Wednesday, May 24, 2017

Stockpile: Give The Gift Of Investing


If you've never invested in stocks before, getting started can be an intimidating prospect. You may think you need a pile of cash to get started. After all, a single share of Tesla sells for $300 (at the time of this writing). You might only have $100 or $50 to invest. What can you do?

Enter Stockpile. A traditional broker will only allow you to purchase shares of stock in whole increments and often their commissions are high enough that it's not financially feasible to buy less than 10 or so shares of stock. Stockpile is a company that lets you purchase partial shares of stocks for a low commission - the lowest I've seen anywhere.

For example, if you wanted to own Tesla stock, but only had $30 to invest, with Stockpile you can buy one tenth of a share with your $30 plus an insanely low commission of $0.99! Sweet! Stockpile allows you to buy stock based on a dollar amount you have available, not multiples of a share price.

They also offer dividend reinvestment for free, so you can take advantage of compounding by plowing dividends right back into the stock.

Stockpile doesn't offer shares of every single stock in the market, but they do offer shares of more than 1,000 companies, including every stock in the S&P 500. You can check to see if they offer shares of a company you are interested in here.

Their Real Advantage - Gifting

But what is really exciting about Stockpile is their gift card program. Gift cards can be electronic or physical and they allow you to give someone a certain dollar amount of a company's stock. For example, if you want to give your graduating nephew $50 of Apple stock, you can buy them a gift card for that.

But this is the cool part - if your nephew doesn't want to own stock in Apple, they can use that gift card to buy $50 worth of any other company stock Stockpile offers. Or, if your nephew isn't into stocks at all (how is this guy related to you?), he can exchange it for a $50 gift card to some other retailer, such as Amazon, for the full face value! This is one gift you know will be used!

The gift card recipient always gets the full face value of their gift card. If they use it to buy stock, they are not charged a commission - that is paid for when the giver purchased the card. If they exchange it for a gift card from another retailer, they get full credit. Gift cards also never expire.

Given the huge flexibility of their gift card program, I can't see any drawbacks to giving Stockpile gift cards!


Open An Account Today And Get $5!

If you are interested in opening an account, use this link and you'll get $5 worth of your choice of stock for free! (Full disclosure: that's an affiliate link and I'll get $5 as well.)

You can fund your account by linking your bank account to your Stockpile account (this is free, but can take 3 to 5 business days) or by supplying a debit card number (costs vary from $0.25 to 2%, based on your bank, but Stockpile will tell you the fee before you are charged - and this provides instant funding business days between 7 AM and 8:30 PM Eastern).

Stockpile offers a great value. In addition to the crazy low commission, Stockpile does not charge a monthly fee to have an account. I don't see any downside to getting started with them!

Wednesday, May 10, 2017

Is This The Latest Trend In 401(k)s?


I received an email from my employer's HR department a while ago that notified me of some coming changes to our 401(k) offerings. They are removing some of the higher cost funds and replacing them with similar lower cost funds. This is a great news because most people don't even realize how much funds are charging them.

The flip side of this is that now participants of the plan will be assessed a quarterly fee to make up for some of the losses. As the memo from my company put it:

Effective June 1, 2017, we have chosen to adopt a lowest cost investment approach within our retirement plan; see the attached notice.  With these changes, the Plan will now receive less fee revenue from certain investments that have been used to offset administrative costs associated with the Plan. As a result, you will see a change in the way investment and administrative fees are managed. You will also have greater visibility to the administrative fees since they are no longer embedded in the higher share class investments – creating more transparency and reducing overall expenses.

The Plan will shift the administrative expenses previously covered by higher cost share funds to a per-participant fee each quarter. This fee, which is currently estimated at $7.50 per quarter, will begin in January 2018 and may vary in future years after annual costs associated with the Plan are determined.


Initially, I was a bit peeved. This seems like they are just passing the costs on to me and the other participants. But really, they are not - we were already paying these fees but they were just hidden in the expense ratios of the funds. (See my previous posts about selecting funds with low expense ratios in your 401(k).)

Overall, this is a big win for investors. My plan replaced 9 funds with lower cost alternatives. Here are the changes:


Old fund Old Expense Ratio New fund New Expense Ratio
PGFIX 0.85% AFGFX 0.61%
REREX 0.85% RERGX 0.50%
DISSX 0.50% VSCIX 0.07%
JDVVX 0.77% JDVWX 0.70%
LLDYX 0.40% LDLVX 0.33%
HIEMX 1.33% VREMX 1.20%
BPRIX 0.35% BPLBX 0.30%
DEVIX 0.99% DVZRX 0.77%
PNCYX 0.62% JHBSX 0.45%

With the exception of the one change to a Vanguard fund (VSCIX), most changes resulted in about a 0.2% reduction in expenses. Some were almost not worth the change, in my opinion (i.e., just a 0.07% reduction from JDVVX to JDVWX), but I still have to appreciate the sentiment.


The new fee participants are being charged is $7.50 per quarter, or $30 per year. So if you have invested more than $15,000 and changed to some of these new plans, you'll likely come out ahead (because 0.20% of $15,000 is $30.) Depending on which funds you are in, you may come out ahead with even less invested. For example, if you switched from DISSC to VSIC, you'd start coming out ahead at just $6,976 invested due to the 0.43% reduction in fees.

But Wait, That's Not All!

The other positive thing about his change is that a percentage fee is being replaced (at least in part) by a flat fee. This means that your fee is still $30 a year, no matter if you have $10,000 or $75,000 invested. With the old fee structure, higher balances would pay more.

Let's Hope This Is A Trend

I am hoping that people are becoming more aware of the hidden and not-so-hidden costs of mutual funds. I'd love to see more companies make changes like this. I'm worried that my perspective my be a little skewed though. I work in the financial services industry, so my fellow employees could be more educated about these issues, which might force HR to be more aggressive at lowering 401(k) expenses than HR departments at companies in other industries.

Has your company done something similar?

Wednesday, May 3, 2017

Goal Update: End Of April 2017

At the end of each month, I post an update of my goals, including a brief discussion of any notable events that might have occurred during the month. The latest month's figures can always be found under the Featured menu in the menu bar at the top of the blog.

Last updated: End of April, 2017
Current value: $31,906
Change from last month: +$1,314
Percent of Goal:  29.34%




Note that the funds in this account are invested in stock, so there will be fluctuations in value that are outside my control. I never withdraw money from this account, so any dips are purely due to stock price changes.

Events Of Note Last Month:


Net income from my online courses was $90.00. My hard money loan generated $133.33 in income. I received $2.30 in eBook royalties. And lastly, I received a $50 check from a class action lawsuit relating to my old Whirlpool washing machine.

Income from my online courses seems to be tapering off. This is likely because newer versions of SQL Server have come out and, although my course content is still applicable to the newer versions,  I suspect people want to always learn on the new shiny.

I remember going to one session at a SQL conference that was titled something along the lines of "Best Practices for SharePoint and SQL Server 2016." The very first thing the guy said was that his session was exactly the same as ones he had done for previous versions of SQL Server, but if he didn't put "SQL 2016" in the title, no one would show up. I walked out, not simply because this pissed me off, but because the year prior, I had attended his session for SQL 2012, so I wasn't going to waste my time sitting through the same session.

I could go through and update my courses to show SQL 2016, but really, for the stuff in them, nothing changed. I'm not going to be as disingenuous as that speaker was by re-branding my courses with something like "Now includes SQL 2016!" So my options are to make a new course based on features of SQL Server that are only found in the new versions, or just accept the declining revenue. Not sure which way I will go yet.

I mentioned back in February that my hard money loan was coming due and I was selling my stock in anticipation of rolling the funds from that into a new loan. I sold my stock, but then found out my loan was extended by three months (which I agreed to), so I've been sitting on about $11,000 cash earning next to nothing for a couple of months. Not ideal, but not the end of the world either.

Relocation Update

Man,  real estate agents can be like sharks smelling blood in the water. I opted to fire the one agent I was using to sell my house (I only had 1 showing in 7 weeks) and hire another. As part of that process, I had to take my house off the market. Immediately, I got barraged with calls from agents trying to get me to list my house with them. The house went off the market on Friday night. On Saturday morning, I received 5 calls in 15 minutes! On Monday, I received about 15 calls in the hour between 8 AM and 9 AM. Because I had actually already signed with a new agent, there was no point in my talking to these people. I basically stopped answering my phone for 2 days if the call was from a number I did not recognize.

Taxes

Taxes this year were about the same, on a net basis, as last year. We ended up owing about $1,000 federal and $500 state, for a total of $1,500. Last year, we owed $1,900 federal and got a $400 refund from the state, for a total of... $1,500. I am nothing, if not consistent :-)

It could have been worse but I had been making quarterly tax payments to lessen the blow. I put aside 15% of the income I receive from my hard money loans, royalties, and online courses for taxes and send that in each quarter. Last year that came to about $600 in payments.

I used to want to end up owing a small amount each year because getting a refund means you have been lending money to the government interest-free for a year. I still feel that way, but after doing our taxes this year, I went ahead and increased our W-4 additional withholding amounts for 2017. My goal now is to end the year somewhere between getting $200 back and owing $200 in taxes. But since tax laws are constantly changing, it's a hard target to hit. It'll be made even more difficult for 2017; my wife's new job pushed us into a new tax bracket, but we are also moving (which gives us some tax deductions) to a state that has no income tax.

Net Worth Update 

For April, our net worth rose by $36,922. As I mentioned last month, this was mainly due to my wife's relocation bonus hitting our bank. Once I sell our house in Arizona and move to Washington, those funds will be used and our net worth will take a corresponding drop.


March 2017April 2017
Note: Mint.com categorizes our HELOC as a credit card debt, not a loan, hence the apparently high credit card balance.















Mint changed their charts. I miss the pretty colors and I think the new version is harder to read.

Our Property total dropped and our Cash went up. This is because I cashed out a hard money loan, which Mint tracks in the Property category. As soon as my bank clears the funds from the check, I'll be sending it to my HELOC, which Mint characterizes as a Credit Card. This is just me moving funds around trying to get ready for the sale of our house and upcoming move.

If you have any questions or suggestions for topics, please drop me a line in the comments section!

Wednesday, April 26, 2017

My Experience With Credit Card Rental Car Insurance


When my wife was interviewing for her new job, we flew up to Washington one weekend and rented a car so we could drive around and check out the area, looking for possible neighborhoods to live in. We were staying in a hotel with underground parking. I had booked the rental car through Dollar Rent A Car and choose the "mystery car" option. (They actually refer to it as the "Lock Low & Go" option.) This was the cheapest option and it basically meant we would get whatever car they decided to give us when we picked it up. It could be a compact. It could be a full size car. Could be anything in between. It turns out we got a minivan.

Because I had to return on a Sunday and my wife had to stay until Monday for her interview, I left a day before she did. Seattle has a subway that goes to the airport, so she could get to her flight without a car. In the meantime, I would return the car on Sunday and save one day of car rental charges.

Oops.

Our hotel had underground parking and the exit required a pretty tight turn to fit through the gate. Because my wife had been driving all weekend, I had very little experience driving the minivan and ended up misjudging the exit turn. I scraped a pillar on the way out. Crap.



When we rented the car, we declined the optional insurance from Dollar. Had we got that, there would not have been a problem. However, we knew our credit card provided rental car insurance coverage, so I declined it to save some money. (You should pretty much always do this - unless you are taking a trip you know will cause vehicle damage.)

This is one time we knew we were going to need the rental insurance. But that's a story for another day.

There's A First Time For Everything

This was the first time I ever needed to file an insurance claim for a rental car and here are a few things I learned:

  • The coverage is secondary. This means you must first file a claim with your own insurance company, find out what they will pay, and then the credit card will pick up whatever isn't covered. (If you do not have your own car insurance, say, for instance, you do not own a car, then the credit card coverage would be primary and cover all damages.) This also means you must pay out whatever is not covered and wait to get reimbursed from the credit card company.

  • Your primary insurance probably won't cover everything the rental car company bills you for. The bill I got from Dollar included not just the cost to repair the damage, but also charges for loss of use (the car could not be rented while it was being repaired) and an administrative fee.



  • Your deductible still applies, of course. I have a $1,000 deductible, so I was responsible for that much, at least.

  • Rental car companies get nasty when trying to collect. I got one letter with my initial bill. I submitted everything to my insurance and they said they would take care of and let me know the status. As with anything involving lots of paperwork, things move slowly and require almost constant follow up. After one month, I got a somewhat nastier letter from Dollar saying I had still not paid and hinted at legal action.

It turns out, my insurance company had approved the claim, but had not done anything with it. After another phone call with my insurance company, I found out there is an electronic system that insurance companies use to pay each other and they were waiting for Dollar to submit the request through that. Another call to Dollar to tell them this. But, they told me, Dollar isn't an insurance company, so they don't have access to that system. Yet another call to my insurance company to get them to mail a check instead.

Oh - did I mention you cannot call the Dollar claims department and speak to someone directly? Every time you call, you get a message saying their representatives are answering calls all day and to leave a message and someone will call you back. The message even says don't call multiple times, it won't make anyone call you back faster. Pretty cheeky.

It's Not Fast


This whole process took two months. It might have gone faster, but I was actually trying to minimize any loss on my part. The last thing I wanted to do was pay out any money and then find out I was not going to get reimbursed for some reason.

When I found out my claim was approved, I gave Dollar the claim number from my insurance company and let them contact the company and work things out. (Given the debacle with the electronic payment thing, that didn't go too well, it seems.) Then, as soon as I found out what my insurance did not pay, and therefore, what I owed, I called my credit card company and got them working on sending that amount to me.

I did not send my payment to Dollar until I had received the credit card payment. So the net effect was I never had to put out any of my own money. But the waiting game I played caused Dollar to send me a second nasty letter after they received payment from my insurance and were still waiting for mine.

Still, It Was No Cost To Me

All in all, it was a fairly painless process that did not cost me any money. My insurance company ended up paying $458.93 and the credit card company paid $1,339.20. It did require about an hour or two of my time just to follow up with all the companies involved and make sure payments were flowing as they should.

This was our first car insurance claim in at least 10 years. Because we've been accident free for so long, our insurance company had enrolled us in their accident forgiveness program. We are allowed one at-fault claim every five years without incurring a rate increase. I'm glad we had that.