December 2006
You are currently browsing the articles from General Finance written in the month of December 2006.
the past 5 years the percentage of people banking online has increased dramatically, but there are still a large number of people who still are not willing to open a bank account online. For many, the reason for shying away from online banks is the internet in general, or not having seeing a face, while many others worry about the safety of banking online. It is normal to feel this way.
You should not have any safety concerns about banking online because it is just as safe, if not safer than having a bricks and mortar bank—just confirm that you are signing up with a reputable bank that is FDIC insured. Not having that personal relationship with your bank and bank reps can be a drawback for some, but most do not need to actually go to a bank with any regularity. Plus, if you have a bricks and mortar bank you can bet they probably have online banking available. So let’s go through the steps so what you might see as an intimidating process can be made as easy as possible for you.
Step 1: Ask someone you know to recommend an online bank to use or ask your current bank if they provide online banking services or look on the internet for sites that compare banks strengths and weaknesses and if they have fees. See if there are special deals available for signing up. Many online banks will give you free money to sign up with them.
Step 2: Decide which type(s) of accounts you want and go to the online banking website (e.g. Netbank, EverBank) and navigate it until you find out where you can apply for an account and click there.
Step 3: Get all your personal information (social security number, job information, etc.) out as well as anyone whose name might also be on the account.
Step 4: Fill in all the required information on the application and submit it online.
Step 5: Write a check in the name of the bank and note that you want to fund your account–you will need to get their correct mailing address(some banks have multiple addresses so make sure you are mailing your check and information to the correct address. Some banks have account minimums so be sure to put in at least the minimum.
Step 6: Your account should be funded and ready to go within a week or so of your mailing of the account funding check. If you have time email or call up the bank’s customer service line and ask for the status of your account.
Step 7: Once your account is set up and funded you might need to order checks (you will need your account number and routing number) or set up another bank so you can easily transfer funds from e.g. a checking account to a savings account. If you want you can also set up services like billpay which will automatically draw from your account whatever bill(s) you want it to pay automatically.
After following these steps you can relax and enjoy the benefits of banking online.
Written by Nagel on December 22nd, 2006 with no comments.
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As we have discussed before it is best to open a mutual fund account directly through the fund itself. Granted, this method will create more paperwork than if you opened it through an online brokerage account. However, if you are concerned about fees eating away at any profits you make at mutual fund investments then going directly through the mutual fund is best.
Why is that? Well, in order to buy a mutual fund through an online brokerage account you have a pay a trade fee, and there this fee is often higher than a typical equity trade. In addition to this fact if you desire to dollar cost average, it is extremely expensive to try to do that through your online brokerage account.
When you open a mutual fund account directly through that mutual fund you will pay no load (see Rule #1) fee and you will only have the normal expense ratio as a cost and sometimes a custodial fee.
Step 1:
Determine what type of mutual fund best complements your investment portfolio. e.g. if you currently have a mid-cap and large cap mutual fund in your portfolio, for diversification sake you should look into a small cap mutual fund or international fund in order to spread your investments into divergent areas of the stock market.
Step 2:
Search investment websites to determine what are the good mutual funds available. Run mutual fund screens using long-term performance as the main filter because excellent long-term results are a better measurement to use than short-term returns.
Step 3:
Examine the risk of the portfolio. If might be too high or too low for your liking. You do not want a mutual fund that is going to keep you up at night and you do not want one that will frustrate you because it does not take risks.
Step 4:
Look over all the information provided and get an idea if this mutual fund is something you are interested.
Step 5:
Make the decision to invest. Find out how much the minimum initial investment is and subsequent investments. Call up the mutual fund directly (or get their prospectus application online) and ask for all the necessary paperwork to invest to be mailed to you. Also, while you have them on the phone ask any questions about the process or the mutual fund. They want you to invest so they are willing to take the time out to help you.
Step 6:
Read the prospectus and fill out the application and write a check to the mutual fund. Also, sign up for an automatic debit to be taken out each month for an amount you can afford. This is dollar-cost-averaging which will help you guard against price swings in the market.
Mutual Fund Rules
Rule #1: Never buy a front-load or back-loaded mutual fund
There are literally thousands of mutual funds available to investors and a large majority of them are no-load mutual funds. Load funds are usually pushed by brokers in order to pad their pocketbook, their company’s bottom line and the mutual fund. Also, look if there are redemption fees because those can be killers.
Rule #2: Never look at only short-term performance
Long-term performance is the best way to predict the ability of a mutual fund to perform well in the future (although there is no guarantee). A strong investment team with years of experience running a fund a is your best bet.
Rule #3: Read the prospectus
Yes, they are boring, but they will provide you with important information regarding the mutual fund. Remember, if you want to pick your own investments and save yourself money you must know what you are getting into.
Rule #4: Examine the expense ratio
Is the expense ratio comparable to other funds in its category? Determine how much of an expense ratio you think is fair and that you are willing to pay.
Rule #5: Examine the turnover rate
If your mutual fund has a high turnover rate then come tax time this turnover can sometimes take a big chuck from your profits
Written by Nagel on December 21st, 2006 with 4 comments.
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You’ve changed jobs and are adapting to your new situation at work. You have a lot on your mind, but one thing you must remember to do is to roll over your 401k. Many, if not most, forget to do this and their 401k sits in their account with their former employer. This is can be a good thing if it is a good retirement plan, but rolling over is probably the best and safest method.
Be proctive and get this done so you can invest that retirement money the way you want. Typically in 401ks you have limited choices for investments, but when you rollover to an online brokerage firm you have much more investment options.
Do not cash this money in because you will owe taxes and a 10% penalty on the funds you withdrawal and do not put into another type of retirement account.
Step 1:
Compare online brokerage firms’ fee structure, customer service, etc. to get a feel for the company. Not all firms are the same so check out the details before committing. Look at some websites that do comparisons like this at bankrate. If you already have an account with a firm then contact them to see if they can provide you a Rollover IRA account. If you have not liked their service then look into transferring that account to another firm since you are already in the process of moving money.
Step 2:
Open a Rollover IRA at an online brokerage firm. Either fill out the online application or have them mail one to you. Make sure to provide them with al the necessary paperwork and ask them what information they will need from your former employer.
Step 3:
Complete a Rollover IRA application for the firm you chose.
Step 4:
Contact your former employer to alert them that you will be rolling over your 401k. Then complete all required distribution forms. Get a date that they will rollover your 401k to your new account. Don’t forget to get a benefits contact name and phone number because you might need it. Get any other information your online broker needs to complete the transaction.
Step 5:
Invest your money when the account has been funded and use an investment plan that complements the rest of your retirement portfolio.
Written by Nagel on December 20th, 2006 with no comments.
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I dread insurance because I feel like I pay all this money and get little in return. But I guess peace of mind is what you are paying for, right?
My wife and I are buying a home. We are changing our auto insurance to the new town; we changing from renter’s insurance to home owner’s insurance and finally we are adding short and long-term disability. We go through Erie Insurance and love it. By bundling all our insurance policies with them we save at least 5% on them all.
My wife has had the same agent for several years and he is extremely helpful so we really believe we are getting what we need.
Written by Nagel on December 19th, 2006 with no comments.
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It has been a couple weeks since I sent in my paperwork and check for Everbank to start a free checking account. I did hear from them and they explained that the received the check, but the paperwork was not all there. I explained that I sent in what was faxed to me by an Everbank representative. So I had to fill out some more paperwork and once they receive those documents in the mail my account will be activated.
So far it has not been the best of experiences, but I think it is just starting off slow. I think the interest rate on my checking account will make up for any problems that might arise.
Written by Nagel on December 18th, 2006 with 1 comment.
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One issue that has been a real pain since getting our new home is getting a locksmith to come over and change the locks to our new house. After the closing date our real estate agent recommended a specific locksmith who does great work and is very inexpensive–two things that our great for new homebuyers.
I called the man and left messages over a 2 1/2 week span until I finally got him on the line this week. He will come come out and change them in the morning.
It is one of those little nagging homeowner issues thatcan drive you nuts once you have moved into your house.
Written by Nagel on December 17th, 2006 with no comments.
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I am not the most tech-savvy person out there, but I am no Luddite. So last weekend when I had severe issues getting my broadband internet Comcast was not the most helpful at times and other times they were great.
The man who installed the broadband internet was very helpful, however, he could not hook up the neccessary wires to get the broadband internet service in the upstairs–the only place was in a utility room in the basement. Uggh! He said I could get a wireless router and USB adapter and I could have broadband internet wireless in our house. I thought that was a decent idea although it was going to cost more money. I went out and found deals on a Linksys wireless router and a USB adapter.
So that took me several hours because I know so little about those products I had to ask many salespeople to explain everything to me and reassure me that it will work. I get home and try to hook it up. My pc is nowhere near the cable and I did not know you had to initiate the internet connection with a wire before going wireless. that error cost me hours of my life and finally I had to take my pc downstairs. I tried calling Comcast several times and they never explained this situation to me (they never told me that service was out in my area the entire day until my last call of the evening). So it took much more time than I thought it would. Linksys would not help me with the wireless router or USB adapter until I had a connection. My computer expert friend could not even figure out what the problem was. I gave up after a full day wasted.
The next morning I had a person from Comcast on the phone. I was keeping cool, but he could not explain what was wrong and he blamed it on my computer and said I would have to buy more equipment. That conversation did not last long. After several more hours I finally got a weak connection and called Linksys. The walked me through verything for an hour and it has worked perfectly since then.
I called Comcast again and asked for reimbursement because I had to purchase all this equipment–they offered to waive the $50 installation fee.
Linksys has lived up to the good people have told me about them. I have had Comcast cable TV in the past and discontinued service because their customer service was awful. So Comcast lived up to expectations. In the end I did get some money back and now I have wireless internet.
Written by Nagel on December 16th, 2006 with no comments.
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I am in the process of changing jobs and now I get to practice what I preach when it comes to rolling over a 401k into an IRA. All my paperwork cleared a week ago on Scottrade for my Rollover IRA account so once my current job is over I can begin the process.
I have alerted my Human Resources person and soon I will talk to Scottrade as well so they can handle most of the heavy lifting getting funds from my 401k to my Rollover IRA.
There is not a lot of money in my 401k and my vesting level is low (20%) so not much will be added to the money I contributed. Once it all goes through I will get to pick another stock I want to invest.
Written by Nagel on December 15th, 2006 with no comments.
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Many know of the benefits of buying a home and building equity instead of paying rent. Often, many do not realize that there are some important tax breaks out there for homeowners. You need to make sure you can capitalize on this so remember these tax break tips and if you have an accountant do your taxes let him or her know that you are elligible.
Read this article in Smartmoney.com to learn a wealth of knowledge that you can use when tax time comes.
Written by Nagel on December 14th, 2006 with no comments.
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I leave my current job on December 29, 2006 and begin my new one on January 2, 2007. My new job has a waiting period of 60 days until I will be covered. This causes some problems.
Fortunately my current employer covers my healthcare for 30 days after my official resignation day. This means I have t find a short-term catastrophic health insurance from late January to the first week of March. This should not be too costly. It typically can run around $60 for that month plus a one-time set-up fee.
The other issue is that my wife is covered on my current company’s health insurance plan. Since this is considered a life-changing her company will allow her to start up on their health insurance plan. Then once the 60-day waiting period ends I can put my wife and myself on my new company health plan.
Written by Nagel on December 13th, 2006 with no comments.
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