Archives for November 2007

Rejected For Laser Eye Surgery: My Money-Saving Plan Foiled

Posted on November 4, 2007 // 34 Comments

My eyes are bad, they have been for a while. So bad, it turns out, that I can’t have laser eye surgery. No LASIK, no PRK, no Custom LASIK, no acronyms at all! Anyways, this has foiled my possible money-savings plans, but I thought I’d share them anyways.

  1. Decide if I want laser eye surgery by November.
  2. Max out my Flexible Spending Account (FSA) during Open Enrollment in December. (Say, $3,000.)
  3. Get the procedure done in January.
  4. Get my $3,000 back from the FSA afterwards in January.
  5. (Travel to less-developed countries in 2008 without worrying about being blind without my glasses…) 🙁

By timing it this way, I not only get the tax benefit of paying for my procedure with pre-tax money (saving 28% or whatever your tax bracket is), but I also effectively get a 0% interest payment plan for 12 months with no credit check. This is because for all the FSA plans I have worked with, you can get the full reimbursement upfront, but you still only fund the FSA via equal amounts from your paycheck.

Filed Under: Frugal Living //

$50 From Wells Fargo, 5.65% APY 4-Month CD

Posted on November 4, 2007 // 22 Comments

Wells Fargo Bank is offering a $50 bonus for opening a checking account with them. Note that they do perform a hard credit check. Their checking account rules vary by state, but I think most have one that is free with direct deposit. You can simply simulate a direct deposit with an online bank transfer via Capital One 360 or similar. Via commenter Paul.

Limit one $50 bonus per household. To qualify for your $50 bonus, you must open and fund a new personal Wells Fargo checking account with a minimum initial deposit of $100 (not including the $50 bonus) by November 30, 2007. The $50 bonus is available with all Wells Fargo checking accounts, including non interest-earning checking accounts, except for Wells Fargo College Checking?, Wells Fargo Teen CheckingSM and Wells Fargo Opportunity Checking? accounts. The $50 bonus will be deposited to your new Wells Fargo checking account within 30 to 45 days of opening.

I thought I’d also throw out there that IndyMac Bank is offering a 4-month CD paying 5.65% APY. $5,000 minimum, online-only.

Filed Under: Banking, Deals & Offers //

Weekend Roundup: Open Portfolios, New ETFs, Old Jobs, and More

Posted on November 3, 2007 // 3 Comments

As I catch up on my feed reader, here are some posts from other bloggers that I found interesting:

The Digerati Lifeshares her latest portfolio update. I love open portfolios, I don’t know why.

Lazy Man has left his job, and his wife explains why that’s okay. I left my job about 2 years ago to go back to school and switch specialties, and my wife was very supportive, which made all the difference in the world. Best decision ever. You gotta be able to chase your dreams, even if you’re married!

IndexFundFan noted the arrival of an Emerging Markets Small Value ETF. Holy non-correlated-asset-classes, Batman! I like having more competition and choices, but I don’t think I’ll partake of this one. I wonder what the tracking error on this thing will be.

Get Rich Slowly states that a credit card is not an emergency fund… but then shares a story where it was ;). It was in a small business setting, though – should that make a difference?

CFO tried Dream Dinners, where you make your own take-out for a week. She liked it the first time, but not the second time. I still get a steady stream of comments on my old Dream Dinners post, although I must admit I never cleared out enough space in the freezer to actually try it ourselves.

Filed Under: General //

Signup Bonuses: $100 From LaSalle Bank, $50 From NewBank

Posted on November 3, 2007 // 26 Comments

LaSalle Bank (now owned by Bank of America) is offering a $100 bonus for opening a checking account, savings account, and using the debit card once. Likes like you need $250 for the checking and $100 for the savings. Keep the minimum amount in there ($250 for checking, none for savings*), and that’s a very nice rate of return.

In addition, you can even fund with a credit card (up to $1,000 per account) and have it count as a purchase. Great for those with rewards credit cards.
[Read more…]

Filed Under: Banking, Deals & Offers //

Building My Portfolio: Efficient Frontier and Modern Portfolio Theory

Posted on November 2, 2007 // 20 Comments

Building upon the idea of investing in broad markets, next up is Modern Portfolio Theory. This is another advanced topic that entire careers can be built around, but here is my attempt to explain it in one quick digestible chunk.

Risk vs. Reward
As far as investing goes, the most basic component we have is cash. If we invest it in a Treasury bill from the government (as riskless as possible), then we will end up with a return after inflation of zero. You just keep up with inflation. No risk, no reward. In order to increase our reward we, must take on more risk. But it’s not a linear relationship. We want to find the mix of investments that offer the best mix of risk and reward. So again we turn to history and whip up some math. (I’ll go easy on the numbers here.)

Reward = Return
The idea of reward is usually represented by the historical average annual return of the investment. Sounds good to me.

Risk = Standard Deviation
The idea of risk has many possible definitions. Stocks are seen as riskier as bonds, because their prices have historically fluctuated much more wildly. For example, for domestic stocks, your best year would be +39% while your worst year would be -28%. In contrast, for a broad bond portfolio, your best year would have been +31% while your worst year would be -8%. (Source: Vanguard) A mathematical way to measure this volatility is standard deviation. The larger the standard deviation, the higher the risk.

Mix ‘Em Up
An asset class is a group of investments that exhibit similar characteristics. If we plot their historical returns vs. historical standard deviations, we might get something like this:

altext

One dot might be the S&P 500. Another dot might be 1-Year Treasury Bonds. Now, what if we starting mixing them up into in various ratios. Like taking 50% S&P 500, 25% US Small Cap, and 25% 5-Year Treasury Bonds. We’ll get a whole lot more dots, err… data points:
[Read more…]

Filed Under: Investing, Retirement //
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