Archives for November 3, 2016

LastPass: Sync Passwords Between Devices For Free

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Password manager Lastpass has announced that they are letting their Free users sync their passwords across all devices – desktop, laptop, tablet, or smartphone. Mac or PC. Android or iOS. There will still be ads for Free users and other features available only for paid Premium users ($1 a month). Still, anyone can now store all their passwords on the cloud for free. I must use my password manager over 100 times a week as it allows me to have a unique, complex password for every single website. Perhaps this move is partially due to iCloud keychain being free for Apple users?

In case you were wondering, it was Lastpass that was hacked last year, although it doesn’t appear any master passwords were directly exposed. This serves as a reminder that cloud sync is convenient, but with its own set of security concerns. Lastpass also offers multi-factor authentication for additional security, which again you’ll have to weigh against convenience issues.

See also: 10-Minute Digital Privacy Tuneup from Consumer Reports

Savings I Bonds November 2016 Update: 2.76% Inflation Rate

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

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Update for I bonds issued from November 1, 2016, through April 30, 2017. The new fixed rate as of November 1st, 2016 is 0.0%, which was a decrease from 0.1% during the last 6-month period. For comparison, 5-year TIPS real yield on 11/1/16 was actually negative at -0.29%. The variable inflation-indexed rate is 2.76% (as was predicted). Your total rate is the sum of your fixed rate and the variable rate. See you again in mid-April 2017 for the next early prediction.

Original post 10/18/16:

Savings I Bonds are a low-risk investment backed by the US Treasury that pay out a variable interest rate linked to inflation. You could own them as a short-term investment in place of bank CDs or savings accounts, or you could hold them as long-term investments in place of government, corporate, or municipal bonds.

New inflation numbers were just announced at BLS.gov, which allows us to make an early prediction of November 2016 savings bond rates a couple of weeks before the official announcement on May 1st. This also allows us the opportunity to know exactly what a October 2016 savings bond purchase will yield over the next 12 months, instead of just 6 months.

New Inflation Rate
March 2016 CPI-U was 238.132. September 2016 CPI-U was 241.428, for a semi-annual increase of 1.38%. Using the official formula, the variable component of interest rate for the next 6 month cycle will be approximately 2.76%. You add the fixed and variable rates to get the total interest rate. If you have an older savings bond, your fixed rate may be very different than one from recent years.

Purchase and Redemption Timing Reminder
You can’t redeem until 12 months have gone by, and any redemptions within 5 years incur an interest penalty of the last 3 months of interest. A known “trick” with I-Bonds is that if you buy at the end of the month, you’ll still get all the interest for the entire month as if you bought it in the beginning of the month. It’s best to give yourself a few business days of buffer time though, since if you wait too long your effective purchase date may be bumped into the next month.

Buying in October 2016
If you buy before the end of October, the fixed rate portion of I-Bonds will be 0.1%. You will be guaranteed the current variable interest rate of 0.16% for the next 6 months, for a total 0.10 + 0.16 = 0.26%. For the 6 months after that, the total rate will be 0.10 + 2.76 = 2.86%. 0.26% for 6 months, then 2.86% for 6 months.

Let’s say we hold for the minimum of one year and pay the 3-month interest penalty. If you theoretically buy on October 31st, 2016 and sell on October 1, 2017, you’ll earn a ~0.92% annualized return for an 11-month holding period, for which the interest is also exempt from state income taxes. If you held for three month longer, you’d be looking at a ~1.34% annualized return for a 14-month holding period. Compare with the current highest 1-year bank CD rates of roughly 1.25% and online savings accounts rates of roughly 1%.

Buying in November 2016
If you wait until November, you will get 2.76% an unknown fixed rate for the first 6 months. The fixed rate is likely to be either zero or 0.1%. (Update: The fixed rate is 0.0%, making the total rate 2.76% for the first 6 months.) Every six months, your rate will adjust to the fixed rate a variable rate based on inflation. If inflation picks up, you’ll get a hiked rate earlier than versus buying in October.

If you buy on November 30th, 2016 and sell on November 1st, 2017, you’ll earn a minimum ~1.51% annualized return for an 11-month holding period, for which the interest is also exempt from state income taxes. As long as inflation isn’t zero or negative over the next 6 months, you’ll earn even more. Your rate is guaranteed to beat out any current 1-year CD rate, and you still have upside potential.

Which is better? If you really want to lock in that 0.1% fixed rate for the long-term, you could buy in October. I think you have more short-term upside if you buy in November, even if your fixed rate might drop to zero. I already bought my 2016 annual limit back in April, and I intend to hold these indefinitely for the reasons listed below.

Existing I-Bonds and Unique Features
If you have an existing I-Bond, the rates reset every 6 months depending on your purchase month. Your bond rate = your specific fixed rate + variable rate (minimum floor of 0%). Due to their annual purchase limits, you should still consider their unique advantages before redeeming them. These include ongoing tax deferral, exemption from state income taxes, and being a hedge against inflation (and even a bit of a hedge against deflation).

Annual Purchase Limits
The annual purchase limit is now $10,000 in online I-bonds per Social Security Number. For a couple, that’s $20,000 per year. Buy online at TreasuryDirect.gov, after making sure you’re okay with their security protocols and user-friendliness. You can also buy an additional $5,000 in paper bonds using your tax refund (see IRS Form 8888). If you have children, you may be able to buy additional savings bonds by using a minor’s Social Security Number.

For more background, see the rest of my posts on savings bonds.

Instapaper Premium Features Now Free To All Users

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

instapaper0Instapaper and Pocket are both handy “read it later” services that lets you save and organize articles to read at your convenience (often with better formatting). Instapaper was recently acquired by Pinterest and just announced that they would release all the premium features to all users for free (formerly $30 a year) . These premium features include:

  • An ad-free Instapaper website
  • Full-text search for all articles
  • Unlimited Notes
  • Text-to-speech playlists
  • Unlimited speed reading
  • “Send to Kindle” via bookmarklet and mobile apps
  • Kindle Digests of up to 50 articles

The Kindle Digests are a nice feature if you prefer reading text on your Amazon Kindle. The Text-to-Speech lets you listen to articles aloud while you are driving. Speed reading was a little funky to me, but some people love it. (Try it yourself.) Here are the responses of an Instapaper rep on concerns about the future:

There’s no catch. Our operational overhead is low, and now that we’re owned by Pinterest we can focus on just delivering the best product to our users.

[…] You are not the product. The value that Pinterest gets from Instapaper are improvements to our text parser and aggregate information about links on the web. We have no plans to serve ads.

Competitor Pocket is also completely free, although they do slot in some ads now. They are slightly different, I wouldn’t say one is better than the other for all people.

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