Conventional Wisdom "Don’t Buy a Distribution" Is Wrong
I mentioned this last year in my post 3 Reminders About Year-End Mutual Fund Distributions. I see the conventional wisdom “don’t buy a distribution” is still going strong. Vanguard reiterated this conventional wisdom in its blog post The record date: Not a tune you can dance to in early December.
But the conventional wisdom is wrong. I patiently waited until I can have a real life example.
After Vanguard published the blog post, Ella posted on the Bogleheads investment forum and asked if she should invest in two ETFs right away or wait until the ex-dividend date. » Read more …
Money Is Fungible
A woman by the name of Melissa called the public radio program Marketplace Money and said her husband had a 50% pay-cut a few months ago. In order to make up for the lost income, she took up teaching part-time at a college. The college just notified her that she’s now eligible to join the college’s retirement plan.
It sounds like a 401(a) money purchase plan. The decision is one-time: if she doesn’t join now, she won’t be able to join later. If she joins, she must contribute 5% of her pay and the college puts in 8%. But, she’s tight in her budget. You can imagine so after her husband’s pay was cut in half. So she asked the radio program if she should join the retirement plan.
Schwab Invest First Visa: Get In Before The Door Closes
I have been using the Schwab Invest First Visa credit card for several months now. It replaces the Fidelity Investment Rewards Visa I used before.
Both cards are issued by FIA Card Services, a subsidiary of Bank of America. The Schwab card pays 2% cash back to a Schwab brokerage account. The Fidelity Visa card pays 2% cash back only after you spend $15,000 in a year (1.5% cash back for the first $15,000). Fidelity also has a 2% cash back card — Fidelity Rewards American Express Card — which is also issued by FIA. More merchants accept Visa than American Express cards.
2% cash back is on everything. No tiers. No special categories. It can’t be any simpler. You also get ShopSafe, the one-time credit card number generator. ShopSafe is not available for the Fidelity American Express card.
WellsTrade: Free Trades With Easy Qualification
This is old news but since it wasn’t included when I gave TFB Awards three years ago I thought I’d mention it now. WellsTrade is an online brokerage service offered by Wells Fargo Investments, LLC. Its most attractive feature is 100 free trades a year.
To qualify for 100 free trades, you only need $25,000 in any combination of banking, brokerage, and credit balances with Wells Fargo (mortgage balance counts at 10%). The brokerage piece is the key. Bank of America also offers free trades but the qualifying balance has to be 100% on the banking side. You can’t use the brokerage balance to qualify.
100 free trades per account include open-end mutual funds in addition to stocks and ETFs. No other brokerage accounts let you buy Vanguard mutual funds for free. Small online broker Zecco offers free trades with $25k balance but the free trades don’t cover open-end mutual funds.
Grace Period and Double-Cycle Billing
Twitter brought my attention to this article on SmartMoney:
It’s another "banks are out there to get you" article. It alleges that some banks are exploiting a loophole in the Credit Card Accountability Responsibility and Disclosure Act of 2009 ("CARD Act") for double-cycle billing.
Alliant Credit Union: Bumpy Ride to High Yield
I wanted to have my money earn more interest than what it does in a money market account. So I joined Alliant Credit Union.
Alliant Credit Union is the 7th largest U.S. credit union based on asset size, with more than 250,000 members. It was originally United Airlines Employees’ Credit Union. Now anybody can join if they live or work near some northwest suburbs of Chicago or become a member of a PTA for a one-time fee as low as $3.
Credit unions are not for profit. They benefit the members in the form of higher interest rates on deposits and lower interest rates on loans. They don’t buy full-page ads in Wall Street Journal. They don’t sponsor NPR podcasts. They don’t pay bloggers referral money for new customers. That’s why you don’t hear as much about them.
If It’s Too Expensive, Don’t Buy
In the aftermath of the financial crisis, after reading so many reports in the media about evil banks, this nugget of wisdom dawned on me:
If it’s too expensive, don’t buy.
You must be saying “Duh!” but let me explain. No, I’m not referring to people buying homes they can’t afford, although that would apply too. I’m talking about the credit card interest rate hikes, late fees, bank overdraft fees, ATM surcharges and so on.
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The Bogleheads' Guide to Retirement Planning by Taylor Larimore, Mel Lindauer, Richard Ferri, and Laura F. Dogu-
