Personal Finance 

Kiplinger Tackles Coupled Finances

Wedding Ducks!In the June 2011 issue of Kiplinger’s magazine, Lisa Gerstner tackles the subject how to blend your finances, a subject that I’ve discussed a few times (and one you have probably weighed in on) in the past because of how important it is.

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Lessons from a Retirement Millionaire

I really like it when major magazines do Q&A’s with regular people, like when Kiplinger talked with Dane Lacey, a 49 year old radiologist from San Diego. It’s somewhat deceptive though as a radiologist is hardly a job that any regular person can get into. It’s a specialty that involves using imaging to treat patients and something you need plenty of schooling to do properly. It’s, as you’d expect, a pretty high paying job since he was able to save $240,000 for retirement in a single year.

As I read the Q&A, I thought I’d write down some good takeaways as well as clarifications on what I found suspicious. In summary, I felt like there were some good lessons to learn from someone who earned a significantly above average income that anyone could use.

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2011 Kiplinger’s Best Online Brokers

Every year Kiplinger’s magazine puts out a survey of the best online brokers. Every year, I take a look at the list because I’m curious how the different brokers stack up. I’d like to know if anyone has made any big changes or improvements to their service, it might change my mind about who I do business with.

Usually the lists don’t change all that much. As you scan this year’s list, you’ll see the same ones near the top, the same ones near the middle, and the same ones near the end. The meat is in the article detailing the different categories (like commissions and fees, investment choices, etc.) because it adds a little color to an otherwise robotic list.

One important thing to remember as you peruse this list: the best online broker is the broker that satisfies all of your requirements. All the bells and whistles in the world don’t matter if they don’t offer exactly what you need. With so many brokers, many of which are inexpensive, you should be able to find your best broker, online or offline, if you’re diligent.

Let’s get to the list…

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 Personal Finance 

Jumpstart Your Retirement Plan Days (Kiplinger Magazine Giveaway!)

Retirement: Get Back To Work!For the last seven years, Kiplinger’s Personal Finance magazine and the National Association of Personal Financial Advisors (NAPFA) partner up and put on an event called Jumpstart Your Retirement Plan. During Jumpstart Your Retirement Plan days, you can call into 888-919-2345 and talk to a fee-only financial planner absolutely free between 9 AM and 6 PM. If you would rather do it on the web, you can just log onto the Jumpstart website and post your question there. This year the event will be held on January 13th (next Tuesday!) and again on January 30th.

Fee only financial planners are, in my humble opinion, the best kind of financial planners available because you pay for their time, often $150 to $300 an hour! Why are they the “best?” The alternative is a financial planner that often advises you for free but earns a commission on the products they sell. For example, I recently talked to a financial advisor who worked for a major investment and insurance firm who gave great advice but always recommended his firm’s products. With a fee-only planner, you are guaranteed to get the most unbiased advice because they don’t get paid based on what you buy, they are paid simply to advise. That’s not to say commissioned financial planners are automatically bad, far from it, but they are less likely to recommend the 100% best possible option (no one ever recommends Vanguard index funds because there is no commission!).

Last year, 90 NAPFA volunteers answered 4,100 calls across the two days, or about two and a half calls an hour each day. If you assume each call lasted about twenty minutes, you’re getting about a hundred bucks worth of advice absolutely free. I think that if you have a pressing retirement or financial planning related question, it’s a no brainer to call them up to ask. As much as I enjoy having you all read my site, I’m not a financial planner, I’m just a regular Joe like you, so this is a great opportunity to ask a professional for free.

Also, to sweeten the pot a little, Kiplinger’s has offered a free one-year subscription to their magazine for Blueprint readers. You can get an entry into the contest by:

  • 1 entry: Leaving a comment below,
  • 1 entry: Being an email subscriber (as always),
  • 50 entries Call in (or posting it online) and ask your question, then post your question here (and answer!)

We only have one subscription to give away and two retirement days so this contest will run until February 4th, to give callers on the January 30th date an opportunity to post their questions and get their fifty entries. Good luck and I hope we get some good questions!

(Photo: The Rocketeer)


Kiplinger’s Best Online Savings Account: FNBO Direct

FNBO DirectKiplinger’s put out their annual 2008 Best List and the best online savings account for 2008 is FNBO Direct. FNBO Direct is the online savings account arm of First National Bank of Omaha (FDIC Certificate #5452), a bank that’s been in business since 1857 (it’s only been “insured” since 1934 because that’s when the FDIC was created). It’s a bank that has weathered its fair share of financial and political storms in those 150+ years of existence and has nary a scratch.

The reasons why Kiplinger named them the best online savings account are the same reasons why I like them – a high interest rate (now 3.25% APY), a simple signup process (it took a few minutes), and a ton of helpful banking features including linking to up to three banks via ACH and online bill payment (with ATM access). The only minus I can think of is the plain and basic interface, but that’s hardly worth mentioning because I don’t need a lot of flash… I’ll take a higher interest rate.

Another bank that has a higher interest rate and similar online flexibility is E*Trade Bank. They offer a 3.30% APY that beats FNBO Direct by 0.05%, have an extremely versatile online system that lets you link up multiple banks, and has the added benefit of instant access to a brokerage account should you want it. The only downside that I see with E*Trade at the moment is that their future is uncertain. The stock price has sunk below a dollar given recent news that they require funds from the TARP in order to stay afloat. Your funds are always protected by FDIC insurance but the spectre of insolvency certainly gives one pause.

Undoubtably, the fact that FNBO Direct has not been in the news probably played a role in their being named the best online savings account. There is such a thing as bad press… especially if it’s about your potential demise!


Kiplinger’s Best Discount Brokers

In the latest issue of Kiplinger’s Personal Finance, they rated a dozen discount brokers on a variety of factors including commission, research & tools, fees, investment options, “easy of use,” and customer service. The results were pretty close to the results of Smart Money’s 2008 ranking of the best discount brokers.

Kiplinger’s Best Discount Brokers

  1. Fidelity
  2. Charles Schwab
  3. Muriel Siebert
  4. TradeKing
  5. E*Trade
  6. OptionsHouse
  7. TD Ameritrade
  8. WellsTrade
  9. Firstrade
  10. OptionsXpress
  11. Zecco
  12. Scottrade

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Kiplinger Doesn’t Advocate Target Date Mutual Funds

This is a guest post by Mapgirl, a single, 30-something woman with a mortgage who has all her student loans paid off. She’s outside most of the demographics being written about in mainstream personal finance media. She’s hoping to fill the niche. If you like what you read (I often do), stop by her blog or consider subscribing to her RSS feed.

Recently, I came across an old article from October 2006 Kiplinger about target-date mutual funds, and I agree with most of the arguments in the article about why these funds are aren’t for everyone. Jim recently wrote a devil’s advocate post about index funds, about which you could make some of the same arguments.

First of all, target-date funds are not without risk, and you’ll have to evaluate them on the same basis of performance as you would any other mutual fund. You could stick your money into one of these funds and get a piddly 4% return. If you’re not paying attention, you’ll be screwed when the targeted date comes around with an underfunded retirement. If you decide to go with a target date fund, make sure it’s performing to your expectations like you would with any other investment.

Second, the Kiplinger article points out that these funds are one-stop shopping and are meant to be the ONLY investment in your portfolio. However, if you already have investments, to reallocate them into these funds will have tax fallout. They say it’s probably not a good idea for someone already saving, but a great place to start if you are young in your 20’s. Sure, if you are young in your 20’s and you aren’t inclined to to save, nor to pay attention to retirement saving, then this is a perfectly fine investment vehicle.

The other part I can’t really say better, so let me quote:

The alternative to not remaking your existing portfolio is to undermine the purpose of the target fund. Suppose, to take an exaggerated example, you throw $1 million into a target fund that has three-fourths of its assets in stocks and one-fourth in bonds. But say you have another $1 million socked away in municipal bonds. Presumably, your goal in investing in the target fund is to acquire a portfolio that’s 75% stocks and 25% bonds. But if you keep the munis, you end up with a portfolio that’s 62.5% in bonds and only 37.5% in stocks.

Third, they write that a 55 year old investor is 9 years away from retirement, but the target date fund has only 60% stocks in it so a target date fund isn’t a very good choice. I have a way around that which is to move to the next one with a date in the future which will carry more stocks. I personally like a lot of risk and I would move to the fund designated for people 5-10 years younger than me just to keep a higher level of risk. I’m surprised the article doesn’t mention this as a possible strategy for being in a target date fund when you don’t think it’s holding enough stocks.

The final point of the article is the piece de resistance. They write that most people don’t have the stomach to sit in one investment for 30 years, which is the whole point of these target date funds. I would agree. I couldn’t have just one iron in the fire when it comes to retirement. Seems
kind of a bad idea, but I suppose a fund like this is better than holding onto CD’s or US Treasuries, which is certainly what some people do with their money.

What about you? Can you stomach holding onto one investment for 30 years? Are you in a target fund? Why?


Cheap Kiplinger’s & Entrepreneur 3 Year Subscriptions

This offer has expired.

If you’ve been looking for a cheap subscription to Kiplinger’s, here’s your chance to get three years worth for only $4.91. That works out to be less than fourteen cents an issue. Click on the magazine cover (or the link above), scroll down and select 36 issues (3 years) and add it to your cart for $44.91. Then use DCMPS40D to get $40 off for a final price of $4.91! I don’t know when this coupon will expire.

If Kiplinger’s isn’t your style, they also have Entrepreneur magazine as well. You can get three years of this magazine for only $5.91. Again, click on the magazine cover (or the link above), select 3 years (36 issues) but this time use the DCMPS30D for $30 off your purchase. Again, I don’t know when this coupon will expire either.

Those coupon codes are likely valid for any magazine subscription but I figured personal finance/money related ones might interest this group more. I’ve never subscribed to Kiplingers, but at $4 for three years I will be, but I am receiving Entrepreneur magazine right now. It’s geared towards people starting (or who want to start) their own business so strictly personal finance folks will find a lot of the article irrelevant.

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