Friday, April 14, 2017

How Much Do You Invest?

A question that people often ask is "How much should you invest in a particular stock?" My short answer is a lot.

During a lunchtime conversation with a co-worker, he announced that he was buying 100 shares in company that makes jeans that happen to be popular with his daughter and her friends. In my mind, that is not investing; that is what some people call "playing in the stock market". And I would never do that. True stock investing requires far more fundamental research.

When deciding on how much to invest, you should push yourself to the edge of your comfort zone. The actual dollar amount depends on how big your portfolio is, and how much trading experience you have. What is comfortable for one person might be a stretch for others. But, by pushing toward the end of their comfort zone, investors are forcing themselves to more thoroughly consider their investment.


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.

Friday, March 3, 2017

Discover Card Q2 2017 Cashback Bonus Categories

Discover Card offers a 5% cashback bonus on a "seasonally rotating" list of spending categories. They just announced their categories for Q2 2017. Currently, these bonus categories are as follows:

Discover Card
  • 5% cash back 1/1/17 - 3/31/17: Gas Stations, Ground Transportation, and Wholesale Clubs
  • 5% cash back 4/1/17 - 6/30/17: Home Improvement Stores, and Wholesale Clubs
  • up to 1% on everything else.

I find it curious that Discover is offering a 5% bonus on purchases from Wholesale Clubs. The only such club that I'm a member of is Costco, and they do not accept Discover as payment. Does anybody know of a Wholesale Club that accepts Discover?


Tuesday, February 14, 2017

Surviving the Paycheck to Paycheck Lifestyle

Whether you live alone or have a family, living paycheck to paycheck doesn't give you any room for unexpected events. If your car needs a major repair or your child needs medical attention it can become difficult, if not impossible to get back on track. The good news is that there are many ways you can supplement your income and recover your losses in short order.

Organize a yard sale
In your time of need, there are clever ways to come up with a few hundred dollars to cover most if not all of your immediate emergency. For one, you can have a yard sale. If it's been a few years since you've cleaned out the basement, attic or garage, chances are pretty good that you have many items that you don't need. Furniture, clothing, tools and silverware are big sellers at yard sales. Doing this you get the added bonus of finally giving your home a thorough cleaning. If you collect coins, stamps, comic books or dolls, there are many private and professional retailers that will pay big for these items. Check online to see if there's a shop in your area.

Borrow money short term
I know the last thing you need is to owe more money, but in some instances, you can't avoid it. If you have a family member or friend who is able and willing you can take out a loan with them for a few months interest-free. If, however, this is not an option available to you, you could choose from any number of installment loans online. Maxlend Loans provides personal cash loans and installment loans in amounts up to $1250 as an alternative option to payday lending. Key benefits include minimal eligibility requirements, fast funding and flexible repayment. Qualified applicants must have a social security number, an active checking account, and a verifiable source of income. This will give you an easy way to borrow the funds and allow you to pay small payments over the course of 6 to 12 months.

Review your budget
As you move forward it's important to get on track so that you don't let yourself fall into this type situation again. Some people have a budget but rarely stick to it. If this sounds like you, you are not alone. A budget is only effective when you follow it. Once you change out this and push that back you eventually run out of wiggle room on your monthly bills and then you're in the mess known as the paycheck to paycheck cycle. It's important to take a look at your bills and come up with a strategy to reduce your income to debt ratio as fast as possible. If your bills are less than your income, ending the paycheck to paycheck cycle can happen rather quickly by prioritizing your bills. For example, if you have credit cards, pay the smallest one off first and then move to the next one with the lowest balance.

Live frugal

One of the fastest ways to acquire money on a shoe-string budget is to learn to live frugally. This doesn't mean you have to make your own detergent, but it is possible. No, what it means is you give up some of your habits that cost more than you think. If you pass up on the morning hot latte, your afternoon lunch with the exception of Fridays and dine in most of the month, those few items can add up to hundreds per month. The best part of learning to live frugally is that you're not sacrificing your quality of life you're simply learning how to make every penny matter.

Thursday, January 26, 2017

IRS e-file – When Will I Get My IRS Tax Refund (2017)?

If you are wondering when you can expect to receive your tax refund from the IRS, you are not alone. In past years, the IRS published a table where you could look up when your federal tax refund would be deposited in your bank account (by direct deposit), or when your check would be mailed. It seems that this document, Publication 2043, doesn't provide a table anymore. From previous years, the IRS reported that over 90% of refunds were issued in less than 21 days. The same results are expected in 2017.

You can also check the status of your income tax refund using this link. (And of course, en Español: ¿Dónde está mi reembolso?) You will need to enter your social security number, filing status, and refund amount to see your refund status.

I've heard some anecdotal stories about the IRS a long time to process refunds in the past. So I will be curious how the IRS does this time around.

If you haven't prepared your tax return yet, I encourage you to do so soon.


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Wednesday, December 28, 2016

Money Market Rates December 2016

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:

1.15% Popular Direct Savings*
1.05% GS (Goldman Sachs) Bank Online Savings
1.00% Ally Bank Online Savings
0.95% Discover Bank Online Savings
0.95% FNBO Direct Online Savings
0.90% American Express High Yield Savings
0.75% Capital One 360 Savings
0.20% Unify (Western) FCU Money Market
0.03% Citibank Savings Plus
0.03% Chase Plus Savings

In some cases, MMA interest rates are tiered. If this is the case, I usually report the interest rate at the $10,000 tier in these updates. Rates are believed to be accurate as of 12/26/16. 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. I have included one credit union in the list so that readers have a comparison point with banks.

*I recently added Popular Direct which is from Banco Popular North America. I don't know much about this bank, but will note that they have a $5000 minimum to open an account, and will charge $4 each month if the account balance is less than $500. If anybody has experience with this bank, I would like to hear from you.

Western Federal Credit Union has announced that they have changed their name to Unify Financial Credit Union. They said that all accounts and services are intended to remain the same after the name change. However, I did notice that they reduced their interest rate after the name change.

The frequent changes show how variable the money market is. Because this is a constantly moving target, it has been very hard to keep track of the rates that I've been getting in my various money market accounts, and this is the main reason I've decided to compile a list of these annual percentage yields.

So, that is the latest list of money market rates. Please let me know if you know of any higher interest rates.


Tuesday, November 29, 2016

Credit Card Bonuses Year-End 2016

Save money on purchases and get cash back with coupon codes and the following credit cards:

Citi Dividend Card
  • 5% cash back 10/1/16 - 12/31/16: Best Buy & Department Stores
  • 1% on everything else.
Discover Card
  • 5% cash back 10/1/16 - 12/31/16:, Department Stores, and Sam's Club
  • 5% cash back 1/1/17 - 3/31/17: Gas Stations, Ground Transportation, and Wholesale Clubs
  • up to 1% on everything else.
Barclaycard Arrival World MasterCard (Travel Rewards)
  • 2.1% on travel and dining
  • 1.05% on everything else.
  • No annual fee.
BankAmericard Cash Rewards
  • 3% on gas
  • 2% at grocery stores
  • 2% at wholesale clubs (including Costco)
  • 1% on everything else.
  • No annual fee.
Costco Anywhere Visa Card
This card replaced the Costco TrueEarnings Card from American Express on June 20, 2016.
  • 4% on gas
  • 3% on restaurants and travel
  • 2% at Costco
  • 1% on everything else.
  • There is no annual fee, however you must be a Costco member.
Citi ThankYou Card
  • 2X points on Dining Out & Entertainment
  • 1X points on everything else.
Barclaycard Arrival Plus World MasterCard (Travel Rewards)
  • 2.1% on travel and dining
  • 2.1% on everything else.
  • ($89 annual fee after first year)

Saturday, October 1, 2016

The US Real Estate Market from 2008 to 2016

Ten years ago, the US real estate market began to fall after a long period of growth. Prices were falling for 31 months in a row. And in 2007, falling prices created mass panic on Wall Street, which dried out money markets and as a result, the banks started to cut lending, finally causing the crash in 2008.

Ten years after, most of US banks are reorganized to withstand a disaster like the one in 2008. They now have the basic capital of over $1.2 trillion, which is 2 times more than it was before the crisis. Restrictive policies of banks to loan approval have cut their profits, so they had to find other ways to satisfy the shareholders. They did it by cutting costs and increasing prices, so they returned profit to 10%. At this moment, the banking sector is well capitalized with low profit and with high discipline.

On the housing market, besides banks, exist other lenders which fulfill more than half of the demand for loans. Those participants are not so well capitalized as banks as they are small lenders that work with small profit. They are mostly nationalized and subject to administrative control.

US housing has the biggest asset in the world, worth $26 trillion, and almost half of that amount is in the debt zone, making highest concentration of risk to investors.

This debt has more implications on common people who are trying to buy their first house than on the investors. Situation now looks like this - about 70% of new mortgages are controlled by state institutions. Contrary to other countries, US housing system offers new buyers cheap 30 year mortgage loans which can be repaid early. This unique shielding system protects lenders and buyers.

After 2008 crisis structure of mortgage owners is changed, banks were partially withdrawn from the market and that left a hole for new independent companies like Quicken Loans and Freedom Mortgage, which play more conservative game without risky loans.

Besides that, the state has an important role since it took over majority of shares in Freddie Mac and Fannie Mae, mortgage companies which now work in a more conservative way.

No matter how this new ownership structure helped the US real estate market recover from crisis, it still has numerous flaws. Regulation of new mortgage originators trough government guarantee companies is too loose, and a second even bigger danger lies in the fact that mortgage bonds were transformed from risky to safe ones since they are state-run bonds.

Strict government policy caused drop in home ownership rates from 69% in 2008 to 63% in 2016 because the young don't have good wages to afford a new house. From 1990 to 2007, private sector recognized that and loosed the rules on what caused the increase in home ownership percentage. Now we can see the first signs of more relaxed system, but not in the measure it was. State granted us homogeneous mortgage bonds which are risk free and easy to trade in value of $200 billion each day, which might help a bit.

There a lot of concerns because government is a key player, but after witnessing previous mistakes in governing of mortgage loans by private sector, we could say - leave it as it is. For now, debt-income ratio below 10% as a long term average is not causing new concerns.