Search Results for: High Interest Savings

Best Brokerage and IRA Transfer Bonuses – October 2019

Posted on October 10, 2019 // 7 Comments

Fidelity, Schwab, TD Ameritrade, E-Trade, Interactive Brokers, Ally Invest all now offer free stock trades. Vanguard offers free trades on all ETFs, not just their own. The new differentiators are things like user interface, customer service, and interest on cash sweep accounts. How about some cash in my pocket too?

The recent shake-up is a reminder brokers are transitioning to maximizing assets under management, as opposed to attracting traders that rack up those commissions. You can often get a cash bonus for switching teams, based on the size of assets that you move over. This usually involves an ACAT transfer of your securities, including tax cost basis history. Here’s a current list of the top brokerage transfer bonuses, along with some additional commentary on Fidelity and Vanguard.

Schwab

  • Link: Up to $2,500 bonus offer
  • $200 bonus for $50k, $300 for $100k, $600 for $250k, $1,200 for $500k, $2,500 for $1m+.
  • New or existing customers moving over new assets. Valid for retail brokerage accounts.
  • Make a qualifying net deposit of cash or securities within 45 days.
  • Maintain net deposit amount (less any market losses) for one year.

TD Ameritrade

  • Link: Up to $1,000 bonus offer
  • Note this matches or is better than their standard up to $600 offer.
  • $100 bonus for $25k, $200 for $50k, $500 for $100k, $1,000 for $250k+.
  • Valid for new taxable or IRA accounts.
  • Open by 1/30/20, funded with new funds or securities within 60 days.
  • Maintain net deposit amount (less any market losses) for 12 months.

Chase YouInvest + Sapphire Banking

  • Link: $1,000 Sapphire offer / Standard offer
  • Sapphire offer: New or existing customers. Brokerage and/or IRA. Must transfer a total of $75,000 or more in new money or securities into eligible Chase checking, savings and/or investment accounts. You must open a new Sapphire banking account by 11/19/2019, complete the $75k transfer within 45 days of opening, and maintain that balance for at least 90 days from the date of funding. Get $1,000 bonus.
  • Standard offer: $200 for $25k, $300 for $100k, $625 for $250k. Transfer within 45 days, maintain for 90 days.

Merrill Edge

  • Link: Up to $1,000 bonus offer / $900 Preferred Rewards offer / $600 Standard offer
  • $100 bonus for $20k, $250 for $50k, $500 for $100k, $1,000 for $200k+ in new assets to BofA/Merrill. If you have a lot more than $200k, you can call them at 888-637-3343 for a custom offer.
  • Expires October 17, 2019. This is a special link that is more than the standard offer. The page says “This limited time offer is valid only for MoneyShow attendees.” but reports of enforcement vary. If they do enforce, you may have to provide proof of attendance to San Francisco Money Show or accept the standard bonus amount.
  • Up to 100 free trades per month with Bank of America Preferred Rewards program.
  • Valid for new IRA or retail brokerage accounts (CMA).
  • Make a qualifying net deposit of cash or securities within 45 days.
  • Maintain net deposit amount (less any market losses) for 180 days.

E-Trade

  • Link: Up to $2,500 bonus offer
  • $200 bonus for $25k, $300 for $100k, $600 for $250k, $1,200 for $500k, $2,500 for $1m+.
  • New non-retirement brokerage accounts only.
  • Open by 12/31/19, funded with new funds or securities within 60 days.
  • Maintain net deposit amount (less any market losses) for 6 months.

Ally Invest

  • Link: Up to $3,500 bonus offer
  • $50 bonus for $10k, $200 for $25k, $300 for $100k, $600 for $250k, $1,200 for $500k, $2,500 for $1m, $3,500 for $2m+.
  • New non-retirement brokerage accounts only. (You must not have closed an account within the last 90 days.)
  • Open by 12/31/19, funded with new funds or securities within 60 days.
  • Maintain net deposit amount (less any market losses) for 300 days past bonus deposit (~370 days after opening).

Fidelity

  • Fidelity used to offer a variety of transfer bonuses, but they didn’t do a good job of curbing abuse and some folks got multiple bonuses without actually bringing in new money. Right now, I can’t find any transfer bonus links. Instead, here are a few reasons why you might want to move your money to Fidelity anyway (you can try out the other brokers above and take their money for doing so first).
  • Fidelity does not sell equity order flow to market makers and high-frequency traders.
  • Fidelity offers a relatively competitive default cash sweep option. As of 10/10/19, the Vanguard Federal Money Market fund pays 1.90% SEC yield, the Fidelity Government Money Market fund pays 1.58% SEC yield, Schwab pays 0.12%, TD Ameritrade pays 0.01%, and E-Trade pays 0.01%.
  • Fidelity has a variety of in-house stock and bond mutual fund options, which trade with no transaction fee at Fidelity and now have no minimum purchase amounts.
  • In my experience, Fidelity has had the most knowledgable customer service reps.

Vanguard

  • Vanguard has never offered a transfer bonus, to my knowledge. Instead, here are a few reasons why you might want to move your money to Vanguard anyway (you can try out the other brokers above and take their money for doing so first).
  • Vanguard has the most competitive default cash sweep option. As of 10/10/19, the Vanguard Federal Money Market fund pays 1.90% SEC yield, the Fidelity Government Money Market fund pays 1.58% SEC yield, Schwab pays 0.12%, TD Ameritrade pays 0.01%, and E-Trade pays 0.01%. This may or may not matter to you, depending on your idle cash balances.
  • Vanguard does not offer free trades on all stocks, but they do offer free trades on 1,700+ ETFs from any provider. Vanguard is not really built for heavy traders of individual stocks.
  • Vanguard has a variety of in-house stock and bond mutual fund options, which trade with no transaction fee at Vanguard.

Transfer notes.

  • Many brokers will charge an “Outgoing ACAT fee” of $50 to $150 when you leave them. I recommend contacting your destination broker and asking them to reimburse you for this fee. If you qualify for one of these bonuses, your account is probably big enough for them to consider it. You may have to send them a statement showing the fee.
  • Before moving, I would download all your old statements and tax cost basis information to make sure it transfers over correctly.
  • An ACAT transfer can take a week or so to complete, so you won’t be able to make any sell transactions during that time.
  • Consider performing a “partial” ACAT transfer where you only move over specifically designated shares (ex. only all 455 shares of BRKB) if you wish to keep some of your original brokerage account open. I would still transfer over all shares of any specific ticker, so that the tax cost basis carries over neatly.
Filed Under: Deals & Offers, Investing //

Chase Sapphire Banking: $1,000 Bonus For New/Existing Customers ($75,000 Assets)

Posted on September 26, 2019 // 6 Comments

New bonus. Chase has a new $1,000 cash bonus offer if you upgrade to or open a new Sapphire Banking account. To qualify, you must transfer a total of $75,000 or more in new money or securities into eligible Chase checking, savings and/or investment accounts. You must open by 11/19/2019, complete the $75k transfer within 45 days of opening, and maintain that balance for at least 90 days from the date of funding. Chase will deposit the bonus into your new account within 10 business days after meeting the requirements.

Banks are trying to develop relationships with the “might be rich in the future” crowd instead of only courting the “really rich”. Okay, the official term is “mass affluent”. Sapphire Banking is a new brand extension of their popular Chase Sapphire line of credit cards, although you don’t need to have one to open this account.

Sapphire Banking details. This is a “premium” checking account for those that can keep $75,000 in deposits or investments in qualifying Chase accounts. If you have less than $75k in assets, then a $25 monthly fee applies. Sapphire Banking perks include:

  • No ATM fees, including rebates on fees charged by non-Chase ATMs.
  • No fees for foreign exchange (ATM/debit), outgoing wire transfers, or stop payments.
  • No fees on the first four overdrafts within 12 months.
  • Free online stock and ETF trades with You Invest by JP Morgan.
  • Access to Sapphire lounges at concerts, sports and special events, early ticket sales and premium seats.
  • $0 monthly service fee on a linked Chase Total Business Checking account.

Moving over ETFs, mutual funds, and stocks. Since investments count towards the $75,000 requirement, if you have that much in ETFs, mutual funds, or stocks at another broker, you could perform an in-kind ACAT transfer over to their discount brokerage firm You Invest. All of your tax basis information should also move over seamlessly these days. Your old broker may charge you an outgoing ACAT fee about about $75, although you might ask You Invest if they will reimburse you for this fee. This would let you avoid parking $75,000 at Chase earning nearly zero interest (okay, it’s 0.01% APY). Losing out on 2% interest on $75k works out to a rate of $125 interest per month ($1,500 per year).

Alternatively, you could move over some cash and then invest in something similar to cash. I’m not sure if You Invest will let you buy individual US Treasury bills or brokered CDs. If not, you might also consider ultra-short bond ETFs like MINT or Treasury Bill ETFs like BIL.

Bonus math. Let’s say they want you to keep your $75k there for 90 days and to be safe you keep it there for another 10 business days until you see the bonus. Let’s make that 120 total days to be conservative. Earning $1,000 over 120 days on a $75,000 balance is ~4% annualized. This is on top of any other return from your investments (T-Bill interest, etc).

This is about the highest bonus that I have seen on this account, which is good because you can only get it once per 12 month period. This includes the You Invest bonus, which would only give you $200 right now if you transferred in under $100,000. The bonus will be reported on a 1099-INT:

You can only participate in one Chase Private Client CheckingSM, Chase SapphireSM Checking or You InvestSM new money bonus in a 12 month period. Coupon is good for one time use and only one bonus per account. Bonus is considered interest and will be reported on IRS Form 1099-INT (or Form 1042-S, if applicable).

Bottom line. Chase Bank has a premium checking account tier called Sapphire Banking, targeted at the “mass affluent”. There is a new account bonus of $1,000 for both new and existing Chase bank customers if you move over $75,000 in cash and/or investment assets.

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

My Money Blog Portfolio Asset Allocation Update, September 2019 (Q3)

Posted on September 17, 2019 // 7 Comments

portpie_blank200

Here’s my portfolio update for the third quarter of 2019. Most of my dividends arrive on a quarterly basis, and this helps me determine where to reinvest them. These are my real-world holdings, including 401k/403b/IRAs, taxable brokerage accounts, and savings bonds but excluding our house, cash reserves, and a few side investments. The goal of this portfolio is to create sustainable income that keeps up with inflation to cover our household expenses.

Actual Asset Allocation and Holdings

I use both Personal Capital and a custom Google Spreadsheet to track my investment holdings. The Personal Capital financial tracking app (free, my review) automatically logs into my accounts, adds up my balances, tracks my performance, and calculates my asset allocation. I still use my manual Google Spreadsheet (free, instructions) because it helps me calculate how much I need in each asset class to rebalance back towards my target asset allocation.

Here are my YTD performance and current asset allocation visually, per the “Holdings” and “Allocation” tabs of my Personal Capital account, respectively:

Stock Holdings
Vanguard Total Stock Market Fund (VTI, VTSAX)
Vanguard Total International Stock Market Fund (VXUS, VTIAX)
WisdomTree SmallCap Dividend ETF (DES)
Vanguard Small Value ETF (VBR)
Vanguard Emerging Markets ETF (VWO)
Vanguard REIT Index Fund (VNQ, VGSLX)

Bond Holdings
Vanguard Limited-Term Tax-Exempt Fund (VMLTX, VMLUX)
Vanguard Intermediate-Term Tax-Exempt Fund (VWITX, VWIUX)
Vanguard Intermediate-Term Treasury Fund (VFITX, VFIUX)
Vanguard Inflation-Protected Securities Fund (VIPSX, VAIPX)
Fidelity Inflation-Protected Bond Index Fund (FIPDX)
iShares Barclays TIPS Bond ETF (TIP)
Individual TIPS securities
U.S. Savings Bonds (Series I)

Target Asset Allocation. Our overall goal is to include asset classes that will provide long-term returns above inflation, distribute income via dividends and interest, and finally offer some historical tendencies to balance each other out. I make a small bet that US Small Value and Emerging Markets will have higher future long-term returns (along with some higher volatility) than the more large and broad indexes, although I could be wrong.

I don’t hold commodities, gold, or bitcoin. While you could argue for each of these asset classes, I believe that it is important to imagine an asset class doing poorly for a long time, with bad news constantly surrounding it, and only hold the ones where you still think you can maintain faith based on a solid foundation of knowledge and experience. That’s just not the case for me with certain asset classes.

Stocks Breakdown

  • 38% US Total Market
  • 7% US Small-Cap Value
  • 38% International Total Market
  • 7% Emerging Markets
  • 10% US Real Estate (REIT)

Bonds Breakdown

  • 33% US Treasury Bonds, intermediate
  • 33% High-Quality Municipal Bonds (taxable)
  • 33% US Treasury Inflation-Protected Bonds (tax-deferred)

I have settled into a long-term target ratio of 67% stocks and 33% bonds (2:1 ratio) within our investment strategy of buy, hold, and occasionally rebalance. I will use the dividends and interest to rebalance whenever possible in order to avoid taxable gains. (I allow it drift a bit either way.) With a self-managed, simple portfolio of low-cost funds, we minimize management fees, commissions, and taxes.

Holdings commentary. On the stocks side, somehow despite all of the various news stories stock prices have been resilient. I’m like a lot of other people and waiting for the next recession to come, but I also know to stay in the game. US stocks have beaten international stocks for a while, but I remain satisfied with my mix, knowing that I will own whatever successful businesses come out of the US, China, or wherever in the future.

On the bond side, my primary objective is to hold high-quality bonds with a short-to-intermediate duration of under 5 years or so. This means US Treasuries, TIPS, or investment-grade municipal bonds. I don’t want to worry about my bonds. I then tweak the specific breakdown based on my tax-deferred space available, the tax-effective rates of muni bonds, and the real interest rates of TIPS. Right now, it is roughly 1/3rd Treasuries, 1/3 Muni bonds, and 1/3rd TIPS. It looks like I need to redirect my dividends into more bonds.

Performance commentary and benchmarks. According to Personal Capital, my portfolio went up 13% so far in 2019. I see that during the same period the S&P 500 has gone up nearly 20%, Foreign Developed stocks up nearly 13%, and the US Aggregate bond index was up about 7%.

An alternative benchmark for my portfolio is 50% Vanguard LifeStrategy Growth Fund and 50% Vanguard LifeStrategy Moderate Growth Fund – one is 60/40 and the other is 80/20 so it also works out to 70% stocks and 30% bonds. That benchmark would have a total return of +14.82% for 2019 YTD.

I’ll share about more about the income in a separate post.

Filed Under: Goals, Investing, Retirement //

Betterment Everyday Cash Reserve Review: 0.40% APY (Tied to Fed Funds Rate)

Posted on August 1, 2019 // 2 Comments

Betterment, best known for their automated portfolio management software, has added a high-yield savings product called Betterment Everyday Cash Reserve. An additional checking product is “coming soon”. This product has several unique features that makes it unlike many other savings accounts. Here are the highlights, followed by both the important pros and cons of this account.

Betterment Everyday Cash Reserve (Available Now)

  • Promotional rate of 0.40% APY as of 2/1/2021 (EFFR + 0.25%) if you sign up for the Everyday Checking waitlist (free)
  • Base rate of Effective Federal Funds Rate (EFFR)
  • FDIC insurance up to $1,000,000
  • No minimum balance. Minimum opening deposit is $10.
  • No monthly fees

If you are an existing Betterment client with Smart Saver, that is going away. You can move over immediately or wait to be transitioned over to this product.

Betterment Everyday Checking (Coming “Later This Year”)

  • No interest paid
  • No minimum balance
  • No monthly or maintenance fees.
  • No overdraft fees.
  • ATM fees reimbursed worldwide
  • FDIC insurance covering up to $250,000†

$1,000,000 FDIC insurance through partner banks. They can offer up to $1,000,000 in FDIC coverage because they use multiple partner banks, currently including:

  • Barclays Bank Delaware
  • Citibank, N.A.
  • Georgia Banking Company
  • Seaside National Bank & Trust
  • Valley National Bank
  • BankUnited, National Association
  • ConnectOne Bank
  • East West Bank
  • Third Coast Bank SSB

You can manually opt-out of one of these banks, for example if you already have cash with them, as to not exceed the $250,000 FDIC insurance limits at any single bank.

Interest rate is directly linked to the Effective Fed Funds Rate. The rate on Everyday Cash Reserve is variable, and will move with the effective federal funds rate (EFFR). As long as you are on the Everyday Checking waitlist, you will get the EFFR + 0.25%.

I view this as a good thing overall, as it’s guaranteed to be quite competitive against most non-promotional rates. It also provides more transparency and lowers the chance of a bait-and-switch to some really sad rate. However, the 0.25% boost above the EFFR is currently a waiver of their 0.25% management fee good through 2019. Being on the waitlist is free and comes with no obligation to open the account, so that’s not a big deal. However, it’s not clear if or how they will extend the waiver after that. You might need an active and open Everyday Checking account, set up direct deposit, or jump through a similar hoop.

Everyday Cash Reserve isn’t your normal bank savings account. There are some quirky things that you should know about.

  • No joint accounts.
  • No routing number or account number, so no direct deposit or linking via other banks.
  • You can only initiate ACH transfers through Betterment, and you can only link one external bank account.
  • It’s not a “real” savings account, so there is no limit of 6 withdrawals per month.

Everyday Checking plans to offer things like direct deposit (and thus real routing and account numbers).

Bottom line. Betterment, a “robo-advisor” best known for their automated investing service, has added a high-yield savings product called Betterment Everyday Cash Reserve. There are some limitations with external bank transfers, but I do like that it has a transparent structure that links the interest rate to the Fed Funds Rate. If you sign-up on their EveryDay Checking waitlist, you can get a competitive rate on liquid savings.

Filed Under: Banking, Deals & Offers //

My Money Blog Portfolio Asset Allocation Update, June 2019 (Q2)

Posted on June 10, 2019 // 6 Comments

portpie_blank200

Here’s my portfolio update for the second quarter of 2019. Most of my dividends arrive on a quarterly basis, and this helps me determine where to reinvest them. These are my real-world holdings, including 401k/403b/IRAs, taxable brokerage accounts, and savings bonds but excluding our house, cash reserves, and a few side investments. The goal of this portfolio is to create sustainable income that keeps up with inflation to cover our household expenses for the next (hopefully) 40+ years.

Actual Asset Allocation and Holdings

I use both Personal Capital and a custom Google Spreadsheet to track my investment holdings. The Personal Capital financial tracking app (free, my review) automatically logs into my accounts, adds up my balances, tracks my performance, and calculates my asset allocation. I still use my manual Google Spreadsheet (free, instructions) because it helps me calculate how much I need in each asset class to rebalance back towards my target asset allocation.

Here are my YTD performance and current asset allocation visually, per the “Holdings” and “Allocation” tabs of my Personal Capital account, respectively:

Stock Holdings
Vanguard Total Stock Market Fund (VTI, VTSAX)
Vanguard Total International Stock Market Fund (VXUS, VTIAX)
WisdomTree SmallCap Dividend ETF (DES)
Vanguard Small Value ETF (VBR)
Vanguard Emerging Markets ETF (VWO)
Vanguard REIT Index Fund (VNQ, VGSLX)

Bond Holdings
Vanguard Limited-Term Tax-Exempt Fund (VMLTX, VMLUX)
Vanguard Intermediate-Term Tax-Exempt Fund (VWITX, VWIUX)
Vanguard Intermediate-Term Treasury Fund (VFITX, VFIUX)
Vanguard Inflation-Protected Securities Fund (VIPSX, VAIPX)
Fidelity Inflation-Protected Bond Index Fund (FIPDX)
iShares Barclays TIPS Bond ETF (TIP)
Individual TIPS securities
U.S. Savings Bonds (Series I)

Target Asset Allocation. Our overall goal is to include asset classes that will provide long-term returns above inflation, distribute income via dividends and interest, and finally offer some historical tendencies to balance each other out. I make a small bet that US Small Value and Emerging Markets will have higher future long-term returns (along with some higher volatility) than the more large and broad indexes, although I could be wrong. I don’t hold commodities, gold, or bitcoin as they don’t provide any income and I don’t believe they’ll outpace inflation significantly.

I believe that it is important to imagine an asset class doing poorly for a long time, with bad news constantly surrounding it, and only hold the ones where you still think you can maintain faith based on a solid foundation of knowledge and experience.

Stocks Breakdown

  • 38% US Total Market
  • 7% US Small-Cap Value
  • 38% International Total Market
  • 7% Emerging Markets
  • 10% US Real Estate (REIT)

Bonds Breakdown

  • 50% High-quality, Intermediate-Term Bonds
  • 50% US Treasury Inflation-Protected Bonds

I have settled into a long-term target ratio of 67% stocks and 33% bonds (2:1 ratio) within our investment strategy of buy, hold, and occasionally rebalance. I will use the dividends and interest to rebalance whenever possible in order to avoid taxable gains. (I’m fine with it drifting a bit either way.) With a self-managed, simple portfolio of low-cost funds, we minimize management fees, commissions, and taxes.

Holdings commentary. On the stocks side, everything has had a nice bounce back up since the drop in late 2018. I know that US stocks have beaten international stocks for a while, but I remain satisfied with my mix, knowing that I will own whatever successful businesses come out of the US, China, or wherever in the future.

On the bond side, my primary objective is to hold high-quality bonds with a short-to-intermediate duration of under 5 years or so. This means US Treasuries, TIPS, or investment-grade municipal bonds. I don’t want to worry about my bonds “blowing up”. I then tweak the specific breakdown based on my tax-deferred space available, the tax-effective rates of muni bonds, and the real interest rates of TIPS. Right now, it is roughly 1/3rd Treasuries, 1/3 Muni bonds, and 1/3rd TIPS.

Performance commentary and benchmarks. According to Personal Capital, my portfolio went up 9.9% so far in 2019. I see that during the same period the S&P 500 has gone up over 15%, Foreign Developed stocks up nearly 11%, and the US Aggregate bond index was up nearly 5%.

An alternative benchmark for my portfolio is 50% Vanguard LifeStrategy Growth Fund and 50% Vanguard LifeStrategy Moderate Growth Fund – one is 60/40 and the other is 80/20 so it also works out to 70% stocks and 30% bonds. That benchmark would have a total return of +10.97% for 2019 YTD.

I’ll share about more about the income in a separate post.

Filed Under: Goals, Insurance, Retirement //

Charlie Munger: Financially Independent at Age 38 in 1962

Posted on May 12, 2019 // 4 Comments

Despite the fresh packaging, we should remember that the “FIRE” concept (Financially Independent, Retire Early) is anything but a new concept. Even I can’t help being a little intrigued by the clickbait title “This Secret Trick Let This Couple Retire at 38”. Such an article could have been written about the 95-year-old Charlie Munger before he started investing alongside Warren Buffett:

The first 13 years I practiced law, my income [from practicing law] was $300,000 total. At the end of that 13 years, what did I have? A house. Two cars. And $300,000 of liquid assets. Everyone else’d have spent that slender income, not invested it shrewdly, and so forth.

I just think it was, to me, it was as natural as breathing, and of course I knew how compound interest worked! I knew when I saved $10 I was really saving $100 or $1,000 [because of the future growth of the $10], and it just took a little wait. And when I quit law practice it was because I wanted to work for myself instead of my clients, because I knew I could do better than they did.

Net worth analysis. According to his Wikipedia bio, the 95-year-old Munger graduated from law school in 1948. Let’s say he practiced law from 1949 to 1962. At the end of those 13 years, he states that he had $300,000 in liquid assets, a house, and two cars. The median value for a Los Angeles area house in 1962 was about $15,000. The median cost of a new car in 1962 was about $3,000. Adding this all up means his net worth in 1962 was about $321,000.

That was a significant amount of money in 1962. According this CPI inflation calculator, that is the equivalent of $2.7 million in 2019 dollars. In other words, the Munger household was financially independent when he was 38 years old.

Income analysis. He also states that in those 13 years as a lawyer, he made $300,000 total. For the sake of simplicity, let’s just say he earned the same income every year. That works out to $23,000 per year. This was a relatively high income – $193,000 per year in 2019 dollars. According to this source, the median family income in 1962 was $6,000 per year. That means he was earning about four times the median average household income.

Super-saver, super-investor, or a little of both? Maybe he shared this somewhere else, but I don’t know his saving rate or his investment return. He does boast of both not spending all that “slender” income and also about investing it “shrewdly”. We have his annual income and his final ending net worth, so you can set one and figure out the other using a compound return formula. I’m assuming everything is after-tax for simplicity again.

  • Let’s say he was a super-saver with a 50% saving rate. That means he saved $11,500 every year and invested it for 13 years. That would work out to an 10.5% annual compounded rate of return.
  • Let’s say he was a super-investor with a 20% annual compounded rate of return. That would work out to an annual savings of $5,500 per year, or a 24% savings rate.

I found that the annualized return of the S&P 500 index from January 1949 to January 1962 was about 18% when you include dividends (source). Thus, my guess is that he was somewhere between these two markers: 50% savings rate/10.5% annual investment return and 24% savings rate/20% annual investment return. These stats are definitely admirable and impressive, but also show that he didn’t hit the lottery or anything crazy.

Munger’s example reaffirms that if you have a relatively high income, save a high percentage of that income, AND invest that money into productive assets, your net worth will grow quite quickly.

A criticism of financial independence seekers is that it is pitched to “everyone” but only works for the rich. It is absolutely true that it is the easiest for high-income earners. How could it be any other way? At the same time, there are many households that earn high incomes that spend 95%+ of it every year. If these folks realize they have financial independence within their grasp, and then change their behavior to achieve it, I still view that as a positive thing. It’s always hard to spend less than the people you hang around with.

In our case, we both eventually earned six-figures, but not the entire time. When we earned a combined $60,000 a year, we lived on $30,000. When we earned a combined $100,000, we lived on $50,000 per year. When we earned $200,000, we lived on under $100,000. Would we have been able to maintain the 50% savings rate on a $60,000 income for 15 years? I’ll never know. I know it would have been much more difficult, and I’m glad we didn’t have to try. I’m also glad we started when we were young and without kids.

Managing expenses (frugality) alone will not get you there, but I still believe it is an important factor once you get your income to a certain level. I would argue that a household earning $100,000 and spending $50,000 per year is much better off in the long run than a household earning $150,000 and spending $125,000 or even $100,000 per year. Now, if someone is making minimum wage, it will be hard to have a lot left over to invest. Your efforts would be best focused on the income side of the equation.

Bottom line. Charlie Munger was born in 1924 and reached financial independence at age 38 from his earnings as a lawyer (before he became partners with Warren Buffet). While he is now best known as a billionaire investor, he took a familiar path to financial independence: solid 9-5 income, consistently high saving rate, and prudent investment of the difference. The same formula he started using in 1949 remains available 70 years later to someone starting in 2019.

Filed Under: Frugal Living, Inspirational, Investing, Retirement //

TAB Bank Kasasa Cash Checking Review: 4% APY (Up to $50k) w/ Activity Requirements

Posted on April 28, 2019 // 12 Comments

Update late January 2019: Reader Steve shares that “TAB Bank is no longer offering Kasasa Cash Checking. But for those already having an account, no changes are planned.”

Original post:

TAB Bank has a Kasasa Cash Checking account that offers 4% APY on balances up to $50,000 if you meet certain deposit activity and debit card transaction requirements. However, they include some vague language that lets them withhold your interest based on their subjective opinion. Details below.

FDIC confirmation and eligibility. I was able to find TAB Bank at FDIC.gov under “Transportation Alliance Bank, Inc. D/B/a Tab Bank” with FDIC certificate #34781 and domain tabbank.com. Since this isn’t a credit union, you don’t need to worry about joining a member organization or maintain a share savings account. Anyone nationwide can apply online and fund using ACH transfer. They also say that they won’t perform a credit inquiry for a checking account.

Monthly requirements. To qualify for the 4% APY on balances up to $50,000 and up to $15 in ATM fee rebates per month, you must have the following during each monthly qualification cycle:

  • At least 1 direct deposit, ACH payment, or bill pay transaction.
  • At least 15 debit card purchases, and each must be $5 or more. When using your card, choose the credit option and bypass using your PIN.

If you don’t meet these requirements, there is no monthly fee but you lose the ATM rebates and your interest rate is only 0.05% APY.

Potential catch? Vague fine print. If you read through their Truth-in-Savings disclosure [pdf], you will find the following vague assertions:

Purpose and expected use of accounts – The Kasasa Cash account is intended to be the accountholder’s primary checking account in which payroll transactions and day-to-day spending activities including but not limited to grocery, gasoline, apparel, shopping, dining, sporting and entertainment transactions are posted and settled.

[…] You will automatically qualify for the account’s rewards during your account’s first statement cycle. If the account is closed before rewards are credited, you will forfeit the rewards.

[…] Commensurate with the spending activities identified above, we expect the account’s debit card to be used frequently throughout each month and for transaction amounts to reflect a wide dollar range. Small debit card transactions conducted on the same day at a single merchant and/or multiple transactions made during a condensed time period particularly near the end of a Monthly Qualification Cycle are not considered normal, day-to-day spending behavior. These types of transactions appear to be conducted with the sole purpose of qualifying for the account’s rewards and thus will be deemed inappropriate transactions and will not count toward earning the account’s rewards.

[…] TAB Bank reserves the right to determine if the Kasasa Cash account is being maintained for a purpose other than day-to-day, primary use. Accountholders who persist in making debit card transactions in a calculated and limited fashion in order to meet their monthly qualifications may have their accounts converted to a different checking account or closed altogether.

Basically, they reserve the right to change up the requirements to whatever they want. We know that banks make money when we use your debit card. However, if you want your customers to use it more, then just make your requirements higher. You already added the $5 minimum per transaction. Just say you want 15 transactions with a combined total of $1,000 or similar. Make the rules fair, clear, and transparent.

Good deal? The interest rate is good, but the vague rules make this account not worth the bother. They are allowed to judge what I am “supposed” to buy on a day-to-day basis as a “normal” person? Pass! If you put in a sizable balance, that’s $100+ of monthly interest that they can withhold for no solid reason (and are actually incentivized to do so as it saves them money).

For now, I would compare with the Orion FCU 4% APY checking account, which doesn’t play such games, is more upfront and understandable. If they make the rules transparent (even if more restrictive), I would reconsider.

Bottom line. TAB Bank has a rewards checking account called Kasasa Cash Checking that offers 4% APY on balances up to $50,000 if you meet certain deposit activity and debit card transaction requirements. However, they hide in the fine print that they can withhold your interest based on their subjective opinion. If they judge you ineligible, you will earn virtually no interest (0.05% APY).

Here are the rest of the Best Interest Rates on Cash.

Filed Under: Banking, Deals & Offers //

US Household Spending Breakdown: Top 20% vs. Bottom 20%

Posted on April 1, 2019 // 1 Comment

Engaging Data has another neat visualization tool up, How do Americans Spend Money? US Household Spending Breakdown by Income Group, using household spending data from the US Bureau of Labor Statistics. Below is a screenshot of this interesting visualization technique (the full version is more interactive). The biggest contrast is seen when comparing the spending breakdown of the top 20% of income earners with the bottom 20%. (Click to enlarge.)

There are a lot of complex interactions going on inside this data visualization. Here are just a few things that I noticed:

  • The average household in the bottom 20% of income only has 1.6 people and 0.5 income earners. The average household in the top 20% of income only has 3.1 people and 2.1 income earners. Is there any causation to this correlation? Does having a high income make you more likely to have a bigger household? Or do bigger households tend to make more money since there are more earners?
  • The bottom 20% by income earns about $25,500 annually while saving absolutely nothing (and either spending down savings and/or going deeper into debt). The top 20% earns $188,000 and saves $50,000 of that annually. For the top 20%, that’s a savings rate of over 25%. Instead of a generic goal like saving 10% of your income, perhaps it is more appropriate to judge yourself by income group. Should a household earning around $200,000 a year expect to save $50,000 a year or be considered an “under-saver”? Or do the ultra-high income earners skew this savings number?
  • The bottom 20% by income has the biggest chunk of their income from “Borrowing and Savings”. The top 20% has the vast majority of their income from salary and/or self-employment income. What is “Borrowing and Savings”? The tool says it could be students living off loans while in school, folks spending down cash savings during unemployment, or retirees drawing down savings. How much of this is people going into debt?
  • If you only looked at the “average” of all households, you wouldn’t see this big difference. You would see a total income of $73,500 a year (mostly from a salary) and a relatively solid savings rate of about 13%.

Bottom line. You see a lot of statistics that use average or median numbers. However, I think that hides the fact that most people aren’t average. The top 20% and bottom 20% of households by income are leading very different lives, at least according to their spending patterns.

You can also view household spending breakdowns by age.

Filed Under: Budgeting, Family //

Schwab Intelligent Portfolios Premium Feature Review: $30 a Month For Unlimited CFP Access

Posted on March 31, 2019 // 8 Comments

Schwab has revamped their Intelligent Portfolios “robo-advisor” service, renaming the upper tier to Schwab Intelligent Portfolios Premium and adding an in-depth financial plan and unlimited advice from a Certified Financial Planner for an additional upfront fee of $300 plus an ongoing $30 a month. Bloomberg compares this to a Netflix subscription:

Current users won’t have to pay the $300 fee, and they’ll be transitioned to the new pricing model as early as Thursday, but only once they have enough assets to make it more cost-efficient for them, at around the $125,000 level. The free version of the service, Schwab Intelligent Portfolios, which automatically builds and rebalances exchange-traded fund portfolios as well as offering more limited guidance, will continue charging no advisory fee.

Feature comparison. The base Intelligent Portfolios product including the following features:

  • Design and choose an appropriate asset allocation.
  • Construct and maintain (rebalance) portfolio using ETFs.
  • Tax-loss harvesting.
  • No advisory fee*.
  • No commissions.
  • $5,000 minimum balance.

* You might see this referred to as a “free” (as it is by Bloomberg above) in that it charges no advisory fee on top of the underlying fees of the portfolio components. I’ll argue below that is it not really “free”.

Schwab Intelligent Portfolios Premium adds the following:

  • Unlimited 1:1 guidance from a Certified Financial Planner (CFP).
  • Personalized Action Plan and portfolio review with a CFP® professional.
  • One-time $300 initial planning fee and $30/month for unlimited guidance.
  • $25,000 minimum balance.

I agree that is a big shift in the portfolio management industry. A major player now offers unlimited access to a CFP for a flat fee of $30/month. CFP access is becoming a commodity. If you pay $15 a month for Netflix and $50 a month for unlimited cell phone data, why not pony up $30 a month for unlimited financial advice? I have pointed out previously that an overlooked feature of Blooom 401k advisory services was that they include unlimited CFP access in their $10/month fee.

I really like the idea of paying a flat fee instead of an asset-based fee for financial advice. I think this move from a big name like Schwab will attract some large portfolios from DIY investors. If you had a $500,000 portfolio, this would only be 0.07% of assets annually. I really hope Vanguard comes out with a flat-fee pricing option while still keeping their ability to work with your existing portfolio. Most robo-advisors, including Schwab Intelligent Portfolios, make you sell out of all your current positions and rebuy using their model portfolios. I have a lot of capital gains already such that selling would cause tax issues.

Schwab Intelligent Portfolios still has the same “catch” in their fine print, however. Every Schwab Intelligent Portfolios client is forced to hold a cash position of about 8% of the total portfolio in cash. More importantly, you also don’t have a choice in how they define “cash”. Here’s the fine print:

The portfolios include a cash allocation to a deposit account at Schwab Bank. Our affiliated bank earns income on the deposits, and earns more the larger the cash allocation is. The lower the interest rate Schwab Bank pays on the cash, the lower the yield. Some cash alternatives outside of Schwab Intelligent Portfolios Solutions pay a higher yield.

My primary concern is NOT that holding 8% cash is bad. It’s that the Schwab cash component that they force you to use is bad. As of 3/31/19, Schwab cash pays only 0.70% APY while the Vanguard Prime Money Market fund earns 2.46% SEC yield and a one-month Treasury Bill has a 2.43% yield. This gap may narrow or widen in the future.

If you assume a 1.50% drag on a 8% cash allocation, that’s the equivalent paying a 0.12% fee because you are losing that much in potential interest. As you grow older and/or become more conservative, the cash allocation grows as well. It is a guaranteed profit source for Schwab, and thus a guaranteed loss for you (not free!). This loss is not “cash drag”. If you wanted to argue that the return on cash is worse than a bond fund, “cash drag” would be an additional cost on top of this issue.

This is the equivalent of them making you hold an S&P 500 ETF with a 1.50% expense ratio instead of an equally-available S&P 500 ETF with an 0.03% expense ratio. People would be up in arms about that, so why not put up a fuss about this? The net fee may be still be a reasonable size, but this is not the type of behavior I am looking for in a service that I am supposed to entrust with my life savings. Just be upfront and charge me a fee. If Schwab replaces their cash component with a competitive money market fund or a simple allocation to Treasury Bills (make your own ETF, Schwab!) then I would get much more excited about this product.

Bottom line. Schwab is adding the ability to get unlimited human advice from a Certified Financial Planner (CFP) for $300 upfront + a flat $30 a month. I think this is a bold move that will affect the overall industry, but I still have concerns about their overall robo-advisor product that includes a low-interest cash component.

Filed Under: Deals & Offers, Investing //

My Money Blog Portfolio Asset Allocation and Performance, March 2019 (Q1)

Posted on March 17, 2019 // 9 Comments

portpie_blank200

Here’s my quarterly portfolio update for Q1 2019. Most of my dividends arrive on a quarterly basis, and this helps me decided where to reinvest them. These are my real-world holdings, including 401k/403b/IRAs and taxable brokerage accounts but excluding our house, cash reserves, and a few side investments. The goal of this portfolio is to create sustainable income to cover our household expenses for the next (hopefully) 40+ years. We are currently “semi-retired”, meaning we both work part-time while also spending a portion of our dividends and interest from this portfolio.

Actual Asset Allocation and Holdings

I use both Personal Capital and a custom Google Spreadsheet to track my investment holdings. The Personal Capital financial tracking app (free, my review) automatically logs into my accounts, adds up my balances, tracks my performance, and calculates my asset allocation. I still use my manual Google Spreadsheet (free, instructions) because it helps me calculate how much I need in each asset class to rebalance back towards my target asset allocation.

Here are my YTD performance and current asset allocation visually, per the “Holdings” and “Allocation” tabs of my Personal Capital account, respectively:

Stock Holdings
Vanguard Total Stock Market Fund (VTI, VTSMX, VTSAX)
Vanguard Total International Stock Market Fund (VXUS, VGTSX, VTIAX)
WisdomTree SmallCap Dividend ETF (DES)
Vanguard Small Value ETF (VBR)
Vanguard Emerging Markets ETF (VWO)
Vanguard REIT Index Fund (VNQ, VGSIX, VGSLX)

Bond Holdings
Vanguard Limited-Term Tax-Exempt Fund (VMLTX, VMLUX)
Vanguard Intermediate-Term Tax-Exempt Fund (VWITX, VWIUX)
Vanguard Intermediate-Term Treasury Fund (VFITX, VFIUX)
Vanguard Inflation-Protected Securities Fund (VIPSX, VAIPX)
Fidelity Inflation-Protected Bond Index Fund (FIPDX)
iShares Barclays TIPS Bond ETF (TIP)
Individual TIPS securities
U.S. Savings Bonds (Series I)

Target Asset Allocation. Our overall goal is to include asset classes that will provide long-term returns above inflation, distribute income via dividends and interest, and finally offer some historical tendencies to balance each other out. I make a small bet that US Small Value and Emerging Markets will have higher future long-term returns (along with some higher volatility) than the more large and broad indexes, although I could be wrong. I don’t hold commodities, gold, or bitcoin as they don’t provide any income and I don’t believe they’ll outpace inflation significantly.

I believe that it is important to imagine an asset class doing poorly for a long time, with bad news constantly surrounding it, and only hold the ones where you still think you can maintain faith based on a solid foundation of knowledge and experience.

Stocks Breakdown

  • 38% US Total Market
  • 7% US Small-Cap Value
  • 38% International Total Market
  • 7% Emerging Markets
  • 10% US Real Estate (REIT)

Bonds Breakdown

  • 50% High-quality, Intermediate-Term Bonds
  • 50% US Treasury Inflation-Protected Bonds

I have settled into a long-term target ratio of 67% stocks and 33% bonds (2:1 ratio) within our investment strategy of buy, hold, and occasionally rebalance. I will use the dividends and interest to rebalance whenever possible in order to avoid taxable gains. (I’m fine with it drifting to 65/35 or 70/30.) With a self-managed, simple portfolio of low-cost funds, we minimize management fees, commissions, and taxes.

Holdings commentary. On the bond side, I still like high-quality bonds with a short-to-intermediate duration of under 5 years or so. This means US Treasuries, TIPS, or investment-grade municipal bonds. I don’t want to worry about my bonds “blowing up”. Right now, my bond portfolio is about 1/3rd muni bonds, 1/3rd treasury bonds, and 1/3rd inflation-linked treasury bonds (and savings bonds).

On the stocks side, everything has had a nice bounce back up since the drop in late 2018. I didn’t really sweat the ride down, so I’m not celebrating the ride up. I remain satisfied with my mix, knowing that I will own whatever successful businesses come out of the US, China, or wherever in the future.

Performance commentary and benchmarks. According to Personal Capital, my portfolio went up 8.6% already so far in 2019. I see that during the same period the S&P 500 has gone up over 12%, Foreign Developed stocks up nearly 11%, and the US Aggregate bond index was up nearly 2%.

An alternative benchmark for my portfolio is 50% Vanguard LifeStrategy Growth Fund and 50% Vanguard LifeStrategy Moderate Growth Fund – one is 60/40 and the other is 80/20 so it also works out to 70% stocks and 30% bonds. That benchmark would have a total return of +8.6% for 2019 YTD. This quarter, I’m right at this benchmark with my customized portfolio.

I’ll share about more about the income aspect in a separate post.

Filed Under: Goals, Investing, Retirement //

Personal Finance: Recognizing Control and Using Your Time Efficiently

Posted on February 21, 2019 // 7 Comments

Morgan Housel wrote a post called The Biggest Returns which really resonated with my outlook on investing and personal finance. The main idea was that you should consider the impact of your efforts in relation to the time and energy spent.

The idea that reducing your needs has the same impact as increasing your income – but the former is more certain and in your control than the latter, so it has a higher expected value – is as true for someone spending $15,000 a year as it is someone spending $15 million per year.

The hard part is becoming satisfied with spending less. […] For me it’s been realizing that what makes people happy is having options – doing what you want, with who you want, when you want, where you want. And options come from savings and assets, which are the opposite of spending.

Stock returns: Limited control. I decided on an asset allocation and invested my money in low-cost, low-turnover investments. Learning about investing and asset allocation initially was a good investment of time, but I still have limited control of the outcome. More importantly, this gave me the conviction and patience that it will work out in the long run. But I still might lose money in any given year, and I can’t just put in more effort and improve that return. I only check in on my portfolio quarterly.

Cash returns: Moderate control. About 1/3rd of my portfolio is in high-quality bonds, which in my definition includes cash and certificates of deposit. Here, I have some more control. For example, if I put money into a 5-year CD at 4% APY, I have high confidence it will do better than a 5-year Treasury bond at 2.50% yield. Sometimes there are such opportunities for the individual investor, sometimes there aren’t. Therefore, I track the best interest rates monthly.

Income: Moderate to significant control. Income is obviously important, and I while would rate it as more important than spending, that doesn’t mean spending in not also very important. There are plenty of people who earn $250k and spend $250k per year, while a $85k earner could spend $60k and save even more. But that same 250k earner has the ability to “see the light” and have their saving explode over the next few years. Unfortunately, there are no easy, foolproof ways to earn a high income. Of course, you should invest in yourself and improve your marketable skills and thus increase your human capital. Some people can move up the corporate ladder, others will do better with a more entrepreneurial route.

Personal spending: Significant control. Managing your spending is all about priorities, but there are two simple ways to attack your spending. First, you could start from the bottom and get rid of the more questionable “wants”: Expensive food habits (coffee, alcohol, snacks), monthly entertainment subscriptions, gambling, etc). Second, you could start from the top and pair down the big “needs”. I could have gotten a mortgage approval for a 3,500 sf house in my neighborhood. I live in a 2,000 sf house. I could pay cash for nearly any vehicle on the market. I bought a used minivan. I could have had fewer kids… Oops!

Credit cards, bank bonuses, and other “found money”: Significant control. You won’t get rich solely from taking advantage of credit card sign-up bonuses, maximizing your cash back, or picking up $10-$100 here and there each week, but I estimate that it adds up to $3,000+ each year for our household. $3,000 is a 5% increase to a $60,000 income, or a free annual vacation. You should pick and choose what works for you; for example I refuse to drive around town (to buy gift cards, redeem coupons, buy and resell, etc). I prefer deals that can be done with just clicks.

This is also a good reminder that even though I might not write about them repeatedly, your biggest returns on effort might be: get a better job, relocate to a city with greater relative opportunity (income vs. cost-of-living), move into a smaller house, and buy a cheaper car (or find cheaper transportation). On a daily basis, the things that catch my eye (and thus what I write about) are actionable ideas where I have control of the outcome.

Filed Under: Frugal Living, Investing //

Empower Banking App Review: 4.30% APY for 30 Days with Each Referral (But Be Careful)

Posted on January 29, 2019 // 8 Comments

Update April 2019: I have had trouble with Empower after opening an account, specifically getting them to credit my interest. I would not recommend Empower as a bank replacement at this time. They do not have have any phone number for customer support and their text-based support is often slow to respond. Combined with the fact that there are no branches, I don’t like that there is nobody to talk to immediately if there is an important problem.

Original post:

The Empower app is a combination of an online checking/savings account and an “AI” assistant that analyzes your income and spending activity from external bank accounts as well. The savings account currently offers a base 2.15% APY and the checking offers 1% cash back on the first $1,000 in debit card purchases each month. A newly referred user can get a 30 day boost of double those numbers – 4.30% APY and 2% cash back. You can get an additional 30-day boost for each friend that you refer. I’ve had this account open for a week now, and here are my thoughts.

Application process (App-only). You must do everything in the iOS or Android app – initial application, funding, transfers, etc. They require all the usual bank things like SSN, but they explicitly state that they will not run a credit check. I don’t believe there is a web browser interface at all. Everyone who opens an account gets both a checking and savings account, plus the digital assistant. Note that when you link an external bank account, the digital assistant will parse through your historical and ongoing transactions and look for ways to save you money. You can easily turn it off, but this may affect the choice of what bank account you wish to link.

(Note: The referral program may only be available to those who use the Apple iOS version of their app. This might have changed already or may change later, but I only have the iOS app running right now.)

Empower Checking has no minimum balance, no monthly fees, no overdraft fees, and free ATM withdrawals from the 25,000 ATMs in the MoneyPass network. In addition, they will reimburse you for one (1) out-of-network ATM transaction each month. I like this last feature as I only take cash out of an ATM about once a month. They give you your debit card number immediately, but will send you a physical Visa debit card as well.

This is a “real” FDIC-insured bank, with deposits insured of up to $250,000 per titled account through Evolve Bank & Trust, FDIC certificate number #1299. The routing number provided in the app is that of Evolve Bank. You can use the routing and account numbers to link your Empower account to other online banks (on their side) without giving Empower access to your transaction history.

The linked debit card offers a base 1% cash back on the first $1,000 in purchases spend each month. Newly referred users get a 30-day boost to 2% cash back, and each time you successfully refer someone to Empower, you will receive another 30-day boost. Debit card purchases have no foreign transaction fees.

Empower Savings has no minimum balance and no monthly fees. The current base interest rate is 2% APY. Newly referred users get a 30-day boost to 4% APY (capped at a $50,000 balance), and each time you successfully refer someone to Empower, you will receive another 30-day boost. You can transfer money between checking and savings instantly, but the savings account is still subject to the federal law limiting withdrawals from savings to six (6) times per month.

Referral program details. There are some important clarifications to their referral program. Here are selected parts:

  • You earn 30 days of boost for each referred friend that opens an Empower bank account and deposits at least $10.
  • Your boost will start the first day the funds clear into your referred friend’s account. If you are already receiving a boost, your boost for any subsequent qualifying referrals will start once any prior boosts conclude. (i.e. invite 3 friends and your can earn three consecutive 30 day boosts).
  • Your referred friends each get a 30 day boost starting the day their deposit of $10 or more clears into their Empower account.
  • During each 30-day boost, each person will earn an additional 1% cashback on the first $1,000 of their debit card transactions during the boost period and an additional 2% per annum Cash Reward on up to $50,000 of savings account balance. The 2% per annum Cash Reward is in addition to the 2.00% APY that is paid on Empower savings accounts.
  • Boost rewards are paid out at the end of each boost period.
  • Invite friends by logging in to your Empower app and sending an invite SMS to your friends.
  • The phone number you text must be the same phone number that your friend signs up for Empower banking with to be eligible.
  • The invited friend cannot be an existing or previous Empower banking customer, nor can they have been invited by someone else in the past.

My experience. Empower feels like the future. Everything is done via app, and it’s kind of creepy. (Yup, that’s my view of the future. Apps and kinda creepy.) The user interface is smooth and I actually like that part. Once you link your external bank, it immediately scans your transactions and points out ways to save money (“You need a new insurance quote! Your premium of $1,234 is too high!” or “Cancel this subscription!”). You may love this feature, or not. My bet is that the megabank apps from Chase, Bank of America, and Wells Fargo will all do this type of stuff eventually.

However, I would not recommend Empower as a bank replacement at this time. They do have have any phone number for customer support and their text-based support is often slow to respond. Combined with the fact that there are no branches, I don’t like that there is nobody to talk to immediately if there is an important problem.

In the end, I don’t see anything drastically new that would make me recommend this app on an ongoing basis unless you had a lot of friends that want a new bank. Lots of online checking accounts offer ATM reimbursements now. 2% APY is common across online savings accounts. The 1% cash back on debit card purchases isn’t that special.

Now, if you did have 12 friends to refer (and $50,000), you could get 4.30% APY on up to $50,000 for a year. That’s an extra $1,150 in annual interest as compared to 2% APY, nothing to sneeze at.

Bottom line. Empower.me is a new fintech banking app that combines a no-minimum checking account, a no-minimum savings account, and AI financial assistant that analyzes your spending and makes suggestions. The feature that makes it noteworthy is that a new user can get a 30 day boost of double their normal interest to 4.30% APY for each friend that they refer to open a new account. However, I would not recommend Empower as a bank replacement at this time due to their lack of even a phone number for customer service. Most online banks have at least a phone number during business hours, and for example Ally Bank has humans available 24/7.

Filed Under: Banking, Deals & Offers //
« Previous Page
Next Page »