this situation a "Trade Triangle" with a +100 being the highest possible score. This kind of technical analysis is great for trend traders who like the "red-light, green-light" simplicity of investing. So, I bought some shares of MRK based on this information.
With a very strong gain yesterday, I have already made more money on Merck than what a MarketClub subscription costs for one year. Note that Trade Triangles are strictly a technical analysis tool. I don't use the MarketClub analysis to tell me what to buy. I rely more on fundamental characteristics like Earnings Per Share (EPS) and PE ratios to decide on which stock to buy. But, I use MarketClub to tell me when to buy. I now have a stop order in place to help protect my gains.
Another comment that I have is that MarketClub does not require you to download and install any software. This is good because you can access your subscription from pretty much any computer. The downside is that your access speed will be limited by your Internet connection. In other words, MarketClub is not the fastest analysis tool that I've ever seen. But, it is pretty good considering that the software runs on their servers and not your computer.
You can subscribe to MarketClub for $150 per quarter or $449 for a year. You will have complete access to many of the investment tools available on INO.com. There is a 30-day risk-free trial period in which you can try them out. They will ask for a credit card when you sign up, but you have the right to cancel within the first 30 days and get all of your money back. So, what do you have to lose?
Another free tool that I utilize to help me keep on top of my portfolio is called Trend Analysis. Trend Analysis is a daily email analysis tool that gives me insight into exactly what my portfolio is doing. For investors who are following many stock symbols, MarketClub sends a daily Email for every symbol in your portfolio.
The links above takes you to a screen where you can get your first stock (future or option) symbol analyzed at no cost to you. After you sign up, you can easily add more symbols to get a daily update, which I find very helpful.
DC
Disclaimer: This material is for general information only. It is not intended as an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any security or fund.
Over the past several months, I have been looking for individual stocks that I can get back into. I used MarketClub to get an instant analysis of Merck, and the results are shown below.
This analysis shows that Merck is now in a strong uptrend, and that this is an ideal time to buy the stock. MarketClub's Smart Scan analysis calls this situation a "Trade Triangle" with a +100 being the highest possible score. This kind of technical analysis is great for trend traders who like the "red-light, green-light" simplicity of investing. So, I bought some shares of MRK based on this information.
With a very strong gain yesterday, I have already made more money on Merck than what a MarketClub subscription costs for one year. Note that Trade Triangles are strictly a technical analysis tool. I don't use the MarketClub analysis to tell me what to buy. I rely more on fundamental characteristics like Earnings Per Share (EPS) and PE ratios to decide on which stock to buy. But, I use MarketClub to tell me when to buy. I now have a stop order in place to help protect my gains.
Another comment that I have is that MarketClub does not require you to download and install any software. This is good because you can access your subscription from pretty much any computer. The downside is that your access speed will be limited by your Internet connection. In other words, MarketClub is not the fastest analysis tool that I've ever seen. But, it is pretty good considering that the software runs on their servers and not your computer.
You can subscribe to MarketClub for $150 per quarter or $449 for a year. You will have complete access to many of the investment tools available on INO.com. There is a 30-day risk-free trial period in which you can try them out. They will ask for a credit card when you sign up, but you have the right to cancel within the first 30 days and get all of your money back. So, what do you have to lose?
Another free tool that I utilize to help me keep on top of my portfolio is called Trend Analysis. Trend Analysis is a daily email analysis tool that gives me insight into exactly what my portfolio is doing. For investors who are following many stock symbols, MarketClub sends a daily Email for every symbol in your portfolio.
The links above takes you to a screen where you can get your first stock (future or option) symbol analyzed at no cost to you. After you sign up, you can easily add more symbols to get a daily update, which I find very helpful.
DC
Disclaimer: This material is for general information only. It is not intended as an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any security or fund.
Tuesday, November 10, 2009
Countrywide SavingsLink Revisited
I first wrote about the Countrywide Bank SavingsLink account in 2007. This account offered interest rates as high as 5.5% at one point. It featured free online transfers between linked external bank accounts. Countrywide was acquired by Bank of America early last year, but the final merging of accounts was not completed until September 2009.
The SavingsLink account is no longer offered by Bank of America, and has been replaced by the "Growth Money Market Savings SL" account. According to my last statement, I am getting an APY of 1.23% in my account, but I think that the rate varies based on account balance. I was not able to find a rate sheet for this particular account on Bank of America's website.
Bank of America's Money Market Savings SL account does not have the same transfer features that the SavingsLink account did. The accounts that I had previously linked to my SavingsLink account were no longer available. When I try to transfer funds to or from Bank of America, it asks me to sign up for SafePass which applies an extra level of security (and complexity) to online transfers. SafePass requires a cell phone, and it will send a 6-digit, one-time passcode as a text message (regular text message fees will apply) to your mobile phone. If you don't have a cell phone, they can set you up with a standalone SafePass card for a one time fee of $19.99.
According to their service agreement, BofA charges a fee of $3 for each outbound transfer. There is no charge for inbound transfers. But there are transfer limits of $3,000 per day or $6,000 per month. I remember transferring as much as $25,000 at one time into my SavingsLink account. I called Bank of America to ask a customer service representative about the reason for these limits, but I only got a vague explanation to the effect that certain customers may have higher limits depending depending on their relationship with the bank.
One other major change is that unlike Countrywide Bank, Bank of America has branches everywhere. Whereas physical deposits to Countrywide Bank had to be mailed to processing facility in Texas, you can make deposit to Bank of America at nearly any branch. At this point, I figure that if I need to transfer money in or out, it might be easier to just go to the branch.
I am no longer tracking the SavingsLink account in my regular money market rates posts because it is no longer available to new depositors.
DC
The SavingsLink account is no longer offered by Bank of America, and has been replaced by the "Growth Money Market Savings SL" account. According to my last statement, I am getting an APY of 1.23% in my account, but I think that the rate varies based on account balance. I was not able to find a rate sheet for this particular account on Bank of America's website.
Bank of America's Money Market Savings SL account does not have the same transfer features that the SavingsLink account did. The accounts that I had previously linked to my SavingsLink account were no longer available. When I try to transfer funds to or from Bank of America, it asks me to sign up for SafePass which applies an extra level of security (and complexity) to online transfers. SafePass requires a cell phone, and it will send a 6-digit, one-time passcode as a text message (regular text message fees will apply) to your mobile phone. If you don't have a cell phone, they can set you up with a standalone SafePass card for a one time fee of $19.99.
According to their service agreement, BofA charges a fee of $3 for each outbound transfer. There is no charge for inbound transfers. But there are transfer limits of $3,000 per day or $6,000 per month. I remember transferring as much as $25,000 at one time into my SavingsLink account. I called Bank of America to ask a customer service representative about the reason for these limits, but I only got a vague explanation to the effect that certain customers may have higher limits depending depending on their relationship with the bank.
One other major change is that unlike Countrywide Bank, Bank of America has branches everywhere. Whereas physical deposits to Countrywide Bank had to be mailed to processing facility in Texas, you can make deposit to Bank of America at nearly any branch. At this point, I figure that if I need to transfer money in or out, it might be easier to just go to the branch.
I am no longer tracking the SavingsLink account in my regular money market rates posts because it is no longer available to new depositors.
DC
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