After the Fall: High Yield Checking Accounts

Another week, and more pain for savers.  Dollar Savings Direct continued their rate chopping from 3.20% APY to 3.05% APY on their online savings accounts.  While still offering one of the highest rates available, their margin is no longer much more than competitors.  Here's a roundup of some other rates we here at the LookBlog follow:

• FNBO Direct  2.60%
  
• HSBC Direct 2.45%
• Emigrant Direct 2.40%
• ING Direct 2.20%

So what's a saver to do?  We mentioned a while back about High Yield checking accounts and the relatively high rates they are still offering as long as you are willing to jump through a few hoops.  The guys over at http://www.highyieldcheckingdeals.com/  have some great resources on what is available in your area, as well as a primer on how these checking accounts can still offer up these rates.  Long story short, by making you use your debit card they earn more on fees allowing them to keep a nice little spread while still offering you a high rate.  Check the site, its definitely worth a read.

As a NJ resident, I'm leaning more and more towards pulling the trigger and opening an account at The Provident bank.  Currently they are offering 5.01% APY on up to 25K and a $123 sign up bonus.  O how I salivate when looking at this compared to the meager online savings yields.  A couple more drops and I'm all but forced to open this up! 

Lets hope things start turning around soon!

One Love,

Look

So much for saving... VFINX in the dumps

A dollar saved is a dollar earned?  Not so much.  So I've been investing in Vanguard's 500 Index (VFINX) for quite some time now.  The graphic above shows the 10 year performance of the fund.  The end of 2007 to now has hit the fund hard erasing gains and causing negative performance.  Bah.  So... what's an investor to do?  Is it a fire sale? Time to buy some new shares? Dollar Cost Average?  Mmm with "experts" prediciting further struggles and the abysmal performance in January causing the year outlook to be just as bad (As January goes, so goes the year...)  its a hard call.  Wait and you could miss those huge upside days.  Invest now and you could see further losses.

They say this recession is worse and more far reaching than any before and that the boost in the stock market post-recession can be a long time away and isn't guaranteed.  Is it the end of an era?  I'm in it for the long haul so I'll stay put for now.  Invest in some more shares slowly and hope things start to turn around.  Hope Warren is right... be fearful when others are greedy, be greedy when others are fearful.  

Steelers just won the Super Bowl. Super.

One Love, 

Look

Time to throw in the towel on WaMu?

The beleaguered bank just can't catch a break. Today Standard & Poor's Rating Services downgraded WaMu's counterparty credit rating to "CCC" from "BB-" further miring it in junk status. The reasoning being a split of the bank on any sale, as vultures are keen on snatching the strong deposit base while staying as far away as possible from the toxic mortgage assets.

As seen in the chart, WaMu's stock price (NYSE: WM) has fallen along with the confidence in the bank, dropping another $0.94 to a 52-week low of $2.26. Uncoincentally, this battering has led them to increase interest rates on online savings to 4.00% and on 12 month CDs to 5.00% in attempts to shore up capital.



While these are GREAT rates given current market conditions (who wouldn't want guaranteed returns in this financial crisis!) how safe is your money? Sure its FDIC insured on deposits up to $100,000 but with all these bailouts and government takeovers, but how long will the FDIC's printing press be available until it breaks down? Here's a great article on reasons to stay with WaMu from MyMoneyBlog, but seeing that nearly 60% of my cash is sitting with WaMu, I still am pretty uneasy with leaving my money in there.

I have an online savings account and an 8-Month CD (which I opened for 4.25% APY) and the trigger is itchin for me to withdraw the money. IndyMac is the closest example to what would happen should WaMu fail and after reading some stories from those customers (via SlickDeals) seems like it took 4-5 weeks for money to be returned. So seeing that a bailout of WaMu would be greater than IndyMac, I can't imagine how long my money would be locked away NOT earning interest.

So do I forgo the attractive interest rates and settle for a lower rate but more security? I'm leaning towards a move back to EmigrantDirect at 3.00%. So far I'm undecided, but I'll wait for this month's interest to be deposited and then I'll make a decision.

Happy rate hunting!

One Love,

Look

Game Day at Shea

Went to the Mets vs. Cardinals game tonight, with the Amazin's coming out victorious of course. Of course it's the last season at Shea stadium (and at Yankee Stadium incidentally) and its a bit sad to see them tear down the stadium. Citi field looms in the background of Shea and beckons a new era for the Mets.

Its sad to see that sports are so often referred to as a business. Whatever happened to "for the love of the game?" Undoubtedly the new stadium will offer less seating and more luxury suites for those who can pay. That means more revenue for the team, but less accessibility for average fans.

What happens if the economy doesn't rebound in the coming years? Less luxury purchasers? Companies cutting back on client outings. Ill timed I suppose. Also how is Citibank feeling about paying all those millions for the naming rights to the new Mets stadium? After all the pain its been going through, wonder if the person responsible for that decision got the ax.

S'all for now.

One Love,
Look

Financial Crisis: The Broken American Dream

It's been quite some time since my last post and much has transpired. The housing market in the U.S. has collapsed with Countrywide Bank being bought by Bank of America, BearStearns the fifth-largest investment bank collapsed and was absorbed by J.P. Morgan, Freddie Mac & Fannie Mae have tumbled as a result of the housing debacle forcing government guarantees, IndyMac was taken over by the FDIC, Lehman Brothers is facing the way of BearStearns, S&L's like WaMu and Wachovia have had their balance sheets come into question. So where does this leave little investors like us?

They say don't panic. Easier said than done. Since the turmoil began last August, my portfolio has seen double-digit percentage declines and the bleeding has still not stopped. Following the "buy low, sell high" adage, I've bolstered these falling positions by purchasing additional shares. While I'm getting these shares at a "discount" this strategy will only bear fruit if a rebound occurs. So since I'm young I'm holding my breathe and blindly sticking to my guns. That's not to say I'm totally exposed to the market. I still have a considerable cash balance and just recently invested in a bond fund to diversify away from my stock exposure. Jumping ship and selling shares seems like the wrong thing to do. Interest rates are at all time lows so there leaves growth possibilities very low. I guess the only thing it would do is to stop the losses. This may be good for someone at/near retirement, but my time horizon is too long to have my money just sit and do nothing. No risk, no reward right?

So what happens if a rebound doesn't occur and we enter a prolonged bear market recession? Well the buy & hold strategies, the dollar cost-averaging and the long term views will end up destroying my retirement plan. No social security to count on, a fledgling 401k. What's a boy to do? Time will tell. I'll suck it up until I can take it no longer and decide what my next plan of action is.

So for those rate chasers, a mini-update. IndyMac failed so I wouldn't recommend pouring cash there (seeing that it might be a process to get it back), but here's the latest rates:

• HSBC - 3.5%
• WaMu - 3.3%
• ING Direct - 3.0%
• EmigrantDirect - 2.75%
• Citi - 2.65%

Good luck investors!

One Love,
Look