Comments on: A Baby Step for Simplifying My Finances

By: TFB

TFB — Sat, 09 Aug 2008 04:39:33 +0000

Justin – Successful businesses try not to compete on price alone. They compete on product differentiation and image. Through advertising they are telling both new and existing customers that the ING brand and convenience are worth some basis points. They are OK with losing the most price sensitive customers. Because they are the largest online savings account provider — last time I read they have 10 times more than HSBC Direct — an increase of even 10 basis points will cost them a lot of money, perhaps many times more than the cost of advertising.

By: Justin (from Credit Finance Message Board)

Justin (from Credit Finance Message Board) — Sat, 09 Aug 2008 01:13:18 +0000

TFB, I completely agree about ING savings no longer being worth it. Emigrant and others have had higher rates than them the last couple years. What I don't get is why ING pays for such massive advertising with billboards, commercials, and magazine ads still to this day. They would be able to offer a higher rate (and get more customers) if they only cut down on advertising?

But back to your situation – I agree $35 a year extra is not worth the trouble for two accounts.

By: TFB

TFB — Fri, 27 Apr 2007 16:29:00 +0000

Anonymous,

Thank you for your comments and welcome to my blog. The $20 fee was announced only yesterday (Apr. 26, 2007). One used to be able to have $3,000 in a regular money market fund and not pay any fee. Now you have to accept e-statement if you have less than $10k.

I think e-statements aren't too bad. They save trees and postage costs. I will do another post about Vanguard's new fee structure.

By: Anonymous

Anonymous — Fri, 27 Apr 2007 15:33:00 +0000

By the way, great blog. I stumbled on it from another. That was my comment above.

I have an IRA account wit Vanguard and an emergency fund with ING and like your idea of simplification. When I went to Vanguard to check it out, I noticed the annual account fee and thought it should be mentioned to your readers.

By: Anonymous

Anonymous — Fri, 27 Apr 2007 15:23:00 +0000

You need to make sure that you mention that there is a 10k minimum or you get charged $20 per year. Unless you opt in to the e-service account management.

By: TFB

TFB — Thu, 08 Feb 2007 00:45:00 +0000

Sun,

Thank you for your comments.

The quoted yield on any money market mutual fund, Vanguard included, is net of expense ratio. Therefore the 0.29% or whatever expense ratio is a non-issue. If the yield you see on Vanguard's website is 5.10%, that's what you receive after the expenses are taken out.

The $3,000 minimum for Vanguard money market fund is not a problem for me because I will always keep more than $3,000 for emergency fund and I will always maintain my investment with Vanguard.

There are also other considerations beyond the yield. I put them in comments to posts on The Simple Dollar here and here.

By: Sun

Sun — Tue, 06 Feb 2007 15:02:00 +0000

While it's true that VMMXX's yield at 5.10% is very close to what I get from IGoBanking's 5.30%, VMMXX does carry a 0.29% expense ratio which has to be considered when doing the comparison. Besides, the fund, like any other Vanguard mutual funds, requires $3000 minimum amount. When some day the fund's yield is no longer competitive, it's not flexible to maintain that amount of balance, otherwise there will be another $10 fee per year for balance below $2,500. With those banks, however, I can always move money around to get the highest yield and leave only $1 on those accounts that are out of favor.