I’ll be testing this particular article out. All are stocks I’ve reviewed in the past and “The Trade Desk” has been a popular pick for The Motley Fool for some time now. I’ll be moving some funds to purchase these 3.
As a followup to my previous post if you purchased the 3 stocks mentioned on April 20th (as I did) here’s where you’d be at as of 05/07 @ 2:18pm.
TTD up 42.01%
SQ up 30.02%
AYX down 2.26%
This is an excerpt from the following article which was quoting Suze Ormon from a post in the NYT. https://ift.tt/3bMv1jO
“So Ms. Orman’s recommendation now is to dollar-cost average in the stock market: purchasing a little bit every month, mostly in index funds, regardless of whether markets rise or fall.”
This reflects what I mentioned when I doubled the amount of money I was depositing (from $250 a week to $500. Not going to break the bank) to take advantage of dollar cost averaging. I don’t necessarily agree with her advice to put funds aside and use credit cards now while making minimum payments but if you can get 0% for x months deals available then it makes more sense. Please note that cash back or reward type cards are mutually exclusive. Once you take a 0 percent deal put the card in a drawer and forget about it because if you purchase ANYTHING after that before the deal is fully paid off you will be paying interest from then on. For example you get $2000 (or a nice washer and dryer set…an example from my past and hhgregg) at 0 percent for 36 months. You make the minimum payments for 2 months and then buy a candy bar for $1. The next month you make the minimum payment + $1. You should be back to normal right? Wrong. The credit card companies take the $1 from the LOWEST applied interest rate which in this case is part of your 0% deal. In the meantime that $1 at regular interest continues to BUILD interest. Assuming you waited until the end of the 36 months it could be hundreds of dollars in interest by then. Now that was just with $1. Imagine if you had spent more than that.
The way I deal with credit cards (I have 12. My Fico score is always 800+) is one of two ways. I keep the limits at around what I could put on them in a typical month. I have actually called in before to have my limits reduced because they auto increased. When buying homes and at other times available credit is factored in as available debt and your potential mortgage holder will tell you that you need to close x cards before we can give you a mortgage. In addition to keeping the limit low I set all the cards to auto pay the full balance at the end of the month (with the exception of cards in a 0% deal. See below). Now you treat them like debit cards because you KNOW that money is coming out of your banking account at the end of the month. Why do this instead of debit cards? Because if you put an item in dispute it is tying up YOUR money on a debit card for up to 6 months not someone else’s. Sure you will eventually get it back but if someone zero’s out your checking account (there are various methods including pulling less than $50 from multiple locations that don’t do real time authorizations) are you going to have the backup funds to live off of for 6 months even if you dispute the funds and they stop them earning interest? The same issue used to happen with checks all the time if someone wasn’t balancing theirs correctly.
The second use case for credit cards is as I indicated…a 0% deal for x months. Take the deal, put the money somewhere safe it’s earning interest. Set your card to auto pay the MINIMUM payment each month and put the card in a drawer…even better cut it in half BEFORE you put it in the drawer to guarantee you won’t use it. (that advice worked better before so many people could do over the phone or internet purchases) Even if you stuck the money in Ally’s no penalty CD earning 1.50% that’s 1.50% more than you are having to PAY so you are making interest on someone else’s money. This is NOT the time to use the money in risky ventures where you may not be able to pay it off. Under certain circumstances(bank filing bankruptcy and other terms which might be in the fine print of your 0% contract) the bank CAN call the note due early and you need to be able to cash that CD or whatever out and pay off the loan.
My credit card’s earn me $1000-2000 a year buying nothing but what I was going to buy ANYWAY. To give you a snapshot…I make 3% back on ALL online purchases minimum…5% at amazon, target and a few others…5% back on cellular phone service. 3-5% back on groceries, 2% back on EVERYTHING…that doesn’t even touch the 4 different cards I have which have quarterly rotating categories they pay 5% back on. I have an agenda widget on my phone’s homepage that shows what card is paying what each month.
Hope someone finds this useful.
Doing alternative yield investing the wrong way.
The obvious alternative to me is fixed annuities, but i’m not sure it’s worth it at current rates.
Today, there is a 7 year A+ rated insurer at 3.5% and you can withdraw the interest.
You’re backed by the state guaranty association. It’s no FDIC/NCUA, but it’s certainly less risky than common stock.
Annuities are always an option. I’ve mentioned them in the past…you usually need to be in them BEFORE an issue like now…previous rates of 6% guaranteed return were common but the problem with the annuities is you have to be prepared to keep it there at LEAST 3 to 4 years as the surrender fee’s are PUNITIVE in the first years.
I would say only open it if you can keep it there for the entire term. And if you are under 59.5, with the early withdrawal penalty, you’d have to lock it up for a lot longer than that. I don’t think they make sense for people under say 55.
I would argue it’s suitable for ANYONE who 1) needs a stable guaranteed income ie retired or disabled regardless of age or 2) wants a guaranteed amount passed onto their heirs as many will pay out x% a year to you but give your heirs a death benefit equal to at LEAST what you put in originally.
That sounds more like the perpetual income annuities, not the annuities that have a flat rate for a fixed term…
Depends on the company I guess…some of them have 10, 20 and 30 year terms without being perpetual.
There are income annuities that have fixed terms, but that’s different from the deferred annuities which need not be annuitized.
Re-posting my post in the CD thread:
I have some funds to invest and I am thinking of locking the funds into a 3-yr investment. However, the current CD rates look dismal.The Keesler 30mo CD @2.14% looks a little interesting but I don’t meet the membership requirement.
I am now seriously considering putting the money into an Oceanview 3yr MYGA @ 3.0% instead. This insurer is rated AM Best A-. Cons of the MYGA include prohibitive early withdrawal penalty and no FDIC/NCUA guaranty. Nevertheless, the amount I am putting in would be covered by my state insurance guaranty fund (less secure than FDIC/NCUA, I know).
Thoughts?
Replying to famewolf’s question:
What are the “state insurance guaranty fund” limits and how does one find out if their state has it?
Here’s the list
https://www.immediateannuities.com/state-guaranty-associations/
MYGAs can almost be compared to CDs, with the following caveats:
With that in mind, if you are below 59.5 years old, you can do a 1035 exchange, when the MYGA matures, to move the funds to another insurer to keep deferring taxes. No 1035 exchange is needed if you stay with the same insurer.
Currently, there is a 3-yr MYGA that pays 3% (AM Best A-). Even if you have to pay the 10% early distribution penalty (if you are below 59.5 years old), you still end up with a 2.7% rate. This is still quite a bit better than the best 3-yr CD you can find now.
What are the rules regarding disabled individuals? For example they typically bypass age restrictions on IRA’s. Whats the state limit and how do you find if your state has one?
This sounds very problematic to me re: state insurance guaranty funds:
“The reason is that if your insurance company was ever declared bankrupt, even though your state fund may become active in providing some protection, you may not get full coverage. Plus, payments to policyholders are never automatic. They depend on court approval and approval by your state legislature. There could be delays of many years before the bankruptcy is adjudicated, during which time your money is not available to you. So it’s best never to rely on the guaranty funds when choosing the company from which to buy your annuity.”
More than likely another insurer would buy the contracts. When people lose faith in the industry, the industry dies, no?
See the table at the link below. The IA list doesn’t include the limits. Life & Health Guaranty Associations | AnnuityAdvantage
That’s true, and if the fixed rates are not at rates that you want to lock up in - you could 1035 into Fidelity’s variable annuity which costs 25bps and hold index funds - in most cases thats probably better than paying the tax and the 10% penalty.
Can you 1035 a fixed annuity to a variable annuity?
As far as I know, you can 1035 any cash value life insurance or any annuity into another type of cash value life insurance product or annuity product.
Historically, what kind of market conditions produced those high fixed annuity returns? I assume bull markets because the insurer could not guarantee 6% returns unless they expected to make much more.
But the other issue for me would be inflation prospects for money locked into annuities. 6% returns sound amazing in a low inflation environment but pretty dismal in a high inflation environment like we had in the 70s and late 80s early 90s. I’m not seeing a return to high inflation soon but with routine deficit spending increasing, it’s not an impossibility.
