Archives for May 2022

Teachers Federal Credit Union New Member Promotion (DO NOT TRY)

Posted on May 30, 2022 // 30 Comments

Update 6/16/22: More than two weeks after joining and taking my deposit, they have finally refunded the deposit and officially declined my application due to vague reasons suggesting fraud. They have made no effort to contact me or to otherwise explain their actions. I’d never use this credit union, even if I lived in their region. 🙄

Update 6/13/22: Myself and many other readers report that this credit union has locked them out of online access and refunded the initial deposit, all without any further communication. All after approving the account, providing account numbers and routing numbers, and allowing us to set up direct deposits. Not a great look for them. I would not try for this bonus anymore if you have not already done so.

Original post as of 5/30/22:

Teachers Federal Credit Union has a new member offer worth up to $400 that consists of a $300 direct deposit bonus and $100 debit card spending bonus. The terms also state that you can stack this with the $50 refer-a-friend promotion. Teacher’s FCU has 32 physical branches in New York state, but membership is open to anyone applying online. Must enter promo code OFFER400 to participate in this offer. Hat tip to DepositAccounts. Offer ends 7/31/22.

$300 Direct Deposit bonus details.

  • Offer available to new members only.
  • Must enroll in Online Banking and eStatements.
  • Open a new Teachers checking account.
  • Have qualifying direct deposits totaling at least $2,500.00 within the first three monthly statement cycles after account opening.
  • Qualifying direct deposits include payroll or government benefits. Transactions that will not count toward direct deposits include external transfers, point of sale credits and in-person check or cash deposits, wire transfers, ATM transfers, and Online and Mobile Banking transfers.
  • For accounts opened online, you must use offer code OFFER400 to be eligible.
  • May be combined with the Refer-a-Friend promotion.

$100 Debit Card Spend bonus details.

  • Offer available to new members only.
  • Must enroll in Online Banking and eStatements.
  • Open a new Teachers checking account with a debit card.
  • Make $500 in eligible purchases using the Teachers debit card linked to that account.
  • The $500 must be spent within the first three monthly statement cycles in order to qualify. Qualifying debit card purchases do not include: ATM transactions, cash-back, Peer-to-Peer (“P2P”) payments, loan payments, account funding and disputed or unauthorized transactions.
  • For accounts opened online, you must use offer code OFFER400 to be eligible.
  • May be combined with the Refer-a-Friend promotion.

$50 Refer-a-Friend bonus details.

  • Referred person must keep account open for 60 days in good standing with a balance greater than $0.
  • Referred person must perform 10 qualifying transactions in 60 days – transactions include debit card purchases, direct deposits, mobile deposits, Teachers bill pay, in-branch deposits and ATM deposits
  • If these requirements are satisfied, both the referrer and referred person will each get a $50 bonus deposited into their Regular Savings account.
  • Here is my $50 refer-a-friend link. Enter your e-mail address to use. Thanks if you use it!

Smart Checking 1.00% APY details. There is a barebones Share Draft Checking with no minimum balance and no monthly fee, but also no interest paid. Alternatively, the high yield Smart Checking account earns 1.00% APY on balances up to $15,000 (and 0.10% APY on balances greater than $15,000) when you meet one of these qualifications:

  • Average monthly balance of $5,000 in your Smart Checking account
  • $20,000 in combined end of month deposit balances
  • Establish direct deposit(s) of $500 or more AND complete 10 debit card purchases each month

(Note that there is a inactivity fee if the Share Savings account balance falls below $100 AND there has been no account activity during the previous two years.)

Application and bonus qualification details. Here are some tips based on my account opening experience.

  • First, start by clicking on a $50 refer-a-friend link from a member and enter your e-mail address. This qualifies you for the $50 Refer-a-friend offer and you will move on to the application process. You can pick either the Share Draft Checking or Smart Checking (both have no monthly fee).
  • You will enter your personal information including name, address, drivers license/ID, Social Security number, and so on. They will ask you some identity verification questions. You will not have to join any special organizations to gain credit union membership, not even a $5 nominal fee. In fact, they will deposit $1 for you into a savings account to get you started.
  • Be sure to enter the promo code OFFER400 when prompted towards the end of the application.
  • Your initial deposit can be charged on a credit card, up to $5,000. I recommend using a 2% cash back card or similar to earn some rewards. If everything goes smoothly, you should receive an e-mail with your member number shortly, which allows you to sign up for online access. Otherwise, they may ask for some additional documentation.
  • They seem to be pretty good about frequent email communication. Once you get the account number (routing number is 221475786), you can use that for establishing direct deposit within the required timeframe. (Note the offer page says 60 days in some places, but the fine print clarifies it is within three monthly statement cycles.) Don’t forget to sign up for eStatements and make those 10 transactions as well to get the $50 referral bonus.

Altogether, this is a very attraction promotion on a pretty decent no-fee checking account. Teachers FCU also has competitive CD rates at times. They currently offer a unique 24 month “Smart CD” that pays 2.00% APY in Year 1 and 2.50% APY in Year 2 (as of 5/30/22).

Filed Under: Banking, Deals & Offers //

Investment Portfolio First Aid for Older Relative, Part 1: Assess The Situation

Posted on May 25, 2022 // 29 Comments

Although I enjoy managing my own investments, I’ve generally avoided managing other people’s money. That always felt like such an important responsibility to take on. Below is the real investment portfolio of an older family member (over 75) that is professionally managed by an large “brand name” financial firm. Understandably, the recent market volatility has hurt the balance and there is some concern, so I took a look.

Before opening up the statement, I joked to myself “There better not be that ARK ETF in there!”…. and there it was. Down 66%! 😱 Deep breaths! My thoughts went to the four basic steps to performing emergency first aid:

  1. Assess the situation
  2. Plan for interventions
  3. Implement first aid
  4. Evaluate the situation.

Here are some anonymized screenshots (with permission) that show holdings, balances, performance, and rough asset allocation breakdown.

Why in the world does this portfolio only have 10% in bonds, at least according to the pie chart above? What exactly are those “alternatives”? I created a Google spreadsheet and started collecting more data from Morningstar:

The Goldman Sachs “multistrategy” fund turns out to consist of roughly 50% net stocks and 50% net cash/bonds. So the overall asset allocation is about 80% stocks and 20% bonds. Perhaps they confused the “age in bonds” rule of thumb with “age in stocks”? 🤔

I don’t know all the details and communications that took place before the creation and implementation of this portfolio, but my first impression is not positive. In addition to an overly-aggressive asset allocation, I see a mishmash of high-cost mutual funds. There isn’t a single penny in a low-cost index fund as a core holding! I don’t believe that you need 15 different funds to be “diversified”. While a relatively small holding, the fact that ARK ETF holdings are down 67% also means they decided to buy in after all of the initial outperformance. In other words, performance chasing.

Speaking of performance, the portfolio is down 25% from the initial purchase amounts. That’s seems like a lot for someone in their 70s, and we haven’t even technically hit a bear market in the S&P 500 yet.

Filed Under: Investing, Retirement //

Hulu Black Friday: $0.99/Month for 12 Months (w/ Ads), Add Disney+ For $2/Month

Posted on May 24, 2022 // 11 Comments

Hulu has a Black Friday deal of $0.99/month for 12 months on their Ad-supported plan that includes two devices and HD resolution. Regular price is $7.99/month. You can also add on Disney+ (Ad-supported) for $2/month or add Starz for $0.99/month for 6 months. Works for new and returning members (must have canceled for at least a month). Set a calendar reminder if you don’t want to auto-renew.

Savings compared to current regular monthly price. Offer for Hulu (With Ads) plan only: $.99/month for 12 months, then auto-renews at $7.99/month or then-current regular monthly price. Ends 11:59 PM PST on 11/28/23. Cancel anytime, effective at the end of your billing period. No refunds or credits for partial months. New and eligible returning subscribers (who have not been Hulu subscribers in the past 1 month) only; Disney+ Basic (With Ads) and Disney Bundle subscribers are not eligible.

Filed Under: Deals & Offers //

How to Do Nothing: Resisting the Attention Economy (Book Notes)

Posted on May 23, 2022 // Leave a Comment

Even though I spend a lot of time online reading through forums, blogs, e-mail newsletters, substacks, and so on, I don’t spend much time on Twitter or Facebook. Slowly reading a detailed review or educational article is one thing, but 100 different people making short, forceful, absolute statements within 5 minutes quickly overwhelms me. There is surely a lot of good discussion, but in a terribly noisy room.

I checked out How to Do Nothing: Resisting the Attention Economy by Jenny Odell for a different perspective. This blurb was intriguing:

Odell sees our attention as the most precious—and overdrawn—resource we have. And we must actively and continuously choose how we use it. We might not spend it on things that capitalism has deemed important … but once we can start paying a new kind of attention, she writes, we can undertake bolder forms of political action, reimagine humankind’s role in the environment, and arrive at more meaningful understandings of happiness and progress.

While I didn’t agree with many of the arguments made in the book, as usual I just tried to find what was useful to me and leave the rest.

What is meant by the goal to “do nothing”?

The point of doing nothing, as I define it, isn’t to return to work refreshed and ready to be more productive, but rather to question what we currently perceive as productive.

From either a social or ecological perspective, the ultimate goal of “doing nothing” is to wrest our focus from the attention economy and replant it in the public, physical realm.

What are we trying to avoid?

But the villain here is not necessarily the Internet, or even the idea of social media; it is the invasive logic of commercial social media and its financial incentive to keep us in a profitable state of anxiety, envy, and distraction.

Here’s what I want to escape. To me, one of the most troubling ways social media has been used in recent years is to foment waves of hysteria and fear, both by news media and by users themselves.

Meanwhile, media companies continue churning out deliberately incendiary takes, and we’re so quickly outraged by their headlines that we can’t even consider the option of not reading and sharing them.

People read a tweet or a headline, react, and click a button—thousands and millions of times over in a matter of days. I can’t help but liken the angry collective tweet storms to watching a flood erode a landscape with no ground-cover plants to slow it down. The natural processes of context and attention are lost. But from the point of view of Twitter’s financial model, the storm is nothing but a bounteous uptick in engagement.

An short bit about John Muir, “Father of the National Parks”:

Muir had already developed a love of botany, but it was being temporarily blinded by an eye accident that made him re-evaluate his priorities. The accident confined him to a darkened room for six weeks, during which he was unsure whether he would ever see again. The 1916 edition of The Writings of John Muir is divided into two parts, one before the accident and one after, each with its own introduction by William Frederic Badè. In the second introduction, Badè writes that this period of reflection convinced Muir that “life was too brief and uncertain, and time too precious, to waste upon belts and saws; that while he was pottering in a wagon factory, God was making a world; and he determined that, if his eyesight was spared, he would devote the remainder of his life to a study of the process.” Muir himself said, “This affliction has driven me to the sweet fields.”

On Epicurus, “epicurean”, and unhappiness:

More generally, Epicurus observed that people in modern society ran in circles, unaware of the source of their unhappiness:

“Everywhere you can find men who live for empty desires and have no interest in the good life. Stupid fools are those who are never satisfied with what they possess, but only lament what they cannot have.”

Quite contrary to the modern-day meaning of the word epicurean—often associated with decadent and plentiful food—what the school of Epicurus taught was that man actually needed very little to be happy, as long as he had recourse to reason and the ability to limit his desires.

On giving others (and ourselves) space to change our minds:

This is one of the things I find the most absurd about our current social media, since it’s completely normal and human to change our minds, even about big things. Think about it: Would you want to be friends with someone who never changed their mind about anything?

But because apologizing and changing our minds online is so often framed as a weakness, we either hold our tongues or risk ridicule.

Weird stuff happens when attention = money. Creating hate = attention = money. Creating dissatisfaction = attention = money. Creating distraction = attention = money.

There are many things going on in the book, but I support physically go outside and hang out with people in-person, and preferably both at the same time. I will put more effort towards these pursuits. (I would say it’s a cheap form of entertainment, but booking an AirBnb within the boundaries of Yosemite National Park was not cheap! 😁)

Filed Under: Book Reviews //

2022 Berkshire Hathaway Annual Shareholder Meeting Video, Transcript, and Notes

Posted on May 20, 2022 // Leave a Comment

Here are my notes on the 2022 Berkshire Hathaway Annual Shareholder Meeting. This year, CNBC has the rights to record and host the full video and transcripts (morning session, afternoon session) and they did a nice job with syncing the text and sound. I enjoyed listening to it like a podcast first and then reading through the text a second time around. There are many financial media articles with highlights, but here are my personal takeaways and notes.

Berkshire Hathaway is their life’s work and legacy. It’s fascinating to see how they have tried their best to build it to last forever. I recently listened to an outdoor podcast called Dirtbag Diaries where a 78-year-old man suffering from late-stage Parkinson’s disease still completed a 10-day whitewater rafting trip in the Canadian wilderness. Some folks just have more life energy than life time left, and wring out every last bit. Inspiring.

Warren Buffett is 91 and Charlie Munger is 98. These guys could be relaxing. They know the end is near, but they still have energy and are doing what they love. They built Berkshire bit by bit and the shareholders that they will leave behind are close family and friends that trust them. BRK is their legacy, and they have carefully crafted it to keep growing for those shareholders long past their lifetimes.

But most — a great many of them just say, you know, “We’ve saved this money. And we trust you and Charlie.” And that’s a great motivator, this trust.

“And, you know, take care of it and I’m not going to learn accounting and try to read all those statements or anything of the sort.”

You know, if I went broke, it wouldn’t really make any difference. It’d keep doing what I do. I’d figure out a way to read a paper and watch a little TV (Laughter) and think about things and talk to Charlie.

But the idea of losing, permanently, other people’s money — people who trust us — really, really — that’s just a future I don’t want to have.

So, the one thing I can tell you about Berkshire — although I can’t predict what our earnings will be, and I can’t predict what the stock will do, and I can’t — we don’t know. We don’t know what the economy will do and all of that sort of thing.

But we do know that we wake up every morning and we want to be safer, in terms of your eventual investment.

Now, whether you make the most money or anything, we do not want you to get a terrible result because you’ve decided to become our partner. And that’s a pledge you can live by.

They aren’t done yet, either. As long as they are able, they will keep adding pieces. They spent $40 billion is just three weeks, and are probably still buying stuff as I type this. The media usually only focuses their attention on certain purchases, but you can track their 13F filings to see exactly they bought and sold. Sites like Dataroma parse them for you, but if you plan on copycat investing be warned that the data is delayed and also Buffett is not always buy and hold forever. He’s not always right, and when Buffett realizes this, he can also sell quickly. Being late after he buys and late after he sells can be a very bad combo.

Berkshire Hathaway share repurchase timing gives some hints. They also bought back a few more BRK shares in January to March 2022 ($3 billion), but none in April 2022 once the price rose. This should give you a hint as to what Buffett thinks is a “good deal” on BRK shares. He wouldn’t buy back shares unless they were safely below his estimate of intrinsic value. You may see those 2021 and early 2022 prices again…

Cash is like oxygen. We should all keep adequate cash reserves in 100% liquid and safe places. Home equity lines of credit can (and have been) frozen quickly. Credit card limits can be reduced. We should know by now that crazy stuff happens quickly.

When 2008 and 2009 — the national panic came along — we didn’t own anybody’s commercial paper. You know, we didn’t have money market funds. We have Treasury bills. And, as I may get into it a little later, I’ll explain to you why.

We would — we believe in having cash.

And there have been a few times in history, and there will be more times in history, where if you don’t have it, you know, you don’t get to play the next day. I mean, it’s just —

It’s like oxygen, you know? It’s there all the time. But if it disappears for a few minutes, it’s all over.

Gambling and investing are getting mixed up yet again. Sports gambling is growing. Short-dated options trading is growing. Crypto has many shady pockets. Remember that casino owners make reliable profits while feeding the gamblers with hope. Which side do you want to be on? Buffett noticed this as a 21-year-old newlywed visitor to Las Vegas:

They’d gone to great lengths to come out to do something that was mathematically unintelligent, and they knew it was unintelligent.

And, I mean, they couldn’t do it fast enough, in terms of rolling the dice, you know, and trying to determine whether they were hot or whatever they may be.

And I looked around at that group. And everybody there knew that they were doing something that was mathematically dumb, and they’d come thousands of miles to do it, and they were —

And I said to my wife, I said, you know, I’m going to get rich.

How to beat inflation? Invest in your own human capital.

But the best thing you can do is to be exceptionally good at something. If you’re the best doctor in town, if you’re the best lawyer in town, if you’re the best whatever it may be, no matter whether people are paying you with a zillion dollars or paying with — they’re going to give you some of what they produce in exchange for what you deliver.

And if you’re the one they pick out to do any particular activity, sing, or play baseball, or be their lawyer, whatever it may be, whatever abilities you have can’t be taken away from you, they can’t actually be inflated away from you.

Somebody else will give you some of the wheat they produce, or the cotton, or whatever it may be, and they will trade you for the skill you have.

So, the best investment by far is anything that develops yourself. And, again, it’s not taxed. (Applause) So that’s what I would do.

Find the intersection of something that interests you, something you have a talent for, and something that pays the bills.

CHARLIE MUNGER: Well — if you stop to think about it, there are two things that neither one of us has ever succeeded at: One, we’ve never succeeded at anything that didn’t interest us, right?

WARREN BUFFETT: Right.

CHARLIE MUNGER: And we’ve never succeeded at anything that was really hard where we didn’t have much aptitude for it.

WARREN BUFFETT: Yeah. And we’ve been doing whatever we pleased for 60 years.

CHARLIE MUNGER: Yeah, we did.

Filed Under: Inspirational, Investing //

Peerstreet Update 2022: Interest Rate Spreads, Secondary Market, Pocket 3.5% APY

Posted on May 17, 2022 // 13 Comments

Another one of my Peerstreet loans was paid off recently, and I realized that it has been over a year since my last update on this experiment in real-estate debt. Here’s my current view on this unique investment.

Peerstreet in a nutshell. “Fractional investments meet hard money lending”. Real estate investors need money quickly to purchase a property, so they pay a higher interest rate for lighting-fast funding but usually only hold the debt for 12-36 months. This used to be for wealthy folks with lots of cash lying around, but Peerstreet lets SEC-accredited investors put in as little as $1,000 to fund a portion of any specific property. The loans are backed by a first lien on the real estate property.

My performance in a nutshell. Since 2016, I have funded 72 loans on 72 different properties with between $1,000 to $5,000 each. I have earned nearly $5,000 in interest at an overall IRR of 6.8% so far (verified with Excel). 67 of the loans have been paid off, 2 are current on their payments and mature in 2022, and 3 are in various stages of being late. Due to rising real estate prices, I am just being patient and letting Peerstreet handle the legal gymnastics.

Why I stopped investing in a nutshell. My 72 loans were all between 7% and 10% interest. The median was 7.50% and the average was closer to 8%. However, in the past year the rates have been more often in the 6.5% to 7% range. Traditional 30-year fixed mortgage rates are now close to 6%, and Peerstreet’s rates are a bit higher now but I am still choosing to sit out at these offered rates. I have been seeing loans taking longer to become fully funded so perhaps I’m not alone. Below are the two most recent loans available, just as an example:

Secondary marketplace. Peerstreet has added a new feature where selected people (usually larger institutions) can make offers on your existing loans prior to maturity, possibly offering you valuable liquidity. In my experience, I have only received a few lowball bids on my loans that are in foreclosure, on the order of 50 cents on the dollar. No thanks. It will be much more interesting if/when they open this up to everyone, so that you can have a more efficient marketplace for loans in default.

Peerstreet Pocket 3.5% APY. Peerstreet also rolled out an optional feature called Pocket that pays higher-than-online-bank rates on your short-term cash. They just raised the rate up to 3.5% APY. You can deposit daily, but only withdraw once a month (with two weeks notice). The funds are not FDIC-insured and are backed by the financial ability of Peerstreet (effectively this is lending money to a young start-up company).

Bottom line. I still like the idea of Peerstreet and have had an overall positive experience (you do need enough invested to maintain proper diversification across loans), but the interest rates currently being paid out just aren’t high enough to maintain my interest. I’m currently withdrawing my funds gradually as the loans get paid back over time and investing them elsewhere. 10% interest rates would get my attention back, though! 💰

If you are interested, you can sign up and browse investments at PeerStreet for free before depositing any funds or making any investments. You must qualify as an accredited investor (either via income or net worth) to invest. If you already invest with them, they now sync with Mint.com.

Filed Under: Deals & Offers, Investing, Real Estate //

Boost Mobile Annual Plans $8.33/mo for 1 GB, $25/mo for 35 GB “Unlimited” Data (AT&T MVNO)

Posted on May 12, 2022 // 12 Comments

Boost Mobile now uses the T-Mobile and AT&T 4G/5G networks after the T-Mobile/Sprint merger completed. Now owned by Dish Network, they have rolled out some aggressively-priced annual plans that are cheaper than the ones from Mint Mobile (which I still use), plus some people may prefer access to AT&T network coverage. Light data users can get 1 GB a month for only $100 a year, while heavy data users can get 35 GB a month for $300 a year ($25 a month). Here are all of the the annual plans and pricing:

  • 1 GB 5G/LTE Data + Unlimited Talk/Text for $8.33/month ($100 for 12 months paid upfront)
  • 5 GB 5G/LTE Data + Unlimited Talk/Text for $14/month ($168 for 12 months paid upfront)
  • 15 GB 5G/LTE Data + Unlimited Talk/Text for $20/month ($240 for 12 months paid upfront)
  • “Unlimited” 35 GB 5G/LTE Data + Unlimited Talk/Text for $25/month ($300 for 12 months paid upfront, data speeds throttled after 35 GB)

After you enter your zip code and e-mail, you should be able to confirm the network based on the SIM card that you purchase. Here is a screenshot of the SIM card that will use the AT&T 4G/5G network:

New Bring Your Own Device (BYOD) customers get a free SIM card, free shipping, no credit check, no contract. Taxes will depend on zip code. Mobile Hotspot included based on your high-speed data allotment (limited to 12 GB for Unlimited plan).

Filed Under: Deals & Offers //

Best Interest Rates on Cash – May 2022 Update

Posted on May 10, 2022 // 4 Comments

Here’s my monthly roundup of the best interest rates on cash as of May 2022, roughly sorted from shortest to longest maturities. We all need some safe assets for cash reserves or as a bond substitute, and there are often lesser-known opportunities available to individual investors. Check out my Ultimate Rate-Chaser Calculator to see how much extra interest you’d earn by moving money between accounts. Rates listed are available to everyone nationwide. Rates checked as of 5/10/2022.

Significant changes since last month: Rates are moving. Brokered CDs and US Treasury bonds close to 3% for 5 years. 1-year Treasury close to 2%. 9.62% Savings I Bonds still available if you haven’t done it yet. 4% APY on up to $6,000 for liquid savings at Current with no direct deposit requirement.

Fintech accounts
Available only to individual investors, fintech companies often pay higher-than-market rates in order to achieve fast short-term growth (often using venture capital). “Fintech” is usually a software layer on top of a partner bank’s FDIC insurance.

  • 4% APY on $6,000. Current offers 4% APY on up to $6,000 total ($2,000 each on three savings pods). No direct deposit required. $50 referral bonus for new members with $200+ direct deposit with promo code JENNIFEP185. Please see my Current app review for details.
  • 3% APY on up to $100,000, but requires direct deposit and credit card spend. HM Bradley pays up to 3% APY if you open both a checking and credit card with them, and maintain $1,500 in total direct deposit each month and make $100 in credit card purchases each month. Please see my updated HM Bradley review for details.
  • 3% APY on 10% of direct deposits + 1% APY on $25,000. One Finance lets you earn 3% APY on “auto-save” deposits (up to 10% of your direct deposit, up to $1,000 per month). Separately, they also pay 1% APY on up to another $25,000 with direct deposit. New customer $50 bonus via referral. See my One Finance review.
  • 3% APY on up to $15,000, requires direct deposit and credit card transactions. Porte requires a one-time direct deposit of $1,000+ to open a savings account. Porte then requires $3,000 in direct deposits and 15 debit card purchases per quarter (average $1,000 direct deposit and 5 debit purchases per month) to receive 3% APY on up to $15,000. New customer bonus via referral. See my Porte review.
  • 1.20% APY on up to $50,000. You must maintain a $250 direct deposit each month for this balance cap, otherwise you’ll still earn 1.20% on up to $5,000. They also pay 6% on USDC stablecoin, but I avoid this as it is not FDIC-insured (and you can get higher rates elsewhere if you did want to hold USDC.) New customer $100 bonus via referral. See my OnJuno review.
  • 1.25% APY (no balance cap). SoFi is now offering 1.25% APY with no balance cap. You must maintain a direct deposit each month of any amount. Convenient if you already have a relationship with them. See $25 + $300 SoFi Money new account and deposit bonus.

High-yield savings accounts
Since the huge megabanks pay essentially no interest, I think every should have a separate, no-fee online savings account to accompany your existing checking account. The interest rates on savings accounts can drop at any time, so I list the top rates as well as competitive rates from banks with a history of competitive rates. Some banks will bait you with a temporary top rate and then lower the rates in the hopes that you are too lazy to leave.

Short-term guaranteed rates (1 year and under)
A common question is what to do with a big pile of cash that you’re waiting to deploy shortly (plan to buy a house soon, just sold your house, just sold your business, legal settlement, inheritance). My usual advice is to keep things simple and take your time. If not a savings account, then put it in a flexible short-term CD under the FDIC limits until you have a plan.

  • No Penalty CDs offer a fixed interest rate that can never go down, but you can still take out your money (once) without any fees if you want to use it elsewhere. CFG Bank has a 13-month No Penalty CD at 1.07% APY with a $500 minimum deposit. Ally Bank has a 11-month No Penalty CD at 0.60% APY for all balance tiers. Marcus has a 13-month No Penalty CD at 0.75% APY with a $500 minimum deposit. You may wish to open multiple CDs in smaller increments for more flexibility.
  • Department Of Commerce Federal Credit Union has a 12-month certificate at 2.15% APY. $500 minimum. 180 day interest penalty on early withdrawals. Anyone can join this credit union through a $5 membership in the American Consumer Council (ACC). Enter ACC membership number on the online application.

Money market mutual funds + Ultra-short bond ETFs
Many brokerage firms that pay out very little interest on their default cash sweep funds (and keep the difference for themselves). Unfortunately, money market fund rates are very low across the board right now. Ultra-short bond funds are another possible alternative, but they are NOT FDIC-insured and may experience short-term losses at times. These numbers are just for reference, not a recommendation.

  • The default sweep option is the Vanguard Federal Money Market Fund which has an SEC yield of 0.53%.
  • Vanguard Ultra-Short-Term Bond Fund currently pays 1.79% SEC yield ($3,000 min) and 1.89% SEC Yield ($50,000 min). The average duration is ~1 year, so your principal may vary a little bit.
  • The PIMCO Enhanced Short Maturity Active Bond ETF (MINT) has a 1.68% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 1.38% SEC yield while holding a portfolio of investment-grade bonds with an average duration of ~6 months.

Treasury Bills and Ultra-short Treasury ETFs
Another option is to buy individual Treasury bills which come in a variety of maturities from 4-weeks to 52-weeks. You can also invest in ETFs that hold a rotating basket of short-term Treasury Bills for you, while charging a small management fee for doing so. T-bill interest is exempt from state and local income taxes. Right now, this section isn’t very interesting as T-Bills are yielding close to zero!

  • You can build your own T-Bill ladder at TreasuryDirect.gov or via a brokerage account with a bond desk like Vanguard and Fidelity. Here are the current Treasury Bill rates. As of 5/9/2022, a new 4-week T-Bill had the equivalent of 0.50% annualized interest and a 52-week T-Bill had the equivalent of 1.94% annualized interest.
  • The Goldman Sachs Access Treasury 0-1 Year ETF (GBIL) has a 0.38% SEC yield and the SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a 0.23% (!) SEC yield. GBIL appears to have a slightly longer average maturity than BIL.

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. If you redeem them within 5 years there is a penalty of the last 3 months of interest. The annual purchase limit for electronic I bonds is $10,000 per Social Security Number, available online at TreasuryDirect.gov. You can also buy an additional $5,000 in paper I bonds using your tax refund with IRS Form 8888.

  • “I Bonds” bought between May 2022 and October 2022 will earn a 9.62% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. More on Savings Bonds here.
  • In mid-October 2022, 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.
  • See below about EE Bonds as a potential long-term bond alternative.

Prepaid Cards with Attached Savings Accounts
A small subset of prepaid debit cards have an “attached” FDIC-insured savings account with exceptionally high interest rates. The negatives are that balances are severely capped, and there are many fees that you must be careful to avoid (lest they eat up your interest). There is a long list of previous offers that have already disappeared with little notice. I don’t personally recommend nor use any of these anymore, as I feel the work required and the fees charged if you mess up exceeds any small potential benefit.

  • Mango Money pays 6% APY on up to $2,500, if you manage to jump through several hoops. Requirements include $1,500+ in “signature” purchases and a minimum balance of $25.00 at the end of the month.
  • NetSpend Prepaid pays 5% APY on up to $1,000 but be warned that there is also a $5.95 monthly maintenance fee if you don’t maintain regular monthly activity.

Rewards checking accounts
These unique checking accounts pay above-average interest rates, but with unique risks. You have to jump through certain hoops which usually involve 10+ debit card purchases each cycle, a certain number of ACH/direct deposits, and/or a certain number of logins per month. If you make a mistake (or they judge that you did) you risk earning zero interest for that month. Some folks don’t mind the extra work and attention required, while others would rather not bother. Rates can also drop suddenly, leaving a “bait-and-switch” feeling.

  • Quontic Bank is offering 1.01% APY on balances up to $150,000. May be useful for those with high balances. You need to make 10 debit card point of sale transactions of $10 or more per statement cycle required to earn this rate.
  • The Bank of Denver pays 2.00% APY on up to $10,000 if you make 12 debit card purchases of $5+ each, receive only online statements, and make at least 1 ACH credit or debit transaction per statement cycle. If you meet those qualifications, you can also link a Kasasa savings account that pays 1.00% APY on up to $25k. Thanks to reader Bill for the updated info.
  • Presidential Bank pays 2.25% APY on balances between $500 and up to $25,000, if you maintain a $500+ direct deposit and at least 7 electronic withdrawals per month (ATM, POS, ACH and Billpay counts).
  • Evansville Teachers Federal Credit Union pays 3.30% APY on up to $20,000. You’ll need at least 15 debit transactions and other requirements every month.
  • Lake Michigan Credit Union pays 3.00% APY on up to $15,000. You’ll need at least 10 debit transactions and other requirements every month.
  • (I no longer recommend this credit union myself, but the rate is still good.) Lafayette Federal Credit Union is offering 2.02% APY on balances up to $25,000 with a $500 minimum monthly direct deposit to their checking account. No debit transaction requirement. They are also offering new members a $100 bonus with certain requirements. Anyone can join this credit union via partner organization ($10 one-time fee).
  • Find a locally-restricted rewards checking account at DepositAccounts.

Certificates of deposit (greater than 1 year)
CDs offer higher rates, but come with an early withdrawal penalty. By finding a bank CD with a reasonable early withdrawal penalty, you can enjoy higher rates but maintain access in a true emergency. Alternatively, consider building a CD ladder of different maturity lengths (ex. 1/2/3/4/5-years) such that you have access to part of the ladder each year, but your blended interest rate is higher than a savings account. When one CD matures, use that money to buy another 5-year CD to keep the ladder going. Some CDs also offer “add-ons” where you can deposit more funds if rates drop.

  • Department Of Commerce Federal Credit Union has a 5-year certificate at 3.05% APY. $500 minimum. 180 day interest penalty on early withdrawals. Anyone can join this credit union through a $5 membership in the American Consumer Council (ACC). Enter ACC membership number on the online application.
  • Live Oak Bank has a 5-year CD at 2.75% APY ($2,500 minimum) with an early withdrawal penalty of 180 days of interest.
  • KS StateBank has a 5-year CD at 2.70% APY ($500 min). Early withdrawal penalty is 18 months of interest.
  • You can buy certificates of deposit via the bond desks of Vanguard and Fidelity. You may need an account to see the rates. These “brokered CDs” offer FDIC insurance and easy laddering, but they don’t come with predictable early withdrawal penalties. Right now, I see a 5-year CD at 3.20% APY. Be wary of higher rates from callable CDs listed by Fidelity.

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

  • Willing to lock up your money for 10 years? You can buy long-term certificates of deposit via the bond desks of Vanguard and Fidelity. These “brokered CDs” offer FDIC insurance, but they don’t come with predictable early withdrawal penalties. You might find something that pays more than your other brokerage cash and Treasury options. Right now, I see a 10-year CD at 3.00% APY vs. 2.98% for a 10-year Treasury. Watch out for higher rates from callable CDs from Fidelity.
  • How about two decades? Series EE Savings Bonds are not indexed to inflation, but they have a unique 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 0.10%). I view this as a huge early withdrawal penalty. But if holding for 20 years isn’t an issue, it can also serve as a hedge against prolonged deflation during that time. Purchase limit is $10,000 each calendar year for each Social Security Number. As of 5/9/2022, the 20-year Treasury Bond rate was 3.38%.

All rates were checked as of 5/10/2022.

Filed Under: Banking, Deals & Offers, Investing //

Warren Buffett’s Activision Merger Arbitrage “Bank/Credit Card Bonus” Deal

Posted on May 9, 2022 // 4 Comments

While listening to the 2022 Berkshire Hathaway Annual Meeting Q&A session (full video and transcript at CNBC), I was amused to hear that Warren Buffett announced that he bought shares of Activision Blizzard stock as part of a “workout”.

The very short version is that Microsoft (MSFT) has entered an agreement to purchase Activision Blizzard (ATVI) for $95 a share. As of close today 5/9/2022, you could buy ATVI for about $77.17 a share. If the sale goes through and closes in June 2023, you would earn a 23% return a little over a year.

The amusing part is that given the size of Berkshire Hathaway, even buying 10% of ATVI at the current price would only cost about $6 billion with a fixed upside of around $1.4 billion. If the deal closes, Berkshire would increase its $700 billion market cap at most by a one-time 0.2%. That’s the same ratio as someone with a $100,000 net worth doing a bank or credit card bonus deal for $200. 🤔

Even though Warren Buffett spends most of his time gradually building Berkshire Hathaway into a cash-gushing legacy fortress that will run for the next 100 years, he still can’t give up a good short-term deal either! It’s like an old habit. I love it! 🤣 Here’s how he ends it:

And incidentally, I don’t talk this over with Charlie. I mean, you know, he knows that occasionally I’ll see an arbitrage deal and do it. And, you know, 50 years ago we were doing it together, and his general feeling is, “Why is Warren fooling around with this kind of stuff, even.”

But it’s the old fire horse that occasionally it looks like the odds are in our favor. But absolutely we can lose money on that company, and, you know, fairly large sums of money, depending on what happened if the deal blows up.

And there will be a lot of people that want the deal to blow up. But Microsoft doesn’t want it to blow up, so we’ll just have to see what happens.

In addition, you and I can stroll over any brokerage app and participate in this “special situation” opportunity as well. There is still risk involved, and I’m sure there is plenty of discussion about it on various stock trading forums that I never visit, but here are my notes:

  • Around October and November 2021, Berkshire Hathaway acquired shares of ATVI at an average price of about $77 a share. This was the decision of either Ted Weschler or Todd Combs, as Buffett corrected. This would indicate that $77 a share would already reflect a margin of safety below intrinsic value, by their estimation, even without any acquisition talks.
  • In January 2022, Microsoft announced an agreement to buy ATVI at $95 a share in an all-cash deal. MSFT has more than enough cash to comfortably pay for this deal.
  • Since then, the shares have traded around $75 to $82 a share. Even after Buffett announced his participation in this deal, the price hasn’t moved much.
  • The primary risk is that US or EU regulators will stop the transaction due to anti-trust concerns. MSFT will pay a break-up fee of approximately $4 a share if it fails due to anti-trust issues.
  • Although he downplays it, I can only assume that Buffett – with all his experience – really does believe that this transaction has a good likelihood of going through, and even if it doesn’t the downside is limited. He has a different view than the market, and is willing to bet real money on it.

As an illustration, for every $1,000 invested into ATVI at $77.17 a share and cashed out at $95 a share, the upside potential is a $230 as of June 2023 (deal deadline, a little over 13 months from now). You can scale this number up or down based on your investment. $10,000 invested means $2,300 upside, and so on. The downside potential is unknown if it falls apart, and theoretically unlimited as with any business.

Disclosure: I bought a small position in ATVI in my side money account. This is not a recommendation for your situation and you should perform your own due diligence. Some people like to bet on a football game because it makes it more interesting, but I’d rather participate in something with an expected positive return and an educational component. I don’t believe in paper trading; skin in the game is a better teacher.

Filed Under: Deals & Offers, Investing //

Vanguard ETF & Mutual Fund Expense Ratio Drops (Updated May 2022)

Posted on May 8, 2022 // 15 Comments

vglogoUpdated May 2022. Vanguard regularly announces expense ratio cuts to their mutual funds and ETFs. This post serves to keep track of these updates, as Vanguard usually removes the press releases after a certain amount of time. Most changes will be minor, it is always good to see continuing progress.

April 29, 2022 press release. Highlights:

  • Vanguard Total US Bond Market ETF (BND) lowered to 0.03%.
  • Vanguard Short-Term Bond ETF (BSV) lowered to 0.04%.
  • Vanguard Intermediate-Term Bond ETF (BIV) lowered to 0.04%.
  • Vanguard Long-Term Bond ETF (BLV) lowered to 0.04%.

February 2022 press release.

  • Vanguard Total International Stock Market (VXUS) lowered to 0.07%.
  • Vanguard Total World Stock ETF (VT) lowered to 0.07%.
  • Vanguard FTSE Emerging Markets ETF (VWO) lowered to 0.08%.
  • Vanguard Total International Bond ETF (BNDX) lowered to 0.07%.
  • Vanguard FTSE All-World ex-US ETF (VEU) lowered to 0.07%.
  • Vanguard FTSE All-World ex-US Small-Cap ETF (VSS) lowered to 0.07%.

Vanguard Select ETFs. These 13 Vanguard Select ETFs are what Vanguard thinks should be the building blocks of your portfolio due to their diversification, low costs, and liquidity. Here are the current expense ratios on the four broadest ones + their classic S&P 500 ETF:

  • Vanguard Total US Stock Market (VTI) at 0.03%.
  • Vanguard Total International Stock Market (VXUS) at 0.07%.
  • Vanguard Total US Bond Market (BND) at 0.03%.
  • Vanguard Total International Bond (BNDX) at 0.07%.
  • Vanguard 500 Index (VOO) at 0.03%.

Background. When you invest in a mutual fund or ETF, the fund company charges you a fee called the annual net expense ratio. If you hold a steady $10,000 in a hypothetical fund with a 1% expense ratio, that would result in an annual charge of $100. These expenses are actually deducted daily in tiny increments from the funds’ net asset value (NAV), and while the numbers can seem small initially they will compound quietly and relentlessly over time. Here is an illustration from the Vanguard website comparing the Vanguard average expense ratio vs. the industry average over different time periods (source):

Vanguard has a long history of lowering their expense ratios as their assets under management grow, whereas the industry average hasn’t changed nearly as much (source).

The Vanguard Effect. In recent years as index funds have shot up in popularity, most of the major providers have introduced similar low-cost products (notably iShares, Fidelity, and Schwab). Every subsequent “price drop” is less newsworthy or impactful to my portfolio. However, I think competition is great and even Vanguard needs to be kept on its toes. I have bought ETFs from other providers when they are the best available option.

However, you can’t ignore the fact that Vanguard has been the leader in the industry. The super-low-cost ETFs only exist where Vanguard has already established itself. If Vanguard hasn’t pushed the cost down in a specific area, their competitors know that and keep the costs high. Here’s a chart showing the “Vanguard Effect“.

Due to the combination of Vanguard’s excellent ETFs and their not-as-excellent customer service recently, you may want to consider buying Vanguard ETFs for free at your preferred brokerage firm including Fidelity, Schwab, TD Ameritrade, and E-Trade.

Filed Under: Investing //

103 Bits of “Advice I Wish I Had Known” by Kevin Kelly

Posted on May 8, 2022 // Leave a Comment

via GIPHY

Kevin Kelly of Cool Tools and many other endeavors is now 70 years old and has 103 more bits of “Advice I Wish I Had Known” for 2022. Very high density of insightful wisdom per sentence, so I like to read a little bit each day and hopefully let it sink in. Here’s a small selection:

– Don’t ever work for someone you don’t want to become.

– The biggest lie we tell ourselves is “I don’t need to write this down because I will remember it.”

– Your growth as a conscious being is measured by the number of uncomfortable conversations you are willing to have.

– Habit is far more dependable than inspiration. Make progress by making habits. Don’t focus on getting into shape. Focus on becoming the kind of person who never misses a workout.

I missed last year’s version, so here are some from the 2021 version:

– That thing that made you weird as a kid could make you great as an adult — if you don’t lose it.

– If someone is trying to convince you it’s not a pyramid scheme, it’s a pyramid scheme.

– Most overnight successes — in fact any significant successes — take at least 5 years. Budget your life accordingly.

– To be wealthy, accumulate all those things that money can’t buy.

– Children totally accept — and crave — family rules. “In our family we have a rule for X” is the only excuse a parent needs for setting a family policy. In fact, “I have a rule for X” is the only excuse you need for your own personal policies.

Too often, advice like this just goes over my head until I’ve already had to learn it the hard way first. Still, worth a try to gain some wisdom the easy way.

Filed Under: Career, Entrepreneurial, Inspirational //

Billionaire Crypto CEO Explains DeFi Farming… Sounds Exactly Like a Ponzi Scheme

Posted on May 3, 2022 // 7 Comments

Sam Bankman-Fried (nicknamed “SBF”) used the “sell shovels during the Gold Rush” model on cryptocurrency and has made billions as the CEO of FTX, a crypto derivatives exchange. He has a background in quantitative trading and performed a now-famous arbitrage of the different selling prices of Bitcoin between Japan and the US when the market was inefficient, buying millions of dollars worth every day where it was cheaper and selling it where it was slightly more expensive.

I’m also a Matt Levine Money Stuff fan, and so I listened to this Bloomberg Odd Lots podcast with Matt Levine and Sam Bankman-Fried with great interest. If you don’t want to listen, definitely read this partial transcript. The whole thing was very educational, like one of those casino documentaries showing you how things really work. Here’s an even shorter excerpt:

Matt Levine: (21:17)
Can you give me an intuitive understanding of farming? I mean, like to me, farming is like you sell some structured puts and collect premium, but perhaps there’s a more sophisticated understanding than that.

Sam Bankman-Fried: (21:28)
Let me give you sort of like a really toy model of it, which I actually think has a surprising amount of legitimacy for what farming could mean. You know, where do you start? You start with a company that builds a box and in practice this box, they probably dress it up to look like a life-changing, you know, world-altering protocol that’s gonna replace all the big banks in 38 days or whatever. Maybe for now actually ignore what it does or pretend it does literally nothing. It’s just a box. So what this protocol is, it’s called ‘Protocol X,’ it’s a box, and you take a token. You can take ethereum, you can put it in the box and you take it out of the box. Alright so, you put it into the box and you get like, you know, an IOU for having put it in the box and then you can redeem that IOU back out for the token.

So far what we’ve described is the world’s dumbest ETF or ADR or something like that. It doesn’t do anything but let you put things in it if you so choose. And then this protocol issues a token, we’ll call it whatever, ‘X token.’ And X token promises that anything cool that happens because of this box is going to ultimately be usable by, you know, governance vote of holders of the X tokens. They can vote on what to do with any proceeds or other cool things that happen from this box. And of course, so far, we haven’t exactly given a compelling reason for why there ever would be any proceeds from this box, but I don’t know, you know, maybe there will be, so that’s sort of where you start.

And then you say, alright, well, you’ve got this box and you’ve got X token and the box protocol declares, or maybe votes by on-chain governance, or, you know, something like that, that what they’re gonna do is they are going to take half of all the X tokens that were re-minted. Maybe two thirds will, two thirds will offer X tokens, and they’re going to give them away for free to whoever uses the box. So anyone who goes, takes some money, puts in the box, each day they’re gonna airdrop, you know, 1% of the X token pro rata amongst everyone who’s put money in the box. That’s for now, what X token does, it gets given away to the box people. …

So, you know, X tokens [are] being given out each day, all these like sophisticated firms are like, huh, that’s interesting. Like if the total amount of money in the box is a hundred million dollars, then it’s going to yield $16 million this year in X tokens being given out for it. That’s a 16% return. That’s pretty good. We’ll put a little bit more in, right? And maybe that happens until there are $200 million in the box. So, you know, sophisticated traders and/or people on Crypto Twitter, or other sort of similar parties, go and put $200 million in the box collectively and they start getting these X tokens for it.

And now all of a sudden everyone’s like, wow, people just decide to put $200 million in the box. This is a pretty cool box, right? Like this is a valuable box as demonstrated by all the money that people have apparently decided should be in the box. And who are we to say that they’re wrong about that? Like, you know, this is, I mean boxes can be great. Look, I love boxes as much as the next guy. And so what happens now? All of a sudden people are kind of recalibrating like, well, $20 million, that’s it? Like that market cap for this box? And it’s been like 48 hours and it already is $200 million, including from like sophisticated players in it. They’re like, come on, that’s too low. And they look at these ratios, TVL, total value locked in the box, you know, as a ratio to market cap of the box’s token.

And they’re like ‘10X that’s insane. 1X is the norm.’ And so then, you know, X token price goes way up. And now it’s $130 million market cap token because of, you know, the bullishness of people’s usage of the box. And now all of a sudden of course, the smart money’s like, oh, wow, this thing’s now yielding like 60% a year in X tokens. Of course I’ll take my 60% yield, right? So they go and pour another $300 million in the box and you get a psych and then it goes to infinity. And then everyone makes money.

Matt: (27:13)
I think of myself as like a fairly cynical person. And that was so much more cynical than how I would’ve described farming. You’re just like, well, I’m in the Ponzi business and it’s pretty good.

So many words, but the bottom line is… people pay more for the “cool box” because other people paid more for the box, which makes other people pay more for the box… Really? You are one of the smartest people in this space, and that the best explanation you can give me?

There’s more in the podcast, and SBF actually came off as knowledgable, reasonable, and practical. He was almost a little too honest about things, and as a result laid bare the reality of how little actually backs most of these schemes. Read between the lines, and you start to see the tricks and manipulations. Bitcoin might be limited to a finite amount, but most of these other random coins and tokens can be created in a day and are thus unlimited. If you get in really early and get out early enough in a Ponzi scheme, you can make money without hard work. But many people are collectively losing billions on these “cool boxes”, often the same people who put a lot of their hard-earned income into lottery tickets. Meanwhile, the shovel-sellers keep getting richer.

Sometimes the best idea is to simply avoid an risky area that will eventually implode. Focus your energy somewhere where your consistent work can grow a competitive advantage over time.

Filed Under: Deals & Offers //
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