Archives for February 2010

Cheap Baseball Tickets Now on StubHub

Posted on February 15, 2010 // 7 Comments

Walletpop had a good article last week about cheap major league baseball tickets being available on StubHub.com. The season hasn’t started yet, so planning ahead and grabbing $2-$10 tickets can make for some reasonably cheap fun. I also found an upgrade to some nice box seats for only $40.

Stubhub’s service fee equals 10% of the full price of all the tickets in your order ($5 minimum per order), and there is also a $4.95 delivery fee (per order). Yes, it’s a bunch of fees, but just look at the total price and you can still find some deals. I’d like to see all the baseball stadiums someday, although I’m falling behind as the Astrodome and old Yankee Stadium have already been replaced! Fenway Park is my current favorite, although Wrigley Field is the next one I most want to visit.

Filed Under: Deals & Offers //

Morningstar Lifetime Allocation Indexes

Posted on February 15, 2010 // 6 Comments

Morningstar recently started publishing their Morningstar Lifetime Allocation Indexes, which are designed as benchmarks for mutual funds that shift their asset allocation as a target retirement date nears. An example is the Vanguard Target Retirement 2045 fund (VTIVX), a buy-and-hold fund designed for those retiring around the year 2045.

Created using historical performance data with Ibbotson Associates, the indexes provide asset allocations that are optimized based on Modern Portfolio Theory. The asset classes included are US and international stocks, US and international bonds, inflation hedges like TIPS and commodities, and cash. However, the interesting part is that their “efficient frontier” optimization model incorporates the idea of human capital, which is defined as the present value of a person’s future earnings.

Here is a chart from their factsheet explaining the idea (click to enlarge):

Accordingly, there are 13 indexes with three different risk profiles – aggressive, moderate, and conservative. It is recommended that you choose the proper profile not based on your love of risk-taking, but based on the quality of your human capital:

Human capital is defined as the present value of a person’s future earnings. This ability to work and earn money over time is like a giant bond that provides fairly stable cash flows. The human capital bond is not investment-grade for all investors however. Some investors have stable income streams and thus should have a higher capacity for market risk. Others have income streams that are more sensitive to economic conditions and should therefore have a more conservative financial asset allocation.

Without further ado, you can view all the asset allocations here. I’ll probably make a nice graph out of this later. For now, let’s say I wanted to retire at about age 50 in the year 2030, and I feel my human capital is moderately stable. The Moderate 2030 asset allocation looks something like this:

84% Stocks
— US 57%
— International 27%
10% Bonds
— US 10%
6% Inflation Hedges
— Treasury Inflation-Protected (TIPS) 1%
— Commodities 5%

I don’t really have any further thoughts on it, besides the fact that I don’t think we should necessarily base everything on historical returns. It might be better to try and figure out the source of those returns. Otherwise, it’s just another data point to add to the many model asset allocations out there.

Filed Under: Investing, Retirement //

Emerging Markets ETFs: EEM vs. VWO Comparison

Posted on February 12, 2010 // 23 Comments

One of the hottest asset classes in 2009 by far was Emerging Markets, which includes stocks from developing markets like China, Brazil, Korea, Taiwan, India, and South Africa. Two of the most popular ETFs in this category are the iShares MSCI Emerging Markets Index (EEM) and the Vanguard Emerging Markets ETF (VWO).

Which one should you choose?

Similarities. Both are primarily passively-managed and based on the MSCI Emerging Markets Index. EEM has been around longer but both currently have similar levels of assets, with $40B for EEM and $34B for VWO.

Differences. EEM is less expensive than most other actively-managed Emerging Markets mutual funds at a 0.72% annual expense ratio, but Vanguard is significantly cheaper still at 0.27%. EEM has a much higher average trading volume, as it has a higher popularity amongst institutional investors and active traders.

While they track the same index, both ETFs have their own sampling methods to replicate that index. EEM holds 439 stocks with an average market cap of $23.1 million, while VWO holds 816 stocks with an average market cap of $17.6 million. Unfortunately, Morningstar chose the MSCI EAFA Index as their benchmark for statistical comparison, so it’s hard to see exactly historically which one has been following the index more closely.

Performance-wise, iShares’ EEM has recently been lagging behind Vanguard, as was pointed out in this IndexUniverse post. In 2009, EEM rose 68.8% but VWO gained 76.3%, nearly 8 percentage points more.

This has led to a significant outflow of funds recently from EEM into VWO:

However, if we look back to 2008 EEM dropped 48.9% while VWO dropped 52.5%. VWO isn’t old enough to compare 5- or 10-year historical returns, but if you compare 3-year annualized trailing returns VWO only beats EEM slightly at 2.69% vs. 2.60%. That’s actually surprising given the 45 basis point expense edge for VWO.

Conclusion. Due to their differences, either EEM or VWO may outperform each other in the short run. However, historically the significantly lower expense ratio of VWO has won out, and I would expect it continue to do so in the long run. VWO also holds more stocks and thus would seem to track the MSCI index more closely, while EEM offers more liquidity if you’re trading high amounts of shares at once.

Disclosure: I am or will be invested in VWO or the mutual fund equivalent (VEIEX). The reason I started this research is because I am currently trying to figure out how to switch to an ETF since the Vanguard fund VEIEX is both more expensive at 0.39% annually and has both a purchase fee of 0.50% and a redemption fee of 0.25%. Ouch! You can compare the total ongoing costs of VWO vs. VEIEX easily at this Vanguard calculator.

Filed Under: Investing //

American Express Extended Warranty Review

Posted on February 10, 2010 // 35 Comments

Roomba VaccumIf you’re like me, you’re vaguely aware that you can get some sort of additional warranty coverage from your credit card, but not interested enough to carefully read those little brochures with the tiny print that come in the mail. Today a fellow named Joe sent me a story about his broken Roomba which describes his experience with American Express when his beloved vacuum broke after 18 months, which was 6 months past the manufacturer’s 1-year warranty. It’s a bit long-winded, but in the end AmEx did refund his original $300 purchase price. After reading it and doing some other hunting around, here’s a summary of the American Express Extended Warrant feature:

The Basics

All American Express (AMEX) cards (as well many versions of Visa and MasterCard) offer an automatic warranty extension if you buy the product using their card. Specifically for American Express, here is the fine print from the their FAQ page:

1. How does the Extended Warranty work?
When you charge the cost of a covered product with your American Express® Card, the Extended Warranty will extend the terms of the original manufacturer’s warranty for a period of time equal to the duration of the original manufacturer’s warranty, up to one additional year on warranties of five years or less that are eligible in the U.S.

In other words, in general they will double the original manufacturer’s warranty, but only up to one year. This is unless your product has a warranty of over 5 years as default. If you are still covered by the original warranty, you must go through the manufacturer. You do not need to sign-up or perform any kind of activation process to get this extended warranty.

Things You Need To Keep

American Express seems to advertise this service the most, and anecdotally is one of the best at actually coming through with their promise. However, you’ll still need to keep several pieces of information to support your claim. For all your big purchases, use an AmEx and keep these papers somewhere organized!

  • The original purchase receipt, which notes which product you bought, the date of purchase, and that it was bought entirely with an American Express card.
  • The product warranty card, which outlines the details of the original manufacturers warranty.
  • Your old AmEx credit card statement, which lists and matches the purchase receipt above.
  • The broken product. AmEx may choose to replace your item, repair it, or refund the purchase price. They choose, so keep what you have until they say so. If they replace it, they may ask you to send the broken item back to them.

Filing a Claim

To start a claim, the Extended Warranty department’s phone number is 1-800-225-3750. You can check the status of your claim online at www.americanexpress.com/onlineclaim. Be prepared to wait two weeks for the claim to process after submitting support materials.

 

Starwood Preferred Guest Credit Card from American Express
My Swiss army knife of travel rewards cards. You get 1 point per $1 spent, and 20,000 Starwood points = 25,000 airline miles (free ticket). Essentially up to 1.25 miles per dollar spent, and you can convert to a variety of airlines or free hotel rooms. Top off an account, or convert a big lump sum.

Currently, the sign-up bonus is 10,000 points after first purchase. On top of that, you can also get an additional 15,000 points by spending $5,000 on the card within the first 6 months. Annual fee is waived for the first year, and is $65 the second year if you keep it.

American Express Disclaimer: This content is not provided or commissioned by American Express. Opinions expressed here are author’s alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through American Express Affiliate Program.

Filed Under: Credit Cards, Frugal Living, Insurance //

ETrade Bank Savings Accounts now by Discover Bank?

Posted on February 9, 2010 // 40 Comments

Just got this e-mail from regarding my ETrade Bank online savings account:

We are writing to let you know that your E*TRADE Bank account referenced above will soon be transferred to Discover Bank, and become a Discover Online Savings Account. This follows our plan to focus more exclusively on providing optimal investing solutions to our customers. We expect the transfer to occur on or about March 7, 2010.

Discover Bank sounds okay from what I’ve read, and the APY on my whopping 3 cent balance will go up from 0.50% to 1.35% APY, but the only reason I kept the E*Trade account around was for its speedy funds transfers. I don’t use any ETrade brokerage services since they are too expensive and the phone hold times are too long. (I do enjoy the commercials, though.) Time to close the account?

Filed Under: Banking //

31% Off FICO Scores at myFICO.com

Posted on February 9, 2010 // 5 Comments

Still got a few resolutions left to do? Here’s a current coupon for real FICO scores and all other credit products at myFICO.com. Use the promotional code MYPOINTS30 to get a FICO score for only $11 (~31% off), the best discount I could find right now:

You can still use CPPSAVINGS for 20% off if this expires.

Experian no longer allows Fair Isaac to sell FICO scores to consumers, even though lenders can still buy and use them. Instead, they join a bunch of other outfits selling their own FAKO (“FAKE-O”) version. But since lenders almost always use real FICO scores in their decisions, those are the only ones you should pay for – if at all – in my opinion.

For the diligent, a cheaper alternative is to sign up for a free 30-day trial of ScoreWatch, which includes two free Equifax scores and reports. Just remember to cancel as soon as you grab those scores. It is easy to cancel online, without having to even call in. As always, you can always request your credit reports (not scores) once every 12 months at AnnualCreditReport.com.

Filed Under: Credit Cards //

OptionsXpress $100 New Account Bonus

Posted on February 8, 2010 // 1 Comment

Online broker OptionsXpress is offering new customers a $100 bonus if they open an account with at least $500 and make 3 trades. You can also transfer in at least $500 of securities from another broker.

Stock trades cost $14.95 if you makes less than 8 trades/quarter, and options cost $15 for 10 contracts. There are no extra fees for broker-assisted trades, as well as no minimum account balances, no account maintenance fees, and no inactivity fees. It’s not that great if you just want the bonus, but a nice incentive if you want to try them out. The strong points of OptionsXpress are their options and futures trading tools, usability, and customer service.

Selected fine print:

Offer is valid for one new Individual or Joint optionsXpress account opened and funded with at least $500 by US residents on or before December 31, 2011 at 11:59 CST, and having executed 3 trades within twelve months of account opening. To receive $100 bonus, account must be funded with at least $500 cash or securities transferred from a brokerage firm other than optionsXpress. The $100 bonus will be deposited into the new optionsXpress account within one month after meeting the terms and conditions of this offer. optionsXpress may charge the account for the cost of the $100 bonus should account fail to remain open with minimum funding (excluding trading losses) 6 months from the account open date. IRAs, other tax-exempt, linked, or shared accounts are not eligible to receive the $100 bonus offer.

Filed Under: Deals & Offers //

Capital One 360 Business Savings Reference Code: $100 Bonus

Posted on February 6, 2010 // 2 Comments

Capital One 360 has an business version of their popular online savings account, called 360 Savings for Business. It has no minimum balance requirements and no maintenance fees, while currently paying 1.05% APY. As with their personal account, you’ll need to link this account with a business account under the same legal name.

You can also get a $100 bonus upon opening an account by using the Reference Code BSA298 on your online application. Expires 2/28/2010.

Filed Under: Banking, Deals & Offers //

Chase Business Checking Coupon: $100 Bonus

Posted on February 6, 2010 // 13 Comments

Chase has an online coupon for a $100 cash bonus for people opening a new Chase Free Business Checking account with a least $500. Offers expires 3/15/10. Thanks to reader Tom. Selected fine print below:

Offer valid 2/1/10- 3/15/10. To qualify for this offer, open a Chase BusinessClassicSM Checking, BusinessClassicSM Checking with Interest, Chase Advanced BusinessCheckingSM, Advanced Business CheckingSM with Interest, Commercial Checking, Commercial Checking with Interest, or Chase BusinessPlus® Extra Checking account and deposit a minimum of $500 or more into your new business checking account within 30 days of account opening with funds not currently on deposit with Chase or any of its affiliates. Offer not available to existing Chase checking customers. Coupon must be presented at time of account opening. Cash premium will be deposited automatically into your checking account within 10 business days after the minimum deposit requirement is met.

Filed Under: Banking, Deals & Offers //

Selling Back Really Old Textbooks Online

Posted on February 4, 2010 // 29 Comments

In the process of trying to minimize junk, I sold off some pretty old textbooks this week. It’s been over ten years since I first bought any of these books, and the last time I used them was probably about 7 years ago. I had saved them initially for the qualifying exams that PhD students must take early on in graduate school, and then later thought I might go back to school or use them as references at work. They also looked nice on my bookshelf and made me feel smart. 😉

I was about to throw them out since I figured they’d be five editions behind by now and wouldn’t be worth anything, but a quick search ended getting me about $10 per book.

Compare Offer Prices
After looking around, the easiest place to start seemed to be the price comparison engine at BigWords.com. You simply enter all the ISBN numbers at once to your virtual “bookbag”, and then click “Start Price Comparison”. The site then looks up the price offered by buyback sites like TextbooksRus, SellBackYourBook.com, Bookstores.com, Cash4Books.net, FirstClassBooks, Valore Books, and eCampus.

They also look up current lowest asking prices at sites where you can sell it yourself, like TextbookX Marketplace, Amazon.com, Half.com, and TextbooksRus. In some cases like the one below, a buyback site actually offered more than these middlemen before their commissions.

Another option I considered was to drive to the nearest college campus bookstore and run the books through each of their databases, but I decided it wasn’t worth the time and gas for me. This would obviously be much easier for current students.

Book Buyback Online
I just wanted to get rid of them in bulk and didn’t feel like maximizing my price for something that might never sell, so I just went with the highest offers from each of the buyback sites. In some cases, I had to group purchases because some sites had a minimum purchase amount (i.e. they won’t buy less than $15 of books from you).

All the sites had a similar process, and were very simple to deal with. You add the books you want to sell, and then print out a packing slip and prepaid mailing label. Most pay for USPS media mail, although some offer FedEx or other faster service. I just had to drop them off at the post office since they weighed more than a pound. Once they receive and process the books, they then cut you a check (some offer bank direct deposit or PayPal). I haven’t received my checks yet, but the sites listed appear to be reputable.

Let me know if you know of a better way to offload your unwanted old textbooks.

Filed Under: Simple Living //

Fidelity Offers Free Commissions on iShares ETFs, Make Your Own Free Portfolio

Posted on February 2, 2010 // 19 Comments

In addition to their new $7.95 per trade price structure, Fidelity is also waiving commissions completely for 25 iShares ETFs. This appears to be a partnership where iShares partially compensates Fidelity themselves for promoting their ETFs.

Fidelity receives compensation from the ETF sponsor and/or its affiliates in connection with a marketing program that includes promotion of iShares ETFs and certain commission waivers. Additional information about the sources, amounts, and terms of compensation is described in the ETF’s prospectus and related documents. Fidelity may add or waive commissions on ETFs without prior notice.

Technically, you could make a relatively complete passive portfolio consisting entirely of these iShares ETFs. For example, if you wanted a stock portfolio encompassing the entire world in proportion to their current market capitalization share, you could go with

45% IWV (Broad United States)
40% EFA (Broad Developed Europe & Pacific)
15% EEM (Emerging Markets)

Since these ETFs have pretty good trading volume, the bid-ask spreads should also be reasonably small. For the bond portion, one possibility would be

50% AGG (Broad, Investment Grade Taxable US Bonds)
50% TIP (US Treasury Inflation-Protected Bonds)

assuming you had room in a tax-advantaged account like an IRA. Not a recommendation, just what I might buy for myself.

US Equity
iShares Russell 1000 Growth (IWF)
iShares Russell 1000 (IWB)
iShares Russell 1000 Value (IWD)
iShares Russell 2000 Growth (IWO)
iShares Russell 2000 (IWM)
iShares Russell 2000 Value (IWN)
iShares Russell 3000 (IWV)
iShares S&P 500 Growth (IVW)
iShares S&P 500 (IVV)
iShares S&P 500 Value (IVE)
iShares S&P Mid Cap 400 Growth (IJK)
iShares S&P Mid Cap 400 (IJH)
iShares S&P Mid Cap 400 Value (IJJ)
iShares S&P Small Cap 600 Growth (IJT)
iShares S&P Small Cap 600 (IJR)
iShares S&P Small Cap 600 Value (IJS)

Dow Jones U.S. Real Estate (IYR)

International Equity
iShares MSCI ACWI (ACWI)
iShares MSCI EAFE
iShares MSCI EAFE Small Cap (SCZ)
iShares MSCI Emerging Markets

Bonds
iShares Core Total U.S. Bond Market ETF
iShares Barclays TIPS Bond ETF
iBoxx $ Investment Grade Corporate (LQD)
JP Morgan USD Emerging Markets (EMB)
S&P National AMT-Free Municipal (MUB)

Filed Under: Investing //

Fidelity Drops Trade Commission Price to $7.95

Posted on February 2, 2010 // 2 Comments

Fidelity announced today that starting February 3rd, 2010, the price of all online equity trades through their brokerage would cost $7.95, with no limit on the number of shares. Previously, the commissions ranged from $8 to $19.95 per trade depending on asset value and trading volume. This is great news for my Self-Employed 401k at Fidelity. Phone and broker-assisted trades cost a little more:

Customers placing trades through Fidelity’s Automated Service Telephone (FAST) will pay an additional $5 per trade ($12.95 total), and those placing trades through a representative will pay an additional $25 ($32.95 total) per trade.

This move makes Fidelity more competitive with the other discount brokers out there, for example I have an account with OptionsHouse which charges only $2.95 per trade.

They also announced commission-free trades for 25 iShares ETFs, which seems like a direct response to Schwab’s commission-free ETFs.

Filed Under: Investing //
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