Archive for February, 2006
Friday, February 17th, 2006
Ponzi scheme. You’ve most likely heard of the term, although you may not know exactly how it works. A Ponzi scheme is a scam where investors are promised amazingly high returns on their money based on some ’secret super-investment’, but in reality the money to pay older investors is simply taken from the money of new investors. Of course, this can’t go on forever, and the investors involved at the end are usually left with nothing.
Let’s take the most recent ‘investment program’ which reeks of being a Ponzi scheme, 12DailyPro, which is now being investigated by the FBI. The story of this interested me so much I started reading ‘Ponzi: The Incredible True Story of the King of Financial Cons‘. The similarities between his story and 12DailyPro are astonishing.
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Posted in Book Reviews | 13 Comments »
Thursday, February 16th, 2006
I listed one good IRA option yesterday for those that are just starting out saving, but now I want to spend some time and explore more options. I don’t want it to seem like I favor Fidelity - people were asking for a good option and I threw one out there. Maybe not the best, but again, sometimes just starting is more important. Besides, you all know that my own retirement money is at Vanguard. 
For the purposes of this comparison, I am assuming that we are talking about a person who does not have a lump sum to invest, but can manage to set aside $200 a month towards an IRA. For those that think that’s too little to start, consider this: Just $200 a month, starting from age 25, growing at a tax-deferred 8% annually, will grow to about $1,000,000 by age 70. For simplicity of comparing investment choices, I will also compare each broker’s auto-pilot retirement funds.
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Posted in Investing | 27 Comments »
Thursday, February 16th, 2006
I just closed my MB Trading brokerage account, which I only recently opened. First, I didn’t really like the interface of their proprietary software or their website layout at all. Neither was not very user-friendly, at least for my amateur tastes.
On top of that, early February they charged me $10 for ‘Jan Software Charges’, which turned out to be their options feed, which I don’t recall signing up for and I definitely never used. Their e-mail support then took 3 days to get back to me when I asked to cancel that feed. Not only would they not waive the original fee, but since it was already February when I got charged, I was charged another $10 for getting the feed in February! $20 in fees and I only had the account open 3 weeks.
All these things are minor separately, but together it just left a bad taste in my mouth. So I’m now looking for another low-cost broker.
Posted in Investing | 28 Comments »
Wednesday, February 15th, 2006
I’m sure some of you are motivated to do avoid some of the financial mistakes shared yesterday. A good way to start is by funding yourself an tax-advantaged IRA. Fidelity has come out with a pretty decent product for this - their SimpleStart IRA. You just need to commit to contributing $200 a month ($2,400 a year) to the IRA, and you can avoid the $2,500 initial minimum investments of many of their funds. Also, as you are not paying any trade commissions and there are no annual maintenance fees, more of your money is going towards your investments.
Fidelity’s Freedom Funds, which are automatically rebalanced based on your planned retirement timeframe, are a good simple option I would recommend for those without strong opinions otherwise. This is just one option I’m throwing out there. Either way, get started!
Added: I’ve done a more thorough comparison of ‘IRA Options For Those Starting Out‘, including brokers that require a committment of only $50 per month.
Posted in Retirement | 7 Comments »
Wednesday, February 15th, 2006
VirtualBank recently released that their eMoney Market Account is now paying 4.60% APY. New accounts can get a $20 bonus. My Rate-Chaser Calculator may also come in handy.
Posted in Banking | 6 Comments »
Tuesday, February 14th, 2006
Wow, I am really impressed with the great quality and variety of submissions for this Reverse Carnival of Money Mistakes. Everything from everyday expenses to complete lifestyle overhauls is covered, and I’m sure everyone reading it can relate to at least some of the money bloopers listed below. This is truly an entertaining way to learn from others. I love reading about personal experiences. A hearty Thanks to everyone who contributed! Also thanks to those who have spread the word about this Carnival, and thanks in advance for those that will.
I’ve shared some excerpts, but be sure to check out the links for the entire story. To celebrate the end of Valentine’s Day (Let’s just say I may need to buy another saute pan after ‘reducing’ my soy ginger sauce to… charcoal), I’ve chosen a pink motif:
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Posted in General | 11 Comments »
Tuesday, February 14th, 2006
There appears to be a new sign-up link for Pinecone Research $5 surveys the mentioned previously, via commenter Grant:
[link is dead]
If you are looking for some paid surveys that are looking for new members, check out MySurvey (see my experiences) and SurveySavvy.
Posted in Bored Money | 15 Comments »
Tuesday, February 14th, 2006
Charles Schwab is offering a $100 bonus if you apply for their Visa card and make one purchase within 45 days. You must not have applied for this card (for their previous $100-$150 bonuses) within the last 180 days. The bad thing that is you may have to wait 8-12 weeks for the statement credit to show up. Link via Fatwallet.
This is hot on the heels of the two $100 bonuses offered by Citibank, of which both my wife and I have gotten $100 each from already. The Schwab card is pretty lukewarm other than the initial bonus, but the Citi cards actually have some perks like 3% back at restaurants or 0% APR on balance transfers for 12 months. It’s all about the Benjamins!
Posted in Deals & Offers | 4 Comments »
Monday, February 13th, 2006
I recently opened an HSBC Checking Account to get the $50 bonus, but also to work with my existing HSBC Direct/OnlineSavings account paying 4.80% APY. Now that I have both, I would definitely recommend it! With my SmartPackage Interest Checking account, there is no monthly fee with either direct deposit or $3,000 in combined balances in ‘qualifying accounts’. The big question was whether the OnlineSavings account is such an account. To have written confirmation, I sent an online secure message on HSBC’s site. The response:
Your Online Savings account balance will be included for the combined balance requirement of your checking account.
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Posted in Banking | 28 Comments »
Monday, February 13th, 2006
Banks have a great gig. Most pay you puny interest, and then turn around and lend it to credit card holders at 15-30% APR. A new start-up, Prosper.com, aims to shrink this gap by allowing individuals to lend directly to each other. As a lender, you get to see the credit rating of a potential borrower and well as the reputation of the ‘group’ they are affiliated with, and decide at what rate you would be willing to loan out your money. Read more at the New York Times and BusinessWeek .
This has been done before in the UK, at a site called Zopa.com. Their model is a bit different in that your loan amount is spread across at least 50 borrowers, up to a maximum of ?200 per borrower. Although you can choose to only fund part of a loan at Prosper, I would think a 50-way split would give you much better protection against the total loss of your money. Still, this is very innovative, and I definitely will write more about it later. Thanks to commenter micah for the heads up.
Posted in General | 24 Comments »
Sunday, February 12th, 2006
Simplified Employee Pensions, or SEP-IRAs, are a retirement account available to both small business employers and employees under certain requirements. Although I’m sure they are covered more thoroughly elsewhere, I wanted to jot some notes down focusing on the self-employed, that is, you are both the only employer and employee all rolled into one. Beware, during my research I found a lot of outdated and thus inaccurate information online.
Who’s Eligible?
Anyone who has any amount of self-employment income, even if you already have a retirement plan with your other job.
Read the rest of this entry…
Posted in Retirement | 21 Comments »
Sunday, February 12th, 2006
Before I finish my taxes, I’ll have to decide how I want to put some of my self-employment income away for retirement. I didn’t know there were so many options! In addition to the usual Traditional and Roth IRAs, I could also do use any of the following:
- Simplified Employee Pension IRA (SEP-IRA)
- Savings Incentive Match Plan for Employees IRA (SIMPLE IRA)
- Keogh Profit-sharing Plan
- Individual, or Solo 401k’s
- Solo Roth 401k’s
I’m definitely going to explore all these options soon, but due to their deadlines the only one that I can actually use for 2005 income is the SEP-IRA, which allows me to open and fund it as late as the extended deadline for tax returns. Gotta love easy decisions.
Posted in Retirement | 2 Comments »
Saturday, February 11th, 2006
I think I’m done waiting for all my W-2s and 1099s to come in (a lot of 1099s!), so here are my fun tasks for today:
1) Make sure I’m not missing anything, as everything should’ve been sent out by January 31st. One sure way to ask for an audit is to forget to include all your income. Many tax forms are also online now.
2) Verify the amounts are correct. Hey, brokerages make mistakes. Make sure you note what interest was supposed to be non-taxable for certain areas, like any municipal bonds or Treasury Bills.
3) Update my emergency list of accounts and contacts, using this thorough and handy Financial Preparation Kit.
Posted in Taxes | 2 Comments »
Saturday, February 11th, 2006
I get a lot of ‘check this site out’ e-mails, but this one actually looks useful. As I’ve mentioned before, many sites like Fatwallet, Upromise, and eBates offer cashback on online purchases if you purchase through their portal. Usually I have to do a quick comparison on all three to see which one offers the best deal for the specific store I’m buying from. This new (beta) site, EvReward.com, does the comparisons for me and includes tons of cashback portals I’ve never even heard of. It even includes the frequent flyer miles-earning options, for you mileage junkies.
Of course, one issue is the reliability of the listed portals in giving your cashback, as you have to use their specific link, enable cookies, and then wait months to get your rebate. I’ve only used FatWallet and eBates with good success. Still, EvReward is my newest bookmark.
Posted in Frugal Living | 7 Comments »
Friday, February 10th, 2006
If you have renter’s or homeowner’s insurance and have to file a claim, it will be infinitely easier if you have documentation of all the stuff you own. But who really bothers to do this? I know I should, but I haven’t.
So when I read in this month’s Kiplinger’s about a free home inventory software at KnowYourStuff.org, I checked it out. First, you snap digital pictures of each of your rooms and then import it into the software. Then you go through each room and itemize all your stuff. You can add useful details like how much you paid, scanned receipts, serial numbers, and so on. It’s still tedious but it does help keep it all together. I really like the idea of being able to just e-mail a digital inventory to myself, as well as burning or printing out a copy to safely store elsewhere.
Posted in Insurance | 4 Comments »
