Archives for April 2023

Savings I Bonds May 2023 Inflation Rate: 0.90% Fixed, 4.30% Total Composite Rates

Posted on April 30, 2023 // 8 Comments

May 2023 fixed rate will be 0.90%, total composite rate is 4.30% for next 6 months. For Savings I bonds bought from May 1, 2023 through October 31, 2023, the fixed rate will be 0.90% and the total composite rate will be 4.30%. The semi-annual inflation rate is 1.69% as predicted (3.38% annually), but the full composite rate is dependent on the fixed rate for each specific savings bond and so it is a little bit higher.

Every single I bond will earn this inflation rate of ~3.40% eventually for 6 months, depending on the initial purchase month. The fixed rate was higher than I predicted, although still a bit lower than short-term TIPS yields. You may wish to wait until October if you don’t like what you see right now. See you again in mid-October for the next early prediction for November 2022.

Original post from 4/12/23:

Savings I Bonds are a unique, low-risk investment backed by the US Treasury that pay out a variable interest rate linked to inflation. With a holding period from 12 months to 30 years, you could own them as an alternative to bank certificates of deposit (they are liquid after 12 months) or bonds in your portfolio.

New inflation numbers were just announced at BLS.gov, which allows us to make an early prediction of the May 2023 savings bond rates a couple of weeks before the official announcement on the 1st. This also allows the opportunity to know exactly what a April 2023 savings bond purchase will yield over the next 12 months, instead of just 6 months. You can then compare this against a May 2023 purchase.

New inflation rate prediction. September 2022 CPI-U was 296.808. March 2023 CPI-U was 301.836, for a semi-annual increase of 1.69%. Using the official formula, the variable component of interest rate for the next 6 month cycle will be ~3.38%. You add the fixed and variable rates to get the total interest rate. The fixed rate hasn’t been above 0.50% in over a decade, but if you have an older savings bond, your fixed rate may be up to 3.60%.

Tips on purchase and redemption. You can’t redeem until after 12 months of ownership, and any redemptions within 5 years incur an interest penalty of the last 3 months of interest. A simple “trick” with I-Bonds is that if you buy at the end of the month, you’ll still get all the interest for the entire month – same as if you bought it in the beginning of the month. It’s best to give yourself a few business days of buffer time. If you miss the cutoff, your effective purchase date will be bumped into the next month.

Buying in April 2023. If you buy before the end of April, the fixed rate portion of I-Bonds will be 0.40%. You will be guaranteed a total interest rate of 0.40 + 6.49 = 6.89% for the next 6 months. For the 6 months after that, the total rate will be 0.40 + 3.39 = 3.79%.

Let’s look at a worst-case scenario, where you hold for the minimum of one year and pay the 3-month interest penalty. If you theoretically buy on April 30th, 2023 and sell on April 1st, 2024, I estimate that you’ll earn a ~4.48% annualized return for an 11-month holding period, for which the interest is also exempt from state income taxes. If you theoretically buy on April 30th, 2023 and sell on July 1, 2024, you’ll earn a ~5.07% annualized return for an 14-month holding period. Comparing with the best interest rates as of April 2023, these short-term rates are roughly on par on what is available via regular nominal Treasury bonds and other deposit accounts.

Buying in May 2023. If you buy in May 2023, you will get 3.38% plus a newly-set fixed rate for the first 6 months. The new fixed rate is officially unknown, but is loosely linked to the real yield of short-term TIPS. My rough guess is somewhere between 0.2% and 0.5%. The current real yield on short-term TIPS is lower than it was during the last reset, when the fixed rate was set at 0.4%. Every six months after your purchase, your rate will adjust to your fixed rate (set at purchase) plus a variable rate based on inflation.

If you have an existing I-Bond, the rates reset every 6 months depending on your purchase month. Your bond rate = your specific fixed rate (based on purchase month, look it up here) + variable rate (total bond rate has a minimum floor of 0%). So if your fixed rate was 1%, you’ll be earning a 1.00 + 3.38 = 4.38% rate for six months.

Buy now or wait? If you buy in April, you will get the remnants of the last period of higher inflation, and a fixed rate that won’t change much for May. If you wait until May, there may be a small possibility that the fixed rate might go up, but even if it does, it will take a while for that to breakeven due to the lower initial inflation rate. Therefore, my opinion is that I would purchase now in April. Note that the real yields on TIPS are currently about 1.2% for a 5-year term, higher than the fixed rate for I bonds.

Unique features. I have a separate post on reasons to own Series I Savings Bonds, including inflation protection, tax deferral, exemption from state income taxes, and educational tax benefits.

Over the years, I have accumulated a nice pile of I-Bonds and consider it part of the inflation-linked bond allocation inside my long-term investment portfolio.

Annual purchase limits. The annual purchase limit is now $10,000 in online I-bonds per Social Security Number. For a couple, that’s $20,000 per year. You can only buy online at TreasuryDirect.gov, after making sure you’re okay with their security protocols and user-friendliness. You can also buy an additional $5,000 in paper I bonds using your tax refund with IRS Form 8888. If you have children, you may be able to buy additional savings bonds by using a minor’s Social Security Number. TheFinanceBuff has a nice post on gifting options if you are a couple and want to frontload your purchases now. TreasuryDirect also allows trust accounts to purchase savings bonds.

Note: Opening a TreasuryDirect account can sometimes be a hassle as they may ask for a medallion signature guarantee which requires a visit to a physical bank or credit union and snail mail. This doesn’t apply to everyone and seems to have gotten better recently, but the takeaway is don’t wait until the last minute.

Bottom line. Savings I bonds are a unique, low-risk investment that are linked to inflation and only available to individual investors. You can only purchase them online at TreasuryDirect.gov, with the exception of paper bonds via tax refund. For more background, see the rest of my posts on savings bonds.

[Image: 1950 Savings Bond poster from US Treasury – source]

Filed Under: Banking, Investing, Retirement, Savings Bonds //

Citi Rewards+ Card Review: 25,000 Bonus Points, 0% Intro APR on Purchases for 15 Months

Posted on April 25, 2023 // Leave a Comment

New limited-time 25k offer w/ no annual fee. The Citi Rewards+® Card has improved their sign-up bonus while keeping its 0% introductory APR for 15 months on purchases and balance transfers, round-ups rewards on small purchases, and no annual fee. Here are the highlights:

  • Improved: 25,000 bonus points after $1,500 in purchases in the first 3 months. 25,000 ThankYou points = $250 in gift cards at ThankYou.com.
  • For a limited time, earn 5 ThankYou(R) Points per $1 spent on hotel, car rentals, and attractions (excluding air travel) booked on the Citi Travel(SM) Portal through June 30, 2024.
  • 2X ThankYou(R) Points at Supermarkets and Gas Stations for the first $6,000 per year and then 1X Points thereafter. Plus, earn 1X ThankYou(R) Points on All Other Purchases.
  • 0% Intro APR on balance transfers for 15 months from date of first transfer and on purchases from date of account opening. After that, the variable APR will be 18.49% – 28.49%, based on your creditworthiness. There is an intro balance transfer fee of 3% of each transfer (minimum $5) completed within the first 4 months of account opening. After that, your fee will be 5% of each transfer (minimum $5).
  • Minimum 10 points earned on every purchase. The card automatically rounds up to the nearest 10 points on every purchase, so for example a $1 parking charge or $2 cup of coffee can earn 10 points. This happens on every purchase with no cap.
  • 10% of your points rebated back on the first 100,000 ThankYou® Points redeemed per year.
  • No annual fee.

Note the following:

Bonus ThankYou® Points are not available if you have received a new account bonus for a Citi Rewards+® account in the past 48 months.

The lockout period is longer, but no longer lumps this card together with other Citi ThankYou cards like the Premier and Prestige.

25,000 ThankYou points = $250 in gift cards. You can view your redemption options at ThankYou.com. I took a quick look and it takes 10,000 ThankYou (TY) points to redeem for a $100 gift card to retailers like Target, Starbucks, TJ Maxx, Lowe’s, Home Depot, Gap, Banana Republic, Barnes & Noble, Bath and Body Works, Bed Bath & Beyond, Cabelas, Kohl’s, Land’s End, LL Bean, Sears, and Zappos. So with 25,000 TY points, you could get 10 x $25 gift cards) from different stores (handy for gifts), or all from the same store. You may also be able to find options to send a check towards your mortgage payment and/or student loan payment.

Personally, my default redemption is for Home Depot and/or Lowe’s. As an owner of an older house, there is always an appliance or home-improvement purchase around the corner. Target is another useful option.

0% introductory APR on purchases for 15 months. This is one of the longest 0% intro periods on purchases, which means that you can keep charging all your purchases on this card for 15 months and not have to pay any interest. Carrying a credit card balance is obviously not ideal, but in extreme times such an offer can help with short-term cashflow issues and defer your monthly expenses until later. You will still need to keep making the minimum payments each month to keep the 0% rate. There is also 0% intro APR for 15 months for balance transfers, but that comes with a balance transfer fee of either $5 or 3% of the amount of each transfer, whichever is greater.

Round up rewards, helpful on small purchases. The default rewards on this card is 1 point per $1 spent, which is rather common these days. They try to mix things up by making it round up to the nearest 10 points on every purchase. For example, a $1 purchase would earn 10 points, not 1 point. A $2 purchase would earn 10 points, not 2 points. A $11 purchase would earn 20 points, not 11 points. This makes the effective rewards percentage much higher on small purchases. If you make a lot of small purchases, this card is well-suited for you.

If you have a high monthly spend amount, I would recommend the Citi Double Cash card instead, as it earns 2% cash back on purchases.

10% Points Back for the first 100,000 ThankYou® Points you redeem per year. Let’s say you get that 15,000 points bonus and earn another 5,000 points from your purchases. When you redeem your 20,000 ThankYou points for a $200 gift card, you’ll also get 2,000 points rebated back to your account.

Thank You points in combination with other Citi cards. You may also combine and transfer your ThankYou points earned with this card to other Citi cards that earn ThankYou points:

  • Citi Premier Card has a big upfront bonus and earns 3X ThankYou points on restaurants, supermarkets, gas stations, air travel and hotels. It also allows you to convert ThankYou points to participating airline mileage programs on a 1:1 basis including JetBlue TrueBlue, Virgin Atlantic, Singapore Airlines, Cathay Pacific, EVA Air, Etihad, Flying Blue by Air France and KLM, and Thai Airways.
  • Citi Custom Cash Card earns 5X ThankYou points on your top eligible spending category up to $500 spent each monthly billing cycle./li>
  • Citi Double Cash earns 2X ThankYou points on ALL purchases.

Bottom line. The Citi Rewards+® Card offers a long 15-month 0% introductory APR period on purchases on top of a 25,000 point sign-up bonus worth $250 in gift cards at ThankYou.com. You may also be able to transfer your ThankYou points to hotel and airlines if you also hold other eligible Citi credit cards. There is also a unique rewards structure for those that make a lot of small purchases. No annual fee.

Filed Under: Credit Cards, Deals & Offers, General //

Alternative Ways To Track Savings I Bond Values (Tools and Calculators)

Posted on April 23, 2023 // 8 Comments

If you have accumulated some savings bonds but don’t really enjoy logging into TreasuryDirect.gov all the time, here are some alternative methods to tracking your balances over time. Each has its own strengths and weaknesses, and the unofficial ones are the results of motivated DIY investors. As an example, I will track a Savings I Bond purchased in April 2013 for $10,000.

Official TreasuryDirect Savings Bond Calculator

Although this official calculator states that it is only meant for paper savings bonds, you can still use it indirectly to track electronic savings bonds (they have the same value as long as they are issued the same month). For example, let’s say you bought $10,000 of I Bonds issued in April 2013. While you can’t enter a $10,000 value directly, you can enter two $5,000 I Bonds. (Enter anything for serial number.) Thus, you’d see that as of April 2023, they are worth $12,636.

You can even save your entire inventory of specific I bonds if you follow the directions here. It feels a bit archaic (you’re basically saving a plain text .html file), but it works. You can even import the values into Google Sheets, according to this Bogleheads forum post.

EyeBonds.info

Created by a user on the Bogleheads forums, this is a very handy and simple website that tracks the price of every savings bonds based on the issue date. For April 2013, simply click on that date and see the growth in value shown below. As of April 2023, you get the same $12,636 value and since the rate is known for the next 6 months as well, you can see the value all the way out to October 2023. This may lead to the easiest way to import the values into your own custom Google Sheet; check out Bogleheads forum post.

eWorkpaper I Bond Calculator

This site also allows you to look up the price history of savings bonds based on the issue date. For April 2013, there are the same ending values along with a chart comparing the value against CPI inflation. You can also quickly create a list of multiple savings bonds here, although it doesn’t appear to allow you to save it for later.

(I personally use these tools once in a while for research, but for tracking balances I simply log into TreasuryDirect.gov during my quarterly portfolio updates and manually enter the values into my Google Sheets page under the “Inflation-Protection Bonds” asset class. It’s only four times a year, and I like to log into the official retro website to make sure my money is still there.)

Filed Under: Banking, Savings Bonds, Tools & Calculators //

Consumer Reports: Which Store Brand Food is the Cheapest Overall?

Posted on April 20, 2023 // 5 Comments

Consumer Reports compared several name brand products against generic store brands to see which private label products get the closest to the name brand for the lowest cost. I have never found any other ketchup that tastes like Heinz, but I could be probably be persuaded for other things. (Actually, I have found Whole Foods’ generic “healthy” versions of popular cereals to be pretty bad as well.)

They also bought a range of products from each store and calculated the overall savings you’d get as compared to name-brand products (on a per serving basis). Costco, Aldi, and Walmart are clearly at the top. I personally think Costco has the best quality store-brand stuff, although you usually have to buy a lot of it. I don’t have much experience with Aldi. I’d also have thought Whole Foods 365 would be better than just a 5% savings, but I suppose it just seems cheaper next to the regular price stuff at Whole Foods. 💰

Filed Under: Deals & Offers, Frugal Living //

Charlie Munger Fireside Chat with Todd Combs (April 2022): Full Recording and Transcript

Posted on April 19, 2023 // Leave a Comment

Charlie Munger held a fireside chat with Todd Combs back in April 2022 as part of a Singleton Prize for CEO Excellence event, and more recently a full audio recording and full text transcript has been made available. The talk covered a variety of different topics, which fans of Berkshire Hathaway/Buffett/Munger-style wisdom will likely value. Found via Neckar and Kingswell (both excellent substacks on value investing topics).

I enjoyed this quote about the power of combining internal motivation and long attention span:

Warren was around me and he used to say, “You really don’t need to be very smart to be a very successful investor.” And I think Warren was right. It’s a field where the temperament is, it’s good to have the extra mental horsepower that Henry Singleton had. That is helpful, but it’s perfectly possible to do splendidly well if you have the right temperament. Just go at it over a long time. You talked about me. I’m not a polymath. What I am is a guy who has been able to take moderate obsession and a long attention span and turn them into pretty good results. Of course, a long attention span will help you a lot, if you’re reasonably smart.

[…] I don’t know how to fix [inaudible]. I’d love to be able to wave my hand and solve that problem, but I don’t think that’s given to man, to fix some of those problems. So I just stay away from the problems that can’t be fixed and pick the ones that can – I don’t like unlimited failure. I don’t want to fish forever and never catch a fish. I have to have some reinforcement. And so I pick some things that can be done and do them. But I do think that if you’re reasonably obsessed with something, even if it’s intermittent, and you have a long attention span, you keep working over the serious problems, that you’ll stumble into an answer. That’s half the secret of life.

However, I also noticed he added in a point about picking the right problem to solve. I’ve previously shared this Venn diagram by Bud Caddell:

caddell620

You do need to pick something where you have a natural “obsession” or “passion” because it will help you keep at it and not give up. However, most mortals should add in a bit of practicality and pick an area for which you at least have a little bit of talent and that isn’t completely impossible or saturated with competition.

Filed Under: Career, Investing //

Plynk Investing App User Bonuses (Expired)

Posted on April 18, 2023 // 10 Comments

Update April 2025: The following bonuses are now EXPIRED.

Update April 2023: Plynk has rolled out a new Recurring Deposit Match promotion for existing users worth up to another $100. You just have to set up recurring deposits of at least $10 and Plynk will match the match the second recurring deposit (or the lesser of the two if they differ), up to a maximum of $100. I received this offer via email, but it is listed on their promotion page and does not appear targeted. Sounds like another $100 in my pocket. New users should pick up the other bonuses below first.

The Recurring Deposit Match promotion (the “Recurring Match”) is effective March 9, 2023, through May 18, 2023 (“Offer Date”) for Plynk brokerage customers in good standing. Make two consecutive Recurring Net Deposits into your account and Plynk will match the second Recurring Deposit, or the lesser of the two if they differ, up to a maximum of $100. For purposes of this offer, “Recurring Net Deposit” shall mean cash transfer made using the recurring deposit feature from an external source that remains in your account for at least 30 calendar days. Recurring Match is only available for Plynk customers with a Plynk account in good order. Deposits totaling less than $10 do not qualify as Recurring Net Deposits.

Updated original post with new user bonus info:

Plynk is a stock and crypto brokerage app meant for beginner investors. Right now, new users can earn $60 or more in bonuses: a $10 sign-up bonus and a $50 bonus after $25 deposit and you can also go through Swagbucks and earn more (bonus value varies with user; I see 3500 points worth ~$35). New Swagbucks users should first grab the $10 new user bonus via referral.

$10 sign-up bonus details. From the fine print:

The $10 Sign-Up Bonus program (the “$10 Sign-Up Bonus”) is effective April 1, 2022, for qualifying new brokerage customers. To be eligible for the $10 Sign-Up Bonus, you must be a new Plynk customer and (i) download the Plynk app, (ii) sign up, and (iii) link an eligible bank account. Plynk will deposit $10 USD into your Plynk account within 30 days of your satisfying these conditions and Plynk accepting your account. Whether a qualifying customer is eligible for the $10 Sign-Up Bonus is a determination made in the sole discretion of Plynk.

$50 Promotion details.

The $50 promotion (the “$50 promotion”) is effective March 9, 2023, through May 18, 2023 (“Offer Date”) for qualifying brokerage customers. Plynk will deposit $50 (“Bonus Award”) into the accounts of customers who link a new eligible bank account and make a minimum Net Deposit of $25 in their account. For purposes of this offer, “Net Deposit” shall mean total cash transfers from an external source minus assets withdrawn or transferred out your brokerage account made within 15 calendar day of linking an eligible bank account (“Qualification Period”). Customers who have already opened a Plynk account and linked a bank account as well as any customer who does not make a Net Deposit totaling at least $25 during the Qualification period are not eligible for the $50 Promotion.

Note that Plynk plans on charging a $2 monthly fee at some point, but apparently they are waiving it for an undetermined amount of time. From their fee schedule:

Monthly app fee: $2. At our discretion, DBS will temporarily waive this monthly fee, in the form of a free trial or otherwise, and will provide notice upon reinstatement of this monthly fee or general changes to our fees. This monthly fee is currently waived for all customers.

This app appears to be a quiet spin-off or separate subsidiary of Fidelity Investments. The cash sweep option money market fund is the same as for Fidelity. Seems like they are experimenting to see what works with beginner investors, as Plynk offers lots of educational aspects and encourages you to invest as little as $1 at a time.

Filed Under: Deals & Offers, Investing //

Warren Buffett CNBC Interview April 2023: Video & Full Transcript

Posted on April 17, 2023 // Leave a Comment

Becky Quick had another CNBC interview with the Warren Buffett and Greg Abel of Berkshire Hathaway, likely as a preview to the annual shareholder meeting that is coming up soon in May. You can watch a replay of the interview via this CNBC YouTube playlist and/or read the full text transcript. I appreciate that CNBC provides the transcripts, and they are the most efficient way for me to digest the information and take notes. Below are a few highlights (bolded emphasis is mine).

With higher interest rates upon us, Buffett reminds us that those 30-year fixed rate mortgages at 3% or 4% were and are a great deal for the borrowers, but not great for the banks (or investors in those mortgages). This is one of the reasons I don’t own mortgage-backed securities (MBS) or a Total US Bond index fund, which many people don’t know consist of roughly 25% mortgage-backed securities.

WARREN BUFFETT: I think that they that there will be problems when and, you know, people had anybody that’s got a fixed rate in, locked in for a while when the fixed rate goes away and they gotta reprice it now has got a problem. And the holder of a 30-year Freddie Mac or Fannie, they’ve got the best deal in the world. And they should. I love the program. But—

BECKY QUICK: You mean somebody who has their 30-year mortgage—

WARREN BUFFETT: Yeah, who has the mortgage. But the reason it’s for the very fact that it’s very advantageous. The person who has the mortgage means it’s a very dumb holding for banks. But I also believe in the system that produces I think net the country is better off because it but I don’t wanna hold any 30-year mortgages myself. And the idea that if you’ve got a 30-year mortgage, you personally, you can call off the deal 10 minutes later, and if, and if the banks got a bad deal they’re stuck with it for 30 years. Berkshire cannot make the deal with our credit than you can make if you qualify for making a Freddie or Fannie Mae. I think that’s a good thing for society. I don’t think it’s a very good investment for banks.

Regarding FDIC insurance, Buffett is willing to bet anyone a million dollars that not a single US depositor will lose a penny of money within the next year due a bank failure. The media likes to stoke the fear. Buffett is realistic and is willing to put his money where his mouth is. I don’t lose sleep about my cash in any bank with FDIC insurance that is under the $250k limits ($500k for a joint account, by the way).

WARREN BUFFETT: But I will be glad to put a million dollars of my own money in the bank that or any place else actually that anybody takes a differing view takes and have them put a million dollars in, and at the end of the year from when we do it if any American depositor has lost money from a bank failure, the other fellow gets to name where the $2 million goes to what charity.

In many ways, the world is better today than it was for previous generations. It’s trendier to complain the other way, but that is human nature.

I think I was very, very, very lucky that Berkshire happened to be in America and I happened to be an American. And I was born in 1930 and I’ve been in a golden age ever since I was born. The GDP per capita’s up, like, six-fold or seven-fold. In one person’s lifetime there’s never been anything like that in the history of mankind. And so and, you know, we love to complain about wherever we are, but, you know, most people don’t work on Saturdays and don’t work on Sundays and when I was a kid everybody worked on Saturdays. And I mean, it the world has changed so much for the better in terms of, you know, how well off people are compared to any other time in history. If I’d been born 150 years ago and I went to the dentist, I mean, you know, they’d pour whiskey down me and all kinds of things. There’s just all kinds of improvements. And but it’s man nature to be dissatisfied. And politics does stir that up. And you’ve gotta say, if you’re out of power, that the other guy’s screwing up and you could do better. And that’s just built into the system. But that was the case when I was a kid, and it’s the case today.

Ignore economic forecasts and interest rate predictions. I’m always amused when Warren Buffett sits there and says “I ignore the noise” and all around him on the screen is all this… noise. S&P 500 up 5 points since 10 minutes ago! DOW down 10 points! 5-year yield up 8 points!

WARREN BUFFETT: I would say that I’ve been in business, running Berkshire for 58 years, and I’ve never opined an economic forecast of any use to the company. And all you have to do is keep running every business as well as we can, and we got to keep plenty of cash on hand so that people are going to keep making intelligent decisions, rather than those forced upon them. And that’s all we know how to do. And if I depended in my life on economic forecasts, you know, I don’t think we’d make any money. I don’t know how to do it. And, you know, people want to get them, so they get them. But it has no utility.

And but we haven’t changed our course, you know, in 58 years. And we just wanna buy good businesses run by people we like and trust and at a decent price. And we’ll keep doing that. And we’ll keep buying Treasury bills every Monday, and we haven’t missed a Monday yet. And we keep all our money short. We keep it in Treasuries.

And we were getting four basis points, which was $40 million on $100 billion worth. And now we get almost 5%, which is $5 billion. So we’ve got 100 times the earnings. But it doesn’t make any difference. I mean, that is there to be the strongest company you can imagine. And also, to take opportunities when they come along.

Warren Buffett buys US Treasuries because they are the absolute safest and most liquid instrument available to him. Notice he has never kept Berkshire Hathaway’s cash in a bank, even a huge megabank like Bank of America or Chase (and certainly not Silicon Valley Bank), because he KNOWS he is not covered by FDIC insurance. As an individual investor, I also KNOW that I am different that I am covered by FDIC insurance up to clear limits. Buffett cares about the interest earned on his cash, but not at the expense of safety. There is a big gap between safe 99% of the time and safe 100% of the time. Any time you have to multiply by zero, you get zero. It sounds stupidly simple, but zero happens.

Filed Under: Investing //

Andrews FCU $200 PayBack Checking Promo

Posted on April 17, 2023 // 2 Comments

Andrews Federal Credit Union has a $200 PayBack Checking offer with qualifying direct deposits to a new checking account. Offer expires 5/31/23. Here is the breakdown of the bonus:

  • $75 credit within one business day of the opening of the account.
  • $125 credit after $500+ in qualifying direct deposits within 60 days of the Payback checking account opening date.
  • Receive $0.10 for every debit card transaction ($5 or more) during the first 90 days your account is open.
  • No minimum balance required to obtain the bonus or to open the Payback Checking account.

More bonus fine print:

Members with an existing personal checking account with Andrews Federal (either as a primary or joint account holder) are not eligible. Qualifying direct deposits include recurring electronic deposits of payroll, pension or Social Security. Person-to-person, bank transfers or other electronic money transfers, such as those made through internet payment services, do not qualify. The $125 credit will be made to the new Payback checking account within 90 days of all requirements being met. Your new Payback checking account must still be open and in good standing when we seek to credit the bonus, otherwise the bonus is forfeited. Only one bonus will be awarded per member regardless of the number of accounts opened. Bonus offers are not transferable and are reportable for tax purposes. A $25 early account closing fee applies if the account is closed within 60 days of opening.

Here are details about the PayBack Checking account:

  • $10 monthly fee will be waived if you receive at least $500 in total direct deposits within a calendar month to this account.
  • No minimum balance.
  • Must be enrolled in Digital Banking and/or Mobile App.

Credit union membership eligibility. From their page on membership eligibility:

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

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

Note: Applying for an account may result in a hard credit inquiry. At least for me, they checked my TransUnion credit report.

Bottom line. This is a relatively straightforward checking bonus. Membership is open to anyone nationwide via American Consumer Council. I am already a member of Andrews FCU based on a previous certificate deal (never open a checking account unless you have to), and I have been satisfied with their service. I got the $75 credit immediately after opening, and expect it go smoothly after my direct deposit. Their current certificates rates are relatively competitive but nothing currently exceptional. You may want to check out their car loans or mortgage rates if in the market.

Filed Under: Banking, Deals & Offers //

William Bernstein on Holding Both Treasury Bonds and TIPS (or Savings I Bonds)

Posted on April 16, 2023 // 1 Comment

sb_posterWilliam Bernstein has a new article titled Riskless at Age 104 in which he outlines why he just bought some 30-year Treasury Inflation-Protected Securities (TIPS) that won’t mature until he is 104 years old. Despite that distracting headline, the article is more about the reasons why you might want to hold both traditional US Treasury bonds that pay a stated rate and TIPS that pay a stated rate above inflation.

Here’s a quote that is nearly the answer to a riddle: What is risky in the short run but riskless in the long run? What is the opposite?

A TIPS is risky in the short term and riskless in the long run, which is precisely the opposite of, and complementary to, a T-bill, which is riskless in the short term but, because of reinvestment rate volatility, risky in the long run.

In the end, Dr. Bernstein recommends holding both:

To summarize, TIPS and T-bills are complementary assets. The former appeals to our System 2’s inner Spock, who first and foremost wants to secure our future consumption, while the latter assuages our System 1’s inner Daffy Duck, who wants us to bail at the worst possible time and violate Charlie Munger’s first rule of compounding, which is to never interrupt it.

The prudent retiree holds a goodly pile of both.

I also split the bond portion of my portfolio between safe traditional bonds (and cash and CDs) and safe inflation-protected bonds. My take:

  • Cash, which can be held in the form of short-term Treasury Bills or cash deposits in an FDIC-insured bank account, satisfies our System 1 “reptile brain”. It’s simple, reliable, and easy to understand. It may not keep up with inflation perfectly, but it also moves around a lot less.
  • TIPS and I Savings Bonds, which allow you to remove the variable of unexpectedly high inflation over long period of time (up to 30 years out), satisfies our System 2 “rational brain”. As a long-time holder, I can attest that it fluctuates in unpredictable ways and is not that much fun to hold. It’s actually like stocks in that price seem to drop in times of crisis. You have to really understand the inner workings, but if you do then it becomes a form of long-term insurance against unexpectedly high inflation.

This is also why I’m still buying Savings I Bonds every year even though the headline rates are not as crazy anymore. I don’t buy them as a substitute for short-term cash, but as a form of long-term insurance policy. When inflation spiked up to 8%+, it wasn’t just $10k of I Savings Bonds that I bought in 2022 that went up 8%+. My entire stash of I Savings Bonds slowly accumulated over a decade or more went up 8%+. I will admit, it felt nice that something went up in 2022. Savings I Bonds also never go down in value (unlike TIPS), so in a way they are the least stressful way to hold inflation-protected bonds.

Filed Under: Banking, Investing, Savings Bonds //

Amazon Prime Stock Up & Save Promo: 20% Off $50+ of Amazon Brand Everyday Items

Posted on April 13, 2023 // 4 Comments

Amazon is running a 20% Off Stock Up & Save Promo for Amazon Prime members that spend at least $50 on Amazon-branded everyday essential items like Presto paper towels, Amazon Basics paper towels, Amazon Basics disinfectant wipes, Presto toilet paper, Solimo K-cup coffee pods, Amazon Basic Care ibuprofen, Amazon Basics resealable freezer bags and sandwich bags, and Happy Belly cereal bars. Lots of food and snacks.

Just add the items to your cart and you should see the discount show up automatically at check out. Look up anything from any of the private labels owned by Amazon including Amazon Basics, Happy Belly, Mama Bear, Presto, Solimo, Wickedly Prime, and Wonder Bound in the eligible categories of Health & Beauty, Grocery, Pet Products, Office Products, and Pet Products. There are over 1,000 items that are eligible. The maximum discount is $100, so you can get 20% off up to $500 of stuff.

If you have the Amazon credit card, you can also stack savings as all Amazon Basics items are also eligible for 10% cash back right now, higher than the standard 5% cash back. So that’s up to 30% off total on a lot of things as many things (non-food) got switched back to the Amazon Basics brand recently.

(RSS and e-mail readers: Due to Amazon’s affiliate rules, you must view this post on the website to view the direct links to Amazon.)

Filed Under: Deals & Offers //

CBC Federal Credit Union 5-Year CD at 5.25% APY (Expired)

Posted on April 12, 2023 // 2 Comments

(Update: This offer is no longer available, but the credit union was very customer-friendly and did honor their rate for those that opened the account during the period when the offer was displayed on their website. You just had to call them up and ask. They are a small credit union with limited resources, and I commend them for acting honorably and in a friendly manner. The rate has now dropped, and they no longer open CDs over the phone; you must open in-branch. )

CBC Federal Credit Union is a small credit union that is offering some top certificate rates as of 4/12/23. NCUA-insured. Here are the rate highlights:

  • 5-year certificate at 5.00% APY ($500 minimum).
  • 5-year certificate with Epic Premium Checking account: 5.25% APY ($500 minimum).
  • Early withdrawal penalty for 5-year certificate is 365 days of dividends (will eat into principal if needed).
  • The rates on their 1-year, 2-year, 3-year, and 4-year certificates are also competitive, with and without the Epic Premium Checking Account.

Their Epic Premium Checking Account offers various perks including a discount on loan interest and also a boost of 0.25% to 0.50% on certain Term Share Certificate Rates. However, it does charge an $8/month fee that cannot be waived. If you close the Epic Premium checking account or it becomes inactive, then you lose the rate boost AND the interest rate on your CD might drop to the current rate. Whether the extra rate boost is worth the monthly fee and maintaining activity on the checking account depends on the amount deposited and your own preferences.

Unknown if there is a credit pull with a new membership application. This is common with credit unions, but I did not see anything come up on my credit monitoring alerts after my application. Must keep $5 minimum in Share Savings account as long as you are a credit union member. Hat tip to DepositAccounts.

Membership eligibility. Although in Southern California with only four physical branches, their eligibility criteria is actually open to anyone nationwide. You can:

  • Live, work, worship, or go to school in Ventura County
  • Participate in programs to alleviate poverty or distress in Ventura County
  • Participate in associations, businesses, or other legal entities headquartered or located in Ventura County
  • Maintain a facility located in the Ventura County
  • Have a family member that is an existing CBC member
  • Importantly… one of the eligible associations is the American Consumer Council, which you can join as part of the sign-up process and CBC FCU will cover the membership fee.

My thoughts. I wasn’t sure if I should post about this, as the last time I posted a CD deal from a smaller credit union, the rate dropped in only two days. These small credit unions usually offer up these high APYs when they have specific funding needs and then they will drop the rate once that dollar amount has been met. However, the purpose of this blog is to share what I am up to, and this is an example of a motivated individual being able to access a much better interest rate than even a billionaire hedge fund manager.

For comparison, as of 4/11/23, the 5-year Treasury bond rate is 3.54%. For retirees and semi-retirees with large cash/bond balances, this is a meaningful rate difference. I don’t know where rates will go in the future, but I like to build a ladder and this is one of the best rates for my “5-year rung” in a while.

If you wish to get in on this rate, you should act quickly and temper your expectations. It’s a good enough deal that it is quite possible that there will be enough new applications to overwhelm their limited staff. You might go through the application process, possibly take a credit pull hit, and have the rate fall before you can fund the certificate. I’m not saying this will happen, but it is possible. Of course, it is also possible that this is only the start of multiple places offering long-term 5% APY CDs.

In terms of best practices, I would recommend taking extra care when applying online and uploading a very clear picture of your photo ID. You want to avoid any hiccups that would require human intervention. If you do have to call, be polite and patient. Once you get your Share Savings account number, use it to transfer funds over online within a few days. (Some people choose to wire funds as that is instant.) Then you must call up CBC FCU and open up the certificate over the phone as an existing member with funds ready to go.

Based on their website, they appear to be using the same backend software as many other credit unions.

Filed Under: Banking, Deals & Offers //

Investment Asset Classes: What Do You Really Need?

Posted on April 11, 2023 // 5 Comments

The Morningstar article Why Investment Complexity Is Not Your Friend points out that out of the thousands of available ETFs and mutuals available, most of them are so narrowly-focused that you really don’t even need to consider them.

What asset classes do you really need to own? Here is their no-nonsense list broken down by “definitely need”, “probably need”, and “don’t need”.

Agree? Disagree? I do believe you can still do quite well over the long run even if keeping things very simple.

Filed Under: Investing //
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