Per Wikipedia, a financial “hedge” is an investment position intended to offset potential losses or gains that may be incurred by a companion investment. Wouldn’t be nice if for every Investment A, there was another Investment B that would always move in the opposite direction? Unfortunately, things aren’t so easy. A common question: Should we own stocks as a hedge against inflation? The Institutional Investor article Here’s Proof That Stocks Were Never an Inflation Hedge provides a little of clarification: “Equities are not an inflation hedge. When inflation is high, they tend to do poorly. But in the long run, they have beaten inflation, so a lot of people claim they’re an inflation hedge, but [that claim is the result of confusion]. In the … [Read More...]

Vanguard has released some preview numbers from its 2023 America Saves report, which covers the nearly 5 million 401k, 403b, and other retirement plans that Vanguard administrates. More stats in this CNBC article. Even though the average balance dropped by 20% in 2022, there wasn’t widespread panic or account changes. In fact, nearly 40% increased their deferral rate: While average account balances decreased by 20% in 2022, primarily driven by negative market performance, participant behaviors mostly remained positive. Nearly 4 in 10 participants increased their deferral rate (either on their own or as part of an automatic annual increase), in line with previous years. […] And against a challenging market environment with increased volatility, only 6% of nonadvised participants traded, the lowest point in 20 years. The table below goes into more… [Read More...]

The beginning of the year is also a good time to check on the new annual contribution limits for retirement and benefit accounts, many of which are indexed to inflation. Our income has been quite variable these last few years, so I regularly adjust our paycheck deferral percentages based on expected income for the year. I still try to max things out if I can, or at least stay on pace to do so. This 2023 SHRM article has a nice summary of 2023 vs. 2022 numbers for most employer-based retirement and benefit accounts. 401k/403b Employer-Sponsored Accounts. For example, I would break down the applicable limit down to monthly and bi-weekly amounts: $22,500 annual limit = $1,875 per monthly paycheck. $22,500 annual limit = $865.38 per … [Read More...]

New ACAT transfer bonus. M1 Finance has rolled out some of their biggest bonuses ever for the new year: M1 New User Deposit Bonus: Up to $500 bonus depending on your initial deposit of $10,000-$100,000. Details on tiers below. M1 New/Existing User ACAT Transfer Bonus: Up to $10,000 bonus, depending on asset size transferred between $50,000 and $2M+. Details on tiers below. M1 Referral Bonus (alternate): $10 bonus with smaller $100+ deposit for new users. I’ve tried out my share of robo-advisors, which sounded nice in theory but I became a little disillusioned as they kept generating lot of unnecessary taxes every time they change their model portfolios to chase the latest and hottest trends. My favorite option is where I… [Read More...]

I’ve gotten a few e-mails about the Save app, which offers a Market Savings Account that “combines the security of FDIC-insured bank deposits with the upside potential of market returns”. I took a glance at the advertised yields (see below) and quickly filed it under “probably too good to be true”, but finally circled back and read through all the fine print and disclosures to figure out what is happening under the hood. Intro. Let’s say you have $1,000 and put it into a 1-year CD at an FDIC-insured bank that pays 5% APY. At the end of the year, you’d have $1,050 guaranteed. Now, imaging you went to Vegas and instead bet that $50 interest on red at… [Read More...]

Advisor Perspectives has a nice chart of 150 years of historical inflation (1872-2022). I appreciate that it includes both the short-term monthly inflation numbers as well as the 10-year rolling average over this long period of time. A few basic observations: From a long-term perspective, there have been many large sharp spikes in inflation throughout the entire period. Inflation has been a persistently recurring concern. From roughly 1872-1940, there were extreme swings between both high inflation and high deflation. Of course, this was also when the dollar was (mostly) on the gold standard. From roughly 1950 onward, the rolling 10-year average for inflation has still varied from ~2% to ~9% annually. Given our current low 10-year average, inflation could continue to be elevated for many … [Read More...]

Offer increased for limited-time. Fidelity Investments is offering a simple improved $150 bonus for opening a Fidelity taxable brokerage account, Cash Management Account, Roth IRA, or traditional IRA. This limited-time offer ends 12/2; the previous offer was for $100. Open with the promo code FIDELITY150 and deposit $50 or more within 15 days after opening your account. Fidelity will give you a $100 bonus within 25 days after opening your account. You must then maintain the bonus award (minus any losses related to trading or market volatility, or margin debit balances) in the account for at least 90 days from the date on which the bonus award is credited to the account. Per the fine print, this is available to both new and existing customers who haven’t taken… [Read More...]

Inflation still 🚀 😬 Savings I Bonds are a unique, low-risk investment backed by the US Treasury that pay out a variable interest rate linked to inflation. With a holding period from 12 months to 30 years, you could own them as an alternative to bank certificates of deposit (they are liquid after 12 months) or bonds in your portfolio. New inflation numbers were just announced at BLS.gov, which allows us to make an early prediction of the November 2022 savings bond rates a couple of weeks before the official announcement on the 1st. This also allows the opportunity to know exactly what a October 2022 savings bond purchase will yield over the next 12 months, instead of just 6 months. You can then compare this against a November 2022 purchase. New … [Read More...]

Here’s my quarterly income update for my Humble Portfolio (2022 Q3). I track the income produced as an alternative metric for performance. The total income goes up much more gradually and consistently than the number shown on brokerage statements (price), which helps encourage consistent investing. Imagine your portfolio as a factory that churns out dollar bills. Background: Overall stock market dividend growth. Stock dividends are a portion of net profits that businesses have decided to distribute directly to shareholders, as opposed to reinvesting into their business, paying back debt, or buying back shares directly. The dividends may suffer some short-term drops, but over the long run they have grown faster than inflation. In the US, the dividend culture is somewhat conservative in that shareholders expect … [Read More...]

Public is a stock brokerage app that has a similar user interface to Robinhood, but has a big focus on the social aspect of sharing your trades and following the stock trades of other users (thus the name). $0 stock commissions, no account minimums, Android or iOS app-only (no desktop). Interestingly, Public no longer accepts Payment for Order Flow (PFOF). Right now, they are offering up to a $10,000 cash bonus to gather more assets via ACAT transfers, depending the value of assets that you move over. Found via DoC. $150 with $5,000 – $24,999 in transferred assets $500 with $25,000 – $99,999 in qualifying new money $2,000 with $100,000 – $499,999 in qualifying new money $5,000 with $500,000 – $999,999 in qualifying new money $… [Read More...]

Update 9/2022: If you are an existing SoFi Checking user, look for an e-mail that includes a deposit bonus worth up to $1,000. More details on the SoFi Balance Offer promo page, which states “This offer is limited to one per account. You must receive this offer directly from SoFi to be eligible.” Both of us were targeted, so it doesn’t seem too picky. Transfer new cash (at least $5k) into your account by 9/30/22. Maintain your balance until at least 11/30/22 in order to receive your rewards. As long as your account is in good standing, you will receive your rewards points by 12/14/22. Tiers are all 1% of the minimum tier amount, up to a $1,000 bonus for $100,000+ in new funds: If… [Read More...]

Here’s my monthly roundup of the best interest rates on cash as of September 2022, roughly sorted from shortest to longest maturities. We all need some safe assets for cash reserves or portfolio stability, and there are often lesser-known opportunities available to individual investors. Check out my Ultimate Rate-Chaser Calculator to see how much extra interest you’d earn by moving money between accounts. Rates listed are available to everyone nationwide. Rates checked as of 9/1/2022. TL;DR: 4% APY on up to $6,000 for liquid savings at Current with no direct deposit requirement. Total Direct at 2.60% APY liquid savings. 1-year CD 3.21% APY. 49-month at 3.85% APY. Compare against Treasury bills and bonds at every maturity (12 month near 3.50%). 9.62% Savings I Bonds … [Read More...]

Personal Capital is an investment advisory service that offers several free online financial tools as a way to introduce themselves to potential clients. I mention them once a quarter, as I use them to track my Humble Portfolio performance and asset allocation across various brokerage and 401k accounts. They also have various retirement planning tools for projecting required savings rates and future income. Below is a screenshot from my own account. (Morningstar recently started charging for their Portfolio X-ray service, leaving Personal Capital as one of the few such services left.) After you sign up for their free tools, Personal Capital would usually call you once and introduce themselves and their services. They want to help you manage your portfolio for a management fee that… [Read More...]

Here’s a good question from reader Elizabeth in response to yesterday’s post about buying Treasury bonds on the open secondary market: One thing I’m interested in is on that same table you shared – Corporate bonds rated BBB are around 6% for 5 years. Can you write about this? What are the pros and cons? Here’s my thought process. Yes, us “retail” investors can also buy individual corporate bonds via major brokers with a fixed income desk like Fidelity. (Bond trading is rare on newer trading apps like Robinhood.) The bonds are judged by various rating agencies and usually separated by their grading. Right now, I see a Moody’s BAA3-rated corporate bond with 5 years left until maturity paying 6.78% interest (click … [Read More...]

via GIPHY Here’s my quarterly update on the income produced by my Humble Portfolio (2022 Q2). I track the income produced as an alternative metric for performance. The total income goes up much more gradually and consistently than the number shown on brokerage statements (price), which helps encourage consistent investing. I imagine them as building up a factory that churns out dollar bills. You can still track your dividend and interest income with a total return portfolio. You don’t need a bunch of high-yield stocks, MLPs, leveraged REITs, or covered call ETFs. Background: Overall stock market dividend growth. Stock dividends are a portion of net profits that businesses have decided to distribute directly to shareholders, as opposed to reinvesting into their business, paying back… [Read More...]

Fidelity just announced a new feature called Fidelity Solo FidFolios. You can make a custom index with up to 50 individual stocks, or a custom asset allocation portfolio using ETFs. You can then buy into your custom portfolio all a once using flat dollar amounts and Fidelity will juggle the fractional shares. For example, your $50 purchase could be split into 50 different individual companies. “Now more than ever, investors want the peace of mind of trading, monitoring, and rebalancing custom stock portfolios in a simple way,” said Robert Mascialino, head of Fidelity’s retail brokerage business. “With the ability to align to a specific theme or individual values, Fidelity Solo FidFoliosSM helps leverage the power of direct indexing to build a customized portfolio while simplifying how investors manage … [Read More...]

A satoshi, or “sat” for short, is the smallest unit of the cryptocurrency bitcoin. “Stacking Sats” is a popular term for gradually accumulating bitcoin by purchasing small amounts of bitcoin at a time. (100 million sats = 1 bitcoin.) The idea is that you should be excited about adding any amount to your stack, focusing on that forward progress instead of the current market price. If only it would be as trendy for folks to “stack VOO” or “stack VTI”. A low-cost S&P 500 or US Total Market index ETF is a tax-efficient way to build up your ownership of a share of excellent American businesses. Unfortunately, there is always something shinier next to this vanilla product. Factor ETFs, themed ETFs, sector… [Read More...]

Updated 6 free stocks for new account, $600 transfer promos. Webull is a brokerage app (PC and web version also available) that has $0 stock trades, $0 options trades with $0 per contract fees, free real-time quotes, and no minimum balance requirement. (Fidelity, Schwab, E-Trade, and TD Ameritrade all still charge $0.65 per contract.) Compared to Robinhood, Webull is more of a full-featured traditional brokerage shrunk down into an app. Robinhood has a sleeker minimalist feel, while Webull has a ton of options for real-time stock quotes, technical indicators, charting, etc. New account bonus details. Right now, WeBull is offering new accounts up to 6 free shares of stock: Open an account with Webull and get 2 free stocks valued between $3 and up to… [Read More...]