Don’t Feed the Alligators

A Personal Finance Blog from a Small-Scale Landlord’s Perspective

Archive for the 'Banking' Category

Frisbee

A reader recently asked me for more information about opening an ING Direct account.  I have mentioned ING in the past, and recommend this bank for anyone who:

  • Is looking to establish a savings account
  • Wants to earn a better interest rate on existing savings
  • Likes free money
  • Wants to allocate separate pools of money to separate savings goals

What’s so great about ING?  Well, there’s nothing particularly spectacular about any one aspect of ING, but it has a lot of really great things going for it, including:

  • A rate of return far higher than the national average for savings accounts, currently 3% — although it’s not typically as high as some other online banks
  • No fees
  • The ability to create “sub-accounts”, which is useful for categorizing savings goals
  • Anecdotally popular customer service*
  • Ease of use; link your current checking account to your ING account to move money back and forth as necessary
  • FDIC Insured
  • Signup bonuses

So, if you have any of the desires listed at the top of the article, and enjoy any of the features listed above, then an ING account may be for you.  If you would like to sign up, then you may want to act quickly.  By using one of the referral links below, you will get a $25 bonus if you make an initial deposit of at least $250.  That’s an instant 10% return on your money.  At the same time, I will get a $10 bonus as well for the referral.

These links work just once, so if you use one, let me know so I can remove it.  If a link doesn’t work, let me know and I will remove it.  If there are no more links, let me know and I will add more.  Contact me if you have questions or concerns.  Happy saving!

ING Referral Link 1

ING Referral Link 2

ING Referral Link 3

ING Referral Link 4

ING Referral Link 5


* The personal finance blogosphere seems to agree on this point.

07.20.2008
AT&T Tilt

Creative Commons License photo figure credit: galaygobi

In the time-is-money category, I have discovered that Google Reader works quite nicely on my mobile phone. After going away for 4 days in June, I found that I was very far behind on my RSS feeds from other blogs. I tried the reader on my phone and sure enough it works great.  Now when I’m taking the dogs out, waiting in line, waiting for this or that, I can fire up Google Reader Mobile and catch up on my feeds.

With that in mind, you may notice that I have installed a few new plug-ins here at Don’t Feed the Alligators.

  • The first new plug-in is one that renders the blog into a format suitable for mobile devices.  This plug-in should even automatically detect that you are using a mobile device and render the articles appropriately.
  • I have also added a “Related Links” section to the bottom of each article so that if you like what you read, you can see what else I have written that’s similar.
  • Lastly, I have added a plug-in that prevents links that I put into my articles that point to other articles that I have written from creating trackbacks.  This has mostly an administrative use, but prevents it from looking like my blog has lots of comments when mostly it has very few (hint, hint…).

Here’s a sampling of some of the other articles and conversations that I have enjoyed over the last couple of weeks:

  • Nickel exposes the safest online banks.  Clearly this list is not all inclusive since the bank we use, EverBank, is not in this list, but is an online bank and scores a solid 3.  But the point here is to make your way over to Bankrate.com (again…) and check out the rating for your bank.  This was how I found out that my former bank, NetBank, was about to fail.
  • Nickel also makes an excellent point about making sure to keep up with maintenance items before they end up costing you even more.
  • Jeremy writes about the fears that many investors have when the market goes into a slump.  He cautions about keeping things in perspective and making sure that you don’t miss the inevitable upswing.  I personally like to watch the growth in the number of shares that I own, rather than their worth, because the worth of a stock only matters when you sell it.
  • JD has a great article on the difference between a career and a job.  I bounced through a string of seemingly disconnected “jobs” early in my “career” and then hit on my current job which relies a great deal on the skills that I acquired collectively at each of those disconnected jobs.
  • JD also writes about the reasons to invest in index funds.  This is not an uncommon topic in Personal Finance Blog circles, but certainly bears repeating again.
"Some people complain that an index fund dooms you to mediocre
investment returns. “Absolutely not,” Bernstein replies. “It virtually
guarantees you superior performance. Over the typical ten-year period,
most money managers would kill for index-matching returns.”"
  • Lastly, Madison posts her reply to a request from a friend to figure out how to get out of debt.  See the top 7 answers from her readers here.

Hope you had a nice weekend!

06.26.2008
The Main Monkey Business

The Main Monkey Business

Creative Commons License photo figure credit: ezola

Last week ScrapperMom and I received our “Economic Stimulus Package” via Direct Deposit. Since there are the two of us plus one dependent, our package totaled $1500. For now, this money will sit in our high interest savings account. With all of the bad economic news lately, we feel a bit more secure with more of a buffer — just in case. (I would like to thank our children and grand-children for giving us this money — you guys really shouldn’t have — really)

If you haven’t received your stimulus check or deposit yet, you can check the schedule at the Economic Stimulus Payments Information Center at the IRS website.

Even though we will be squirreling away our refund for the time being, that doesn’t mean that we won’t still be able to take advantage of some really great additional incentives offered by a number of retailers, including grocery stores. A number of stores have made the offer to increase your stimulus check by 10% if you use it to shop at those stores.

Here’s a list of stores participating:

Each of these stores has a different policy on the increment value of your check that you can redeem, but they all offer to stretch your check an additional 10%. Now I certainly don’t encourage you to spend at these stores just to get the extra 10%, but if you were going to shop there anyway, or needed something that one of these stores offers, then by all means, stretch away.

If, like us, you received your stimulus payment by Direct Deposit, you may still be able to receive the 10% by showing proof of your receipt of the stimulus in the form of a bank statement. This article from the Boston Globe states explicitly that Shaws will allow you to redeem your 10% in this way.

In our case, we will be getting triple credit by using the Stimulus like this:

  1. Purchase $1320 worth of gift cards from Shaws (which is where ScrapperMom typically does our grocery shopping) for a cost of $1200.
  2. Use our Chase Freedom card, which offers 3% cash back on grocery purchases to buy the gift card, to reduce the cost of the gift card to $1164.
  3. Keep the $1500 Stimulus in our high interest savings account until September when our credit card bill for the year is due (point 2 in this article).

And actually, since we would be spending money at Shaw’s anyway, the final payment for the gift cards will come out of the grocery line item for our spending plan (aka budget) for the next 3-4 months anyway, allowing the Stimulus to continue sitting in our high interest savings account, earning away.

Here are some other ideas for what to do with your Stimulus:

  • Start or augment your emergency fund
  • Pay down high interest debt like credit cards or car loans
  • Fund your Roth IRA
  • Pay down low interest debt like student loans
  • Fund your kids’ 529 college savings plan
  • Donate it to your favorite charity or cause

Have you received your stimulus check yet? How did or do you plan to spend it? Let’s hear it in the comments section!

If you liked this article, you may be interested in seeing some related articles:


06.14.2008
Skydiving

Creative Commons License photo figure credit: ctsnow

  • Yesterday I was chatting with one of my company’s summer interns about his plans for the weekend. He told me that he was going skydiving. Wow! I thought, that’s awesome. I’ve always wanted to go skydiving, but never got around to it before I got married and became a parent. I explained to the intern that the second thought that went through my head after “Wow” was “life insurance policy.” I have a sizable life insurance policy in place already, but I’ve been meaning to read up on the fine points of it to figure out exactly what coverage I have. I find that I have many insurance policies, but don’t know what insurance I actually have. You always hear horror stories about people having insurance, but not being covered for some bizarre sequence of events. So back to the top of my to do list goes: Read and understand current insurance policies.
  • A short phone call this week earned me about $150. I have been engaged in a kind of progressive credit card arbitrage. We got a cash back rewards credit card last summer that came with a high limit and a 0% APR on purchases for a year. We’ve been making minimum payments to the card while stashing the rest of the full payment in a high interest savings account. I had written in my credit card notes that the 0% offer expires in July. I called the credit card issuer to ask specifically when the offer expires. The answer is that the offer is good until the END of my August billing cycle, which means that I don’t have to settle up until the middle of September. I estimate that I should be able to earn about $150 dollars in extra interest on the money that is sitting in my Vanguard Money Market fund.
  • We finally received our tax refund this week, which isn’t bad considering that we didn’t file until about 3 weeks ago. It took longer than expected to file this year due to some Traditional to Roth IRA conversions that we ended up being ineligible to make. So it took a while to figure out how to undo the conversion and then how to record that on the tax return.
  • In case you’re wondering: this tax refund will be used to bolster our emergency funds which currently total $10,233. This is far short of 6 months worth of expenses, but we’re getting there.

Some articles that I enjoyed over the last two weeks:

  • Gather Little By Little investigates the fine art of hypermiling — eking every possible mile out of a gallon of fuel for your car. We have been de facto hypermilers since 2001 when we purchased a diesel car that easily gets 45 miles per gallon. However, I have been independently implementing some of the suggestions that also appear in GLBL’s article and anecdotally seem to have improved city mileage to previously unheard of heights. I won’t know for sure until the next fillup, which may still be weeks away.
  • The Boston Globe reports that People in Debt Feel Literal Pain. Wow! Debt troubles are pervasive! The lesson here: If you want to improve your health, get out of debt.
  • Gametheorist writes about his children’s entrepreneurial teamwork in selling candy bars for their sports club fundraiser. What fascinated me about this was the posturing of the pricing in order to induce people to buy more. What further fascinated me is that it worked so well!
  • Lastly, PaidTwice had another rough week in homeownership. Her week went from dreams about a more luxurious bath experience to a shorted circuit breaker to a major, necessary home repair. Isn’t it nearly always the case that just when we start to feel secure, comfortable, and in control of our lives Mr. Murphy comes knocking? This happens to me at work, with our finances, around the neighborhood, on the highway, etc. The best guard against Mr. Murphy is a healthy emergency fund, both in literal and figurative senses. Always try to foresee alternative outcomes and plan around them or hedge against them. We can’t foresee or prepare for everything, but a little planning can go a long way — see Point 1 at the top of this entry.
Coin Stacks

Creative Commons License photo figure credit: PPDIGITAL

Next month ScrapperMom and I will have both maxed out our Roth IRAs for the year. Since this is currently the only tax advantaged vehicle available to us, for us to continue to save will require a new strategy of some kind. Our prior experience with saving in taxable accounts has been in high interest savings accounts. We have never purchased stocks or mutual funds outside of a retirement account.

We have a number of medium term plans, including purchasing a new home, paying cash for a new (to us) car, buying more investment properties, etc. Some of these, like the new home and car, are expected to take place in approximately five years. This leads me to start wondering again what kinds of investments make sense for parking the money which we will begin to save in 2 months.

One idea that has crossed my mind a number of times is that of using Target Retirement Funds. Target Retirement Funds are a relatively new concept that has gained ground quickly in recent years. Generally TRFs are funds of stocks, bonds, and/or other funds that are balanced by the fund manager to be appropriate for someone who plans to retire close to the year in the name of the fund. For example, the Vanguard Target Retirement Fund 2010 has an appropriate mix of stocks and bonds for someone who is just about to retire and needs to shift from growth to a more steady income with preservation of capital. The nice thing about these funds is that they automatically adjust over time so that someone who owns shares of one of these funds does not have to rebalance her portfolio periodically. The funds also continue to adjust as the date of retirement passes by, so they continually become more and more conservative.

The Vanguard 2010 Target Retirement Fund (VTENX) is currently composed as follows:

Top 10 Holdings

Security Net Assets
Vanguard Total Stock Mkt Idx 44.08%
Vanguard Total Bond Market Index 40.28%
Vanguard European Stock Index 6.18%
Vanguard Inflation-Protected Secs 4.43%
Vanguard Pacific Stock Index 2.69%
Vanguard Emerging Mkts Stock Idx 2.27%
Vanguard Total Stock Market ETF 0.05%

Typical TRFs have some interesting characteristics. They are passively managed, meaning that the funds or the contents seek to match some index, and are only adjusted periodically by a manager to track the index. The balance in the fund is only adjusted periodically to be appropriate for the date of retirement. Because of this, the management fees or expense ratios tend to be low. They also tend to be tax efficient since there isn’t a lot of trading so the realized gains are low. They are now available at most major brokerages. As Kevin at No Debt Plan shows, one huge advantage of a TRF is that the barrier to entry into the fund is substantially lower than inventing in each of the funds in the fund individually.

Why am I considering a “retirement” fund for medium term savings? Well, that’s what I’m trying to figure out also. If a 2010 TRF is a smart move for someone at or near retirement who needs to try to continue to earn enough to keep pace with inflation but can’t afford to lose any money, then why wouldn’t this also be ideal as a medium term savings vehicle?

Let’s look at the pros and cons:

Pros:

  • Low cost barrier to entry; if I wanted to create a well rounded portfolio for this savings goal it would take nearly over $15,000 just to get started.
  • More upside potential than a cash account like a CD or Money Market account
  • Easy to manage
  • Tax efficient

Cons:

  • No guarantee on return
  • No guarantee on capital; more downside potential than a cash account
  • Periodic fees in the form of expense ratios
  • Lack of “peer review” in concept

I’m the type of person who is generally willing to take on a bit more risk than many. While this investment is not without risk, the risks are generally low, as the fund is well diversified across several different investment classes, many different investments within those classes, and through global investment exposure. I’d like to see some real estate investment trusts in the mix, but I think this is probably as good as it’s going to get for now.

So what do you think? Am I crazy or brilliant? Is this a good strategy for a medium term (5-10 year) savings plan, or is it too risky for such a short term? Should I go for the 2010 or 2015 plan? What do you think about using the 2020 or 2025 TRF for longer term goals?