Tag Archives: interest

Selling GLD Before My Profits Are Too High

January 24, 2012 Joy Leave a comment

I’m not a day trader, or even a month trader. But I’ve started to realize if I want my portfolio to have any serious upside, I need to rebalance every now and again. I’ve sold off most of my cleantech investments including PBD, ENOC, and COMV, and put that money into a mix of large-cap tech companies (AAPL, CSCO), international funds (HAO, EWZ, EDIV), and food (MCD, CBOU, SBUX, WFM.)

Up until today, I’ve only sold small cap losses that seem to be destined for failure or, at best, growth after years of retreating even further, while that money could be in a large-cap dividend stock earning income. Today, however, I decided to sell one ETF where I have turned a profit.

So long GLD, at least from my taxable account. After making an early $500 investment in GLD I found out that gold, even in an ETF, is taxed at a collectors rate. That means 28% capital gains tax. Instead of letting my $500 sit in my taxable account (it is at about $900 now) I’ve decided to sell the 5 shares and move my investments into other funds that belong in my taxable accounts. And after today’s AAPL earnings news, I’m tempted to put the $900 into purchasing two more shares of the company that made the computer I’m currently writing on and the phone I’ll be making calls on in a few minutes. I only own 70-some odd shares of AAPL stock, my goal is to get to 100 shares before the company hits $500 a share. Since AAPL doesn’t pay dividends, this is the perfect company to hold in my taxable accounts.

Meanwhile, I invest regularly in GLD in my Roth IRA account. It seems GLD is fairly expensive right now (afterall, I nearly doubled my initial investment from just a few years ago) so I might hold on aggressively investing in it. My Roth account is my “play” account, since I can only put $5k in it per year. I put that mostly into high-dividend ETFs and rebalance by adding more funds in new sectors the following year. For instance, this year I’ve already invested about $2k into XLE (oil) and XRT (retail companies) as well as GLD. I only have $3k left for my Roth this year, but I plan to start contributing to my 401k (no match) soon, and trying to max that out this year. I’m hoping for a significant raise, which in the ideal world will be enough to cover maxing out my 401k without noticing those contributions too much, but I’m not sure yet if that’s actually going to happen. Fingers crossed.

In the meantime, I have $900 liquid that I can invest somewhere. Oh goody. I think it’s pretty crazy that I currently have $149339.25 in my investment accounts right now, not counting about $10k liquid (though taxes are going to eat some of that up I think.) Even though $150k doesn’t seem like a lot of money, I’m proud that in the last 6 years since I’ve graduated college I’ve been able to go from $5k in savings to over $160k. Still pushing for that $200k this year — if the economy decides to recover and I manage a sizable raise it will help lift me up there, otherwise I’ll probably end up at $180k for the year. Really would like to see that happen, I’m so set on entering my 30s with $250k in the bank, I’ll be pretty peeved at myself if I don’t make that goal.

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6.01% APY on your Checking Account! Wait, it is too good to be true.

February 20, 2009 Joy 10 Comments

So… this seemed too good to be true. I just found out, it is. The offer is only available for people who live in the bank’s county in Illinois. So much for 6% APY. There’s nothing like that around here!

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I was listening to my favorite talk radio program – The Ray Lucia Show – yesterday, and a guy called in to ask about a 5% APY checking account he saw advertised on the Internet. He wanted to know if it’s legit.

Since I haven’t seen any set APY rates of 5% since three years ago, when I saw those rates on a CD, I was intrigued. The “Brain Trust” team at the radio station did a little research and found out that, indeed, this offer was through an FDIC insured bank and it was legit. Of course there was a catch – you have to 1, have direct deposit and 2, use your debit card at least 10 times per month/billing cycle.

That left me with the question – what happens if you don’t. So I did some research online and found that many smaller banks are offering up these high interest checking accounts to lure in new customers. Smart for them.

I just opened a 6.01% APY (!!!) checking account with First Robinson Savings Bank. Read through the fine print, and so far it seems pretty straight forward. The rewards are only on cash under $25,000 — but that’s ok, I’m not ready to save more than $25,000 in a checking account anyway. You do need direct deposit (I’ll have to get my work account to switch over from my Bank of America – thank goodness I’m now a full time employee!), and you do need to make 10 transactions a month (I could buy gum ten times and that’d be fine.)

Some other banks are offering similar rates, more in the 5% range…

Union State Bank is offering 5.01% APY with similar rules and AmericaNet is offering 5.25% APY.

I’ll admit, I’m a little nervous opening up a bank account at a small bank in some random Midwestern state (not that I have anything against the midwest!) but these rates might not be too good to be true, just too good to pass up.

Given that my Chase Freedom card rewards are about $20 a month, on month’s I spend a lot, I figure I could probably make a similar amount in this checking account and not risk forgetting to pay my bills on time and getting hit with late fees.

From the fine print, it looks like if you fail to make your 10 transactions per month you just get only .25% apy for that month – so basically, you don’t get any interest. But you can start over the next month.

Considering I barely ever use cash, my debit cards always get a lot of action. This sounds like a good way to earn at a good rate while also starting to exit Bank of America. Right now I have a checking account, savings account, and CD at BoA. If this 6.01% rate turns out to be legit, I’ll move my CD over there once it expires, and possibly move the cash I’ve been saving at ING there too — since it’s only earning like, 2%.

Have any of you opened up / used one of these high interest checking accounts before? Any horror stories I or my readers should be aware of?

Investing

Lending Club: First Impressions

January 31, 2009 Joy 1 Comment

The Internet is a wonderful place. Thanks to a few tweets back and forth with the ~~CEO~~ Director of Product Strategy for Lending Club, I landed myself a few bucks in my account to test out the growing P2P site. I’ve invested about $500 into Prosper over the past two years, but it’s in a silent period now and I’ve got a hankering for P2P lending, so it makes sense to try out the ever-popular lending club.

I haven’t done much so far. Signing up was easy (then again, I remember signing up for Prosper was easy too. It’s always easy to sign up when the company wants you to give them your money.) The interface is nicely designed and clean… at least from a noob perspective.

I’m about to make my first loan… I just need to figure out how to do that. It seems like the rates are set by credit scores and such, as opposed to somewhat randomly ala Prosper. I guess that’s good? I failed at Prosper by lending $50 to a person with a B credit rating who was looking for money to study abroad. It was her second time posting the listing. Yea, that one defaulted. Everyone else has been paying on time. I’m not seeing the interest rates I’d like… even though the performance is still wayyyy beating all my stocks.

Ok, so I’ll write more about Lending Club once I’ve figured out how to pick my loan(s). They first took me to a page that – similar to Prosper – would set up an investing plan for me based on my desired risk allocation. I never used that on Prosper… I like to hand-pick my loans. So that’s what I’m going to try to do… I’ll report back when I figured it out and get my first loan set up.

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2008 Taxes, Part 1: Did my 50% of income strategy work?

January 18, 2009 Joy 3 Comments

In 2008, I tried a financial strategy meant to keep me both “in-the-know” and “out-of-the-know” at the same time. This simple strategy was to save 50% of my income for taxes in a high-interest savings account. As a self-employed person this was legal, as long as I paid 90% of my previous years’ tax along the way. Being as in 2007 I made less than $30k and my income shot up to $58k in 2008, this made a whole lot of sense.

The outcome of my 2008 plan seemed to have worked decently. I just tallied up my tax figures for the year, not counting any deductions I or Turbo Tax may take, and my total tax owed for 2008 is $22876. This includes my 25% tax bracket federally, $15.3% self employment tax, and $9.3% tax bracket in California (why is California one of the highest tax states to live in yet we’re also the deepest in debt???)

I saved $26,000 for taxes after paying $4315 in estimated taxes over the year (I still owe my Jan 15 estimated tax for federal, need to send that out, but I hear it’s not late as long as you get your return in by Feb 2.)

So, number crunching that means sans deductions, I still owe $18,562, leaving me with $7438.17. I’m sure with deductions it will be a little less then that and then with my various interest income from different accounts it will be a little more. I’m guessing I’ll end up with at least $7200 to save.

So the good news is I start 2009 off with $7,200, or thereabout, to spread about in my various accounts as a “cushion” for the year. Sweet. Still deciding on whether to get a tax accountant for my 2008 returns, though I figure even if I don’t take any deductions I’ll get

In 2009, my tax situation is an entirely different story. My income may go up a bit, but I’m now a full-time employee, so I can’t shelter as much money from taxes over the year… nor do I really want the headache. In my next post, I’ll describe how I’m planning to take a more active approach to budgeting in 2009.

Investing

After Maxing Out an IRA, Where Should Retirement Savings Go?

January 10, 2009 Joy 4 Comments

This year, I’m going to be making at least $60k. Which is wonderful. I plan on saving as much of that money as I can. The question is where to save.

2009 is an interesting year to have the opportunity to put away a chunk of money. With the stock market down, it seems like a great time to start making consistent, monthly long-term investments in the stock market. But without a 401(k), where do I put all of my savings? It’s surely a luxury to be able to ask this question, but one that I have to start thinking about nonetheless.

There’s also the real possibility that even if I do an amazing job at work in 2009, my startup will not receive funding to go on in 2010. Thus, I have to plan for unemployment at some point, just in case. The good news is that if I do a good job and the company goes under, god forbid, i’ll have a really solid network of references to help me find my next opportunity. So my only concern here is making sure I do an amazing job over the coming months. That’s just about the only thing I need to do for this situation to turn out positively.

But the question remains, where do I put this savings? It’s so hard to find answers to this question because most people say “max out your 401(k) first and then max out your Roth.” Well, what if you don’t have a 401(k)? Then where does your money go?

There are a lot of options. I’m not sure, from a tax perspective, which are the right options for me. And maybe the tax savings isn’t something I should be concerned about? Savings, in general, is a good thing.

So… a few other factors play in to the equation. I’m pretty sure I want to go to grad school in a few years. I’ve decided I likely want to go for an MBA, hopefully at a fairly good school. I’m not sure when I’m going to do this exactly. But I know I need one to become a product manager, which is my goal right now. There is always a chance I won’t end up going to grad school, but it’s looking more and more likely as I advance my career and figure out my long-term goals.

There’s the possiblity that I will move with my boyfriend to New York or wherever he goes to grad school (which is even more of a definite than my potential grad school experience) and have to find a new job. NY is a super expensive city, obviously, so having a solid emergency fund will be vital. I already have an emergency fund of $7k, but I’d like to grow it if I’m going to be moving to NY.

Assuming I can put away $10,000 for the year, where do I put it?

$5000 goes into the Roth IRA.

Then, where does the rest of it go???

Some options that I know of:

1. Mutual funds. No tax help there. Taxed going in and coming out.

2. An HSA. Which still has a limit of $2,900 a year. And my company would put in $1,200 a year. So that’s only $1,700 more on top of the $5000 in the Roth.

3. An 529 education savings fund. The problem with that is if I don’t go to grad school and/or have kids who go to college, I lose the money.

There are two types of 529 plans: prepaid and savings. Prepaid plans allow one to purchase tuition credits, at today’s rates, to be used in the future. Therefore, performance is based upon tuition inflation. Savings plans are different in that all growth is based upon market performance of the underlying investments, which typically consist of mutual funds. Most 529 savings plans offer a variety of age-based asset allocation options where the underlying investments become more conservative as the beneficiary gets closer to college-age. [via wikipedia]

4. P2P lending. I’d like to try out lending club. My Prosper accounts are doing ok, only one default, and I’ve heard better things about Lending Club.

5. ETFs and individual stocks. I already put about $2,000 into a Sharebuilder account (that’s down to $1500). But the coming year may be a good time to buy some good stocks at bargain prices. Unlike two years ago when I started investing.

6. Buy property. I don’t really have enough money to do this, nor do my circumstances equate to this making sense. But I know there are tax benefits to owning property, which is why I’m including it in the options.

7. CDs. CD rates suck right now. But they’re at least safe.

8. Bonds and other such lower risk investments. Prob doesn’t make sense in my 20s.

That’s about the only options I can think of right now? I don’t think employed people can open a SIMPLE IRA or SepIRA… so I’ve run out of options. Or do you guys have a better suggestion for me?

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What do you think about Credit Unions?

January 23, 2008 Joy 4 Comments

When I was Googling CD rates in hopes of finding high-interest CDs to balance my rapidly-losing-money stock and mutual funds, I came upon a list of various banks and places with their rates. Most of them were around 3 to 4 percent for any reasonable amount to invest in a CD (sorry, if I had $50,000, I would not put it all into one 10 year CD, even if the interest rate was fixed at 5 percent). Then I saw that this one place was offering a 7 percent rate for new members. 7 percent interest on a CD? Where do I sign up?

After doing a little more research, I found out that the “bank” was actually a credit union. While I had planned to take out my $5000 from my liquid BoA CD that’s getting 4.1 percent interest at the moment and put it into a 7 percent CD, it turns out the only amount I can put into this CD is $1000. No more, no less. Well, getting 7 percent returns on $1000 won’t hurt.

Still, I’m a bit confused about credit unions. I did some further research and they seem like a pretty good deal. The only thing I’m concerned about is that when I signed up, the fine print noted they could charge me $20 in membership fees if they wanted. It wasn’t really clear if this was a one time fee, or a per year fee… or monthly…

Credit unions sound good otherwise. When it comes to obtaining loans and such, since these places are, unlike banks, non profits, they can give relatively low rates. That’s about the extend of my understanding of these credit union places for the time being. I decided to sign up for that $1000 CD (I’ll be dropping a check off at my local branch later this week) so I can learn more. I figure if I ever get around to be able to afford a house (or a teeny tiny condo), it will make sense to be affiliated with this type of financial institution.

Do any of you belong to credit unions? Why or why not?