Favorite PF Tools, Accounts, and Books

Often times, I get asked about the various tools, accounts, and books that I personally use to organize and manage my personal finances/life (which often become very intertwined!) on a day-to-day basis.

In order to facilitate this sharing, I’ve decided to use this page as the central location for this information. One thing I realized while putting this list together was that while I’ve discussed a lot of these topics on my site, I’ve never shared the specific companies that I use to make them happen in a central place (which I think may be of some value to people that are trying to figure these topics out in their own personal finances).

If there are any categories of things that you think I might be leaving out, definitely let me know! Let’s get started, shall we?!

Checking/Spending Account

For my checking account, I use good ole’ Bank of America. Although Bank of America is not perfect and might not offer the best perks around, the main reason I’m still using Bank of America is that they are truly everywhere in the United States. They are in Arkansas where my parents live, they are on the East Coast where my sister and I live – they are everywhere. And, the fact that Bank of America is everywhere has made it very easy on me over the past few years since I have moved three times.

Often, I have considered moving my checking account to an online bank since they offer much better interest rates and other features. However, there is something to be said about having a physical bank if I need a certified cashier’s check (I just checked, and online banks such as ING Direct’s do not offer certified checks) to buy a house or pay a moving company. Additionally, I question the security of mailing a check through the Postal Service in order to make a deposit. On top of this, Bank of America has never charged me a monthly account maintenance fee since I have always met their required criteria

Credit Cards

As far as credit cards go, I generally use only 3 credit cards on a regular basis (even though I have close to 15 of them which I rarely use and keep in an envelope. I only opened these to take advantage of the $50-$100 cash back bonus that came with opening the account. Some nice easy money!).

If you’re interested in learning more about these credit cards or opening an account for yourself, I’d encourage you to first compare your options at CreditCards.com to make sure they best suit your needs.

  • For the majority of my purchases (except ones at gas stations and Amazon), I use the Chase Freedom Visa Credit Card. This card offers:
    • No annual fee.
    • $100 cash back bonus after you make $500 or more in credit card purchases within the first three months (not very hard to do if you use it for all purchases).
    • 0% introductory APR for purchases and balance transfers for the first year.
    • 5% cash back on up to $1500 in purchases each quarter in rotating purchase general categories (examples are gas, groceries, restaurants, etc).
    • Unlimited 1% cash back on all other purchases; rewards never expire.
  • For all my gas purchases for my car, I use the Chase BP Visa Credit Card.
    • First, aside from the Gulf of Mexico oil spill fiasco (which may or may not have been BP’s fault), I believe that BP is a fairly “good” company as far as big oil goes. They have a very active renewable energy (wind, solar, etc) program compared to Exxon Mobil, and are also located nationwide in the event that I have to move around.
    • The card offers no annual fee, $0.15 per gallon rebates on every $100 spent at BP gas stations that can be redeemed in the form of discounts on gas purchases. This is sort of a confusing payout system, but if you sit down and do the calculations, I figured out that it equates to about 3% cash back. Not as good as the 5% cash back that it used to give, but still pretty competitive compared to the other cards available!
  • For all of my Amazon purchases (cheap used books and Christmas/birthday gifts), I use the Chase Amazon Visa Credit Card. This card offers:
    • No annual fee.
    • $30 cash back bonus upon signing up for a card.
    • 3% cash back on all Amazon purchases.

Roth IRAs

Currently, I have two Roth IRAs – one with Vanguard that I contribute to on a regular basis (I HIGHLY recommend Vanguard. Read more below about Vanguard if you’re interested) and one with Capital One Sharebuilder that I opened back when I first started my investing “career” back in 2007. Sharebuilder has had quite a lifetime! First, it was an independent company, then it was purchased by ING Direct, which then got swallowed up by CapitalOne only recently.

In my opinion, I both love and hate Sharebuilder all at the same time.

  • I love that they 1) have no required account minimums, 2) make it incredibly easy and affordable to invest new money in to stocks and ETFs through recurring automated investing plans (commissions of $4 or less per buy transaction, happens only once a week on Tuesday), and 3) often times offer $50 account opening bonuses.
  • However, I hate the fact that it costs $10 per trade to sell out of any shares or purchase new shares in a market order fashion. This high “share leaving cost” is one of the primary reasons why I have kept my Roth IRA with Sharebuilder all of these years.
  • So, the verdict on Sharebuilder essentially is that if you’re investing/buying for the long, long term, Sharebuilder is a good, simple alternative. However, if you’re looking to buy and sell more frequently, there are other cheaper discount brokerage options available out there (will discuss more below).

Rollover IRA, Individual 401k, and Taxable Mutual Fund Account

For my Rollover IRA (rolled over from my Fidelity 401k at my job before graduate school), Individual 401k, and taxable mutual fund accounts, I proudly and very loyally use Vanguard.

I really cannot recommend how good Vanguard is enough. They are the industry leaders in offering low-cost, passively managed, index mutual funds (often times lower than Fidelity), which is the type of investing instrument I use as part of my passive investing strategy. They have very good, responsive customer service, never charge transaction fees, and waive account maintenance fees for portfolios over $50,000 in value.

Life Values, Doggie Emergency Fund, Property Tax, and House Maintenance Savings Accounts

I store my cash funds earmarked for my life values, doggie emergency fund, condo property tax, and house maintenance savings purposes in an HSBC Advance Online Savings Account that I opened up back in 2007 or so.

Although the interest rate it pays (currently 0.20% APY as of 12-Jan-2013) is lower than some of the market leaders (it used to pay one of the highest rates around when I first opened the account in 2007) such as Ally Bank (0.95% APY) and EverBank (0.76% APY), HSBC does offer a nice user interface along with no monthly account maintenance fees or minimums and automatic savings transfers.

While there are now better options around in today’s market for online savings accounts (one of them being ING Direct, discussed below), HSBC is acceptable enough for me to stick with them for the time being for these accounts. Additionally, I figured I could invest my time in to more value-added activities than chasing returns, as recommended by Ramit in his book, I Will Teach You to Be Rich.

Life Dreams Savings Account

The 3% of my take-home pay that I save for fulfilling my life dreams is stored in a high-yield online savings account with ING Direct (recently purchased by Capital One).

I am a very big fan of ING Direct (this and Ally Bank are my two favorite online savings options). They offer a very high, competitive interest rate of 0.75% APY, no fees, no minimums, automatic scheduled transfers, and a very simple yet elegant online user interface. Another good thing about ING Direct is that people seem to be more aware of this company as compared to the other online-only banks, which seem more obscure to people that aren’t plugged in to the online finance world as much.

Emergency Fund and Income and Self-Employed Income Tax Savings Account

My emergency fund and self-employed/income tax savings are stored in a ‘high yield’ online savings account with Dollar Savings Direct (part of Emigrant Bank).

As was the case with HSBC, I opened this account probably 5 years ago when Dollar Savings Direct was offering a very high interest rate compared to other online banks. However, in the present day, this is definitely not the case. They have more requirements ($1000 minimum) for accounts than Ally Bank or ING Direct, yet offer a lower interest rate (currently at 0.55% APY).

Nevertheless, since they don’t charge any monthly account fees and the account is FDIC insured, I’m OK keeping this account on-board for the time being.

Internet Provider

While I’m not happy about it, my Internet provider is Comcast. I use them only because they are the only Internet provider in my condo complex. I’ve written many times about how I don’t particularly like them and think their customer service is less than stellar/a headache.

However, their actual Internet service is not all that bad. Aside from that, they are always running promotion pricing deals which can be taken advantage of simply by calling every few months to see what is being offered. At the present, I am taking advantage of a promo deal for Blast Internet at the price of Economy. Not too shabby!!!

Cable TV Provider (or Lack Thereof in my case)

In general, I think that cable TV is a waste of money. Sure, it’s a nice thing to have, but is it required and worth the money? For me, it’s a significant expense that is not worth the money.

Instead, I use Netflix to rent DVDs for entertainment! For $12.59 per month, I can rent 2 – DVDs at a time among Netflix’s really good selection of both older movies and newer releases (just recently watched The Dark Knight Rises, a cool movie!). They even offer a free trial membership for new members if you’re interested in taking a look.

Charity that I Contribute To (and Savings Account I Use to Save Money for It)

The charity that I choose to contribute 5% of my take-home salary to each year is the National Multiple Sclerosis Society Blue Ridge Virginia Chapter. 2013 will also be my 5th straight year of me participating in the MS150 Bike Ride Event here in Virginia in June each year. My goal for the 2013 event will be to raise $7500 for the cause!

I got/stay involved with this charity for several reasons: 1) MS is in the same general category of neurological diseases for which I do research in graduate school (Alzheimer’s disease), 2) there is a great team that I do the bike ride with here in Virginia each year, called Grateful Tread, 3) my girlfriend runs clinical research trials for MS, and 4) I’ve learned that MS is a disease that very greatly affects not only the patients, but also the caregivers which have to tend to the patients as their motor functions degrade. With everyone’s help, I sincerely hope we find a cure for this disease in my lifetime! 🙂

As mentioned above, I donate 5% of my income each year to the MS society. To do this, I execute automatic monthly withdrawals from my checking account to an online savings account with ING Direct (recently acquired by Capital One). As I stated previously, I am a big fan of ING Direct, and would highly recommend it to anyone reading this. I like it specifically for saving for charity purposes because it enables me to set up specific sub-accounts that I can name as I please in order to better organize my savings.

Condo Homeowner’s Insurance

I have my comprehensive homeowner’s condo insurance policy through Erie Insurance. I purchased this through a local agent here in Virginia because the price difference was no different than if I purchased it directly from the company. I pay $36 per month for the coverage. The details of the policy are shown below:

  • $150,000 of personal property insurance.
  • $1 MM of personal liability insurance.
  • $5,000 in medical payments to others (each person).
  • Loss assessment.
  • Earthquake coverage, but not flood insurance.
  • Replacement cost personal property.
  • Enhancement endorsement.
  • Identity recovery coverage.

Person-2-Person / Microloans

As part of my quest to achieve my life values each year, I invest $500 per year in microloans to help Latin American countries. I invest in these through Microplace. I also have a small amount of money invested in LendingClub in order to try out their platform.

Overall, I am very satisfied with both LendingClub and Microplace. However, it is important to understand that they are VERY different! Microplace offers microloans primarily to help spur small business development and empowerment of poorer folks in 3rd world countries (which is why I use them to invest in causes in Latin America). On the other hand, LendingClub is geared at helping fund folks in the United States with repaying their credit card/automobile debt, build pools, and green projects.

From a pure investment-return perspective, you can likely get a higher rate of return at LendingClub (9% on some loans at LendingClub vs. 2-3% at Microplace). However, I like investing with Microplace because I believe my Dollars can make a big difference in these 3rd world countries. On top of that, I’ve never experienced a loan-default with Microplace, meaning that the investments are very safe/conservative. Microplace is also owned by Paypal, a company with which I have a lot of experience.

Index-ETF Investments

As you might have read previously on my site, index-ETFs have quite a few advantages (including about a 0.1% lower expense ratio) over indexed mutual funds. However, these advantages only hold true if you can trade the ETFs commission free (or with very cheap commissions), similar to the way you can trade the proprietary mutual funds with Vanguard or Fidelity.

Because of this consideration, the two places I use for ETF investing are Vanguard (primarily) and Sogotrade (if for some reason there is an ETF I want to buy that is not a Vanguard ETF, such as the IAU gold ETF I invest in as part of my test run with Harry Browne’s Permanent Portfolio). Vanguard is great for ETF investing, offering 50 total ETFs tracking a wide variety of indices and sectors (although sector funds are generally not necessary for good diversification). The best of all is that if you buy and sell these funds in a Vanguard brokerage account, they trade commission free! Can’t beat that (Sogotrade.com will be discussed more in the next section).

“Play Money” Individual Stock Investments

As a passive investor, I personally do not think that people have any business investing in individual stocks (even if they are following the advice of a stockbroker or stock newsletter) with large amounts of their retirement assets. Having said that, I do like to “try my hand” at different stock investing strategies from time to time, but when I do, I make sure to only bet money that I can afford to lose 100% of. This type of money is called “play money.” I speculate with this play money in individual stocks in an online discount brokerage account.

In my mind, the two best discount online stock brokerages are Zecco (recently merged with and is now called TradeKing) and Sogotrade, with Sogotrade being slightly more favored by me since they offer cheaper commissions. Sogotrade offers unlimited stock and ETF trading for $3 commission per trade, along with no account maintenance fees or minimums. Tradeking also is very good, offering $4.95 commissions for each trade.

Health Insurance

Luckily, the cost of Aetna Student Health Insurance is fully covered through my graduate chemical engineering program. As I’ve posted about previously on this site, buying independent health insurance can be extremely expensive, so I’m very grateful that this coverage is provided through my work!

Being student health insurance, it’s not necessarily the most comprehensive, especially compared to the coverage I had with the company I worked with prior to coming to graduate school. For example, you pretty much HAVE to go visit the student health center on campus prior to seeing any other doctor or specialist. This isn’t too bad I suppose, but it is slightly restrictive. Even so, the coverage has satisfied my needs thus far while in graduate school.

Laptop Computer

As you can imagine, all of the things related to my personal finances that I’ve discussed so far have been electronically based. Therefore, a good mobile laptop computer is required for me to ferry back and forth each day to the lab where I work in graduate school. The laptop computer I use is a Toshiba Satellite L555D-S7930.

I purchased the 17″ screen laptop over 3 years ago now, and it still works great! The only “finicky” thing about the computer is the charging step. What happens is that about 1 out of every 10 times I plug in the laptop, the battery doesn’t recognize that the cord has been inserted, and I have to plug and unplug it several times until it registers.

Printer / Scanner / Copier

Often times, in my personal finance endeavors, I’ll need to email scanned copies of forms carrying my signature for tax/financial account application purposes and print off numerous pages from the Internet in order to learn more about specific topics.

In order to accomplish all of these things with one device, I use the Brother All-in-One DCP7065DN Printer/Copier/Scanner. As the name suggests, it is a double-sided B/W laser printer that also includes scanner and copying purposes. At $150, it was fairly inexpensive for all of the capability that I get with the machine. Additionally, the fact that it is a laser printer drastically reduces my printing costs per page! I would highly recommend.   

Cell Phone and Car

Ok, so we’re getting a little far out here, now describing what type of cell phone and car I use. However, I promised you above that I would be complete!

You might think that being a PF blogger, I would definitely have a high-tech smart-phone. However, I still rock out the old school Samsung flip-phone with no Internet capability. I can send text messages and make phone calls though! On top of that, I am also able to email myself notes throughout the day if I am somewhere without pen and paper. Additionally, I use a FREE transcription service through ifttt.com, which enables me to call a voicemail, leave a message, and then it will automatically convert it to text and email me the transcript and mp3 audio file. Not too shabby for being free, eh!?

For my car, I drive a 2009 Toyota Rav-4, recently upgraded from a 2004 Honda Accord DX. My family is a big fan of cheap, reliable Japanese automobiles, even though most Toyotas are actually made in US plants nowadays!

Financial Organization System

To organize all of the hardcopies of my financial documents, I use a self-created financial filing system recommended by David Bach in his excellent book, Smart Couples Finish Rich. You can read more about it here.

Email / Calendar Management

While I am definitely a big fan of Gmail, I choose to manage all of my email and meeting/appointment scheduling through Microsoft Outlook. Actually, I have a Gmail email address piped in to my Outlook account. It works very nicely because all of my emails and meeting details are automatically backed up and sync’d in the Gmail ‘cloud,’ while I get to enjoy the good folder organization system that Outlook offers.
Within Outlook, I use the electronic filing ‘COTAP’ system recommended in the book, Hamster Revolution, along with the workflow system recommended by David Allen in his book, Getting Things Done.

Tax Preparation

For preparing my taxes each year, I use an actual accountant as opposed to an online service, such as H&R Block at Home or TurboTax (both of which are very good programs for the do-it-yourselfer!).

Zero-Based Budget and Net Worth Tracking

In order to track my net worth each month and my zero-based budget, I use a simple, self-created Google Docs spreadsheet. I prefer to track these things manually in spreadsheet format because a lot of the accounts I have are not available in the automated personal finance software programs available, such as Mint (free), Manilla (free), SaveUp (free), Personal Capital (free), and Quicken Home ($). However, if you’re looking to make this process a lot quicker, these programs can be a great alternative! 

 

Books I Used to Create my Overall Personal Finance Strategy

Personal Finance for Dummies by Eric Tyson, MBA

Looking back on it all, I believe this was the first book I ever read prior to getting in to personal finance. 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).

Smart Couples Finish Rich by David Bach

Perhaps one of the most memorable movie quotes (to me personally) was the quote by Morgan Freeman in “The Shawshank Redemption” when he said, “Get busy livin’, or get busy dyin’. That’s damn right.” I really like this quote because when you think about it, life is really too short to not live it to the fullest.
In David Bach’s book, “Smart Couples Finish Rich,” I found it very interesting to learn about the personal finance strategy that he adopts with the people he advises in his financial planning business. He calls his strategy a “Purpose Focused Financial Plan”.
Essentially, what the strategy is all about is that people/couples should plan for their specific values and life dreams, as opposed to planning what material possessions are needed for life (can be easily influenced by contemporary culture). I’d HIGHLY recommend anyone, even single people, to pick up a cheap used copy of this book and read it multiple times!

Books I Used to Create my Investing Strategy 


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 Personal Finance Journey 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. It is also a great primer for explaining why individual stock selection (or active investing in general) simply does not work in the long term.

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.

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 a 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

 


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.

 

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 mutual funds 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!


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.


The Intelligent Asset Allocator by William Bernstein

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!

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