Archives for May 2017

Work + Skill + Luck + Risk = Big Success

May 29, 2017 By Jonathan Ping 8 Comments

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A new book called Barking Up the Wrong Tree by Eric Barker promises to reveal surprising facts about what really determines success. The publicity tour has generated several articles about how high school valedictorians are less successful than you might think:

Beyond the clickbait, what really happened? I haven’t read the book, but I did learn that Dr. Karen Arnold of Boston College tracked 81 high school valedictorians and salutatorians for 14 years after graduation. Here are some of the findings of this study:

95% went on to graduate college.
The average college GPA was 3.6.
60% went on to receive graduate degrees.
90% were in professional careers.
40% are in highest tier jobs (not exactly sure what this means).

Apparently, none of the subjects became billionaires or “changed the world” in a meaningful way. Why not?

The theory is that high grades are a product of conformity and obedience, while being “successful” is about mastering a unique skill and non-comformity. Research has found that high grades are only loosely correlated with intelligence. In addition, out of a survey of 700 millionaires, the average GPA was only 2.9. If you are devoted to a single passion, it can be hard to have good grades in all subjects; thus you tend to struggle in high school.

My question is – How you define “success”? If it’s a respectable career with above-average income, it seems that being valedictorian gives you a much higher chance for that. There’s a reason why many parents want their kids to get good grades and become an engineer, doctor, accountant, or lawyer. You are playing the odds. There are many starving artists and writers, but not many starving nurses.

If “success” is becoming a billionaire, then yes it seems that being a valedictorian may not match up with that. If you want to get rich quickly, you’ll need to start your own business and take some sort of ownership stake. The richest people all own something – music copyrights, book copyrights, businesses, real estate, something.

The difference is taking risks. By definition taking a risk means there is the chance of failure. A small business can make you rich, but most small businesses end up failing. However, you’ll only get graduation speeches from the winners. This is called survivorship bias, as this XKCD comic explains:

There is no direct formula for success, but you can still break it down into the required parts:

Work + Skill + Bad Luck + High Risk = Failure + Experience

Work + Skill + Good Luck + High Risk = Success + Experience

No Work + Good Luck = Failure

The takeaway is that you need hard work, valuable skills, taking a risk, and some luck. Luck plays a role, but you need the other three or you have no chance at all.

If you can be a high school valedictorian, I feel you are able to do hard work and thus have the ability to develop valuable skills. That’s a good base. The difference is… will you take the risk? Will you risk putting all your time and energy into developing a skill or a company that may or may not result in something valuable? Will you accept that chance of failure? Or would you rather go with the odds and do something with more reliable results? Perhaps statistically valedictorians take less risk than other groups.

I plan on advising my kids to take calculated risks when they are young and can devote 70 hours a week to a single task. That’s possible when you aren’t taking care of your kids (or your parents). However, I would also teach them that a reliable stream of above-average income plus a high savings rate equals financial freedom, aka early retirement in 10-20 years. (Getting rich via ownership just accelerates the process even further.) Once you have that financial freedom, you can do whatever you want with your life. Start a charity, write a novel, spend time with family, travel the world. Living a lifestyle aligned with your values certainly sounds like “success” to me.

Filed Under: College & Education, Entrepreneurial, Frugal Living

Last updated: April 25, 2019

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Prescription Check App by Warby Parker: Extend Your Eye Prescription For Free

May 24, 2017 By Jonathan Ping 3 Comments

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Warby Parker sells prescription eyeglasses and sunglasses, primarily online at prices lower than traditional retail optical stores (starts at $95). They can send you frames to try on at home, or you can upload a picture of yourself and “try on” frames virtually.

The next step is to remove the optometrist visit whenever possible. Per this Quartz article, Warby Parker has rolled out a new Prescription Check app that will write you a new prescription (with a new expiration date) if their eye exam shows that your prescription hasn’t changed.

You basically do the “Big E” exam while standing the proper distance away and looking at your desktop computer screen, using the smartphone app for interaction. The updated prescription is written by a licensed eye doctor and is valid at any optical center (not just Warby Parker). The app is registered with the FDA. For now, the service is at the convenient price of free.

The catch? For now, eligibility is limited to the following:

Must be a resident of California, Florida, New York, or Virginia.
Between ages 18 and 40.
Must already own Warby Parker prescription eyeglasses.

Warby Parker says they will increase eligibility over time (and eventually start charging a fee). I went ahead and signed up for e-mail alerts.

I’ve worn glasses for decades and would agree that there are times that I just want another pair of glasses but my eye prescription expired after 12 months. On the other hand, I do feel reassured when I visit the optometrist that everything is alright. Maybe they should extend prescriptions to 2 years if your vision has been stable for a while.

(Added: A reader tweeted that in some states like California, eyeglass prescriptions last for 2 years while contact lenses are for 1 year. Another site that does online eye exams is Opternative.com.)

Filed Under: Deals & Offers

Last updated: May 25, 2017

Free Return Shipping When Paying with PayPal (Activation Required)

May 24, 2017 By Jonathan Ping 7 Comments

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If you shop online at websites like eBay, Walmart, and Home Depot where PayPal is an option for payment, consider that PayPal will reimburse your shipping costs if you buy using PayPal and end up having to make a return.

You must first activate this service, and then after that PayPal will cover up to $30 of return shipping costs for up to 12 eligible PayPal purchases worldwide per calendar year (January 1st to December 31st). You must submit a refund request within 30 calendar days of mailing back the returned item. Found via SD.

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When shipping back the item, remember that you’ll need to provide the following proof:

A return shipping cost receipt that also shows the seller’s address. (If your receipt doesn’t show the seller’s address, also send a photo of your return package that does.)

Filed Under: Deals & Offers

Last updated: May 24, 2017

Real-World Example of Why High-Cost Index Funds Are The Worst

May 22, 2017 By Jonathan Ping 4 Comments

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Here’s another reminder that in the world of investing, having low costs is more important than owning “passive” index funds. Why? The simplest argument is that index funds can have high expense ratios.

Anyone can open an account at Vanguard, Schwab, Fidelity, or TD Ameritrade and purchase an S&P 500 index fund with expenses of about 0.05% a year. That works out to $50 a year on a $100,000 balance.

Meanwhile, the following companies have the most expensive S&P 500 index funds on the market. These happily charge you $1,000 to $2,300 a year on a $100,000 balance while investing in the same companies in the same amounts. Credit to Meb Faber for compiling this list.

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These could be considered the worst mutual funds out there. Why? If you buy an actively-managed stock-picker fund, at least you have the possibility of outperformance (for a little while at least). You bet on red in roulette even though there is zero and double-zero. With an expensive index fund, you have zero upside. You can’t win. You didn’t even bet on double-zero. Instead, you essentially lit 1% of your money on fire.

Let’s look at the real-world performance of Rydex S&P 500 Fund (RYSYX) and the Vanguard 500 Index Fund (VFINX). Here’s a Morningstar chart showing the relative performance of the Rydex S&P 500 Fund (RYSYX) and the Vanguard 500 Index Fund (VFINX) from the inception of the Rydex fund in mid-2006. This is a “Growth of $10,000” chart, and you can see how the gap just keeps widening over time.

Here’s a quick takeaway from this chart:

Someone who invested $100,000 in the Rydex S&P 500 Fund (RYSYX) from 5/31/06 to 5/21/17 (~11 years ago) would now have $185,183.
Someone who invested $100,000 in the Vanguard 500 Index Fund (VFINX) from 5/31/06 to 5/21/17 (~11 years ago) would now have $235,948.
That is a difference of over $50,000 with no luck involved as both are passive funds that that legally promise in their prospectus to track the S&P 500 index.
Let me repeat: That’s a difference of $50,000 on a $100,000 starting balance over only 11 years! That is real money; actual dollars that someone will not have to spend in retirement. Imagine what that number could grow into over 30 years of saving.

Isn’t that horrible? Now, consider that the reason why someone would buy these funds in the first place was probably due to a human advisor putting their client in such a fund. Therefore, there is the possibility of another layer of advisor fees on top of the fund expense ratios. (Or they could be options in a bad 401(k) plan. It would be really scary if these were the best options on a plan menu.)

I can’t understand how these companies can get away with charging so much for doing so little. According to Morningstar, the State Farm S&P Index fund (SNPBX) currently has $1.4 billion in assets and the Invesco S&P 500 Index fund (SPICX) has $1 billion in assets. Billions of dollars? Why are so many people buying this stuff?!

Filed Under: Investing

Last updated: May 22, 2017

Real-World Example of Sequence of Returns Risk

May 21, 2017 By Jonathan Ping 2 Comments

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The standard investment advice is the older you get, the more bonds you should hold in your portfolio. There are various rules of thumb like “Age in Bonds” or “Age minus 20 in Bonds”, and so on. On the other hand, stocks have higher historical long-term returns, so shouldn’t we keep as much in stocks as we can?

It’s not just about the long-term average return, you also have to worry about the sequence of returns. I’ve shared a hypothetical example of sequence of returns risk before, but Will Street Project has a great post called Why Drawdowns Matter that illustrates this effect using real-world numbers.

From 2000 to 2016, the overall total return of the S&P 500 Index (large US stocks) and the Barclays US Aggregate Bond Index (broad US bonds) was roughly the same. The sequence for stocks was bad then good. The sequence for bonds was basically a slow, gradual line upwards. Stocks thus lagged bonds for most of the period but caught up and even surpassed bonds a bit by the end.

Here’s what would have happened if you started with $100,000 in either the S&P 500 or the US Aggregate Bond Index and kept on buying $500 per month:

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Here’s what would have happened if you started with $100,000 in either the S&P 500 or the US Aggregate Bond Index and kept on selling $500 per month.

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The difference is that in the top chart you are adding money (and thus buying stocks at a lower price during the bear markets), while in the bottom chart you are taking out money (and thus selling stocks at a lower price during the bear markets).

It is important to note that things would look different if stocks shot up initially and then tapered off, as opposed to stocks struggling initially but then going back up at then end of the period. However, we can’t control the sequence of returns in our own retirements, so we have to be prepared.

One solution is to hold more bonds (or single-premium immediate annuities). Another solution is to use a dynamic withdrawal strategy so that you’re taking out less money during a down market.

Filed Under: Investing

Last updated: May 21, 2017

Shoe Dog by Nike Founder Phil Knight: A Great Audiobook

May 18, 2017 By Jonathan Ping 2 Comments

As a kid in the late 1980s, I admit that I yearned for a pair of Nike Air shoes. I’d doodle shoes with that AIR logo and visible air pocket. I still remember the day I finally got a pair. They were an ugly blue-suede color from the bottom of some bargain bin, but they were only $34.99 and they were mine.

As Nike was already huge by then, I never had any curiosity about the early years of Nike. I only started listening to Shoe Dog: A Memoir by the Creator of Nike by Phil Knight after seeing it mentioned as Warren Buffett’s “favorite book of 2016” in his Berkshire Hathaway annual letter.

While I usually prefer reading physical books since I like to write notes and make highlights, this book seemed more like a story so I decided to listen to it as an audiobook. That turned out to be a good decision. (Right now, Audible is offering two free audiobooks as part of its free trial. As with all Amazon trials, it’s easy to cancel. The other book I picked was When Breath Becomes Air.)

Here are some quick notes that I took (less than usual due to it being an audiobook) along with some of my favorite quotes (you can mark notable places with the app and then go back).

Phil Knight was on the University of Oregon track team. He ran for fun and would have kept running even if he never owned a shoe company.

I’d been unable to sell encyclopedias, and I’d despised it to boot. I’d been slightly better at selling mutual funds, but I’d felt dead inside. So why was selling shoes so different? Because, I realized, it wasn’t selling. I believed in running. I believed that if people got out and ran a few miles every day, the world would be a better place, and I believed these shoes were better to run in. People, sensing my belief, wanted some of that belief for themselves. Belief, I decided. Belief is irresistible.

He was a visionary, but not necessarily how you think. Knight first sold imported shoes from Japan – Tiger by Onitsuka. In fact, he only started Nike after Tiger threatened to pull his distribution rights. He didn’t start with “Air Jordans” and “Just Do It” fully-formed in his mind. He was more of a warrior/competitor that just kept on fighting.

Nike’s success was not at all guaranteed. Knight had to maintain a full-time job as an accountant while running his company on the side. There were many hiccups and struggles and lawsuits, each of which could have bankrupted the young company.

I’d like to remind them that America isn’t the entrepreneurial Shangri-La people think. Free enterprise always irritates the kinds of trolls who live to block, to thwart, to say no, sorry, no. And it’s always been this way. Entrepreneurs have always been outgunned, outnumbered. They’ve always fought uphill, and the hill has never been steeper. America is becoming less entrepreneurial, not more.

Knight never used this word, but he appeared to be more of an introvert than an extrovert. He wasn’t a natural salesman or self-marketer. He didn’t like advertising. He developed a strong core of extremely loyal people at Nike. He was not a micro-manager.

Don’t tell people how to do things, tell them what to do and let them surprise you with their results.

Thoughts on becoming rich:

When it came rolling in, the money affected us all. Not much, and not for long, because none of us was ever driven by money. But that’s the nature of money. Whether you have it or not, whether you want it or not, whether you like it or not, it will try to define your days. Our task as human beings is not to let it.

On luck:

Luck plays a big role. Yes, I’d like to publicly acknowledge the power of luck. Athletes get lucky, poets get lucky, businesses get lucky. Hard work is critical, a good team is essential, brains and determination are invaluable, but luck may decide the outcome. Some people might not call it luck. They might call it Tao, or Logos, or Jñ?na, or Dharma. Or Spirit. Or God.

On why he finally shared this personal memoir:

I’d like to share the experience, the ups and downs, so that some young man or woman, somewhere, going through the same trials and ordeals, might be inspired or comforted. Or warned. Some young entrepreneur, maybe, some athlete or painter or novelist, might press on. It’s all the same drive. The same dream.

Finally, some career advice:

I’d tell them to hit pause, think long and hard about how they want to spend their time, and with whom they want to spend it for the next forty years. I’d tell men and women in their midtwenties not to settle for a job or a profession or even a career. Seek a calling. Even if you don’t know what that means, seek it. If you’re following your calling, the fatigue will be easier to bear, the disappointments will be fuel, the highs will be like nothing you’ve ever felt.

Another anecdote that showed his honesty was that although he regrets not being able to spend much time with his young children, he also admits that if he had the chance he would do the same thing all over again.

There are many other worthy highlights in this book. I definitely recommend Shoe Dog for people interested in the origin story of Nike, entrepreneurialism, global business, and as interesting autobiography.

Filed Under: Book Reviews

Last updated: April 25, 2019

Frugal Entrepreneur Earns $5,600 a Month Farming Other People’s Yards

May 17, 2017 By Jonathan Ping 3 Comments

Here’s a cool story at the intersection of entrepreneurship, frugal living, and sustainable farming. Jim Kovaleski is a one-man farm, growing produce and selling it at local farmers markets, earning over $5,000 a month. What’s unique is that he doesn’t have a central plot of land – he grows his plants on other people’s residential yards in Florida and Maine. Some stories say he “leases” the land but in the interview below he says he doesn’t pay in cash, only in veggies.

He’s profiled above on the Justin Rhodes YouTube channel. Found via Kottke.org.

This nomadic gardener travels between Maine to Florida gardening leased front yards. With a frugal lifestyle and revenues as high as $1.5K a week, he’s living the dream.

It’s not an easy job, but he gets to work on his own terms while developing a unique set of skills. I’m impressed both by the yield he gets from relatively little space, and how he keeps people’s front yards looking relatively nice (as opposed to industrial or commercial). If you live in a neighborhood with the right vibe (like my old one in SE Portland), this idea could probably be replicated.

Filed Under: Entrepreneurial, Frugal Living

Last updated: May 17, 2017

Coffin Homes: Living in Tiny Spaces As a Last Resort

May 17, 2017 By Jonathan Ping 1 Comment

The Atlantic has a photojournalism article The ‘Coffin Homes’ of Hong Kong which startled me and challenged my idea of a “tiny” living spaces. The size reminded me of capsule hotels in Japan, except these are in much worse condition and are permanent residences. A sad and extreme example of high population density and lack of affordable housing.

Cheung reports that there is a “dark side to the property boom in wealthy Hong Kong, where hundreds of thousands of people priced out of the market must live in partitioned apartments, ‘coffin homes’ and other inadequate housing.” These residents are among an estimated 200,000 people in Hong Kong living in such tiny subdivided units, some so small that a person cannot even fully stretch out their legs.

Filed Under: Real Estate

Last updated: May 17, 2017

Ally Bank vs. Goldman Sachs Bank CD Interest Rate Comparison

May 15, 2017 By Jonathan Ping 7 Comments

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After last week’s WSJ article about interest rates, I noticed that both Goldman Sachs Bank USA (GS Bank) and Ally Bank have both been hiking rates on their CDs. Competition is good and I like that they both still show the desire to stay at the top as rates start rising again. (GS Bank is formerly GE Capital Bank, which also had a good history of maintaining high rates.) I’ll still chase a good limited-time CD rate if it’s high enough, but I like not having to move my cash around constantly.

Is Ally or Goldman Sachs a better overall place to keep your cash? Here is a direct rate comparison at various terms (as of 5/15/17). Both have hikes rates already this month.

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In terms of side-by-side rate comparison, GS Bank is either the top or tied for the top at all the term lengths as of 5/15/17. Things could change with future rate changes. However, I would point out that their early withdrawal penalties are slightly different, with Ally being more lenient across the board.

Ally Bank Early Withdrawal Penalty Schedule

Terms less than 24 months = 60 days of interest
Terms 25 months to 36 months = 90 days of interest
Terms 37 months to 48 months = 120 days of interest
Terms 39 months and longer = 150 days of interest

Goldman Sachs Bank Early Withdrawal Penalty Schedule

Terms less than 12 months = 90 days of interest
Terms of 12 months to 5 years = 270 days of interest
Terms of more than 5 years = 365 days of interest

Both offer fast transfers between external bank accounts as quickly as one business day. I have not opened a Goldman Sachs Bank account (yet) so I haven’t done a side-by-side comparison of transfer speeds.

Bottom line. Both Ally Bank and Goldman Sachs Bank are solid, all-around online banks and offer least highly competitive rates across all term lengths. Goldman has slightly higher rates at certain terms lengths, but Ally has smaller early withdrawal penalty. Alliant Credit Union is another worthy all-around competitor that I also considered, but Alliant’s certificate rates are lower across the board other than their 1.05% APY savings account which is tied. I hope to continue to take regular rate snapshots.

Filed Under: Banking

Last updated: June 22, 2021

How Much Do Other Parents Help Pay For College Tuition?

May 14, 2017 By Jonathan Ping 23 Comments

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As the school year ends, I am reminded that my children are another year closer to college. I still remember paying off my own $30,000 in student loan debt, and now I am worried about saving up for their tuition. While I still maintain that parents should secure their own retirement needs before worrying about their kid’s college bill, what if you are doing okay and want to help out?

A Priceonomics survey of over 1,400 college graduates between the ages of 25 and 54 found on average that people graduated college initially with roughly $40,000 in student loan debt and currently still maintain a balance of roughly $30,000.

Of these college graduates, how many people receive financial help from their parents? How much assistance did they get? Here are the results.

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The survey also asked questions about gender, race, and the extent to which debt hindered their ability to cover daily expenses, save for retirement, or start a small business. The article focused on the differences, but overall I saw more similarities than differences. In all the cases, between 50% and 71% of people felt that their student loan debt hindered them in all three scenarios.

There are many (terrifying) projections about how much college will cost in 2035. I’ve seen numbers over $100,000 per year for private tuition/housing and $50,000 per year for public tuition/housing in today’s dollars. However, according to this survey only 9% of parents paid for most and 11% paid for half of their kid’s tuition. 80% of parents either paid nothing or “a little”. It’s hard to reconcile these two stats. Are students in 2035 really going to graduate with $100,000 of debt? Something is going to have to give.

Filed Under: Career, College & Education

Last updated: February 22, 2019

Best Interest Rates on Cash Savings – May 2017

May 11, 2017 By Jonathan Ping 16 Comments

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The WSJ article Bank of America Pays Peanuts for Deposits, but the Money Keeps Flowing In (paywall) outlines how BofA gets away with paying less interest on its deposits than nearly any other US bank (not that the other mega-banks are that much better). BofA only pays an average of 0.08% on $796 billion of cash deposits, including certificates of deposit:

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Keep your savings somewhere else! Even if you have a BofA account for the ATM network, you can avoid fees on their basic checking accounts with either a monthly direct deposit, a minimum balance of $1,500 with no direct deposit, or by keeping $20,000 in stocks/ETFs at Merrill Edge with no direct deposit and no minimum balance. Anything above that can easily earn more interest with a companion account like Ally Bank Savings that now has 1-day transfers between linked accounts.

On that note, here is my monthly roundup of the best safe rates available, roughly sorted from shortest to longest maturities. Rates checked as of 5/11/17.

High-yield savings accounts
While the huge brick-and-mortar banks rarely offer good yields, the online banks with a history of competitive rates offer online savings accounts clustered around 1% APY. An important feature to note with savings account is that their interest rates can change at any time.

As I’ve been “bait-and-switched” a few times and there are no lucrative rates that make it worth taking another risk, I am currently sticking with Ally Bank for their reliably competitive rates and overall good user experience. Their online savings is currently at 1.05% APY.

Money market mutual funds
If you like to keep cash in a brokerage account, you should know that money market and short-term Treasury rates have been inching upwards. It may be worth the effort to move your money into a higher-yielding money market fund.

The Vanguard Prime Money Market Fund has increased their SEC yield to a half-decent 0.95%. The default sweep option is the Vanguard Federal Money Market Fund, which only has an SEC yield of 0.69%. You can manually move the money over to Prime if you meet the $3,000 minimum investment.

Short-term guaranteed rates (under 1 year)
I am often asked what to do with a big wad of cash that you’re waiting to deploy shortly (just sold your house, just sold your business, inheritance). Honestly, I wouldn’t get fancy or take unnecessary risk. Just keep it safe in a short-term CD or online savings account that in insured under the FDIC limits until you have a plan.

Palladian Private Bank has a 6-month promotional rate of 1.30% APY guaranteed (maximum initial deposit of $100k) for new accounts. After the first 6 months, the rate reverts back to their normal rate (currently 0.90% APY). Since the initial promo rate is fixed, this makes it the highest guaranteed 6-month CD rate available.

US Savings Bonds
Series I Savings Bonds offer rates that are linked to inflation and backed by the US government. You must hold them for at least a year. There are annual purchase limits. If you redeem them within 5 years there is a penalty of the last 3 months of interest.

“I Bonds” bought through the end of April 2017 now will earn a 1.96% rate for the first six months, and then a variable rate based on ongoing inflation after that. While that next 6-month rate is currently unknown, at the very minimum the total yield after 12 months will around 1% with additional upside potential. More info here.
In mid-October, the CPI will be announced and you will have a short period where you will have a very close estimate of the rate for the next 12 months. I will have another post up at that time.

Prepaid Cards with Attached Savings Accounts
A small subset of prepaid debit cards have an “attached” FDIC-insured savings account with high interest rates. The risks are that balances are capped, and there are many fees that you must be careful to avoid (lest they eat up your interest). The other catch is that these good features may be killed off without much notice. My NetSpend card now only has an eligible balance up to $1,000.

Insight Card is one of the best remaining cards with 5% APY on up to $5,000 as of this writing. Fees to avoid include the $1 per purchase fee, $2.50 for each ATM withdrawal, and the $3.95 inactivity fee if there is no activity within 90 days. If you can navigate it carefully (basically only use ACH transfers and keep up your activity regularly) you can still end up with more interest than other options.

Rewards checking accounts
These unique checking accounts pay above-average interest rates, but with some risk. You have to jump through certain hoops, and if you make a mistake you won’t earn any interest for that month. Rates can also drop quickly, leaving a “bait-and-switch” feeling. But the rates can be high while they last.

Consumers Credit Union offers up to 4.59% APY on up to a $20k balance, although 3.09% APY on a $10k balance might be easier to achieve unless you satisfy a long list of requirements. Note that the 4.59% APY requires you to apply and get approved for an additional credit card through them (other credit cards offer $500+ in sign-up bonuses). Keep your 12 debit purchases small as well, as for every $500 in monthly purchases you may be losing out on 2% cashback (or $10 a month on after-tax benefit). Find a local rewards checking account at DepositAccounts.

Certificates of deposit
If you have a large cushion, it’s quite likely to just sit there for years. One option is to keep your money in longer-term investments where you can still take it out in a true emergency and pay a reasonable early withdrawal penalty. Alternatively, you could create a CD ladder of different maturity lengths such that you have access to part of the ladder each year, but your blended interest rate is higher than a savings account.

Connexus Credit Union is offering a 1-year Share Certificate at 1.50% APY (90-day early withdrawal penalty) and a 3-year Share Certificate (180-day early withdrawal penalty) at 2.00% APY. Both have a $5,000 minimum deposit. Anyone can join this credit union via partner organization Connexus Association for a one-time $5 fee.
Hanscom Federal Credit Union is offering a 4-year Share Certificate at 2.50% APY (180-day early withdrawal penalty) if you also have Premier Checking (no monthly fee if you keep $6,000 in total balances or $2,000 in checking). HFCU also offer a 3% APY CU Thrive “starter” savings account. HFCU membership is open to active/retired military or anyone who makes a one-time $35 donation to the Nashua River Watershed Association.

Longer-term Instruments
I’d use these with caution, but I still track them to see the rest of the current yield curve.

Willing to lock up your money for 10+ years? Did you know that you can buy certificates of deposit via Vanguard’s bond desk? These “brokered CDs” still offer the same FDIC-insurance. As of this writing, you can get a 10-year non-callable CD that pays 2.75% APY. (Unfortunately, current long-term CD rates do not rise much higher even as you extend beyond a 5-year maturity.) Prices will vary daily.
How about two decades!? Series EE Savings Bonds are not indexed to inflation, but they have a guarantee that the value will double in value in 20 years, which equals a guaranteed return of 3.5% a year. However, if you don’t hold for that long, you’ll be stuck with the normal rate which is quite low (currently a sad 0.10% rate). You could view as a huge early withdrawal penalty. You could also view it as long-term bond and thus a hedge against deflation, but only if you can hold on for 20 years. Too long for me.

All rates were checked as of 5/11/17.

Filed Under: Banking, Deals & Offers

Last updated: August 9, 2018

Best Places to Find a Decent Used Car For Under $1,000

May 10, 2017 By Jonathan Ping 7 Comments

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I suppose my pre-Uber generation might be the last one to equate having your own car with fun and freedom. In high school, I would comb through the “Under $2,000” section of the newspaper classified ads every day. How it looked didn’t matter as long as it meant I could go places without my parents. More recently, I bought a cheap beater car on Craigslist in order to learn how to drive a stick shift. Goofing around in that thing was great nostalgic fun, although I sold it soon after.

This Car and Driver article compares the various places that you can find your own cheap-yet-decent car:

Impound lots
Junkyards
Airport Auctions
Public Auctions
The Spare Car on Facebook
Government Auctions

The author Steven Lang has been an “auto auctioneer, car dealer, and part owner of an auto auction for nearly two decades”. Amazingly, even after inflation the target price point is under $1,000.

Here’s the uncomfortable truth: To spend less than $1000 on a car, you have to be willing to risk that money and spend maybe $500 to $1000 more to get it back into tip-top mechanical shape. So do yourself a big favor and don’t be lazy in your pursuit. Go where you can have the least uncertainty and invest in the automotive beauty that lies within.

While I still enjoy learning tips about the “hunt”, these days you will find me driving around in a comfortable and reliable Toyota Minivan. My philosophy is now “buy new and drive it for at least a decade”.

Filed Under: Frugal Living

Last updated: May 10, 2017

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