Personal Capital Review 2017: Automatically Track Net Worth and Portfolio Asset Allocation

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Personal Capital is free financial website and app that links all of your accounts to track your spending, investments, and net worth. You provide your login information, and they pull in the information for you automatically so you don’t have to type in your passwords every day on 7 different websites (similar to Mint). Investment-specific features include tracking portfolio performance, benchmarking, and asset allocation analysis.

Net worth. You can add your home value, mortgage, checking/savings accounts, CDs, credit cards, brokerage, 401(k), and even stock options to build your customized Net Worth chart. You can also add investments manually if you’d prefer. I have a habit of accumulating bank and credit union accounts, so I find account aggregation quite helpful.

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Cash flow. The Cash Flow section tracks your income and expenses by pulling in data from your bank accounts and credit cards. This chart compares where you are this month against the same time last month. If you hate budgeting, you may find it easier to view a real-time snapshot of your spending behavior. Their expense categorization tool is not as advanced as Mint.com, as you can’t for example tell them to always classify “Time Warner Cable” as “Utilities” and not “Online Services” or whatever they do by default. The default is usually pretty accurate, but if it isn’t you have to change it manually.

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Portfolio. This is where Personal Capital is better than many competing services, by analyzing my overall asset allocation, holdings, and performance relative to benchmarks. They also analyze your investment fees to see if you can get them reduced. I first signed up for Personal Capital four years ago, and since then my investments have gotten spread out even further. I now have investments at Vanguard, Fidelity, Schwab, TransAmerica (401k), and Merrill Edge. It’s nice to be able to see everything together in one picture.

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For comparison, Mint does not allow manual input of investments and it did not break down my asset allocation correctly based on my linked accounts. In fact, all it shows is a big orange pie chart with “99.9% Not Sure” and “0.00 Other”. Not exactly helpful.

Personal Capital considers the major asset classes to be US stocks, International stocks, US Bonds, International Bonds, and Cash. The “Alternatives” classification includes Real Estate, Gold, Energy, and Commodities.

If you have one bank account, one credit card, and a 401(k), you may not need this type of account aggregation service. Life tends to get messy though, and this helps me maintain a high-level “big picture” view of things.

Security. As with most similar services, Personal Capital claims bank-level, military-grade security like AES 256-bit encryption. The background account data retrieval is run by Envestnet/Yodlee, which partners with other major financial institutions like Bank of America, Vanguard, and Morgan Stanley. Before you can access your account on any new device, you’ll receive an automated phone call, email, or SMS asking to confirm your identity.

How is this free? How does Personal Capital make money? Notice the lack of ads. Personal Capital makes money via a optional paid financial advisory service, and they are using this as a way to introduce themselves. (People who sign up for portfolio trackers have money…) Their management fees are 0.89% annually for the first $1 million, which is rather expensive to my DIY sensibilities. They are a legit, SEC-registered RIA fiduciary and currently manage over $3.6 billion. In my opinion, this status improves their credibility as an entity with access to my sensitive information.

Note that if you give them your phone number, they will call you to offer a free financial consultation. If you answer the phone or e-mail them that you don’t want to be contacted anymore, they will honor that request. However, if you simply ignore the phone calls, they will keep calling. Know that you can keep using the portfolio software for free no matter what happens. Therefore, if you aren’t interested, I would recommend simply being upfront with them. A simple “no thank you” and you’re good.

Bottom line. It’s not what you make, it’s what you keep that counts. The free financial dashboard software by Personal Capital helps you track your net worth, cash flow, and investments. I recommend it for tracking stock and mutual fund investments spread across different accounts. I’d link your accounts on the desktop site, but interact daily through their Android/iPhone/iPad apps for optimal convenience (log in with Touch ID or mobile-only PIN).

Betterment Now Offers Human Advice + Flat Fee Structure

betterment_logoThe robo-advisor evolution continues. Betterment just announced some significant changes that include the option to upgrade to a Certified Financial Planner (CFP®) and a more simplified flat fee structure. Here are highlights from the new plans:

  • Betterment Digital. Their original product with digital portfolio management and guidance. Now at a flat 0.25% annually (no more tiers). No minimum balance. There is no longer be a $3/month fee if you don’t make monthly auto-deposits. The management fee on any assets over $2 million is waived.
  • Betterment Plus. Digital features above + an annual planning call from a “team of CFP® professionals and licensed financial experts who monitor accounts throughout the year.” You will also have unlimited e-mail access. The plan is a flat 0.40% annually. $100,000 minimum balance required.
  • Betterment Premium. Digital features above + unlimited phone access to a “team of CFP® professionals and licensed financial experts who monitor accounts throughout the year.” You will also have unlimited e-mail access. The plan is a flat 0.50% annually. $250,000 minimum balance required.

Betterment’s previous fee structure for Digital was 0.35% for balances under $10,000 with $100/mo auto-deposit (or a flat $3 a month without), 0.25% for balances of $10,000 to $100,000, and 0.15% for balances above $100,000. This means that with the new flat 0.25% fee structure, people with balances under $10k will end up paying less while those with $100k+ will be paying more. If I had a big balance at Betterment, I’d be quite unhappy with the price hike. Existing customers on the 0.15% tier will stay on that fee structure until June 1st, 2017.

Here’s how this breaks down in terms of your account size:

  • $10,000 account balance. Digital would cost just $25 a year ($2.08 a month). There is no longer any requirement for auto-deposit to avoid a $3 a month fee. Plus or Premium not available.
  • $50,000 account balance. Digital would cost $125 a year ($10.41 a month. There is no longer any requirement for auto-deposit to avoid a $3 a month fee. Plus or Premium not available.
  • $100,000 account balance. Digital would cost $250 a year ($20.83 a month). Plus would cost $400 a year ($33.33 a month) and include an annual planning call with a human advisor. Premium not available.
  • $250,000 account balance. Digital would cost $625 a year ($52.08 a month). Plus would cost $1,000 a year ($83.33 a month) and include an annual planning call with a human advisor. Premium would cost $1,250 a year ($104.17 a month) and include unlimited calls to a human advisor.

Commentary. I don’t write about robo-advisors all that often, but Betterment adding human advisors as an upgrade option signals a big change in the industry. For the investors with modest balances, the flat fee is cheaper but it has always been pretty cheap; at $50k in assets it costs the same as a Netflix subscription. Perhaps more important is knowing that as you continue to grow assets, a human advisor will become available without having to move your money elsewhere.

For those with at least $100k in assets, the upgrade cost to talk to a human advisor annually appears reasonable ($150 a year more at $100k asset level). You also get unlimited e-mail interaction for quick questions. If you go to an independent CFP and request a one-time consultation, that will usually cost a $400 to $500 flat fee. Potential concerns include that you don’t get a dedicated person but a team. However, in my experience even if you get assigned a dedicated person, they’ve often moved onto another job within a year. The wording also suggests that the pool of advisors are not all CFPs.

This move signifies both the good and bad about the current robo-advisor environment. The good is that they keep evolving and looking for ways to improve (i.e. index replication, tax-sensitive asset location, tax loss harvesting). The bad is that these can involve big changes with little notice (i.e. portfolio tweaks, fee changes). This time, the good is now you have the option to pay more for human advice. The bad is that if you already had a lot of money with Betterment, your fees got hiked by 10 basis points. This is why I prefer to DIY, because I enjoy being in control.

That said, if I had to switch I would prefer human access for estate-planning purposes (Mrs. MMB doesn’t want to manage our portfolio). Betterment says they have an advantage because they are independent. For comparison, I would look into Vanguard Personal Advisor Services (VPAS) which costs 0.30% annually and includes a team of human advisors. Possible drawbacks of VPAS include no automated tax-loss harvesting and you’ll be confined to Vanguard products.

Ally Bank 1-Day ACH Funds Transfer Review

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Considering all of the things that can be done instantaneously nowadays, I’m rather disappointed that it still takes 3 business days to move money between most financial institutions. NACHA has been gradually working on same-day ACH transfers – apparently credits are live (like direct deposit), but not debits. Even then, banks may treat this as a “premium” service and charge a fee.

Ally Bank announced in October 2016 that they would support free 1-day ACH transfers for eligible transfers on 12/3/2016. They later announced a delay until 1/7/17. I finally got around to testing out this new feature in mid-January. Here are their own words:

We can now complete qualified transfers between your Ally Bank and non-Ally Bank accounts in 1 business day – free of charge. If 1-day delivery is unavailable, we’ll deliver your transfer in 3 business days.

Here’s their updated timing chart (note the cut-off times):

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Here are the reasons why a transfer would be ineligible for 1-day delivery:

  • Your one-time transfer is ineligible due to account inactivity, overdrafts or transfer returns.
  • Your transfer is part of a recurring transfer plan.

In my experience playing around with the website, there may be other additional factors. Here are the results of various combinations of to/from between Ally Savings/Checking and a sample External Bank B. This is what Ally is telling me upfront, before initiating the transfer.

  • Ally Savings to External Bank B = 1-day Transfer
  • External Bank B to Ally Savings = 1-day Transfer
  • Ally Checking to External Bank B = 3-day Transfer
  • External Bank B to Ally Checking = 1-day Transfer

I’ve never had an overdraft transfer or overdraft, and I’ve done a transfer from Ally Checking to External Bank B in the last 30 days so there should be no issue with inactivity. I’ve used a few different External Banks and came up with same results; transferring from Ally Checking to External Bank consistently takes 3 business days while the other combinations only take 1 business day.

This usually isn’t a problem since I can make an instant transfer between Ally Checking to Ally Savings and then do a 1-day transfer from there, but savings accounts are only allowed six withdrawals per month. If I have a lot of transfers in any given month, I will eventually run into delays.

Ally has redesigned and improved the user interface of their funds transfer page. They now provide a a nice illustration of when your funds will be debited and when they will be deposited at the target location. It is also explicitly states whether it is a 1-day or 3-day transfer. Here’s an Expedited 1-day transfer:

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Here’s a Standard 3-day transfer (in this case technically it will take only two days):

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In terms of competition, I don’t know of another bank that advertises a consistent 1-day transfer speed. For example, this is what Capital One 360 has to say on their transfer times:

Capital One 360 is unable to guarantee the date a transfer to your linked account will be completed. However, depending on the date and time of your request, it should be completed in 2 business days.

Bottom line. Ally Bank now offers 1 business day transfers in eligible cases with an improved user experience. Overall, I’m happy with this development as it applies most of the time (see above for details). I use Ally Bank as my central hub for cash transfers with Ally Bank Savings Account (higher interest, 6 withdrawals per month) as my default location for liquid cash savings and as a free overdraft source from Ally Checking (unlimited withdrawals per month). If I find a high-interest CD that looks good, I move money to/from my Ally account to where it needs to go, so speed can matter.

Amazon Prime Rewards Visa Signature Card Review: 5% Back at Amazon

primecreditChase and Amazon have rolled out the Amazon Prime Rewards Visa Signature Card, a new credit card (not store card) available only to Amazon Prime members. I’m surprised how much mainstream press coverage this card received. Highlights:

  • 5% back at Amazon.com for Amazon Prime members. If you stop your Prime membership, you’ll be downgraded to 3% back.
  • 2% Back at restaurants, gas stations, and drugstores.
  • 1% Back on all other purchases.
  • Sign-up bonus of variable amount based on each person’s account. I was offered a $70 Amazon Gift Certificate. Click on the “Apply Now” link to see your personalized offer, you’ll have time to stop the application.
  • No foreign transaction fees.
  • No annual fee.
  • Extended warranty protection. Extends the time period for the U.S. manufacturer’s warranty by an additional year, on eligible warranties of three years or less.
  • Purchase Protection. Covers your new purchases for 120 days against damage or theft up to $500 per claim and $50,000 per account.

Existing Amazon Rewards Visa Signature cardholder? If you have the original card and are an Amazon Prime subscriber, you should be “upgraded” to this new card automatically. You may see the change online first (your linked purchases will start earning 5% back instead of just 3% back) before you actually receive a new physical card.

Commentary. I recently did a Amazon Store Card review, about a retail card issued by Synchrony Bank that was only valid at Amazon.com. My overall opinion of this credit card is similar, except for the extended warranty protection. If you use gift cards to buy things at Amazon, you will forgo the extended warranty protection and purchase protection that many other credit cards offer. With this card, you will get the extended warranty protection and 5% cash back. How much is an extra year’s warranty worth? Depends on how many big-ticket items you buy at Amazon and how likely you’ll actually remember to use this benefit.

My rough rule of thumb is that a “hard” credit check can reliably net me at least $500 in value, usually from “try me! try me!” credit card incentives but also potentially from bank bonuses and higher interest. It is very rare that I shop at any specific retailer enough to get $500 in savings. For example, it would take $10,000 of Amazon purchases at 5% back to net me $500 in cash back. If the sign-up bonus gets high enough, then I may take another look.

(2% back at restaurants, gas stations, and drugstores only draws a yawn when I can get that much cash back on everything. 1% cash back on everything else… zzzz.)

For the casual Amazon shopper, 5% rotating category credit cards often have Amazon or a place that sells Amazon gift cards as an eligible category. Other cards like the American Express Blue Cash Preferred offer 6% back at grocery stores (that sell Amazon gift cards) or Chase Ink Business cards offer 5% back at office supply stores (that sell Amazon gift cards). Basically, there are other ways that I can stock up on Amazon gift cards at 5% off without having this card.

In the end, if you are a loyal Prime member that spends a lot of money at Amazon and prefer simplicity, then this card can make sense. Link it to your Amazon account, and don’t use it for anything else. You’ll then track all your Amazon spending on one card, and also get extended warranty protection and purchase protection. As with any rewards credit card, you should always pay off your bill in full as the annual interest rate on balances is significantly higher than 5%.

Spare5 App Review: Earn Less Than Minimum Wage In Your Spare Time

sp5app0Find yourself bored on this holiday break? Spare5 is a new entrant in the world of “earn money in your spare time”. You sign up and do short tasks on either their smartphone app or desktop web browser. They pay cash via PayPal weekly or donate to a charity of your choice.

What kind of tasks? The problem they are solving is that certain things are very hard for machines to do, but are easy for humans to do. Examples are assessing the tone of a conversation or separating elements of a photos. You’re basically creating an “answer sheet” to help compare against and train machine learning algorithms. (Help train the robots that will take over the world!) Some tasks were mildly amusing, while others were quite tedious.

How much money do they pay per task? As far as I can tell, very little. The tasks that I was offered ranged from zero to $0.10 per task. Most were around a penny each. It took me roughly an hour to reach the minimum payout of $1. I know that they want you to prove yourself before offering higher-value tasks, but from my experience it will take a while to even reach $5 an hour on average.

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Is Spare5 legit and do they actually pay out? Yes, they paid me via PayPal. Here’s a screenshot:

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Bottom line. Like most “earn money in your spare time” options like paid surveys or mystery shopping, the per-hour wage is low. I doubt the average user makes even close to minimum wage. Honestly, if you are a motivated person I would invest your time into improving your skill set so you can eventually make $25, $50, or $100 a hour.

That said, I think this app is going to be successful. Machine learning is growing, and they’ll need to test it against real human intelligence. While I won’t be a regular user, there will be more than enough people who are willing to do the work. Of course, I also fail to see why people spend hours playing games on their phones. If you just want something to cure boredom, I suppose getting paid $1 an hour is better than paying someone else $1 for a virtual axe or something.

This is far from a glowing recommendation, but if you do sign up there is a referral bonus that offers new users a 10% bonus on up to $100 in earnings in your first 180 days with a my referral link. That’s an extra $1 for every $10 in earnings. Thanks if you use my link, I will get $2 for every $10 you earn with Spare5 (up to $20).

Andrews Federal Credit Union Application and Account Opening Review

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I keep a portion of my cash reserves in certificates of deposit. As I had some Ally Bank CDs maturing this month, I decided to open a share certificate from Andrews Federal Credit Union during their 2016 Holiday Promotion. Please see my separate post on their 84-month 3% APY CD for details on the specific offer (there is still time!). The review information below should apply to anyone trying to open any deposit account at Andrews FCU.

Joining an eligible group for membership. Here is their page on membership eligibility:

Our field of membership includes Washington, DC, civilian and military personnel of Joint Base Andrews, Joint Base McGuire-Dix-Lakehurst, and military installations in central Germany, Belgium, and The Netherlands; as well as over 200 employer groups throughout Maryland, Virginia and New Jersey. We also have nationwide membership eligibility through the American Consumer Council.

As I do not live the in DC area and do not qualify otherwise, I joined the American Consumer Council (ACC), a non-profit organization dedicated to consumer education, advocacy and financial literacy. Sounds like something worth supporting! You can join through the website. I believe the cost is a one-time $8, although there is a promo code “consumer” that has worked to get the membership fee waived. You can make additional donations as you wish. They will send you an e-mail shortly with your ACC membership number.

Application process. You can then proceed to the Andrews FCU website and start the application. You will need your ACC number to satisfy the eligibility question “I am a member of the American Consumer Council (ACC), and my ACC membership number is ___”.

Note: Applying for an account will result in a hard credit inquiry. At least for me, they checked my TransUnion credit report. If you have TrueIdentity and have your TransUnion report secured using their free lock feature, you will want to unlock it before submitting this application. (This delayed my application because they are pretty busy right now and did not notify me immediately.) You can lock it back up again after account approval.

You will need to provide the usual personal information – name, address, SSN, driver’s license, etc. You will also need to provide them with a bank account routing and account number to fund the initial share account. The minimum amount is $5. You will need to keep $5 in your Share account for as long as you are an Andrews FCU member. I just started with $5.

Account approval. Once your account is approved, you should get the following message:

Congratulations, your account with Andrews Federal Credit Union has been opened. Your member number is XXXXXXXX. The signature card has been sent to your email address via DocuSign for you to sign electronically.

Your new account funding is being processed and will be posted to your new account once received by us from your other institution. If you requested an ATM or VISA Debit Card as part of your application, your card order has been placed. The routing number for Andrews Federal is 255074111.

You may now enroll for SmartConnect, our online banking system, by visiting our web site www.andrewsfcu.org and selecting Online Banking Enrollment. If you require further assistance, please call us at 800.487.5500.

Thank you for choosing Andrews Federal Credit Union.

It’s nice that you can do the signature card via DocuSign. That meant my entire application process was completed online. I did try to call them a few times, but had some trouble navigating their phone tree without a member number. However, if I didn’t have my TransUnion report locked, I wouldn’t have had any reason to call them at all. Other than that delay, I would say the application took only one or two days to process.

Funding your checking, savings, or certificate account. I found the easiest way to open my share certificate was to move money into my share savings account, and then fund the certificate from the share savings. I use Ally Bank as my banking hub, so I added Andrews FCU as an external account in my Ally account using my share account number and routing number (255074111). For some reason, the direct login verification didn’t work for me, so I completed the verification using two small test deposits. It took 2 business days for the test deposits, and 2 business days for the transfer from Ally to Andrews FCU.

Opening the share certificate. Once the funds arrived, I opened the share certificate online by clicking on “Open an Additional Account”. Despite the promotion stating you had to call in, the special certificates were available online. Here’s a screenshot (click to enlarge):

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You will need to chose your dividend reinvestment and maturity options. That’s it. The share certificate now shows up on my online banking page, right next to the share savings account. The process was pretty straightforward, just be sure to remove any credit locks or freezes on your TransUnion credit report. Remember that you’ll need to fund your special certificate by any stated deadline.

$50 Refer a Friend Bonus. As part of the holiday promotion, new members can also get a $50 cash bonus if referred by an existing member. The referrer also gets $50. However, the referred person must open a checking account and set up direct deposit of $500 or more. Here are the exact terms:

Refer a friend offer available to existing Andrews Federal members who refer a new member to the credit union. New member must open a new Free or Advantage Checking account with a direct deposit of $500 or more. Direct deposit must be initiated within 30 days of opening new Free or Advantage checking account, and must be received for at least two consecutive monthly statement cycles for both members to be eligible for reward. Account must remain open and in good standing for at least 90 days; accounts closed prior to 90 days will be ineligible. $50.00 will be credited to the referring member’s and the new member’s credit union accounts within 4 weeks after the 90- day period has ended. New member must qualify for credit union membership, which includes the opening of a Base Share Savings account with a minimum balance of $5.00.

In practical terms, I believe that during the application process there is a question “Where Did You Hear About Us?” and you can pick “Family/Friend Referral” and you can leave your friend’s name and Andrews FCU membership number in the comments field. If you are looking to open up a checking account and set up direct deposit, I am a member now so if you want a referral please contact me.

Ally Bank CD Maturity Review: Phone and Online Redemptions

allyreview_logoUpdated with online maturity information and screenshots. If you have money in a bank certificate of deposit (CD), you should be aware that most of them will renew automatically for the same term length upon maturity. That means if you don’t specifically tell them otherwise, your 5-year CD will roll over for another 5 years if you’re caught snoozing during the grace period. Different banks set different grace period lengths and renewal instructions; the best ones in my opinion let you set the decision ahead of time (i.e. Pentagon Federal Credit Union).

I bring this up again because I have a few Ally Bank CDs coming up for renewal. Here’s a quick review of the process for other Ally Bank account holders. First, here is the official policy taken from their website:

What happens to my CD at maturity?
You’ll have a 10-day grace period starting on your maturity date to:

Change the term
Make additional deposits or withdraw funds
Close the CD

If you don’t make changes to your CD by phone or in online banking by the end of the 10-day grace period, it will automatically renew into the same term. To provide renewal instructions in online banking:

Log in to your account
Go to the Main Menu , then Manage CDs
Select Make Changes

Here’s the timeline.

Roughly 30 days before maturity. If you have chosen paperless documents, you’ll receive a somewhat vague e-mail from Ally Bank with the subject line “You have new correspondence in online banking.” This is actually your official “Certificate of Deposit Maturity Notice”, so don’t overlook it! If you have paper statements, you’ll get a separate letter from Ally via snail mail.

Between 30 days before maturity to 10 days after maturity. If you want anything besides an auto-renewal of the same term at current market rates, then you must notify the either by phone at 1-877-247-ALLY (2559) or online. (Less than 2 years ago, there was no online option.) Here’s a screenshot of where I clicked after reaching my CD page (click to enlarge).

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If you call them, they’ll ask you a bunch of identity verification questions, much more than other phone calls. You can also ask if they still offer a Loyalty Bonus where you’ll get an extra 0.05% APY if you renew your CD. I was not shown any such offer when renewing online. (The Ally Ten Day Best Rate Guarantee also applies.) If you want to make a withdrawal or other changes, they’ll ask you why. Nothing high pressure, but they’ll softly encourage you to renew.

I decided to withdraw my funds this time. If you have multiple CDs like I do (for minimizing penalties in case of early redemption), they will have to read you the details and disclosures for each one. You can just skip over it if you do it online. I do my daily banking at Ally so I just swept it into one of my online savings accounts while I decide what to do with it. Here’s a screenshot:

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Remember that the phone wait time is shown live on the top of their main website (I only call if it is around a minute). Closing two CDs over the phone took about 15 minutes. Closing three CDs online took under 5 minutes. I’m glad they added the online option, it was much faster.

Also see: Ally Bank Savings Account Review.

Access from AT&T Review: Affordable Home Internet For Low-Income Households

accessatt0Access from AT&T is an affordable internet access plan for low-income households offered in certain areas with AT&T service. The cost is either $5 a month at 3 Mbps or $10 a month for 5-10 Mbps, depending on your area. According to their FAQ and press release, other features include:

  • No deposit required
  • No activation or installation fee
  • No contract
  • Free modem + WiFi router rental
  • Free access to the entire national AT&T Wi-Fi Hot Spot network.

However, note that AT&T will run a credit check. I don’t quite understand the reasoning though, as they state it won’t affect your eligibility. From their website:

As part of standard AT&T policy, all orders for new service are subject to a credit check. Results of the credit check will not impact your ability to obtain Internet service under the Access program from AT&T.

Qualifying households must have:

  • At least one resident who participates in the U.S. Supplemental Nutrition Assistance Program (SNAP) and
  • An address in AT&T’s 21-state service area, at which we offer wireline home Internet service, and
  • No outstanding debt for AT&T fixed Internet service within the last six months or outstanding debt incurred under this program.

California residents also are eligible if:

  • At least one member of your household receives SSI benefits; and
  • At least one of the Access from AT&T Internet speed tiers is available at the address where you live.

You can apply for the Access by AT&T program here. You can also learn more by calling AT&T at 1-855-220-5211 for assistance in English or 1-855-220-5225 for assistance in Spanish.

I am not applauding AT&T for this effort, just promoting its availability. AT&T agreed to offer this service as a condition of their merger with DirecTV. I think people should take advantage of it if it works economically for them. However, I see no evidence that AT&T did this for charitable reasons. They are only doing the bare minimum required by law. I think they are rightly being criticized for not offering this affordable plan in areas where they have speeds lower than 3 Mbps.

Also see:

Hanscom Federal CU Thrive Review: 3% APY High Interest Starter Account

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Updated with additional $30 bonus. Hanscom Federal Credit Union (HFCU) has a CU Thrive account, which works like a certificate of deposit that rewards consistent saving. The rate is set for 12 months, and during those 12 months you can transfer up to $500 every month from a HFCU checking account. No monthly fees. However, you cannot make any withdrawals during those 12 months, or you will be subject to an early withdrawal penalty of 90 days interest.

This product is not meant for big balances. Instead, it is meant to encourage a modest savings habit. The current interest rate of 3% APY is triple what the top high-yield savings accounts offer right now, and more than double what the top 1-year bank CDs are offering. HFCU is NCUA-insured, which is the credit union equivalent of FDIC-insured banks.

How much interest can I earn? At 3% APY, if you maxed out this account and set aside $500 a month for 12 months, at the end you’d have put in $6,000 and earned about $90 in interest (~$97 if you made every transfer on the 1st of the each month by my quick calculations). Not life-changing, but again federally-insured and triple what you could get at another bank. $6,000 also happens to be just about the same amount as a full Roth IRA contribution. Hint, hint.

At the end of the 12 months, all accrued savings plus earned dividends will be transferred into your primary savings account. Each member can only have one CU Thrive account open at one time, but after one 12-month period ends you can open up another one (assuming it is still offered). Full disclosure (PDF).

Eligibility details. To open a CU Thrive account, you must first open an HFCU checking account in addition to the savings account required for all members. HFCU offers a free checking account with no direct deposit and no minimum balance requirement. To open a checking account, just must be a member. Like most credit unions, membership is open by family, employer, or by membership in a partner organization (which makes it open to nearly everyone). For example, you could join the Nashua River Watershed Association for a one-time $35 fee and thus be eligible for HFCU membership. You must also keep $25 in the share savings account as long as you are a member.

New refer-a-friend program. They have re-activated their referral program, which allows you to join receive an additional $30 cash bonus after being an active member for 90 days. The referring member gets $30 as well. You may still be required to otherwise qualify for membership. I would recommend saying that you plan on joining the Nashua River Watershed Association but also listing yourself as being referred by an existing member. If you would like a referral from me, please me send your full name, e-mail address, the text “HFCU referral” via my contact form. I will use this information only to fill out their referral form.

Account opening process. I started the online application and said I would join the Nashua River Watershed Association for a one-time $35 fee (I didn’t know about the refer-a-friend option at the time). I had to provide the usual personal information and then answer questions based on my credit report to verify my identity. Based on my free credit monitoring, they did not perform a hard pull on my credit report. You can fund with an online bank transfer but they also gave me the option to fund with credit card up to $2,000. They didn’t mention if this would be considered a cash advance or not, but it showed up as a purchase on my American Express card. Finally, you must print out, sign, and mail in a signature card. You can also open an account in-person. All of their physical branches appear to be located in Massachusetts.

My 1-year experience. I had set the maximum $500 to be transferred every month to my CU Thrive account from my HFCU Checking account. I made 11 transfers but missed one because my checking balance was too low on the date of automatic transfer. My fault. When that happens, the account basically just skips the transfer. There is no penalty, you just don’t get to earn interest on that money. I called them but they said there was no way to replace that transfer, even if I moved more money into the checking account a day later. Other than that, everything went very smoothly and I was paid my interest as promised. At the 1-year maturity date, the funds were automatically transferred to my HFCU savings account and the CU Thrive no longer shows up on my online account page. I can now open up another CU Thrive account, if I wish.

I also discovered that Hanscom Federal has paid a Loyalty Dividend to its Credit Union members for over 15 consecutive years. For both 2014 and 2015, they paid a 2% bonus on dividends earned and consumer finance charges paid over the year. So on top my my $78.46 of interest earned, I earned another $1.57 in bonus loyalty dividends.

In addition to the CU Thrive and free checking options, HFCU also has a competitive Home Equity Line of Credit (HELoC) with no application fee, no annual fee, and no closing costs if you keep it open for 24 months. I’m thinking of opening one just to have around, does anyone have experience with this HELOC product?

Bottom line. The CU Thrive account is a good option for people looking to build up a savings habit, with a possible 3% APY for 12 months, $30 sign-up bonus, and free membership eligibility. However, the system really works best if you use HFCU’s free checking as your primary checking account. Juggling it as an external savings account is perfectly possible, but you have to keep on top of your transfers to avoid idle cash earning zero interest. I received all of the interest promised, the customer service was nice and polite when contacted, and any errors were my own.

Schwab Target Date Index Funds Review

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Charles Schwab has announced Schwab Target Index Funds, a new series of “all-in-one” target date mutual funds that are made up entirely of in-house Schwab Index ETFs and a Schwab cash mutual fund. Their existing offering Schwab Target Funds differs in being significantly more expensive and including a mix of passive and actively-managed funds. Each fund will have a target date between 2010 and 2060, spaced in 5-year increments. Let’s take a closer look.

What’s inside? The portfolio for any given target year is composed of 9 different asset classes. Here is a graphical illustration of their “glide path”, or how the asset allocation changes relative to the target retirement date. (Source. Click image to enlarge.)

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Here’s a 2016 snapshot of what every fund is holding by target date (Source. Click image to enlarge.):

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Overall, the glide path conforms to industry norms, with high equity at younger ages and lower equity as you reach and pass retirement. Here are the ETFs and mutual funds that represent each asset class.

  • US Large Cap Equity – Schwab U.S. Large-Cap ETF (SCHX)
  • US Small Cap Equity – Schwab U.S. Small-Cap ETF (SCHA)
  • International Developed Equity – Schwab International Equity ETF (SCHF)
  • Emerging Markets Equity – Schwab Emerging Markets Equity ETF (SCHE)
  • Real Estate – Schwab U.S. REIT ETF (SCHH)
  • Short-Term Bond – Schwab Short-Term U.S. Treasury ETF (SCHO)
  • Intermediate-Term Bond – Schwab U.S. Aggregate Bond ETF (SCHZ)
  • Inflation-Protected Bond – Schwab U.S. TIPS ETF (SCHP)
  • Cash – Schwab Variable Share Price Money Fund — Ultra Shares (SVUXX)

How much do they cost? What are the investment minimums?

  • Individuals can buy Investor Shares with an expense ratio of 0.13%. The minimum initial investment is $100.
  • Employer-sponsored retirement plans can access the Institutional Shares with an expense ratio of 0.08%. There is no minimum initial investment.

An interesting thing to note is that the mutual funds technically have an extra layer of management fees and “other fees” on top of the expenses from the underlying ETFs and mutual funds. However, Schwab has agreed to cap the expenses at 0.13% for Investor Shares and 0.08% for Institutional Shares. This is supposed to stay in place “for so long as the investment adviser serves as the adviser to the fund”… they might want to re-word that.

In any case, even with the cap, the Investor Shares still cost more than the expenses from the underlying investments. You are basically paying 0.05% to 0.08% for some simple asset allocation. That means you could build your own portfolio using the same Schwab ETFs at a lower cost. You could also get rid of the (unnecessary in my opinion) cash component, which currently only yields 0.43% with another temporary fee waiver as of 8/26/2016. Personally, that’s what I would rather do, but I will admit that some folks will do better with an automated asset allocation.

How does it compare with Vanguard Target Retirement Funds? This is the natural comparison, as Vanguard’s target funds have the most assets and they used to be the cheapest before Schwab came along. Across the series, the expense ratio for their retail fund varies between 0.14% and 0.16%. You can now see why Schwab has priced their funds just below that at the “sale price” of 0.13%. Schwab loves to be cheaper by a basis point or two.

In terms of asset allocation and glide path, here are some side-by-side comparisons:

  • Vanguard has a equity split of 60% domestic and 40% international. Schwab has a equity split of 67% domestic and 33% international (if you consider the 4% US REITs as US stock).
  • Vanguard starts at 90% equity max and reaches 50% equity at retirement age. Schwab starts at 95% equity max and reaches 40% equity at retirement age.
  • Asset classes that Schwab includes specifically, which Vanguard does not: REITs, inflation-protected bonds (TIPS), and cash.
  • Asset classes that Vanguard includes specifically, which Schwab does not: International bonds.

Commentary. Schwab is definitely serious about index funds. They’ve built their own set of low-cost index mutual funds and index ETFs to compete with Vanguard and iShares. They already have an automated portfolio “robo-advisor” called Intelligent Portfolios, which uses these index funds as well as some “smart beta” funds. They’ve added these Target Index funds to grab the 401(k) and individual markets including IRAs. Put another way, they sell flour and butter, and they also sell pre-made pies and cakes.

This is a long-term play for Schwab, as they’ve all but admitted that the index ETFs themselves are currently losing money, while hoping to either make up the difference in other fees, services, or products somewhere down the line (like when interest rates rise again). Schwab will surely grab much more assets from employer retirement plans as a result of this move. In my limited experience with them, I have found Schwab to have solid customer service, at times in fact better than Vanguard. If they can leverage their customer service and human component, I think this is a smart move on their part.

However, if given the choice, I’d recommend my family to buy Vanguard Target Retirement funds first because Vanguard is not a for-profit company and I trust Vanguard more to keep customer interests first over the long run. (I believe that Schwab includes cash where it isn’t necessary in order to increase their future fees from money market funds, which are an important contributor to profits. This isn’t as significant here as in their robo-advisor product, but it will matter more as interest rates rise. More importantly, Vanguard doesn’t play such games.) However, big-picture-wise they are very similar. I’d gladly recommend that they buy a Schwab Target Index fund in their 401(k) or 403(b) plan as they are likely the best options if available. This is a positive development overall for individual investors.

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.

Republic Wireless Review: New $20/Month Plan, Phone Options, SIM Cards

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Republic Wireless provides mobile phone service, specializing in making phone calls seamlessly over WiFi. They are not afraid to make big changes and take risks in trying to be more competitive in their offerings. While their 2.0 Refund plans received a mixed response (we switched out during this transition), they recently announced their new 3.0 Clear Choice plans with the T-Mobile network and a wider selection of phone options. Here’s a look at the changes.

Who can save money? Republic Wireless still works best for heavy talk and text users with frequent WiFi coverage. Data usage can be anywhere from none to relatively heavy (10 GB). The plans are priced per person, so they work well for individuals that can’t take advantage of family or shared plans. Here are all of their newest Clear Choice plan options:

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In their opinion and mine, the sweet spot of their plan is the $20/month offering, which includes unlimited talk, unlimited text, and 1 GB of 4G LTE data. For $15 a month, you can get unlimited talk and text with zero data.

Phone options. One of the weak spots of Republic Wireless was that they need to use special software to run their WiFi voice calls, so they restricted you to specially-modified phones. You had to either buy a new phone from them, or try to find another RW-modified phone on the secondary market.

With their 3.0 structure, they have introduced a large list of GSM phone options. You can either buy a phone from them or bring your unlocked phone and use their SIM card. There are still no Apple phones on the list (hopefully this changes one day).

  • Google Pixel
  • Google Pixel XL
  • Samsung Galaxy S7 Edge
  • Samsung Galaxy S7
  • Samsung Galaxy J3
  • Samsung Galaxy S6
  • Nexus 6P by Huawei
  • Nexus 6 by Motorola
  • Nexus 5X by LG
  • Moto X Pure Edition
  • Moto G4
  • Moto G4 Plus
  • Moto G4 Play
  • Moto Z
  • Moto Z Play

Bottom line. Republic Wireless is making some big changes, so it’s worth taking another look at them. The cell network is now T-Mobile for new customers, not Sprint. The $20 a month plan for unlimited talk, text, and 1 GB of LTE data is very competitive. There are 9 new Android GSM phones available starting at $199, a new SIM card option, but still no Apple phones.