Archives for August 2016

Infographic: Income vs. Cost-of-Living For All 50 States

The NY Times has an article called What $100 Can Buy, State by State. You know I can’t resist a good 50-state infographic. The first chart is basically a cost-of-living comparison. The findings shouldn’t be too surprising.

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  • Stuff and services cost the most in District of Columbia, Hawaii, New York, New Jersey, California, and Maryland.
  • Stuff and services cost the least in Mississippi, Arkansas, Alabama, South Dakota, and Kentucky.

You would expect the states with higher cost-of-living to also have higher incomes. But the correlation isn’t always perfect. I found the second chart to be more interesting, as they adjusted for incomes. Some places had low-to-average income and high prices, while some states had average-to-high incomes and low prices.

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  • The states where per capita incomes have the most purchasing power were North Dakota, Connecticut, District of Columbia, Wyoming, Massachusetts, and Nebraska.
  • The states where per capita incomes have the least purchasing power were Utah, New Mexico, Arizona, Idaho, and Hawaii.

Ting Review: Bring Your Existing Phone, Referral Discount, Now Cheaper Data

tinglogTing provides mobile phone service with a “pay-only-for-what-you-use” and “bring your own phone” structure. I recently switched my parents over to Ting from Republic Wireless so that they could use our older iPhones (easier for them, easier for us to do tech support). Ting recently updated their pricing structure to include cheaper data, so I am updating my review.

Who can save money? Ting works best for overall moderate usage, especially spread across multiple users. Why pay for unlimited minutes and texts when you don’t need them? Why pay for 5 GB every month if you often use less? Sample rates:

  • $12.00 per line ($26 total) per month for 2 lines sharing 500 minutes, 100 texts, and no data. (This is the typical bill amount with my parents.)
  • $27.50 per line ($55 total) per month for 2 lines sharing 1,000 minutes, 1,000 texts, and 2 GB data.
  • $9.50 per line ($38 total) per month for 4 lines sharing 500 minutes, 1,000 texts, and no data.
  • $16.75 per line ($67 total) per month for 4 lines sharing 1,000 minutes, 1,000 texts, and 2 GB data.

Put your own numbers into the Ting interactive rate calculator to see if you can save money. Each line is a flat $6 and all lines share a bucket of either minutes, text, and data.

Here’s a screenshot of their NEW rate breakdown:

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Here’s a screenshot of their OLD rate breakdown. You can see that their data used to be much more expensive, working out to $19 for the first GB, $29 for 2GB, and then $15 per extra GB of data (billed pretty much down to the penny). As of 8/5/2016, the numbers are $16 for the first GB, $20 for 2 GB, and now $10 per extra GB of data (billed in $10 increments). The price drop applies to everyone and pretty much no matter what, the new data plan is cheaper than the old data plan.

Ting realized that they were being known as “good if you don’t use a lot of data”.

Ting uses both Sprint CDMA and T-Mobile GSM networks, so you can bring over any used Sprint phone, used T-Mobile phone, or any unlocked GSM phone. Use their Ting phone compatibility checker tool. If you bring your own GSM phone, you’ll need a SIM card. Prices change with time and promotions, but they currently cost $9 + free shipping via USPS Priority Mail.

Bring Your Own Phone. You can buy a refurbished iPhone 5 directly from Ting for about $200, but you can also buy a used iPhone 5 for about $109 from Swappa. A used Samsung Galaxy S4 from Ting costs about $180, but they are about $100 on Swappa.

Being able to bring over the same phone you’ve already been using is the best way to save money. We had an old Verizon iPhone 5, which is also GSM unlocked. We just bought a SIM card, popped it in, and starting using the service immediately.

Refer-a-friend discount. New Ting customers get a $25 credit with a referral link (that’s mine). Thanks in advance if you use it, you’ll be saving my parents some money on their next bill.

Bottom line. Ting’s strengths are transparent, metered monthly plans and a flexible bring-your-own-phone policy. They recently dropped their data prices. “Pay for what you use” means that you don’t need to pay for 3 GB tier every month if most months you only use 1 or 2 GB. The math works out best for shared plans. You can bring over any used Sprint, used T-Mobile, or unlocked GSM phone. Not everyone will save money, so use their rate calculator to compare your own situation.

Best Buy: 10% Off All Prepaid Phone Cards

bbprepaidBest Buy has a sale offering 10% off prepaid phone cards. The “top-up” options include Verizon Prepaid, T-Mobile Prepaid, AT&T GoPhone, Cricket, Net 10, Virgin Mobile, Boost Mobile, TracPhone, Simple Mobile, Locus, and H20.

Cricket Wireless (uses AT&T network) offers a $40 a month plan ($35 net after $5 AutoPay credit) with unlimited talk, unlimited text, and 2.5 GB of LTE data. The data speeds are throttled to 8 Mbps for LTE and 4 Mbps for 4G HSPA+, which is still pretty fast to me but is a way that they save money. With this promo, you can buy a $40 topup card for $36, theoretically taking your net outlay down to $31 a month.

If you want to buy a lot of cards, you can stack this with the previously-available AmEx Offer for $25 off $250 at Best Buy. California residents should note that Best Buy will charge the MTS surcharge (basically sales tax) on prepaid card purchases.

Pay Your Rent with Credit Card With No Fees With RadPad and Android Pay

Update: This offer was ended early, basically saying they had to break their word because they were faced with huge losses. Not a well-run promotion.

radpad0With a new promotion by RadPad and Android Pay, you can pay your rent with a credit card (Visa, Mastercard, American Express) and earn points/miles/cash rewards through the end of 2016. Your landlord will simply receive a check on your behalf from RadPad.

Android Pay requires an NFC-enabled Android device running KitKat 4.4+ and the Android Pay app. A partial list includes LG G4, LG G5, HTC One M9, HTC 10, Nexus 6P, Nexus 5X, Samsung Galaxy S6 and S7, and Moto X. Here is a 3rd-party list of NFC-enabled phones.

You must log into Pay with Radpad from an Android device or use the RadPad app, and then pay using Android Pay.

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If you have a compatible phone, this promo seems like an easy way to rack up some extra frequent flier miles or satisfy a bonus requirement. You can schedule payments ahead of time if you wish. The standard fee is otherwise 3.49% for credit cards and free for debit cards. (You can now search for an apartment, sign your lease using Docusign, and pay rent using your debit card for free, all through Radpad.)

Free Two-Month Pandora One Subscription

pandoraGroupon is offering a free 3-month subscription of Pandora Premium music streaming service, which usually costs $9.99 per month. This upgrade includes access to 40 million songs on-demand, removal of all ads, unlimited skips, offline listening, and individualized playlists.

With Pandora Premium, enjoy personalized radio with on-demand listening. Users can search and play any song or album. Create playlists and use the power of Pandora to help complete them. Save data by downloading the music you want offline, and enjoy all of your favorites with no ads and unlimited skips and replays.

The plan will automatically renew to $9.99 a month unless canceled. Thankfully, you can choose to cancel now (or at any time) and your service will keep working until the end of the three months. Not valid for current customers. While supplies last, over 10,000 taken already.

Google Photos: Unlimited Free Photo and Video Backup + Free Up Phone Storage

Updated August 2016. I have been using Google Photos as a free online backup for an Apple iPhone for a year, and it has worked very well and saved me money on iCloud. The app has a new-ish feature called “Free Up Space” that automatically identifies which pictures it has already backed up online for you, and will delete them off your Android or iOS device in order to save space. (I’m a bit paranoid about my photos, so I do a physical backup to hard drive as well.)

You may see this commercial during the Olympics (directed at 16GB iPhone users):

Original post:

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Google may already see all your search queries, have access to all your e-mails with Gmail, and now it wants to store all your photos. Why would you let them? How about unlimited space. Free. From the Google Blog:

Google Photos gives you a single, private place to keep a lifetime of memories, and access them from any device. They’re automatically backed up and synced, so you can have peace of mind that your photos are safe, available across all your devices.

Google Photos will store unlimited images for free, with a few conditions. You can choose from one of two options:

  • High quality – Unlimited free storage. Recommended for phones or point-and-shoot cameras that are 16 megapixels (MP) or less. Good for typical printing and sharing. Will be compressed using their special algorithm. Anything under 16 megapixels will have minimal degradation of quality, supposedly it is optimized so that visually you can’t tell the difference. Anything bigger than 16 megapixels will be downsized to 16 megapixels, which can be significant for DSLR users.
  • Original quality – Limited free storage: Uses your Google Account’s 15 GB of free storage. Recommended if you take photos with a DSLR camera and want to maintain the exact original quality. Recommended for printing large banners or to store your original files. Store your photos and videos exactly as you captured them.

Google Photos will store unlimited video for free at 1080p quality. This is pretty big for me, as my videos take up the most space and right now I don’t pay to back them up in the cloud – only on external hard drives. If you upload something 4K, it will downsize to 1080p.

As you might expect with Google, they have also tried their best to make searching through your huge image library as easy as possible:

VISUAL SEARCH: Your photos are now searchable by the places and things that appear in your photos. Looking for that fish taco you ate in Hawaii? Just search “Hawaii” or “food” to find it even if it doesn’t have a description.

There is even facial recognition that groups photos with the same face. The app automatically creates collages of similar photos, albums of photos taken at the same time and place, and even animations.

Amazon Prime members can get free unlimited photo storage, but only 5 GB of free video storage.

Here are the links for the Web interface, Android app, and Apple iOS app.

Hours of Work Needed to Buy S&P 500, Gold, and Oil

Here’s an interesting series of charts that measure how many hours of work it has taken to buy various things like the S&P 500 index, an ounce of gold, or a barrel of crude oil. You could see it as an alternative to adjusting historical prices by CPI inflation. Found on Twitter, done by @TheChartmeister.

work500

In July 2016, the average hourly earnings of a production worker according to the Bureau of Labor Statistics was $21.59 an hour. In January 1964, it was $2.50 an hour.

In July 2016, it would take roughly 100 hours of work to buy the S&P 500 index if it was in dollars. Back in 1964, it would have only taken roughly 30 hours of work.

Here are direct links to the tweets.

Reader Question: Good Time To Lower International Stock Exposure?

earth_apolloHere’s a reader question on international equities that reflects some of what I’ve been reading elsewhere and thinking about in my head:

I was doing my mid-year rebalance and noticed that international equity funds did terrible over the past 10 years, I have a fair amount of money in international equities, as do you. I’m considering lowering the % because they generally under perform US funds. Would love your thoughts.

First, let’s look back at some history (i.e. my old posts). Is it really true that US stocks historically perform better than International stocks? Also, the diversification benefit comes from the very fact that these asset classes don’t always move in sync (not perfectly correlated), allowing you to attain a higher risk-adjusted return by holding some of both as opposed to just one or the other.

From 1970-2006, foreign stocks outperformed US stocks, while the point of optimal risk-adjusted returns was a split of 76% US and 24% Foreign Developed (EAFE) (70% is a typo). The chart is taken from a past edition of A Random Walk Down Wall Street by Burton Malkiel.

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From 1970-2013, the same chart shows that US stocks now outperformed foreign stocks on average, with the point of optimal risk-adjusted returns at 70% US and 30% Foreign Developed. From Rick Ferri:

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From 1970 to 2015, the average annualized return of the S&P 500 has been 10.3%, while MSCI Europe has returned 10.0%. Sometimes US wins. Sometimes International wins. Here’s a chart from Ben Carlson of A Wealth of Common Sense showing the rolling 5 year over- and underperformance of U.S. stocks relative to European markets (MSCI Europe):

domint2016

This is an example of why “staying the course” sounds easy but it isn’t in real life. On one hand, some of the recent doubt about Europe and Emerging Markets has to be about performance chasing. Look at the recent divergence in two major mutual funds that track Total US (VTSAX) and Total International (VTIAX) indexes, taken from Morningstar. This shows the growth of $10,000 invested 5 years ago:

domin2016b

On the other hand, there are real reasons behind the performance difference. The US economy has been more resilient and the future does look more bright. Europe and Emerging markets have more obvious problems without a visible solution. But that also means that US stocks are more richly valued, and International stocks are “cheaper”. Every model that uses historical data shows that International stocks have a higher future expected return. Here is Research Affiliates as one example:

domin2016c

Summary. The formal advice is that you should have a written “investment policy statement” (IPS) that states why you hold your current asset allocation in the first place. In other words, what where the reasons behind your current allocation? Have they changed? For me, nothing has really changed about why I bought both US and international stocks in the first place. Their long-term historical returns remain similar, and while the US may be slightly ahead at this moment, this could easily change again in the next decade.

It’s not fun to hold these international stocks right now, but I focus on the fact that European and Emerging Markets valuations are relatively cheaper and the dividend payout rates are relatively higher. By owning a globally-diversified passive portfolio, I choose to rely on the markets to work themselves out over time.

Early Retirement Portfolio Income, 2016 Mid-Year Update

dividendmono225I like the idea of living off dividend and interest income. Who doesn’t? The problem is that you can’t just buy stocks with the absolute highest dividend yields and junk bonds with the highest interest rates without giving up something in return. There are many bad investments lurking out there for desperate retirees looking only at income. My goal is to generate portfolio income that will keep up with inflation.

A quick and dirty way to see how much income (dividends and interest) your portfolio is generating is to take the “TTM Yield” or “12 Mo. Yield” from Morningstar quote pages. Trailing 12 Month Yield is the sum of a fund’s total trailing 12-month interest and dividend payments divided by the last month’s ending share price (NAV) plus any capital gains distributed over the same period. SEC yield is another alternative, but I like TTM because it is based on actual distributions (SEC vs. TTM yield article).

Below is a close approximation of my most recent portfolio update. I have changed my asset allocation slightly to 60% stocks and 40% bonds because I believe that will be my permanent allocation upon early retirement.

Asset Class / Fund % of Portfolio Trailing 12-Month Yield (Taken 7/31/16) Yield Contribution
US Total Stock
Vanguard Total Stock Market Fund (VTI, VTSAX)
24% 1.83% 0.44%
US Small Value
WisdomTree SmallCap Dividend ETF (DES)
3% 2.98% 0.09%
International Total Stock
Vanguard Total International Stock Market Fund (VXUS, VTIAX)
24% 2.71% 0.65%
Emerging Markets Small Value
WisdomTree Emerging Markets SmallCap Dividend ETF (DGS)
3% 3.14% 0.09%
US Real Estate
Vanguard REIT Index Fund (VNQ, VGSLX)
6% 3.21% 0.19%
Intermediate-Term High Quality Bonds
Vanguard Intermediate-Term Tax-Exempt Fund (VWIUX)
20% 2.82% 0.56%
Inflation-Linked Treasury Bonds
Vanguard Inflation-Protected Securities Fund (VAIPX)
20% 0.82% 0.16%
Totals 100% 2.18%

 

The total weighted 12-month yield was 2.18%. This means that if I had a $1,000,000 portfolio balance today, it would have generated $21,800 in interest and dividends over the last 12 months. (I will note that the muni bond interest in my portfolio is exempt from federal income taxes.) For comparison, the Vanguard LifeStrategy Moderate Growth Fund (VSMGX) is an all-in-one fund that is also 60% stocks and 40% bonds. That fund has a trailing 12-month yield of 2.04%, taken 7/31/2016.

Both of those yield numbers are significantly lower than the 4% withdrawal rate often quoted for 65-year-old retirees with 30-year spending horizons, and is even lower than the 3% withdrawal rate that I usually use as a rough benchmark. If I use 3%, my theoretical income would cover my current annual expenses. If I used the actual numbers above, I am still slightly short. I will admit that planning on spending only 2% is most likely too conservative. Consider that if all your portfolio did was keep up with inflation each year (0% real returns), you could still spend 2% a year for 50 years.

I still like this income yield calculation as very conservative lower bound that adjusts for stock market valuations (valuations go up probably means dividend yield go down) as well as interest rates (low interest rates now, probably low bond returns in future). As an aspiring early retiree with hopefully 40 or even 50 years ahead of me, I like having safe numbers given the volatility of stock returns and the associated sequence of returns risk.

Free Airport Lounge Pass with LoungeBuddy and Visa

loungepass0Update: LoungeBuddy ended the offer really early. Sorry!

LoungeBuddy is a smartphone app that helps you navigate airport lounges around the world. Their new promotion offers a free airport lounge pass (up to $40 value) when you book with LoungeBuddy and pay with your Visa card. Valid until 10/31/2016 or until supplies last. One per customer.

Be sure to book online through LoungeBuddy.com/visa and not through their app. You will be limited to select airport lounge partners. For example, I only see one lounge for Los Angeles International (LAX):

loungepass

Here are the full terms and conditions.

I keep the LoungeBuddy app on my smartphone, and have found it very handy if you participate any sort of lounge access program and want to optimize your usage.

Google Play Promo: 75% off any Movie Rental

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Here’s another small but easy promotion. Get 75% off any movie rental on Google Play with code PAYPALCAUS. If you click on the link, it should already be applied. So a $4 rental will only cost you a $1. Redeem by 8/31/16 and rent by 10/31/16. Hey, it’s easier than dealing with Redbox.

Enjoy a discounted movie rental, compliments of Google Play and PayPal. Choose from thousands of titles in the Google Play Movies Catalog. Redeem your offer by August 31, 2016 and complete your movie rental purchase by October 31, 2016.

SPG 20% Transfer Bonus: 20,000 Starwood Points = 30,000 American Airlines Miles

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American Airlines (AA) has a new promotion on transferred Starwood Preferred Guest (SPG) Starpoints, where they will add a 20% bonus on any transferred AA miles from 8/1 to 9/14/16.

Starpoints are already quite flexible and transferrable to multiple airlines on a 1:1 basis (which is why everyone likes their credit card). Even better, when you convert a minimum of 20,000 Starpoints to miles, you get a 5,000 mile bonus. (If you only convert 19,999 Starpoints, then no bonus.)

Therefore, combining the two gets you this:

  • You ask to convert 20,000 Starpoints to 20,000 American Airlines miles.
  • Starwood will add 5,000 miles, and the miles will arrive in your account in 3-4 days.
  • American Airlines will add another 20% (5,000 miles) in 7 business days.
  • 20,000 Starpoints is now 30,000 American Airlines miles.

From the terms and conditions:

To earn the 20% conversion bonus, member must convert points from the Starwood Preferred Guest program. This offer is non-transferable and non-reversible.

Bonus miles will be posted by American Airlines to the qualifying AAdvantage® member’s account within 7 business days after the initial conversion activity has been posted by Starwood Preferred Guest. Bonus miles earned in this promotion do not count toward elite status qualification.

American Airlines also recently updated their award redemption rules so that they are less valuable in many instances, so be sure to check first before transferring. Also, note that you are allowed to place a free 5-day hold on award redemptions. Therefore you can hold an award first and then transfer over Starpoints, although the 20% American bonus portion may not arrive in time.