What Does It Mean When Your Credit Union Goes Into Conservatorship?
Can Merchants Require a Minimum Purchase for Debit Cards?
DepositAccounts.com July 2017 Rate Trends
Are You Ready for a Cashless Society?Best Bank Account Interest Rates - Summary for August 8, 2017
We continue to be on track for a December Fed rate hike. The next Fed meeting on September 19-20 will likely announce the start of a program to reduce the Fed’s balance sheet. The latest economic news to support a December rate hike came on Friday, with the release of July’s job report. Economist Tim Duy summed up the jobs report in his Fed Watch blog post by saying:
A solid report that suggests further declines in the unemployment rate in the months ahead. The Fed will want to stay preemptive in this environment. I don't foresee them backing off their rate forecast for this year and next very easily.
Low inflation continues to be a possible excuse the Fed could use to pass on a December rate hike. Recent speeches by two Fed officials reinforced this possibility. In a speech Monday, St. Louis Fed President James Bullard said that “[e]ven if the U.S. unemployment rate declines substantially further, the effects on U.S. inflation are likely to be small.” Also on Monday, Minneapolis Fed President Neel Kashkari gave a speech that suggested that low inflation could cause the Fed to hold off on rate hikes. In the speech he said that “[i]nflation has been coming up short, a little low, relative to our 2 percent target. That actually matters.” It should be noted that both Fed officials have a record of being inflation doves. Bullard isn’t a voting member this year, and he won’t be a voting member until 2019. Kashkari is a voting member this year, but will not be in 2018. Kashkari was the lone dissenter at the Fed in both the March and June meetings. He was against the rate hikes.
In an unusual occurrence, most Treasury yields were up from last week except the 1-month yield and the 30-year yield. Both of those held steady from last week. The 5-year Treasury note had the largest yield change (an increase of 4 bps).
The odds of at least one more rate hike this year is now almost 50-50 according to the Fed funds futures. The odds of two rate hikes went up slightly from last week, but it still remains low at 3.4%.
The following numbers are based on Daily Treasury Yield Curve Rates and the CME Group FedWatch.
Treasury Yields:
- 1-month: 1.00% same as last week (0.52% on Jan 3)
- 6-month: 1.16% up from 1.15% last week (0.65% on Jan 3)
- 2--year: 1.36% up from 1.34% last week (1.22% on Jan 3)
- 5--year: 1.84% up from 1.80% last week (1.94% on Jan 3)
- 10-year: 2.29% up from 2.26% last week (2.45% on Jan 3)
- 30-year: 2.86% same as last week (3.04% on Jan 3)
Fed funds futures' probabilities of future rate hikes by:
- Sep 2017 - up by at least 25bps: 1.4% same as last week
- Dec 2017 - up by at least 25bps: 50.4% up from 45.6% from last week
- Dec 2017 - up by at least 50bps: 3.4% up from 3.0% from last week
Savings and Checking Account Rates
Even though the Fed skipped a rate hike last month and there is little chance of a rate hike before December, we’re still seeing savings account rate hikes at several internet banks. In the last two weeks, we’ve seen saving and money market account rate hikes at Live Oak Bank, PurePoint Financial, Northern Bank Direct, SFGI Direct, Popular Direct and Discover Bank. Most of the rate increases were small, ranging between 5 and 10 bps. Nevertheless, the fact that we are still seeing rate increases when the Fed rate hikes are so gradual is promising. Competition is definitely a factor, and that appears to be an especially important factor for internet banks.
Two of the most noteworthy rate hikes were today’s increase at Live Oak Bank and Friday’s increase at PurePoint Financial. Live Oak Bank increased its savings account rate to 1.40% APY. Live Oak Bank now shares the top spot for savings accounts with DollarSavingsDirect. Based on recent history, this might not last long. DollarSavingsDirect has been advertising that it’s “America’s highest rate,” and it has hiked rates twice before to maintain this designation.
Note, there are three money market accounts that have higher rates than 1.40% APY, but all three have issues. First State Bank of Texas offers a Jumbo Money Market Account with a 1.55% APY, but this requires a $100k minimum balance. No interest is paid if the balance falls below $100k. The two sister banks, All America Bank and Redneck Bank, both offer 1.50% APY on their Mega Money Market Accounts, but this applies to balance up to only $35k. The portion of the balance above $35k only earns 0.50%.
The second noteworthy rate hike was on Friday at PurePoint Financial. Its savings account rate increased to 1.30% APY for balances of at least $10k. There are now six banks offering 1.30% APY.
One thing to watch out for are banks that create new accounts with higher rates rather than raising the rates on their existing accounts. This forces existing customers to open a new account if they want to earn the higher rate. Last week, Popular Direct did this for the second time. It created the new Plus Savings Account with a 1.21% APY. Its old account, the High Rise Savings Account, is no longer being advertised and continues to earn 1.15% APY. Customers who have this High Rise Savings Account will have to open the new Plus Savings Account if they want to earn the higher rate.
One bank has been added to my 1.25% club. The number is now up to 11. The new bank is Northern Bank Direct which now has a money market account that earns 1.26% APY for balances up to $250k. This 1.25% club is the group of nationally available checking, savings and money market accounts that have rates of at least 1.25% APY and that are clearly not promotional or temporary. The old ten in the club include Sallie Mae Bank, CIT Bank, BankDirect, ableBanking, Self-Help FCU, BankPurely, UFB Direct, PurePoint Financial, Dollar Savings Direct and Live Oak Bank.
Reward Checking Accounts
There were again no changes to my list of nationally available reward checking accounts. Reward checking rates have been slower to respond to the Fed rate hikes as compared to internet savings account rates. Since much of the rates of reward checking accounts are paid for by debit card activity, banks may continue to go slow with rate hikes.
To find the highest reward checking rates and balance caps in your state or nationwide, please refer to our reward checking rate table. If you're new to reward checking, please refer to my blog post, Overview of Reward Checking and Our Reward Checking Table.
Certificate of Deposit Rates
I’m now publishing my CD survey as a separate post. Please refer to my survey of the best CD rates. This recap will focus on banking news of the week and liquid accounts.
CD Deals: I just wanted to include this reminder of a few noteworthy CD deals that are available.
The best CD rates are currently being offered by Advancial Credit Union which has recently been identified as having a backdoor to membership via an association. The best rates requires a $50k minimum deposit and range from 1.67% APY for a 6-month term to 2.67% APY for a 60-month term. More details about this credit union and its CDs are available in this blog post and in the comments of that post.
Ally Bank continues to offer a 1.50% APY on its 11-month No Penalty CD for balances of at least $25k. Balances of $5k to under $25k earn a 1.25% APY. Please refer to this blog post for more details.
For those who want a longer-term CD, Ally Bank’s 5-year CD (2.25% APY for all balances) is a good choice. It isn’t the 5-year rate leader, but its 5-year CD is very competitive when you factor in the mild early withdrawal penalty (150 days of interest). Sallie Mae Bank is giving Ally some competition. It recently raised its 5-year CD APY to 2.35%. This CD’s early withdrawal penalty is just slightly larger than Ally’s (180 days of interest). You can see the effective yields of these CDs when closed early by using the CD Early Withdrawal Penalty Calculator.
Rates as of August 8, 2017Checking/Savings/Money Market Accounts:
- Best Savings Account Rates (Nationwide and by State)
- Best Money Market Rates (Nationwide and by State)
- Best Checking Account Rates (Nationwide and by State)
- Noteworthy Accounts Available Nationwide:
| Institution | Rates | Notes |
|---|---|---|
| State Bank of Texas | 1.55% ($100k) | Jumbo MMDA - Account review |
| All America Bank | 1.50% (up to $35k), 0.50% ($35k+) | Mega Money Market Account - Account review |
| Redneck Bank | 1.50% (up to $35k), 0.50% ($35k+) | Mega Money Market Account |
| DollarSavingsDirect | 1.40% (no min) | Dollar Savings Account - Account review |
| Live Oak Bank | 1.40% ($250k max) | Savings Account - Account review |
| Self-Help Federal Credit Union | 1.36% ($500k), 1.26% ($500) | Money Market - Account review |
| BankDirect | 1.35% ($10k) | MMA - Account review |
| Signal Financial Credit Union | 1.35% ($25k, enrollment in Premium Bundle) | Premium Money Market - Account review |
| CIT Bank | 1.30% (up to $100k), 1.25% ($100k+) | Premier High Yield Savings - Account review |
| Sallie Mae Bank | 1.30% | MMA - Account review |
| BankPurely | 1.30% ($1 min) | SavingPurely - Account review |
| ableBanking | 1.30% ($250 min) | Money Market Savings - Account review |
| PurePoint Financial | 1.30% ($10k min) | Online Savings - Account review |
| UFB Direct | 1.30% ($25k+), 0.20% ($100) | Premium Savings - Account review |
| The Palladian PrivateBank | 1.30% (6mo intro rate) 1.10% blended APY | Savings Account - Account review |
| Northern Bank Direct | 1.26% ($250k max) | Money Market - See review |
| Salem Five Direct | 1.25% (guaranteed through July 1, 2018) | eOne Savings, for new customers only Account review |
| BBVA Compass | 1.25% ($10k min) | ClearChoice MMA Promo - Account review |
| EBSB Direct | 1.25% ($10k min) | Money Market Special 3 - Account review |
| McGraw-Hill Federal Credit Union | 1.25% ($75k), 1.10% ($20k),1.00% ($5k) (guaranteed through 8/31/17) | Ascend Account - Account review |
| EverBank | 1.21% (1yr intro rate) 0.71% ongoing rate | MMA/Checking - Account review |
| SFGI Direct | 1.21% | Savings account - Account review |
| Incredible Bank | 1.21% ($2.5k), 0.05% ($250k+) | IncredibleBank Savings - Account review |
| Popular Direct | 1.21% | Popular Direct Plus Savings - Account review |
| Barclays | 1.20% | Online Savings - Account review |
| Synchrony Bank (formerly GE Capital Retail Bk) | 1.20% | High Yield Savings - Account review |
| GS Bank | 1.20% | Online Savings Account - Account review |
| Radius Bank | 1.20% ($2.5k min) | Radius High-Yield Savings - See review |
| Ally Bank | 1.15% | Online Savings |
| American Express Bank | 1.15% | High Yield Savings - Account review |
| My e-BAnC by BAC Florida Bank | 1.15% | Super Saver - Account review |
| Discover Bank | 1.15% (no min) | Online Savings - See review |
| MyBankingDirect | 1.15% ($5k+), 0.25% (less than $5k) | Earn >More Money Market |
| SmartyPig | 1.15% ($10k min), 1.05% (less than $10k) | SmartyPig Savings - Account review |
| Nationwide Bank | 1.15% ($10k), 1.00% ($1) | Nationwide Member Checking Account |
| Connexus Credit Union | 1.15% ($100k), 1.00% ($50k,) 0.75% ($20k) | MMA - active chk required |
| Northpointe Bank | 1.12% | Statement Savings - Account review |
| Alliant Credit Union | 1.11% ($100 min) | High-Rate Savings - See review |
| Northeast Bank | 1.10% | Pearl Money Market Promo, new customers - Account review |
| Dime Savings Bank | 1.10% | Dime Direct Money Market, new money - Account review |
| FNBO Direct | 1.10% | Online Savings |
| Capital One | 1.10% ($10k+), 0.60% (up to $10k) | 360 Money Market - Account review |
| iGObanking.com | 1.10% ($25k min) | MMA, New accounts and new money only, Account review |
| Chevron Federal Credit Union | 1.10% ($250k+), 1.00% ($2.5k+) | MarketEdge Savings |
| AloStar Bank of Commerce | 1.05% | Savings account - Account review |
| Discover Bank | 1.01% ($100k min), 0.95% ($2.5k) | MMA - See review |
| Pacific National Bank | 1.00% | Money Market Deposit Account - See review |
| iGObanking.com | 1.00% | iGOsavings - Account review |
| MySavingsDirect | 1.00% | MySavings Account - Account review |
| UFB Direct | 1.00% ($25k min) | UFB Savings - Account review |
Reward Checking Accounts:
- Noteworthy Accounts Available Nationwide:
| Institution | Rates | Notes |
|---|---|---|
| Northpointe Bank | 5.00% (up to $10k), 0.10% ($10k+) | UltimateAccount - Account review |
| Consumers Credit Union | 4.59% (up to $20k) | Rewards Checking - debit card and $1k credit card requirements |
| Consumers Credit Union | 3.59% (up to $15k) | Rewards Checking - debit card and credit card requirements |
| One American Bank | 3.50% (up to $10k), 0.25% ($10k+) | Kasasa Cash - Account review |
| Consumers Credit Union | 3.09% (up to $10k) | Rewards Checking - debit card with NO credit card requirements |
| Evansville Teachers Federal Credit Union | 3.00% (up to $15k), 0.00% ($15k+) | Vertical Dividend Checking - Account review |
| Lake Michigan Credit Union | 3.00% (up to $15k), 0.00% ($15k+) | Max Checking |
| Great Lakes Credit Union | 3.00% (up to $10k), 0.10% ($10k+) | Ultimate Checking |
| Security State Bank | 3.00% (up to $10k), 0.25% ($10k+) | Kasasa Cash - Account review |
| Partner Colorado Credit Union | 3.00% (up to $10k), 0.50% ($10k+) | High Interest Checking |
| American Bank & Trust | 2.51% (up to $10k), 0.25% ($10k+) | Kasasa Cash |
| Industrial Bank | 2.50% (up to $15k), 0.25% ($25k+) | Kasasa Cash |
| Capital Educators Federal Credit Union | 2.50% (up to $10k), 0.20% ($10k+) | High Yield Checking |
| New Buffalo Savings Bank | 2.27% (up to $35k), 0.2497% ($35k+) | Kasasa Cash - Account review |
| Bellco Credit Union | 2.25% (up to $25k), 0.25% ($25k+) | Boost Interest Checking - Account review |
| Main Street Bank | 2.25% (up to $25k), 0.25% ($25k+) | Kasasa Cash - Account review |
| Altra Federal Credit Union | 2.25% (up to $15k), 0.50% ($15k+) | A+ Checking |
| Coastal Credit Union | 2.25% (up to $10k), 0.10% ($10k+) | Go Green Checking - Account review that includes companion Go Green MMA |
| Georgia Bank Company | 2.15% (up to $25k), 0.40% ($25k+) | Kasasa Cash - Account review |
| TruStone Financial Credit Union | 2.02% (up to $20k), 0.10% ($20k+) | TruRate Checking - Account review |
| BankFirst | 2.02% (up to $10k), 0.15% ($10k+) | Kasasa Cash |
| Finex | 2.018% (up to $25k), 0.20% ($25k+) | Axcess Rewards Checking, Premier Account (formerly First New England Federal Credit Union) |
| XCEL Federal Credit Union | 2.01% (up to $25k), 0.03% ($25k+) | Kasasa Cash Checking |
| Bay State Savings Bank | 2.01% (up to $20k), 0.25% ($20k+) | Kasasa Cash - Account review |
| Legence Bank | 2.01% (up to $10k), 0.25% ($10k+) | Kasasa Cash |
| 5Star Bank | 2.00% (up to $25k), 0.15% ($25k+) | Kasasa Cash Checking Account review |
| Country Bank | 2.00% (up to $20k), 0.25% ($20k+) | Kasasa Cash Checking Account review |
| Elements Financial | 2.00% (up to $20k), 0.10% ($20k+) | High Interest Checking - Account review |
| MainStreet Bank | 2.00% (up to $15k), 0.25% ($15k+) | Kasasa Cash - Account review |
| Blue Federal Credit Union | 2.00% (up to $15k), 0.25% ($15k+) | Extreme Checking (up to 4% w/account relationships) - Account review |
| All America Bank | 2.00% (up to $10k), 0.50% ($10k+) | Ultimate Rewards Checking |
| United Educators Credit Union | 2.00% (up to $10k), 0.25% ($10k+) | Kasasa Cash |
| KS StateBank | 1.95% (up to $25k), 0.50% ($25k+) | Check PLUS - Account review |
| Connexus Credit Union | 1.75% (up to $25k), 0.25% ($25k+) | Xtraordinary Checking |
| First Tech Federal Credit Union | 1.58% (up to $10k), 0.16% ($10k+) | Dividend Rewards Checking |
| MemoryBank | 1.50% (up to $250k) | EarnMore Interest Checking - Account review |
| Superior Choice Credit Union | 1.50% (up to $30k) | AMP Checking |
| Heritage Bank | 1.26% (up to $25k), 0.10% ($25k+) | eCentive Account |
| Bank of Internet USA | 1.25% (up to $150k), 0.00% ($150k+) | Rewards Checking |
| ABCO Federal Credit Union | 1.01% (up to $25k), 0.10% ($25k+) | Rewards Checking |
| Community Bank of Raymore | 1.01% (up to $10k), 0.20% ($10k+) | Kasasa Cash |
| Community Bank of Pleasant Hill | 1.01% (up to $10k), 0.20% ($10k+) | Kasasa Cash |
| First American Bank | 1.00% (up to $15k), 0.21% ($15k+) | Everyday Rewards Checking |
| Bank of Blue Valley | 1.00% (up to $10k), 0.10% ($10k+) | $1k/month debit card req (formerly Ultimate Checking) |
Certificates of Deposit:
- Best CD Rates (Nationwide and by State)
- Best IRA CD Rates (Nationwide and by State)
- Survey of the Best CD Rates (Nationwide and Local)
Bank Account Alternatives - NOT FDIC Insured
| Institution | Rates | Notes |
|---|---|---|
| Ally Financial Demand Notes | 1.15% rate for $50k+ | |
| Duke Energy PremierNotes | 1.15% rate for $50K+ | Duke Energy PremierNotes review |
| Ford Interest Advantage | 1.15% rate for $50k+ | Ford Interest Advantage review |
| Vanguard Prime Money Market Fund | 1.11% 7-day yield | |
| Fidelity Money Market Fund | 0.98% 7-day yield | reviews on Fatwallet |
| Vanguard Tax-Exempt Money Market Fund | 0.73% 7-day yield | |
| Fidelity Municipal Money Market Fund | 0.53% 7-day yield |
Removed, No Longer Available Nationally
| M.Y. Safra Bank | 1.10% (up to $500k), 0.20% ($500k-$1m) | Direct Online MMA - Account review |
Post Publication Edits
8/10/2017: Radius Bank High Yield Savings rate raised.
I think we saw the impact of all the verbiage yesterday in the stock market. Of course one day certainly does not make a trend. But if stocks are unable to sustain themselves, I believe that will mitigate against another Fed rate increase this year.
Bozo,
I believe people are coming to the realization that rates we be low for years to come. I look back at the comments for the last 6-7 months and many people thought Trump would roll into town and rates would go up. If one looks back 6 years ago, a 5 year cd was around 2.25%. Just look what the stk market has done since that time. The bond market is trying to tell people who will listen that the economy is very weak and is only where it is today because it is juiced by the fed. $1.5T in student loans,$1.3T in subprime auto loans, $4.5T on feds balance sheet. The bond market doesn't lie. I cannot envision a future that does not include "the mother of all crashes".
Stocks, bonds and bond funds, CD ladders, plain-vanilla savings accounts, real estate, even precious metals, can have a place in a balanced retirement portfolio.
That is a bad news for savers, what it really means is that the FED will be selling back those notes, bonds and other instruments back to the banks and the open market, in other words, will flood the banks with money and that means our savings will not be needed by the banks for the next 4-5 years if the sell out at the FEDs level is gradual ($1 trillion a year).
With the Fed buying level reduced a bit, the overall fixed income marketplace will experience the usual number of sellers and fewer buyers. This situation will force sellers to increase the interest rate they pay on their securities being offered for sale in order to entice the remaining buyers in the marketplace to buy more and to attract new buyers into the marketplace.
For sake of contrast, back during the economic collapse (2008-2009 etc.) the Fed was buying fixed income securities like a drunken sailor, increasing the size of its balance sheet enormously. With such a gigantic buying presence in the marketplace back then, sellers of securities were able to pay very low rates of interest and still, regardless, successfully sell the securities they needed to sell. The resultant low interest rate environment went a long way toward supporting the stock market and helping it to recover from the drubbing it had experienced in 2008.
More recently, in the last few years, the Fed has maintained a neutral posture, neither increasing nor decreasing the size of its balance sheet. This means when securities owned by the Fed matured they would be replaced, but no new securities would be purchased as happened during the crisis.
But this is what low rates do to the market. Warren Buffet said if rates are still low 10 years from now stocks are dirt cheap today. Many Companies have been giving caution to the 4th quarter. I still believe there will be no unwinding this year and no rate hike in Dec. The fed can let the bonds mature and not rebuy, even though that would take forever to unwind. But they are not in a hurry.
The question is do you lock in now or wait for December.
Also as the stk market has been going up the last few weeks, the 10yr. remained the same. 2.25 range. Someone is controlling things.
I went the Bellco route myself, which offers a high rate now and a higher rate in December if the FOMC hikes the federal funds rate. But in so doing I had to swallow two problems:
First, my CD interest rate could fall if the Fed lowers rates.
Second, Bellco allows purchase of only one indexed CD. It's one and done . . unfortunately. I would definitely buy another such CD in a heartbeat were this permitted. It is not. And if another financial institution is offering these (CD indexed to federal funds rate) I am unaware.
It is times like this when war and bellicose talk is in the air that gives people a chance to sell. After paying a premium for their purchase and only being able to sell at spot price, breaking even or even a small profit might be possible now or in the next couple of weeks.
The Federal Reserve Act specifies that the Federal Reserve may buy and sell Treasury securities only in the "open market." The Federal Reserve meets this statutory requirement by conducting its purchases and sales of securities chiefly through transactions with a group of major financial firms--so-called primary dealers--that have an established trading relationship with the Federal Reserve Bank of New York (FRBNY). These transactions are commonly referred to as open market operations and are the main tool through which the Federal Reserve adjusts its holdings of securities. Conducting transactions in the open market, rather than directly with the Treasury, supports the independence of the central bank in the conduct of monetary policy. Most of the Treasury securities that the Federal Reserve has purchased have been "old" securities that were issued by the Treasury some time ago. The prices for new Treasury securities are set by private market demand and supply conditions through Treasury auctions.
Bonds go down when the interest rates go up and the opposite is true the other way around. In order the primary dealers to make money, they must create spread between buy and sell levels. The spread is the one that determines the interest rates on the CDs, savings and other instruments. If a bank can make more money selling cheap CDs to buy FED's bonds, the savings rates get depressed and if the FED flood the markets with bonds, the rates across the board will fall.
Primary Dealers
Bank of Nova Scotia, New York Agency
BMO Capital Markets Corp.
BNP Paribas Securities Corp.
Barclays Capital Inc.
Cantor Fitzgerald & Co.
Citigroup Global Markets Inc.
Credit Suisse Securities (USA) LLC
Daiwa Capital Markets America Inc.
Deutsche Bank Securities Inc.
Goldman Sachs & Co. LLC
HSBC Securities (USA) Inc.
Jefferies LLC
J.P. Morgan Securities LLC
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Mizuho Securities USA LLC
Morgan Stanley & Co. LLC
Nomura Securities International, Inc.
RBC Capital Markets, LLC
RBS Securities Inc.
Societe Generale, New York Branch
TD Securities (USA) LLC
UBS Securities LLC.
Wells Fargo Securities, LLC
When she said "retail money", she meant money that cost them money to receive them and maintain them.
Retail money must be insured by FDIC, retail money are entered in the books as liability (not assets), retail money carry risk because they must be re-invested or lent against them to keep the ledgers in balance, in other words, the retail money cost them twice as much than the money borrowed from the FEDs and other banks or issuing other instruments to raise capital.
Retail money, if any left in the balance from the day are swept into US treasuries overnight and the money earned on them are fully taxable to the banks. In other words, the big banks shy away from retail money, on the other hand, a smaller bank or a CU may be more favorable to retail money and that is why we see better interest rates and deals at them.
If your life is based on somebody else's knowledge for your education and well being, there is no answer on "google and wikki".
The "google and wikki" are controlled by the globalist, communists, socialist and the liberals.
The information on "google and wikki" are there to mislead you, brain wash you and seed falls knowledge.
If you can get millions of search results just by typing a single word, it tells you a lot of what is referenced and connected to what (which most of the time is irrelevant, old and misleading info).
If "google and wikki" know the answer to your request, why don't you find it yourself, instead of wasting your time and our time and make us replying to a person (you), who does not even care for the right answer, but wants to show authority with demands.
The information you did read in this blog is voluntary and personal opinion, demanding from someone something is not allowed in public blogs.
http://www.infoworld.com/article/2610434/cringely/google--evil--you-have-no-idea.html
http://www.naturalnews.com/2017-04-21-pure-evil-how-google-steals-content-crushes-small-publishers-and-monopolizes-the-internet-for-profit.html
When done please let me know, I have a list of over 100 proofs of what they do to the world.
The market was down a lot today. That might provide opportunities too if it continues. Id need a significant correction to buy significant amounts though.
Ive been in SO, a utility that provides my power for a little over 5 years now. I added slowly here and there on pullbacks. Finally, I own enough to cover my power bill. (If I wanted to)
Not a huge position but more significant than anything else Ive been buying in recent years. I still buy things but dabbling. And more selling than buying as things happen. (Buyouts, mergers & so forth)
Id be a lot richer today if I took bigger stock market risks over the last 10-15 years. Way too conservative in hindsight.
Moving right along, after a few decades or so, you might want to harvest some gains and move a bit more of your asset allocation to CD ladders. Which is what I did. Back right about 2006.
Shifting a tad, over time, to a CD ladder, provides guaranteed cash for retirement. A healthy dollop in a garden-variety savings account (to pay for recurrent expenses, such as a car, roof, or HVAC), even better.
The web is full of other sites dedicated to stock and bond market blogs with "would have, should have, could have" stock market tales and advice.
Just because a site is dedicated to deposit accounts does not preclude a measured discussion of asset allocation. After all, even with deposit accounts, folks discuss CDs, CD ladders, cash, and Treasuries.
I've long been a fan of the adage "it's not the market, it's the fees".
The 12 b-1 charge is 0.0070% and the Turnover is very low 4.00%, which is almost like a passive ETF fund. Such low turnover has good and bad side, the good side is low fees, the bad side is, on a downturn years, it will become unmanageable and poised for huge losses.
I personally prefer funds between $500 millions and $1 Billion and in specific sectors only. It has been proven over a long time, that the exit door is more important than the entry door, the fees are important too, anything over 0.1% eats a lot over a long time period, especially on a down turn years.
I also invested in QQQ in 2012, now is more than double in value. I alway have order to sell at bellow 5-10% of the present value, in perpetual renewal dates (every 30-60) days, I re-value it and place the order to sell should a sudden downturn happen, I will be out without big losses.
Think of a thermometer, at night the numbers fall to a certain level and then they rise the next day. The stocks are the same thing, put a sell and a buy order with a spread tolerance to your liking and is done.
That way, the timing is wiped out as a variable.
Example: Stock present value is $100, I put sell limit at $90 and a buy order at $80, done. The momentum into sale may go even lower then $80, no problem buy some more at $70 and that way you made a profit when everyone lost 20-30% of their value and you still own the same stock.
Think just numbers, the timing is irrelevant on such trades.
P.S. You can do the same thing if you know how to short a stock, but that is for more experienced traders.
Then, I went to a class at Schwab (in Walnut Creek, CA) to learn how to short. I took the class, and realized options were way over my head.
Stated another way, trading was fun (while it lasted). I actually made a few bucks. Finally, I realized the psychic and emotional toll it took on me, and the scant rewards, and, as they say, that was that.
Trading was fun. I give all who attempt it great fortune. I made a few bucks, and got out when the getting was good.
At ETrade, you can buy a stock(s) without money ($0.00) available in the cash account and sell at the end of the day for a profit or a loss, actually you can do 3 such trades per day without any money. The bad thing is, you can lose money if the stock drops, but then again, you have 3 days to pay for the stock if you do not want to book loses for the day. Most of the time I have made good amount of money without having any money in the cash account.
VSTAX doesn't time the market, it is the market.
Vanguard doesn't panic sell.
And, your platitudes like,
"It has been proven over a long time, that the exit door is more important than the entry door."
are nothing short of idiotic.
Just the opposite has been proven.
And, don't count on those stop loss orders protecting you.
If there's a sudden downturn, they might not be executed in the manner you're expecting.
While I understand the concept of limit orders, in these days of smart phones, does anybody really need them? Back when I actually worked for a living, I thought of a sell limit order as protection while I was doing something productive, but away from the computer. Is that even relevant today?
Even for folks in their 40s or early 50s, there is usually enough time to right the ship. The absolutely, positively, worst thing you can do is stay with horrid, high ER, investments, thinking they will somehow "snap out of it". They probably won't, as history shows stock-picking and actively-managed funds under-perform low-cost index funds. It's just a fact.
I believe Jack Bogle is the longest living recipient on a heart transplant. After reading your various posts ( which are spot on in every respect, especially hitting home for me from the late 90's - " trading was fun (while it lasted)" I could see you replacing Jack as the new man reputing all the fantasy claims out there from people who "know how to beat the market".
Jack Bogle (the real one) is a living legend. He "invented" the concept of low-cost passive index funds. His tombstone might read "he saved ordinary investors trillions." For those of us boomers who got in early on Vanguard funds (mostly via 401K plans which were looking out more for participant returns than high fees), Vanguard has been a godsend for retirement planning. OK, I'll stop gushing.
The last thing a retiree wants to do for those periodic but painful expenses is cash out dedicated retirement funds. Cash is always nice to have.
Realistically, how much "emergency" cash should you have? It depends on how old you are, how employable you are, whether you are married (and whether your spouse is employed), and whether you have income-producing assets. The old adage of "six months in an emergency fund" is somewhat quaint.
As an extreme example, take someone like yours truly (and wife). We have three "cash lockers". One is in a garden-variety savings account. Another is in after-tax-CDs. The third is in laddered IRA CDs.
It all depends on your age or life style is NOT the right answer, in reality all of our money including IRAs, properties, CDs, savings, cash, stocks, bonds, expensive jewelry, gold, silver, credit cards, line of credits and so on, are emergency money.
Most of us have repetitive monthly expenses and once they are paid with repetitive monthly incomes like salary, interest received from savings, CDs, dividends, SS (for people over 62) and so on, you do not need any emergency money at all.
For unexpected repairs, medical accidents, house repairs and so on, use already cash you have in your savings accounts or preferably your credit cards. If there is major emergency that needs lots of money, use line of credits or insurances on hand to cover it or cash a CD or negotiate with the creditor for monthly payments (they can not demand to be paid in full) and you may have other recourses to fight the invoice in court if they are outrageous or not reasonable or made under duress when you or your spouse where desperate of highly emotional when the contract was signed.
My inflow is higher than the outflow of money and therefore no need for specific fund for emergency. Credit cards and line of credits are second defense and the savings, CDs, stocks, bonds and so on are the third defense (they all can be called) emergency money.
The definition for emergency money is mostly psychological then actual.
Now that I know credit cards and expensive jewelry can be used as emergency money I can now take my $20,000.00 emergency cash fund and buy a new car.
Thanks for your help.