Archives for February 2011

Low Cost Stock Broker Alternatives 2011

If you’re thinking about switching online stock brokers, perhaps due to a price increase, here are some low-cost options. To avoid the common $50 to $75 ACAT transfer-out fee for moving your entire portfolio somewhere else, you can sell all your positions, transfer out the cash, and then have them close the account. You may be subject to capital gains taxes. Otherwise, look for a broker that will cover your transfer-out fee.

Still want free trades? WellsTrade still offers 100 free trades per year with assets of at least $25,000. They may be feeling squeezed as well, but with the ability to cross-sell with other Wells Fargo products like checking accounts and credit cards, they are probably still making money. Bank of America also offers free trades, but with a $25,000 cash balance only.

If you’re looking to build a low-cost, index fund portfolio, I would recommend opening a Vanguard Brokerage Services account with their unlimited free trades for all Vangaurd ETFs. Indeed, many other brokers offer some sort of free trades on a limited list of ETFs including Fidelity, Schwab, and TD Ameritrade. I personally like the selection at Vanguard the best.

If you want to trade individual stocks, the rock-bottom low-cost broker appears to be Just2Trade at $2.50 a trade. They never seem to do any promotions.

I also have an account with OptionsHouse at $3.95 a trade which uses the same Penson clearing firm. A FW member TheHimalayas posted that they were allowed to switch over to OptionsHouse with no ACAT fees because of this, but I haven’t verified this myself. I am happy with my OptionsHouse account, and the fact that they grandfathered us existing members at $2.95 a trade doesn’t hurt.

OptionsHouse also has a bunch of promos going on. If you open a new account with at least $3,000 and use the code FREE100, you’ll get 100 commission-free trades for stock or option trades executed within 60 days of funding the new account. Alternatively, you can get up to $100 in ACAT fees rebated to you when you transfer your account with a minimum value of $3,000 with the promo code ACAT100REFUND. They also have a 100 free trades + $125 in transfer fee rebates offer for IRAs with the promotion code IRAFREE.

Finally, another solid option at the $4.95 price point is TradeKing. TradeKing will credit your account transfer fees up to $150 charged by another brokerage firm when completing an account transfer for $2,500 or more when you send them a copy of your account statement with proof of the transfer charge.

Zecco Trading Ends Free Trade Offer, Now $4.95 Per Trade

Discount brokerage Zecco Trading announced this weekend that effectively immediately, they will no longer offer 10 free trades per month for those with assets of $25,000 and over. Here is partial text from the e-mail:

Starting on March 30, 2011, our new commission rates will be:

* Equity trades: $4.95 per trade*
* Options trades: $4.95 per trade, plus $0.65 per contract

With this change we are no longer offering 10 free trades per month. As before, there are no minimum balance requirements or inactivity fees to open or maintain a Zecco Trading account.

The change is effective immediately for all new customers who have not fully opened their account.

Thus ends the final chapter of their “free trades” motto. Let’s not forget that Zecco stood for Zero Cost Commissions. Starting out in 2006, we got 40 trades per month for a balance of $1,000 or $2,500 (I forget). Then that was lowered to 10 free trades per month to balances of $2,500+. Then it was 10 free/mo for balances of $25,000+. I had a lot of hope for the business model behind the free trade community vision of Zecco, and it’s sad to see it end.

But here’s the harsh reality. If you’re going to offer free trades, you’re gonna have to make the money up elsewhere. Historically, a huge source of revenue for discount brokers has been earning interest on idle cash balances. With interest rates being so low, this source of income has dried up. Trading volume is down, so there are less people exceeding the 10 per month limit and paying up for additional trades.

2011 TradeKing New Account Referral: $100 Bonus

Online broker has brought back their $100 sign-up bonus for new accounts. If you get a referral from an existing account holder, open a new account with at least $1,000, and make a trade, both people will get $100.

TradeKing offers $4.95 trades (market & limit) with no minimum balance requirement. I’ve had an account for years now, and they’ve gotten the job done without issues. They were recently rated #1 in customer service by SmartMoney magazine in 2010. The details:

  • New customer must fund new non-IRA account with a minimum of $1,000 within 30 days of new account opening.
  • Must execute one trade in the new account within 180 days of new account opening.
  • The minimum funds of $1,000 must remain in the account (minus any trading losses) for a minimum of 180 days of new account opening or the credit may be surrendered.

If you’d like a referral just contact me, and I’ll be happy to send you one. I only need your e-mail address. There is no promotion code, but you’ll need to click on the specific link in the e-mail for tracking purposes. Offer expires March 31st, 2011. Update: Alive again from 9/1 to 9/30/11.

Also, if you want to move your stocks over from another broker… If you transfer an account of $2,500 value or greater over to TradeKing, they will also refund up to $150 in account transfer fees charged by your old broker.

$1 for Three DVD Rentals from Redbox (Again)

Groupon has a national deal through the end of March 1st that will get you three one-day rentals at RedBox kiosks for $1. Retail is $1 per day, so $3. If you don’t have a Groupon account already, please use my sign-up link, and I’ll get some Groupon credit for referring you. Then visit the deal link. Not valid on Blu-ray or video games.

Expires Jun 1, 2011. Limit 1 per person, may buy 2 additional as gifts. May redeem across up to 3 visits. Tax included.

If you’ve never used Redbox before, first-time users that register for a new account on their website also get a code for a free rental after their first paid rental. The unofficial site InsideRedbox is a good source for ongoing free coupon codes. Here is a kiosk locator.

No Fee 0% APR Balance Transfer For 12 Months – Discover Card – Expires 2/28!

A reminder that this offer is scheduled to end on February 28th, 2011.

The Discover More Card is available with no balance transfer fee through this online offer link, offering both 0% intro APR on balance transfers and purchases for 12 months.

The fact that this card has no balance transfer fee is significant, as other recent offers have had fees of 3% or higher (although they are also up to 24 months). You can literally borrow money for free and pay it back in 12 months (keeping in mind you’ll still need to satisfy the minimum payment each month until then).

When you see the application, be sure to scroll down to the Terms & Conditions and verify that you are getting 0% for 12 months and no balance transfer fee. You should see the following text at the top under “Interest Rates and Interest Charges”:

APR for Balance Transfers: 0.00% introductory APR for 12 months after the first transaction posts to your account under this offer.

And then the following a bit lower under “Fees”:

Transaction Fees * Balance Transfer – 0% of the amount of each transfer made under this offer and with this application; otherwise, either $10 or 5% of the amount of each transfer, whichever is greater.

Application Quick Tips
In order to get the highest credit limit possible, be sure to maximize your reported “household income” as much as you can legitimately by including everything like the income of everyone living with you, alimony, child support, interest income, dividend income, etc.

If you wish to get cash from this balance transfer offer without it being classified as a “cash advance”, one trick is to request money to be transferred to other non-Discover credit cards that you have. This will create a negative balance, after which you request a refund check be sent to you. Citibank and American Express are recommended for this because they have automatic features on their websites to request a credit balance refund.

Finally, it is important to note that Discover has a new policy that you can only have one open Discover card at any time. If you want this 0% for 12 months with no balance transfer fee and you already have a Discover card, you must cancel that card first, and then come back and apply for this new card. You can’t convert your current Discover and still get this promotion. That will avoid any problems.

Dilbert and Bogart On “F#(& You” Money

Trying to think of a good name for your retirement fund? Here’s a funny Dilbert comic about a colorful option:


In fact, the origins of the term “F— You Money” can be traced to actor Humphrey Bogart. The following quote is attributed to him:

The only good reason to have money is this: so that you can tell any SOB in the world to go to hell.

There is also this story from some biographical accounts of his early years:

Long before he was Hollywood’s most famous tough guy, Bogart began his acting career on the stage. After serving in the United States Navy during WWI, he got his start playing a handful of very juvenile roles in drawing-room and country-house comedies. In 1920, he scored a leading roll in the comedy “Cradle Snatchers” and received a bevy of positive notices. It was during this time that he was said to have kept $100 dollars in his dresser drawer at all times, calling it his “F” you money. Instead of taking a part he didn’t want, he could just say “F” you.

I looked it up and $100 in 1920 was about $1,000 in today’s dollars.

I like Bogart’s definition better. He basically says “I’ve now got the financial independence to be picky in how I spend my time.” You don’t need a million bucks. Even a smaller sum of money tucked away can make a big difference in your mood and outlook on life. The first $25,000 I saved up freed me up to pursue my real passions and make the next $250,000.

Hotel Bidding Tools For and Travel

I’m working on planning our next travel adventure, and discovered a few new sites to help people navigate “opaque” hotel price engines and In my 5-Step Guide to Finding The Lowest Rate For Hotel Rooms, I outlined the benefits of using database sites like BiddingForTravel and BetterBidding to gather information from successful purchasers to remove some of the mystery. Hopefully, these will help you even further.

With Hotwire, you know the price, but not the actual name of the hotel before you commit. A while back, I pointed out the ability to figure out the hidden hotels behind the price on Hotwire primarily using the number of reviews shown. Shortly afterward, they removed that description. The job became harder, but BidGoggles attempts to use all the smaller clues given to you in order to do the same thing again. Here’s how it works.

You provide them with the following: Star rating, Country, State, City, and Subarea (Neighborhood). Then you match up the little logos that show you what amenities the hotel offers, such as a fitness room, swimming pool, or free breakfast. The results have been hit or miss with me, although I found that it helps if you omit a few amenities if you get no matches. Hopefully their database gets better with time, although the site seems to have slowed down development.

The Bidding Traveler
With the ‘Name Your Own Price’ feature of Priceline, you have to bid auction-style for the price of a room, in addition to only knowing the general neighborhood and star-rating of the hotel. So you have to decide how much to bid on any given hotel quality level, as well as having to deal with the rules of how you can bid again if you’re initial offer is rejected.

TheBiddingTraveler has you choose your hotel’s neighborhood (“zones”) along with the highest quality star-rating you want, and then provides you with some guidance as to what your starting bid and your final offer (the absolute highest price you’d be willing to pay). Recently rejected and accepted bids are provided, along with actual hotel names. Finally, the website actually walks you through the “optimal” bidding strategy, step-by-step.

The main downside I noticed was that some of the accepted bids are sparse for some cities and can be a bit old, so again the quality of the database is very important. Happy travels!

Added: You can save another 2% or more with cashback sites like eBates ($5 new customer bonus), Mr. Rebates ($5 bonus), and BigCrumbs.

Application Tips For Individual Health Insurance

In a NY Times Op-Ed piece entitled Money Won’t Buy You Health Insurance, Donna Dubinsky shares her troubles with getting individual health insurance coverage, even though she has many millions from co-founding Palm. Based on this article, here are some ways to improve your chances of getting coverage.

  1. Use an independent insurance broker. By going with an experienced broker that represents several companies instead of a sales agent employed by one single company, you have a better chance of finding a policy that best fits your needs.
  2. Apply simultaneously to many different companies. Insurers always ask “Have you ever been denied health insurance?”, and you don’t want to have to answer yes. By applying to many at the same time, you won’t have to. Besides, different insurers can also have very different underwriting criteria.
  3. Instead of applying as a family, apply to each company as individuals. One insurer might have a problem with one person in your family, and then reject everyone as a result. Dubinsky eventually found coverage for everyone in her family by going this route.
  4. Be smart when filling out your medical history. You don’t want to leave anything important out, because that can invalidate your coverage later on. The insurer will be requesting a copy of your medical records. However, on your end it’s best to provide only exactly what is required with short, direct answers.
  5. Find a way to join a group plan indirectly. The most obvious is trying to add yourself to a spouse’s group plan. Alternatively, look for potential professional groups and organizations to join in order to qualify for group health insurance plans. In some states, as long as you have a business with at least two total employees (including yourself), you qualify for a group health plan. Consider hiring an employee or even another family member part-time to qualify.

A good resource for learning about the specific health insurance rules for your state is Look under “Health Insurance & Managed Care”. Finally, I absolutely agree with the final words of her article:

The new health care reform legislation is not perfect. Nothing that complex could be. But I have no doubt that the system is broken and reform is absolutely essential. If we are not going to have universal coverage but are going to rely on employer plans, then we must offer individuals, self-employed people and small businesses a place to purchase insurance at a reasonable price.

If members of Congress feel so strongly about undoing this important legislation, perhaps we should stop providing them with health insurance. Let’s credit their pay for the amount that has been paid by the taxpayers, and let them try to buy health insurance in the individual market. My bet is that they all would be denied. Health insurance reform might suddenly not seem to them like such a bad idea.


Stable Value Fund 2011 Interest Rate Announced

If you have a 401(k), 403(b), or similar retirement plan, you may have an investment option called a stable value fund. Sometimes it goes by a different name like Guaranteed Pooled Fund, but they are always marked as a conservative investment. The pitch is basically the higher interest rate of longer-term bonds, with the relatively liquidity and stable principal value of a money market fund. I explored the risks and rewards of stable value funds before and currently hold them as part of my bond allocation.

My specific stable value fund is run by Transamerica Financial Life Insurance Company (TFLIC) and offered an interest rate of 3.5% for all of 2010, which was much higher interest than any other similar bond investment was going to pay me. Then they told me that until February 28th, 2011, the interest rate would be 3.0%. Finally, I just received a letter that told me that the interest rate from March 1st to December 31st, 2011 would be lowered to 1.8%.

So, should I stay or should I go? Interest rates continued to drop in 2010, so I did expect them to lower their rate.

Online savings accounts like Capital One Consumer Bank are paying around a low 0.75% APY, and I have no access to something like that in my 401k. They recently announced a self-directed option through Schwab, although I need to find more details about how much transaction costs would be. The Vanguard Short-Term Treasury Fund (VFISX) is currently yielding only 0.66%. Taking a look at current Treasury yields shows the 2-year at 0.78% and the 5-year at 2.30%.

So the interest rate itself is still pretty competitive relative to other “safe’ investment options. My other bond alternative inside the account is the huge PIMCO Total Return fund (PTTRX) with a 3.12% yield and 4.8 year duration, which did pretty well for me when I had it but I worry about asset bloat with $240 billion is assets, manager risk, and interest rate risk.

In the absence of any significantly better options, it looks like I’m staying put.

Prosper P2P Lending 1% Cashback + Potential Market Inefficiency

I kinda missed the boat last Thursday 2/17 because peer-to-peer lending site had a promotion going on for borrowers that stated that they would make a entire month’s loan payment for you. A quote from their e-mail:

It’s our fifth birthday, and to celebrate we have a special gift just for you! If you apply for a loan and submit a listing on our site today, February 17th, we will make your second loan payment (up to $300)*!

Astute borrowers realized that they could simply take out a loan and pay it back after 2-3 months since there was no pre-payment penalty. After all loan initiation and other fees, the borrower could still net a little over a hundred bucks. Not bad for “borrowing” money!

However, this also meant that somebody had to fund their loans. I’m sure some potential investors found it weird that Prosper suddenly had a lot of AA-rated loans from folks with very good credit and peculiar descriptions like “I really don’t need this money for anything, and intend to pay this loan off in 3 months.” 🙂 The requested loan amounts will also be very close to $3,500, the ideal amount for profit maximization.

To top it off, I just got this e-mail from Prosper regarding getting 1% cash back on any bids placed on Monday, February 21, 2011. Here’s the e-mail text. No special link or promo code was given, so I can only assume it is open to all.

This offer is as straight-forward as they come: invest in any listing on the site today, and you’ll earn 1.0% cash back*! With a cash back offer and returns averaging 10.1%**, why wait?

* The promotional period begins at 12:01 AM PT and ends at 11:59 PM PT on Monday, February 21, 2011. 1.0% cash back will be paid on all bids placed during the promotional period that ultimately become funded loans. Cash bonus will be deposited to your Prosper account by March 31, 2011.

Update: Promotion extended to end of 2/23:

* The promotional period began at 12:01 AM PT on Monday, February 21, and will end at 11:59 PM PT on Wednesday, February 23, 2011. 1.00% cash back will be paid on all bids placed during the promotional period that ultimately become funded loans. Cash bonus will be deposited to your Prosper account by March 31, 2011.

Now, if you could technically find and fund several of these high-quality borrowers who have an incentive to pay off their loan in 3 months, you could have an investment that would return around 1% in interest + 1% cash back over a period of just around 3 months. That’s a lot better than a savings account.

I know that some of you readers got in on this. If you’re still looking to get funded, share your loan listing below using your usual commenter e-mail. This is not risk-free as you are still lending money to strangers, but if you’re an AA borrower on Prosper who initiated a loan listing on 1/17th or shows as early on 1/18th for ~$3,500, then I am more willing to take the risk. I am relatively comfortable with P2P lending with certain criteria, and already have over a few thousand dollars in highly-rated loans on LendingClub.

$2 for Five Movie Rentals from Blockbuster Express – Groupon

Groupon has a national deal this weekend that will get you five one-day rentals at Blockbuster Express kiosks for $2. The regular cost would have been $5. I don’t really get the limitation of one per person when you can buy seemingly unlimited as “gifts”.

Note: You can only use one free code per transaction. In order to use all five promo codes you must rent (and check-out) five separate times. I tend to use these Blockbuster kiosks more than Redbox ones simply because they are at Safeway grocery stores, but the idea is basically the same. You can return to any Blockbuster kiosk, not just the one you rented from.

If you are one of the six folks out there that doesn’t have a Groupon account already ;), please use my sign-up link, and I’ll get some Groupon credit for referring you. Then visit the deal link.

Valid through May 1, 2013. Limit 1/person, may buy more as gifts. Valid only at any Blockbuster Express kiosks and for online reservation for pickup at kiosks. Not valid on Blu-ray or Hot List titles. Groupon value reduces by $3 after 5/1/2013, except where prohibited by law.

The Joys of Making Your Own Popcorn

I try to keep my life simple, but don’t see myself as a serious frugal person. I don’t make my own soap, and I eat out a lot. But one thing I recently fell in love with was making my own popcorn. It sounds so obvious, but it never really sunk in that I could make a huge bowl of kettle corn in 5 minutes and $0.50 in materials. To think, I was buying the stuff from the local farmer’s market for five bucks a bag!

Basic Directions

Heat 1-3 tablespoons of any cooking oil on medium high to high and add a single kernel of popcorn in a large, heavy covered pan. I use a wok-shaped stir-fry pan like this one. After you hear the first kernel pop (the oil is now hot enough), pour in 1/3 to 1/2 cup of popcorn (or enough to cover bottom of pan, no more than 1 kernel deep); re-cover. Shake constantly until all kernels are popped.

Plain Popcorn Tips
Adding salt is classic, but fine salt like popcorn or pickling salt sticks the best. Seasoned salt works too. For a gourmet taste and impressing folks, get some truffle salt. Delicious! I sometimes spray some Pam to have it adhere even better.

I’m not a huge fan, so have never made buttered popcorn. I’m sure you could just melt some butter and pour it over. I’ve also seen special popcorn oil with “butter flavor”, whatever that is. There’s also butter-flavored sprays and popcorn toppers.

Cheese Popcorn
I like these Kernel’s Seasons line of popcorn toppings. White cheddar and nacho cheddar are good. They are really fine so you don’t need to use much, and they are low in calories (6 cal per 1/2 tsp, which is how much I use at once).

Kettle Corn
For every 1/2 cup of popcorn, add in 1/4 cup of plain white granulated sugar. The sugar will dissolve, and after adding some salt you’ll end up with the great salty-sweet taste of kettle corn! Did you know that most microwave versions of “kettle corn” don’t use real sugar because it burns?

Caramel Corn
Instead of plain white sugar above, use brown sugar. The molasses will make it taste amazingly like caramel corn. It takes some practice not to burn the sugar by tweaking the heat level. If you love the “Chicago mix” flavor combination like me, now you can make it yourself by making this and a batch of cheddar cheese popcorn.

Cost Breakdown

First are the retail prices in my area, per A 30 oz. bottle of unpopped Orville Orville Redenbacher costs $7. A 3-pack of 3.3 oz (10 oz. total) microwave popcorn bags of the same brand costs $3.50. This means each microwave bag and costs $1.16, while the same amount (~5 tbsp) of plain kernels costs $0.56. Adding oil and sugar is another ~5 cents. If you went out and bought bulk popcorn you can get it for $1 per pound, making each serving about 15 cents.

Honestly, I can’t imagine going back to using the microwave, besides the ability to make it at an office or dorm room. I actually burn popcorn less when cooking it manually. Pre-packaged microwave popcorn also comes with preservatives, usually TBHQ. GetRichSlowly offers some tips on DIY microwave popcorn, but I say just use a pan. I do like the idea of not using any oil with a hot air popper, but that’s just one more kitchen appliance I don’t want to deal with.

All I can say is, if you like popcorn, try it!