Category Archives for Invest & Retire

Presentation on benefits of starting to invest at a senior in high school!

Hi everyone! I’ve been wanting to post a presentation/powerpoint slide deck on my blog that I put together that I am going to present to high school seniors in the area on the benefits of starting to invest early to take advantage of compound interest over the long term.

However, the settings on the site won’t allow me to upload an entire presentation.

If you are interested in seeing the presentation (or even better, dessiminating the information to teenagers), please email a request at jazzdog059@aol.com!

Talk to you soon!
Student

How do I decide if a Roth IRA (Individual Retirement Account) or Traditional IRA is right for me?

The decision of whether to open a Roth IRA or Traditional IRA is a very important one. In doing an investigation online, I came across the website at the link below that gives a good comparison on the features of both types of accounts.

About.com – Roth IRA vs. Traditional IRA

But, in my mind, the decision can basically be narrowed down by answering two questions:

1) Do you meet the qualifications needed to open a Roth IRA? 

In order to open a Roth IRA, you must have earned income of less than $95,000 (single) and $150,000 (married couples filing together).

2) When is it more beneficial for you to pay the taxes on the proceeds from your account?

In the case of a Roth IRA, you contribute after-tax income to your account. However, when you withdraw it at retirement, it is tax free! This is incredibly generous that the government gives us this tool to invest with.

In the case of a traditional IRA, you contribute pre-tax income to your account, and then pay taxes on the earnings when you withdraw the money (much like a 401k account).

So, if you are young like I am (24 years old) making a middle-class salary (under $95,000 limit), but you are investing money prudently and hoping that the miracle of Time Value of Money will cause your nest egg to grow, you will most likely be in a lower tax bracket now than you will be when you retire and withdraw the money (lower tax bracket = lower taxes). Therefore, it is more beneficial for me to use a Roth IRA and pay the taxes now vs. later.

General Rule of Thumb – from David Bach’s book, Fight For Your Money

• If you’re under 35 years of age, a Roth IRA is the way to go.
• If you’re 50 or over, a Traditional IRA is the way to go.

See! Not too difficult right? Let me know if you have any questions.

Keep on learning!

Jacob

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Does Phil Town’s Rule Number 1 – 15 min a Week Stock Trading System Work?

After trying Phil’s Rule #1 system for 6 months and not seeing the results of my efforts, I am leaning towards saying “no.” However, by doing this system, I probably learned more about investing in individual stocks that I ever thought that I would. So, for that reason, I am not sorry one bit for taking on the activity.

I therefore began to search around for evidence of anyone’s success through a Google search. I pretty much hit a dead end, and could not find anyone that really tried the system and found success.

So, what exactly does Phil’s Rule 1 system involve and what made me intrigued enough to give it a try?

The thing that made me try Phil’s system was that it is the only individual stock picking strategy that is actually 1) systematic, 2) repeatable, 3) formulaic, and 4) most importantly, has a way to block emotions from coming in to investing. In a way, it is the most similar approach to dollar value averaging and index mutual fund asset allocation I could find.

Description of Rule 1 System:

1) Search for and identify stocks to invest in – These should only be companies that you would be proud to own, trade for > $1 per share, and have > 500,000 average daily trading volume. Ok – good. I agree with this approach. The type of companies you should invest in should be at the intersection of what you love to do, what you are good at doing, and what you can earn money doing.

2) Next, identify if the company has a “moat” – What he explains we are looking for here is >10% growth rate  over 10 years for the following things: Return on investment capital, sales revenue, EPS growth, Equity per share, and free cash flow growth. He does a very nice job explaining exactly how to calculate these numbers, and Phil also offers a very good free calculator on his website (www.ruleoneinvestor.com) that I have used and would highly recommend. We also make sure that the company has enough current free cash flow to be able to pay back it’s long term debt in 3 years or less. OK – I agree with this as well.

3) Research the management and make sure the CEO is good and that no insider selling is happening – OK I agree with this.

4) Calculate the appropriate sticker price, or what the stock should be selling at given it’s current EPS and EPS growth rate. We then calculate the Margin of Safety price (MOS) to make sure that we buy the stock a significant enough discount to shield ourselves from mistakes and be able to achieve higher returns.

5) Once you ID a company that fulfills all of these fundamental requirements, it is then time to use technical analysis tools to make sure you are either buying or selling at the right time. Phil recommends using three technical tools to make sure of this – 1) MACD indicator, 2) Stochostics, and 3) 10 day moving average. Without going in to all of the details of these (Phil does in his book), Phil recommends that you only buy when all 3 of the tech. indicators say “buy” and that you only sell when all 3 indicators say, “sell.” I felt like this was really good because it eliminates the emotionally urges investors have to sell off at the wrong time and buy when prices are too high. Remember, you only buy the stock if 1) all technical indicators say to, and 2) it is trading below the MOS price. If a stock doesn’t fit these requirements, we put it on our watch list and review the current price each week to see if it has been discounted enough by the market to be under our MOS price.

So, that’s Phil’s system at a high level! How did I fare using it?

Since I wasn’t ready to commit my own real money to using his system before trying it out, I did 6 months of simulated trading/investing with this system using an Excel spreadsheet and my Google Finance watch list.

The companies listed below were ones that I found that fit the fundamental criteria above and were placed on my watch list. However, there were only two stocks during the 6 month period that came in below my MOS price that I calculated, Apollo and Research in Motion. I took this as a good sign because I didn’t want to be investing in just any company.

During the period that I tested out this system (August 2009 – January 2010), the S&P500 index return was 11.2%.

The returns for my trading activity for Apollo and Research in Motion were as follows (not included trading commissions or taxes):

• Apollo – 2% gain, 1.4% gain, 6% gain, 0.3% loss
• Research in Motion – 12.4% gain, 3% loss, 6.25% loss

If you sum up the returns, you get a total return of 12.85%. However, if you subtract 1% from each return for commissions, it is easy to see how the total return dips below the return of the market (and you haven’t considered taxes yet).

Netflix

eBay

Alcon

Apollo Group

Walgreen’s

ITT Educational Services

Capella’s Education

JCOM

Garmin

Varian Medical

Vasco Data Security

American Ecology

Research In Motion

Hittite Microwave

Aeropostale

Petsmed express

Quality Systems

Factset Research Systems

Priceline

meridian bioscience

fluor

Decker’s Outdoor

Apple

Stryker

Amazon

Jacob’s Engineering

Panera

Hansen Natural

Mobile Telesystems MBT

America movil amx

Amphenol

Western Digital Corp WDC

Turkcell TKC

Flir FLIR

EOG resources EOG

Immuncor BLUD

China Mobile CHL

murphy oil MUR

Gildan Activwear GIL

Endo pharma ENDP

Compania de bebidas ABV

Pharm Product Development PPDI

American Oriental Bioengineering AOB

Lincare LNCR

China Automotive Systems CAAS

Gamestop GME

Ross Stores ROST

Best Buy BBY

Amedisys AMED

Devry DV

Netease.com NTES

Synaptics SYNA

Google GOOG

So, to summarize, Phil’s system is very interesting, and I feel that I learned a lot from it. However, I still do not believe that it beats portfolio theory, asset allocation, and investing in index mutual funds.

Is it better to invest a lump sum you have just received all at once or spread it out over time?

This is a fairly complicated question, because it depends on your investing horizons and your ability to handle risk.

In the book, he basically states that if you have a long-term investment plan and can tolerance a certain degree of risk, it is better to invest the lump sum all at once for several reasons.

1. Markets are efficient and it is impossible to predict consistently where the market will be tomorrow.

2. It takes the emotion out of the timing to invest.

So, invest your lump sum as soon as possible and be done with it!

Index Mutual Funds, Current Asset Allocation, and Investment Strategy

Note: This post will serve as a running list of topics and updates related to mutual funds, asset allocation, dollar value vs. dollar cost averaging, and retirement investing accounts. The advice here should not serve to replace the advice of a financial professional, but rather is to give you some ideas to talk about further with your financial counsel.

Asset Allocation –

As a result of reading the books listed in the Financial Book Review post of my blog, I came up with the following target asset allocation percentages, based on my long-range view of investing and being young/able to tolerate high levels of risk.

% Equity = 75%
% Cash/fixed income securities = 25%
——————————————
Total Portfolio = 100%

For the equity portion of my portfolio, my target split is shown below:

% US Domestic Equity = 71% (71% x 0.75 equity = 53% of total portfolio)
% International Equity = 29% (29% x 0.75 equity = 22% of total portfolio)
——————————————-
Total Equity Portion of Portfolio = 100%

To further break this down in to subcategories so we can select INDEX mutual funds to give us exposure to these areas, the books recommended the following %’s.

Detailed Allocation Calculations
1. % Cash (money market target 5%)
2. % Non-Inflation Protected Short Term and Intermediate Bond Funds (avoid long term bond funds) (target 15%)
3. % TIPS Bonds (Inflation protected bonds -target 5%)
4. % International Equity (Target 11%)
5. % International Emerging Markets (Target 11%)
6. % Domestic Large Cap (Target 8%)
7. % Domestic Small Cap (Target 8%)
8. % Domestic Small Cap Value (Target 14%)
9. % Domestic Large Cap Value (Target 13%)
10.% REIT (Real Estate Investment Trust – target 10%)
———————————————————–
Total Net Worth = 100%

Recommended Vanguard Index Funds for These Categories – All of these have very low fees, and since they are index mutual funds, you will have higher returns than 70% of investing professionals with active management. You can open an account with Vanguard very easily at http://www.vanguard.com/. There are generally no commissions/fees for buying Vanguard funds through your Vanguard account. All funds require $1000-$3000 of initial principal to buy a particular fund.

1. Cash – place in Dollarsavingsdirect.com high yield savings account – see blog post titled, Favorite Online Savings Accounts.
2. Vanguard Total Bond Market Index (MUTF:VBMFX) and Vanguard Short Term Bond Index (MUTF:VBISX)
3. Vanguard Inflation-Protected Secs (MUTF:VIPSX) – Note: this is an actively managed fund.
4. Vanguard Total Intl Stock Index (MUTF:VGTSX)
5. Vanguard Emerging Mkts Stock Idx (MUTF:VEIEX)
6. Vanguard Total Stock Mkt Idx (MUTF:VTSMX)
7. Vanguard Small Cap Index (MUTF:NAESX)
8. Vanguard Small Cap Value Index (MUTF:VISVX)
9. Vanguard Value Index (MUTF:VIVAX)
10.Vanguard REIT Index (MUTF:VGSIX)

Investing New Money when it Comes In –

So, I’ve bought the funds listed above, now what do I when I get my paycheck each month and have new money to invest? There are essentially two ways to do this exercise.  This is where dollar-value averaging and/or rebalancing comes in to play!

Portfolio Rebalancing


Portfolio is the process of maintaining the recommended allocation target %’s listed previous in order to maximize return and minimize risk. The rule I follow for when to rebalance is called the 5% rule. For example, the target allocation % for the REIT part of your portfolio is 10%. Following the 5% rule, you would rebalance the portfolio either by selling shares or contributing more money depending on whether the current % of the total portfolio was 15% or 5%, respectively.

As a general rule, I try to avoid selling shares of mutual funds (even in tax-sheltered accounts) frequently in order to perform rebalancing. Instead, when new money comes in, I buy additional shares in other funds if as needed to maintain my targets.

However, a full rebalancing of your portfolio should be 1X to 2X per year, unless your allocations targets are already aligned from keeping it up throughout the year with monthly investments.

Dollar Value Averaging


Another method of maintaining your portfolio/deciding how much money to invest and when is called dollar value average. This is similar to it’s cousin, Dollar Cost Averaging, but I believe it is slightly more effective.

In Dollar Cost Averaging, the idea is that a constant amount of money is invested each month in to your account, and therefore, will buy MORE shares when the market is down and LESS shares when the market is up.

However, in Dollar Value Averaging, the idea is to meet portfolio value goals that you pre-define at regular intervals throughout the year. For example, say you just bought the S&P 500 index mutual fund with Vanguard in your Roth IRA for $3000 in 2009. In 2010, you plan to contribute $200 per month to the fund for all 12 months. Therefore, you would then lay out value targets throughout the year as follows.

End of Month
Jan     $3200
Feb    $3400
Mar   $3600
Apr   $3800
May  $4000
etc

At the end of the month, you assess the current value of the portfolio and compare it to the targets above. For example, if at the end of Jan, the fund is worth $2900, you would then contribute $300 instead of $200 in order to force yourself to buy more shares when the market goes down. Continuing with this example, so we invested $300 at the end of January. Then, at the end of Feb, the market has gone up a lot and we find that the value of fund is currently $3500. Since it is over our target, we would then invest nothing in the stock fund, and instead place the investment money in a cash or fixed income security. Make sense?

In my opinion, I believe that Dollar Value Averaging works best with a one mutual fund portfolio. Since I own a lot of mutual funds, I tend to steer clear of using it because it would be hard to apply to my situation.
Keep learning!

Student

Recently Read Financial Book Reviews

This place will serve as a running review of the different financial related books I read and anything I find useful and/or interesting out of them.

1. Getting Things Done by David Allen

This is a great book that someone at my old job in Virginia suggested I read, and I really became a fan of the system. What it details basically is a system of using folders (both physical and through Microsoft Outlook) to a) capture everything that comes your way at work and b) how to process it quickly – either by doing it under the 2 minute rule, deleting it, deferring it, or delegating it. Probably the best thing that I have learned as a result of this book is how to set up a folder system on Outlook that categorizes actionable items by where they need to be done, instead of organizing it by project, etc.

This is one (non-finance book) that I would highly recommend to improve your life at work. The link below can take you to Amazon to find a cheap used version of the book (since I believe buying new books is usually a waste unless it is a gift).

2. Personal Finance for Dummies by Eric Tyson, MBA

In this book, Eric Tyson us with a very good, high-level look at pretty much every financial topic you could ever need to know about – investing for retirement, mutual funds, retirement accounts, educational funds for your children, insurance, life insurance, car loans, house loans, etc. This is one of those books that I like to keep around the house for the random questions that come up about topics that I forget about since they only come up every year or two (should I have term life insurance?, for example). Definitely worth the money to buy your own copy (used of course).

3. Rule #1 – Phil Town


In this book, Phil Town details a truly fascinating and easy system of investing in individual stocks. It is without a doubt, my favorite book I have read to date on individual stock investing.

The system he details is to me, the most integral and repeatable system for investing in individual stocks. He claims that with this system, it is absolutely possible to achieve returns of 15% or more per year and beat the market indices.

Since I was so fascinated with his system, I decided to dedicate a stand-alone post on my investigation I have done for the past 6 months where I have been following the rules of his system with “simulated trading.” See that post for the exciting result! I want to believe in it, but let’s let the results speak for themselves. This book is definitely worth reading.

4. The Way to the Top by Donald Trump


At a high level, this book is a quick read that details several hundred quotations of business advice from business leaders (CEO’s, CFO’s, company founders, etc). In my opinion, most of the advice was fairly common sense, or I had heard it before. However, there were several noteworthy take-home bits of advice that I wanted to share below:

1. Always investigate future bosses – find out what he or she can teach you and how he or she is perceived in the organization.
2. Treat everyone politely.
3. Find a mentor
4. Deal directly with the people needing to make the decision – not the middlemen/women.

Below is the link if you are interested in picking up a used copy!

5. Stocks for the Long Run by Jeremy Siegel


In my opinion, this book is the best investment book ever written, and definitely deserves a place on any My Money Blog followers’ book shelf. This is essentially the closest thing to an “investment bible” on the market today.

In this book, Siegel analyzes everything – historical returns on bonds, stocks, mutual funds, the effectiveness of active money management, the performance of the stock market with Democrats vs. Republicans in the presidency, and methods for building an effective portfolio using Modern Portfolio Theory.

6. What Wall Street Doesn’t Want You to Know by Larry E. Swedroe


This was another book that I very much enjoyed. From reading this, I really would break this book up in to two sections – the first 250 pages of talk about stock market history and essentially serve to build a case/show evidence for why active stock management is a loser’s game.  The second section (last 150 pages or so) was the most beneficial for me since I already knew a lot about stock market history and the pitfalls of active stock investing. In this section, Swedroe goes about telling how to build a portfolio that will achieve superior returns and lower risk. As was the case with Stocks for the Long Run and A Random Walk Down Wall Street, Swedroe repeatedly emphasizes the use of index mutual funds. The most useful lessons learned in the 2nd part of the book are described below.

1. The method to use for rebalancing a portfolio – using the 5% rule (see http://mypersonalfinancejourney.blogspot.com/2010/01/index-mutual-funds-and-current-assett.html for a detailed description of the rebalancing method).

2. Describes allocation % targets between REITS, US large, small, and value stock funds, and international stock funds. There is a very handy table that I printed copy of on page 307. Be sure to get a copy of the book and check out that page!

3. For higher returns, tilt more towards value and small cap stock funds (index funds of course)

4. The idea that a bond fund may indeed not be the best engine for the fixed income portion of your portfolio. Swedroe suggests that nowadays, it is so easy to invest in the actual fixed income security (e.g. t-bills), that it is more cost effective to just go ahead and buy it directly from the source instead of paying for the 0.1% management fee

7. A Random Walk Down Wall Street by Burton G. Malkiel

This is another gem that I would highly recommend for anyone who is a big believer in modern portfolio theory and the unlikelihood of beating the market long term by investing in individual stocks.

Like most books of it’s kind, the first part of the book is dedicated to proving that the market moves randomly, and that it is not possible to beat the market by buying and selling individual stocks or relying on active mutual fund management. One thing that I really like is how it takes the time to analyze the performance of both technical and fundamental analysis and how it compares to the performance of a mutual fund that matches the market indices.

The last 100 pages or so are where this book really makes itself worth the purchase. It describes in detail approximate target asset allocations for different age groups. For example, for mid-twenty year olds like myself, it recommends 5% cash, 20% bonds (5% of portfolio should be TIPS), 65% stocks (of this, 2/3 should be domestic, 1/3 should be international stocks with good exposure to emerging markets), and 10% real estate. As you can see, this goes in to a lot more detail about target asset allocations than the asset allocation calculators available on the internet.

Another couple of key points that Malkiel discusses in part 2 of this book are 1) tax-managed funds for taxable accounts and 2) investing in the Wilshire index vs. the S&P 500.

1) Malkiel brings up the point that it is better to invest in Tax-managed mutual funds that fund houses offer if the account is taxable. This is a good idea for people that have more money at hand I believe. However, for myself, since my money is fairly limited, I do not have the $10,000 initial principal required to buy a tax managed mutual fund.

2) Malkiel also reinforces the important point that one should try to invest in the Wilshire 2000 index instead of the S&P500 index if you can only afford to have a limited number of funds in your account. The reason for this is simple: the Wilshire index represents a broader range of stocks, ranging from small cap to large cap, throughout the US markets. Therefore, this gives an investor more diversification than an S&P500 fund, since the 500 companies in the S&P are only very large cap stocks.

8. The Four Pillars of Investing by William Bernstein

This was one of the first books I read on asset allocation and index mutual fund investing several years ago. It really was what got me interested in learning more about how it all works.

One of the things that I like about this book is that it dedicates more time to explaining how to build a portfolio vs. spending half of the book explaining why to invest in index mutuals instead of active management. It goes in to a lot of detail about the different specific options of mutual funds available to an investor in each asset size/class.

It even goes as far as to address how to best approach investing, starting with say $1000 (when you can’t afford to have 10 mutual funds). It then details how you build a portfolio piece by piece as you accumulate money over the years.

Highly recommended for a first book to read in learning to invest!

9. The Smartest Investment Book You’ll Ever Read by Daniel Solin


This is a great little book (170 pages and a very quick read at that!) that basically grazes over all of the topics in the books of Stocks for the Long Run and A Random Walk Down Wall Street. However, Solin keeps it to the high level view of things, and doesn’t delve in to the details that the others do. So, it’s good for getting a general message across, begin to set up your investing system with index mutual fund, find your correct asset allocation, and learn why stock brokers and active money management do not work!

10. The Intelligent Asset Allocator by William Berstein

This is another great title from Mr. Berstein that addresses how to build and maintain a successful portfolio of index mutual funds. It has a nice section that addresses the importance of portfolio rebalancing as well. I especially also like the section of the book that describes in detail each of the recommended funds from the Vanguard fund family along with whether that fund should be held in a taxable or tax-shelter account.

Another very neat aspect of this book is the long list of investment resources at the end. Definitely worth taking a look at!

11. Finding the Next Starbucks by Michael Moe

I read this book as part of my continued effort to find some method that would make me a believer in individual stock investing. This book did not perform that task.

However, it did provide some valuable insight in to how to identify growing trends within society and the companies that you can invest in to ride the waves. The one concrete concept that I did like in this book was how to calculate the P/E/G ratio for growth stocks. This is calculated by dividing the P/E ratio provided by most financial search engines by the 5 year projected EPS growth rate. You can then compare the P/E/G ratio to a chart that has been generated to get a feel for the growth potential.

Another good bit of information in this book is that Moe gives the reader a list of resources on where to find “hot” stocks that are experiencing new highs in the current market. The role I see a list such as that one playing is to provide a starting point for further screening. For example, I would ID a company using the sources Moe points out, then further analyze them using the Rule 1 methodology (see Rule 1 results post).

12. The Complete Idiot’s Guide To Managing Your Time by Jeff Davidson

This is the first book I have read that ventured in to the realm of the topic of managing your time, in a general sense (not just in the office as is the case with David Allen’s Getting Things Done book).

In this book, Davidson tackles every topic related to time management: from finding ways to avoid working unnecessary overtime, to putting your relationship as a priority in your life, to time saving devices and services that can be used. This book has it all!

Several of the specific topics that I enjoyed in this book were the ideas below:

1. The section about ways to avoid working overtime. It actually shows that some of the most successful people have lives out of work and rarely do work overtime. Jeff even shows how studies have been performed to show how productivity decreases by working overtime.

2. The section about defining what is most important to you in life and setting up your priorities so that time is allocated properly.

3. The section about “buying yourself some time” – This section adddresses the idea that the most important resource in your life in time, so why not spend some money to save yourself time on things you do not enjoy doing? It is an interesting idea. For example, he gives scenarios where it makes sense to hire someone to help you in areas such as mowing the grass, cleaning the house, getting groceries delivered to your house, etc.

Overall, this is a highly recommended read! The link to Amazon is show below to pick up a used copy.

I want to get started investing for retirement, but I only have $100. What do I do?

Someone asked me this question recently, so I thought I’d make a post here.

The most important thing is that you have made the choice to get started investing and taking advantage of compound annual interest returns as soon as possible. Rule number 1) you will want to open up and invest in a tax deferred retirement account. If you are young like me, I would recommend setting up an individual Roth IRA with the Vanguard group. Rule number 2) you will want to invest in an indexed fund since it is almost impossible to beat the market consistently over the number of years until you retire. Since index mutual funds require a higher account minimum level, I would suggest investing in an ETF (Exchange Traded Fund) with Vanguard. Rule number 3) buy a fund that gives you exposure to the entire US stock market to have sufficient diversification. I would recommend the ETF with the ticker symbol VTI. A description of this fund can be found at the link below. Best of luck!

https://personal.vanguard.com/us/funds/snapshot?FundId=0970&FundIntExt=INT

Another great site for investing in ETF’s is Sharebuilder (a subsidiary of ING Direct Bank – Learn about Electric Orange from ING DIRECT USA. Every dollar earns high interest.). They offer automatic investment plan trades for $4 per trade. They even have a very nice portfolio builder software tool. The Sharebuilder homepage link is shown below.

• If you are interested in signing up, email me at irwin.jacob@gmail.com, and I can send you a link that will enable you to get $25 free just for signing up!

Sharebuilder Homepage


Keep on learning!


Jacob

Favorite Discount, Low Cost Online Brokers – Individual Stock Trading

Although I am a big support of the Efficient Market Theories (more on this and index mutual funds later) and that you cannot beat the market long term by buying and selling individual stocks, I do believe it is healthy to commit some “play” money to this activity. If you feel the same way, the broker’s below can help you out!

1. Sogotrade – Sogotrade is a division of Genesis Securities (a member of the NYSE). They offer some of the lowest trading fees available at $3/trade and only a $500 minimum account balance. Free to open an account!

Sogotrade.com – Account Sign Up

SogoTrade Commission Schedule

• Equity Trades

• Online (market or limit)*	$3 Unlimited shares *
  Broker-Assisted **	$27 Unlimited shares **

• Option Trades

• Online	$5.00 plus 65¢ per contract
  Broker-Assisted **	$27.00 plus 65¢ per contract
  Options exercise/assignment	$15
  Account minimum	$500.00
  Electronic funds transfers	Unlimited / free
  Inactivity fees	None
  Subscription fees	None

• 
  
• 
  
• 2. Zecco Trading – Zecco used to offer free share trading, but they recently ceased that and increased the price per trade for market orders to $4.50. So, it is still very discounted. The account details are shown below.

Favorite High Yield Online Savings Accounts

Currently, the best online savings account I have found (one with highest rating and easiest to use) is DollarSavingsDirect.com. All accounts are FDIC insured, according to law, and the current interest yield is 1.50%. This is the website branch of Emigrant Bank, which has been around since 1850. Quite a good deal! I have all of my emergency savings money in this account.

Go to www.dollarsavingsdirect.com to open up an account for free. The minimum account balance is $1,000

Account Highlights
• Open your account online. It’s quick and easy.
• No Fees. $1,000 account balance minimum.
• No need to change your checking account. Your Dollar Savings Account™will be linked to your current checking account.
• Access your account 24/7 at DollarSavingsDirect.com.
• Have a question? Visit our FAQ page.