Archives for 2018

Top 10 Best Small Business Credit Card Bonus Offers – October 2018

“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.”

Do you have small business income or work as an independent contractor? Do you have side hustle either by yourself or via a company like Uber/Lyft, Amazon, eBay, Etsy, Airbnb, and so on? You are eligible to open a small business credit card, which offers the benefit of keeping your personal and business expenses separate. You can use the rewards earned for a company retreat (even if you’re the only employee) or simply to cover some business expenses. If you are not a corporation or LLC, you can apply as a sole proprietorship, with your name as the business name as your Social Security number as the Tax ID number. I did this for years successfully before incorporating my business.

Credit card companies are in heated competition right now, and they are offering strong perks and $500+ value for a single new card during the first year to try out a new card. These are the top 10 credit card offers that I would apply for in October 2018, if I didn’t already have most of them. Please see links provided for full details.

This is a companion post to my Top 10 Best Credit Card Bonus Offers for personal cards. Note that small business bonuses are on average even higher than those on consumer cards.

Note: Certain Chase cards have a “5/24 rule” which is an unofficial rule that they will automatically deny approval on new credit cards if you have 5 or more new credit cards from any issuer on your credit report within the past 2 years. This rule applies on a per-person basis, so if you are new, you might want to start with those Chase cards.

Chase Ink Business Preferred Card

  • 80,000 Ultimate Rewards points (worth $1,000 towards travel!) after $5,000 in purchases in the first 3 months. See link for details.
  • 3X points on the first $150,000 spent on travel, shipping purchases, internet/cable/phone services, and advertising purchases with social media sites and search engines.
  • Primary rental car coverage when renting for business purposes.
  • $95 annual fee.
  • Subject to 5/24 rule.

Chase Ink Business Unlimited Card

  • $500 bonus cash back after $3,000 on purchases in the first 3 months. See link for details.
  • Flat 1.5% cash back on all purchases with no limit.
  • No annual fee.
  • Subject to 5/24 rule.

Chase Ink Business Cash Card

  • $500 bonus cash back after $3,000 on purchases in the first 3 months. See link for details.
  • 5% cash back on the first $25,000 spent in combined purchases at office supply stores and on cellular phone, landline, internet and cable TV services each account anniversary year.
  • No annual fee.
  • Subject to 5/24 rule.

CitiBusiness® / AAdvantage® Platinum Select® World Mastercard

  • 70,000 American Airlines miles after $4,000 in purchases in the first 4 months. See link for details.
  • First checked bag free on domestic flights perk ($60 value per roundtrip, per person).
  • $0 annual fee for the first year, then $99.

Southwest Rapid Rewards Premier Business Card

  • 60,000 Rapid Rewards points (redeemable for $900+ in Wanna Getaway airfare) after $3,000 in purchases in the first 3 months. See link for details.
  • $99 annual fee.
  • Combine with the Southwest Rapid Rewards Premier Consumer Card to earn the Southwest Companion Pass.
  • Subject to 5/24 rule.

American Express Plum Card

  • $600 cash back. Earn a $200 statement credit after each $10,000 you spend in purchases, up to $30,000, within the first 3 months. See link for details.
  • 1.5% early pay discount on all purchases which stacks on top of the bonus above.
  • $0 annual fee for the first year, then $250.

American Express Business Gold Rewards Card

  • 50,000 Membership Rewards points (flexible, worth 50,000 miles at various airlines) after $5,000 in purchases in the first 3 months. See link for details.
  • 3X points on one category of your choice, for example airfare purchased directly from airlines.
  • $0 annual fee for the first year, then $175.

Capital One Spark Cash Business Card

  • $500 cash bonus after $4,500 in purchases within the first 3 months. See link for details.
  • Flat 2% cash back on all purchases with no limit.
  • $0 annual fee for the first year, then $95.

Hawaiian Airlines Business Mastercard (Barclaycard)

  • 50,000 Hawaiian miles after first purchase. See link for details.
  • One-time 50% off companion discount for roundtrip coach travel between Hawaii and the Mainland on Hawaiian Airlines.
  • $99 annual fee.

Alaska Airlines Visa Business Card (Bank of America)

  • 32,500 Hawaiian miles + Companion Fare after $1,000 in purchase within 90 days. See link for details.
  • Companion fare voucher is “Buy one ticket, get one for just taxes and fees” ($0 fare taxes and fees from just $22).
  • Free checked bag on Alaska flights for you and up to six other passengers on the same reservation.
  • $50 annual fee for company, $25 per card.

Starwood Preferred Guest® Business Credit Card (American Express)

  • 100,000 bonus points. after $5,000 in purchases in the first 3 months. Note these are the new post-merger Marriott points (1 old Starpoint = 3 new Marriott point). See link for details.
  • 1 Free Night Award every year after your Card account anniversary. Award can be used for one night (redemption level at or under 35,000 points) at a participating hotel.
  • $0 annual fee for the first year, then $95.

TopCashBack Existing User Promo: Free Fall-Themed Dish Towel ($2.99 Value)

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If you shop at Target stores and are an existing TopCashBack portal member, grab a free $2.99 Thanksgiving Dish Towel at this link. Offer expires Sunday, October 21st at 11:59pm PST. Instructions:

1) Simply click the “Get Offer” button to go to the Target website.
2) Purchase any $2.99 Select Threshold Kitchen Towels then shop as normal.
3) Within 7 days of purchase, you’ll see the transaction in your TopCashback account
4) Once confirmed, your transaction will become payable within 14 days.

Not worth a special trip, but free is free. You will have 7 days to pick it up after order confirmation. I also see an optional button online to extend pickup for an additional day past that. If a specific towel design is not in stock at your location, try another one. TopCashBack likes to offer little freebies to all existing users now and then to keep us aware of their service.

qara.info Portfolio Asset Allocation, October 2018

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Here’s my quarterly portfolio update for Q3 2018. These are my real-world holdings and includes 401k/403b/IRAs and taxable brokerage accounts but excludes our house, cash reserves, and a few side investments. The goal of this portfolio is to create enough income to cover our household expenses. As of 2018, we are “semi-retired” and have started spending some dividends and interest from this portfolio.

Actual Asset Allocation and Holdings

I use both Personal Capital and a custom Google Spreadsheet to track my investment holdings. The Personal Capital financial tracking app (free, my review) automatically logs into my accounts, tracks my balances, calculates my performance, and gives me a rough asset allocation. I still use my custom Rebalancing Spreadsheet (free, instructions) because it tells me exactly how much I need in each asset class to rebalance back towards my target asset allocation.

Here is my portfolio performance for the year and rough asset allocation (real estate is under alternatives), according to Personal Capital:

Here is my more specific asset allocation broken down into a stocks-only pie chart and a bonds-only pie chart, according to my custom spreadsheet:

Stock Holdings
Vanguard Total Stock Market Fund (VTI, VTSMX, VTSAX)
Vanguard Total International Stock Market Fund (VXUS, VGTSX, VTIAX)
WisdomTree SmallCap Dividend ETF (DES)
Vanguard Small Value ETF (VBR)
Vanguard Emerging Markets ETF (VWO)
Vanguard REIT Index Fund (VNQ, VGSIX, VGSLX)

Bond Holdings
Vanguard Limited-Term Tax-Exempt Fund (VMLTX, VMLUX)
Vanguard Intermediate-Term Tax-Exempt Fund (VWITX, VWIUX)
Vanguard Intermediate-Term Treasury Fund (VFITX, VFIUX)
Vanguard Inflation-Protected Securities Fund (VIPSX, VAIPX)
iShares Barclays TIPS Bond ETF (TIP)
Individual TIPS securities
U.S. Savings Bonds (Series I)

Target Asset Allocation. Our overall goal is to include asset classes that will provide long-term returns above inflation, distribute income via dividends and interest, and finally offer some historical tendencies to balance each other out. I personally believe that US Small Value and Emerging Markets will have higher future long-term returns (along with some higher volatility) than US Large/Total and International Large/Total, although I could be wrong. I don’t hold commodities, gold, or bitcoin as they don’t provide any income and I don’t believe they’ll outpace inflation significantly.

I believe that it is important to imagine an asset class doing poorly for a long time, with bad news constantly surrounding it, and only hold the ones where you still think you can maintain faith.

Stocks Breakdown

  • 38% US Total Market
  • 7% US Small-Cap Value
  • 38% International Total Market
  • 7% Emerging Markets
  • 10% US Real Estate (REIT)

Bonds Breakdown

  • 50% High-quality, Intermediate-Term Bonds
  • 50% US Treasury Inflation-Protected Bonds

I have settled into a long-term target ratio of 67% stocks and 33% bonds (2:1 ratio) within our investment strategy of buy, hold, and occasionally rebalance. With a self-managed, simple portfolio of low-cost funds, we minimize management fees, commissions, and taxes.

Holdings commentary. On the bond side, as Treasury rates have risen, last quarter I sold my shares of Vanguard High-Yield Tax Exempt and replaced it with Vanguard Intermediate-Term Treasury. I liked the slightly higher yield of that (still pretty high quality) muni fund, but as I settle into semi-retirement mode, I don’t want to worry about the potential of state pension obligations making the muni market volatile. In addition, my tax bracket is lower now and the Federal tax-exempt benefits of muni bonds relatively to the state tax-exempt benefit of Treasury bonds is much smaller now. On a very high level, my bond portfolio is about 1/3rd muni bonds, 1/3rd treasury bonds, and 1/3rd inflation-linked treasury bonds (and savings bonds). These are all investment-grade and either short or intermediate term (average duration of 6 years or less).

No real changes on the stocks side. I know that US stocks have higher valuations, but that’s something that is already taken into account with my investment plan as I own businesses from around the world and US stocks are only about 30% of my total portfolio. I have been buying more shares of the Emerging Markets index fund as part of my rebalancing with new dividends and interest. I am considering tax-loss harvesting some older shares with unrealized losses against another Emerging Markets ETF.

The stock/bond split is currently at 68% stocks/32% bonds. Once a quarter, I reinvest any accumulated dividends and interest that were not spent. I don’t use automatic dividend reinvestment.

Performance commentary. According to Personal Capital, my portfolio now slightly down in 2018 (-2.7% YTD). I see that during the same period the S&P 500 has gained 5% (excludes dividends), Foreign (EAFA?) stocks are down 8.2%, and the US Aggregate bond index is down 2.4%. My portfolio is relatively heavy in international stocks which have done worse than US stocks so far this year.

An alternative benchmark for my portfolio is 50% Vanguard LifeStrategy Growth Fund (VASGX) and 50% Vanguard LifeStrategy Moderate Growth Fund (VSMGX), one is 60/40 and one is 80/20 so it also works out to 70% stocks and 30% bonds. That benchmark would have a total return of +0.07% YTD (as of 10/16/18).

I’ll share about more about the income aspect in a separate post.

Infographic: Where Did Housing Prices Crash the Most and the Least?

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The Washington Post had an article looking back 10 years later: How the housing market has changed since the crash. Inside was an interesting map of where the home prices crashed the most and the least (click to enlarge):

I wish they had a similar map that shows how much each individual state has also rebounded from the bottoms. According to this NYT article, the national median price is up 44% over the last 6 years:

When the housing bubble burst a decade ago, property values dropped by as much as 60 percent in some areas. Millions of Americans lost their homes to foreclosure. Nationally, the median price of existing homes today is $269,600 — up 44 percent in the past six years.

There are so many local variations. The house that we bought in 2007 was supposedly near the market top, but today the market value is still probably worth 50% higher. That’s far behind stock market returns, but you also have to consider that we could have bought that house with a tiny downpayment. If you put $40,000 down on a $400,000 house and it goes up to $600,000, then you roughly quadrupled your money (after fees). This goes right along into the conclusion of the WaPo article:

Among the lasting fundamental changes brought about by housing crisis, says Sharga, is that people today look at a home as place to live, not as an investment.

“It’s important to realize that homeownership is something to aspire to, but it’s also important to be ready for it,” he says. “It can be a wealth builder, but, as we saw, it can also be the quickest path to financial devastation if you’re not prepared.”

You can still buy a house with zero to 3.5% down payment these days, and that’s big leverage. Leverage goes both ways. It can make you rich much more quickly, but it can also make you broke much more quickly.

Starbucks Masterpass Promo: Buy $10, Get Free $5 Gift Card

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sbux_cupHere’s another Starbucks promotion that can land you a free caffeine boost. Buy a $10+ Starbucks eGift Card with Masterpass, get a free $5 Starbuck eGift card. Masterpass is the online checkout system for Mastercard (like Visa and Visa Checkout).

Offer good from 10/16/18 through 10/24/18 or while supplies last. Limit 1 promotional eGift per person. Usually my wife and I both send each other a gift… If they run out of free codes, they usually will take down the offer page. However, if you’re interested I’d take advantage of this offer as soon as possible. Full terms.

You should see both the $10 gift card and bonus $5 gift card at checkout, while the total should be $10. If you see the Capital One Masterpass option only and your Mastercard is not with them, try the link again in a new Incognito/Private window. I was able to use my Citi Double Cash card (2% cash back), which is a Mastercard.

Ally Bank Payback Time Promotion: 1% Additional Cash Bonus (~6% APY 3-month CD)

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Ally Bank has a new promotion called Ally Payback Time that is offering a 1% cash bonus (up to $1,000) on new deposits on top of their existing interest rates. Valid for both new and existing customers. Given the holding period, this roughly equates to the same total interest paid as a 3-month bank CD at 6% APY. Here’s how it works:

  • Enroll by 10/21/18 at ally.com/payback. You must enroll or you won’t get the bonus. Existing customers must enroll with the same e-mail as linked to their Ally bank account.
  • Fund account by 10/31/18. This means your account has to be approved, opened and funded by this date. Technically the terms state that the funds must arrive by 11/5/18, but that is likely just a grace period and you should initiate any fund transfers by 10/31/18.
  • Maintain funds through 1/15/19. You must keep your new funds there through 1/15/19. This is really only a 2.5 month period if you waited until the last moment. Withdrawals may lower your bonus.
  • Get cash bonus on 2/15/19. After another 30 days, they will deposit your cash bonus into your Ally account.

To be clear, the bonus applies to new funds added to an eligible Ally bank account, not your total balance. Eligible accounts include Ally Online Savings, Money Market, Interest Checking, and CD accounts.

Rough math. The current rate on the Ally Online Savings account is 1.90% APY, and the 11-month No Penalty CD is 2.10% APY on $25k+ balances (as of 10/15/18). Given that you can an additional 1% bonus in a bit under 3 months, the bonus itself works out to the equivalent of a 4% annualized yield. 2% 4% = 6%, so you’re looking at the equivalent of a 3-month CD at 6% APY for new money deposits between $1,000 and $100,000. At such a high yield, this promo is a “no-brainer” when compared to other liquid savings accounts for the next 3 months.

The promo page has a calculator to show you your total cash earned over a year. If you move over $10,000 at 1.90% APY, you’d get $190 of interest in a year a $100 bonus = $290 total. That would work out to a total of 2.9% APY if you were lazy and just kept it all there for a year. Still not too shabby.

Should I move money out of Ally and back in to qualify? No, it won’t make any difference as Ally has already thought of that. All new funds added after 10/8/18 will count as new money for this promotion. They’ve already set the start date in the past, so you gain nothing by delaying your enrollment.

Existing customers. As a longtime Ally accountholder, I’m happy to see that this offer includes existing customers, even if it has to be new money. The promotion should be called the “Ally Money Comeback Time” as lots of people are probably bringing back funds that in the past year or so.

Payback Time? This YouTube ad explains the meaning behind “Payback Time”, basically the megabanks pay you no interest and keep it for themselves:

Bottom line. Ally Bank has a new promotion to attract new money (or bring back old money). You get a 1% cash bonus (up to $1,000) on new deposits on top of their existing interest rates. For their savings account, this works out to a 3-month holding period paying roughly 6% annualized interest. You must enroll soon by 10/21 and your account must be opened and fully funded by 11/5/18 at the very latest.

Savings I Bonds November 2018 Interest Rate: 2.32% Inflation Rate

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sb_posterSavings I Bonds are a unique, low-risk investment backed by the US Treasury that pay out a variable interest rate linked to inflation. 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 2018 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 2018 savings bond purchase will yield over the next 12 months, instead of just 6 months.

New inflation rate prediction. March 2018 CPI-U was 249.554. September 2018 CPI-U was 252.439, for a semi-annual increase of 1.16%. Using the official formula, the variable component of interest rate for the next 6 month cycle will be 2.32%. 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.

Tips on purchase and redemption. 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. If you miss the cutoff, your effective purchase date will be bumped into the next month.

Buying in October 2018. If you buy before the end of October, the fixed rate portion of I-Bonds will be 0.30%. You will be guaranteed a total interest rate of 2.52% for the next 6 months (0.30 + 2.22). For the 6 months after that, the total rate will be 0.30 + 2.32 = 2.62%.

Let’s look at a worst-case scenario, where you hold for the minimum of one year and pay the 3-month interest penalty. If you theoretically buy on April 30th, 2018 and sell on April 1, 2019, you’ll earn a ~2.09% annualized return for an 11-month holding period, for which the interest is also exempt from state income taxes. If you held for three months longer, you’d be looking at a ~2.20% annualized return for a 14-month holding period (assuming my math is correct). Compare with the best interest rates as of October 2018.

Buying in November 2018. If you buy in November 2018, you will get 2.22% a newly-set fixed rate for the first 6 months. The new fixed rate is unknown, but is loosely linked to the real yield of short-term TIPS, which has been rising a bit. The current real yield of 5-year TIPS now about ~1.00%. My best guess is that it will be 0.50% or 0.60%. Every six months, your rate will adjust to your fixed rate (set at purchase) a variable rate based on inflation.

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 (set at purchase) + variable rate (minimum floor of 0%).

Buy now or wait? In the short-term, these I bond rates will not beat a top 12-month CD rate if bought in October, and probably won’t if bought in November unless inflation skyrockets. Thus, I probably wouldn’t buy in October. I haven’t bought any savings bonds yet this year, and will wait until November to see what the new fixed rate will be. If it greatly lags the real yield on short-term TIPS, then I will probably just buy TIPS instead. However, if it is close, I will probably buy some savings bonds as a long-term investment given the unique benefits below.

Unique features. I have a separate post on reasons to own Series I Savings Bonds, including inflation protection, tax deferral, exemption from state income taxes, and educational tax benefits.

Over the years, I have accumulated a nice pile of I-Bonds and now consider it part of the inflation-linked bond allocation inside my long-term investment portfolio.

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 with 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.

[Image: 1946 Savings Bond poster from US Treasury – source]

Citi Simplicity Card Review: 0% for 21 Months (1.75 Years), No Late Fees, No Penalty Rates

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CitiSimplicityCard (1)

Interest rates are rising, and that applies to credit cards as well. Our partner Citi has updated the Citi Simplicity® Card with an extended 0% intro period for balance transfers while also offering some “accident forgiveness insurance”. Do you have a balance that you are finally ready to pay off? The highlights:

  • The ONLY card with No Late Fees, No Penalty Rate, and No Annual Fee… EVER
  • 0% Intro APR on balance transfers for 21 months from date of first transfer. All transfers must be completed in first 4 months. After that, the variable APR will be 15.99% – 25.99%, based on your creditworthiness
  • 0% Intro APR on purchases for 12 months from date of account opening. After that, the variable APR will be 15.99% – 25.99%, based on your creditworthiness
  • If you transfer a balance with this offer, after your 0% Intro purchase APR expires, both new purchases and unpaid purchase balances will automatically accrue interest until all balances, including your transferred balance, are paid in full
  • There is a balance transfer fee of either $5 or 5% of the amount of each transfer, whichever is greater
  • The same great rate for all balances, after the introductory period
  • Save time when you call with fast, personal help, 24 hours a day – just say “representative”
  • Enjoy the convenience of setting up your own bill payment schedule on any available due date throughout the month

No late fees, no penalty rate details. On most other credit cards, if you make a late payment, you’ll first be charged a late payment fee of about $35. On top of that, your super-low interest rate disappears and instead gets jacked up to something called their “default rate” or “penalty rate”. This could be over 30% APR! The Citi Simplicity card adds a bit of flex in that they do not charge penalty rates or late fees.

Note that if you are 30 days late on this or any credit card, Citi will still report this activity to the credit bureaus. This card may be forgiving but you should still keep your credit score as high as possible.

The strongest part of this card is the long 21 month period, so you can spread out payments over 1.75 years and ideally pay it all off by the end. There is a 5% balance transfer fee ($5 min). However, 5% works out to just 3 months of interest at 20% APR. Transferring a balance to this card from a 20% APR card would be the equivalent of paying 3 months interest at 20% APR and then having 18 months with 0% interest. Once the intro period on all 0% cards expire, the rates will go right back up. You’ll either need to pay it off or transfer your balance again if you need more time. With this card, you’ll have a full 21 months to spread your payments out.

Alternatively, if you know you will pay it off within a shorter time period, look for a card with no balance transfer fee. Compare with other low fee 0% APR balance transfer offers.

This card does not earn any cash back, points, or airline miles. I’d open a separate card for rewards after your balances are paid off and you join the “Paid in full every month” club.

Bottom line. The Citi Simplicity® Card is best for folks that are serious about paying off their balances. You get a long 0% introductory period of 21 months on balance transfers, with a one-time 5% balance transfer fee ($5 min). The card includes consumer-friendly features that help ensure your low rates don’t get hiked with a single late payment. If you do the math and can make adequate payments to pay down your balance over a 1.75 year span, this card may help get you debt-free with minimal gotchas. No annual fee.

“Disclaimer: This content is not provided or commissioned by the issuer. Opinions expressed here are author’s alone, not those of the issuer, and have not been reviewed, approved or otherwise endorsed by the issuer. This site may be compensated through the issuer’s Affiliate Program.”

EBSB Direct High Yield Savings Account 2.50% APY ($5,000 minimum)

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EBSB Direct has a new High Yield Statement Savings Account that pays 2.50% APY on balances between $5,000 and $1 million. No interest is paid if your balance is below $5,000.

$50 minimum to open. If you are an existing EBSB Direct customer, to open this account you must deposit new money from another financial institution. Interest is compounded monthly and credited monthly. There is a $25 fee if you close the account within 180 days of opening.

EBSBDirect.com appears to be the nationally-available, online division of East Boston Savings Bank. However, be careful not to apply at the main bank website EBSB.com unless you are a resident of MA, RI, or NH as they will reject your application. I guess the checking accounts and branches are only for locals.

This account is notable as it is the first nationally-available savings account to reach 2.50% APY. Unfortunately, there is no rate guarantee period. I’m hesitant to open yet another bank account without a rate guarantee or a locked-in CD, but hopefully the other banks will catch up soon. 2.25% APY was the previous top savings rate as of the beginning of October. Check out my Ultimate Rate-Chaser Calculator to get an idea of how much extra interest you’d earn if you are moving money between accounts.

Total Bond ETF Review: iShares Aggregate Bond ETF (AGG) or Vanguard Total Bond ETF (BND)

“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.”

One of the major building blocks of your portfolio is probably a bond mutual fund or ETF. The most popular bond benchmark is the Bloomberg Barclays Aggregate Bond Index (AGG), which basically tracks all U.S. taxable investment-grade bonds. These popular index funds all track some variation of this index:

  • Vanguard Total Bond Market Fund (VBTLX/VBMFX) and ETF (BND). The biggest bond mutual fund. This fund is also inside all Vanguard Target Retirement 20XX or LifeStrategy All-In-One funds.
  • iShares Core U.S. Aggregate Bond ETF (AGG). The biggest bond ETF.
  • Schwab U.S. Aggregate Bond ETF (SCHZ).

What’s inside a Total Bond fund? A recent Vanguard Blog post provides some insight into the components that make up the Barclays U.S. Aggregate Index from 1977 to 2017:

  • US Treasury. Bonds issued and backed by the US government, including Treasury notes and bonds. (Nominal only, TIPS are not included.)
  • US Government-related. Securities issued by a Federal Agency or a government-sponsored enterprise like Fannie Mae or Freddie Mac. These are either explicitly or implicitly backed by the US government.
  • Securitized (MBS). Mortgage-backed securities, backed by residential mortgages and packaged by Ginnie Mae, Fannie Mae, Freddie Mac, and others including private issuers.
  • Securitized (ex-MBS). Asset-backed Securities, backed by things such as consumer auto loans, credit card debt, and home equity loans.
  • US Corporate. Securities issued by corporations with investment-grade ratings from the major ratings agencies.

The first thing to note is that the bottom three layers are essentially all backed by the US government. When considered in this chart format, you can see that these bottom three layers consistently make up about 60% to 80% of the AGG. Thus, historically you can estimate that roughly 2/3rds of the index is backed by the US government and 1/3rd is privately-backed by securitized assets or corporations.

How much more does a Total Bond fund yield than a Treasury Index fund? Here’s how much the AGG Total Bond index yields above a Treasury index historically:

So the ingredients are little riskier overall than 100% US Treasury bonds, but you also earn a little higher yield.

Which is better? For the most part, I agree with this William Bernstein list of what kinds of bonds should be in an individual portfolio. I slightly prefer either 100% Treasuries, municipal bonds, or bank CDs – all depending on the after-tax yield. The idea is to pick the safest bonds that are hopefully the least correlated with your stocks. For example, the expectation is that Treasuries are more likely to go up when stocks are dropping.

But for the most part, I think a total bond fund is just fine as well. You can see it’s still pretty safe and you get extra interest in exchange for the extra risk that the market has decided is the proper compensation.

First things first – Buying a low-cost total bond index fund is very likely to return more over the long run than an expensive actively-managed bond fund. Choosing between Treasuries and a Total Bond fund is a secondary decision.

Bottom line. Lots of people own bond funds and ETFs that track the US Aggregate Index (AGG). These charts help show you what’s held inside such Total US Bond funds and how much more they yield than 100% Treasury bonds.

American Express Pink Gold Card: New 50,000 Point Offer + $100 Dining Credit

“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.”

American Express is trying to shake off its stodgy image – with a new Pink card! They prefer Rose Gold. The new American Express Pink Gold Card has a 50,000 bonus point offer if you apply via a referral link (that’s mine). Here are the highlights:

  • 50,000 Membership Rewards points when you make $2,000 in purchases within the first 3 months.
  • Up to $100 dining credit. 20% back (up to $100) on dining purchases at U.S. restaurants within the first 3 months. They are “picking up the tip”. That means spending $500 over 3 months will max out the $100 dining credit.
  • Up to another $120 in Grubhub and Seamless credit. Up to $10 in statement credits each month when you pay with The Gold Card at participating partners – Grubhub, Seamless, The Cheesecake Factory, Ruth’s Chris Steak House and participating Shake Shack locations.
  • $100 airline fee credit. Select one qualifying airline and then receive up to $100 per calendar year in statement credits when incidental fees are charged by the airline to your AmEx Gold card. Examples are checked baggage fees and inflight meals.
  • 4X points at US restaurants.
  • 4X points at US supermarkets, on up to $25,000 per year.
  • 3X points on flights booked directly with airlines or on amextravel.com.
  • $250 annual fee. Additional cards (authorized users) are free.

The Pink card color and limited-time welcome offer is available through January 9th, 2019. They are treating this as a rebrand of the Premier Rewards Gold Card, so you can’t have gotten that bonus already:

Welcome Offer not available to applicants who have or have had this card or the Premier Reward Gold Card. We may also consider the number of American Express Cards you have opened and closed as well as other factors in making a decision on your welcome offer eligibility.

Membership Rewards points can be converted to the following airline and hotel programs (there are more, this is just a selection):

  • Delta SkyMiles
  • Hawaiian Airlines
  • JetBlue
  • ANA Mileage Club (partner of United Airlines)
  • Air Canada (partner of United Airlines)
  • British Airways (partner of American Airlines)
  • FlyingBlue (Air France/KLM)
  • Singapore Airlines
  • Virgin Atlantic
  • Choice Privileges
  • Hilton Honors
  • Marriott Rewards (Starwood)

The bonus math depends on a few factors. I’m going to be conservative and value the 50,000 Membership Rewards points at $500. (There are a lot of mileage transfer bonuses so you could value them much higher.) If you spend $500 in any US restaurant over 3 months, you’ll be able to get the full $100 statement credit. Spending $10 a month at Grubhub and Seamless will depend on if you’ve become addicted to these hyper-convenient food delivery apps. The airline fee credit will depend on how much you travel, but checked bag fees are everywhere (and rising). Minus the $250 annual fee. If you max out all the perks, the first year value is $570 without taking into account the 4X and 3X bonus categories. I don’t think it’s a perfect fit for me, but worth a look.

Bottom line. The new American Express Pink Gold Card has a bunch of new features more targeted at the young, urban traveler. There is also a limited-time 50,000 point + dining credits offer if you apply via a referral link.

Free National Emerald Club Executive ELITE Upgrade Sign-Up Link

“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.”

Improved offer. Here’s an even better link for Emerald Executive Elite, which is the higher tier – one above Emerald Executive and two tiers above plain Emerald Club. I was able to click on the link, sign in to my existing Emerald club account, and get upgraded to Elite through February 2020. If I rent a car and pay with AmEx, I also get 5 credits, enough for 1 free rental day on any car class. They will change your Contract ID, but you can change it back if you want.

Original post:

The loyalty program for National Car Rental is called Emerald Club, which has a unique feature in that they maintain an “Emerald Aisle” where you can show and pick any car in that aisle based on your tier. The base Emerald tier (anyone can sign up and join this for free) may only mean picking between a Nissan Altima or a Hyundai Elantra, but it’s still a bit of fun as I like cars. When spending my own money, my preferred car company is National. As a member, you’ll also be able to book a full-size car at the mid-size price (“free upgrade”).

American Express has a promotion with a free upgrade to Emerald Executive status until February 28, 2020, which includes additional perks like access to nicer cars like SUVs and large sedans. You have to sign up for a fresh new account. The form doesn’t appear to ask for an American Express number. Obtaining this status usually requires 12 paid rentals or 40 paid rental days in a calendar year.

In addition, if you enroll through the promotion and also pay for your first rental with any American Express, they will credit you with six Emerald Club Credits. This is a good deal, as 6 credits is enough for a free car rental already with Executive status. You’d usually have to make 6 short rentals to get 6 credits.

*Offer valid for new members only enrolled via this promotion between 9/16/18-1/31/19. Get six Emerald Club Credits you can use toward a future rental day after you enroll in the Emerald Club at nationalcar.com/axec between 9/16/18-1/31/19, rent one time from National and pay with any American Express Card.

If that link doesn’t work, you can also try this similar link for Visa Infinite cardholders. I don’t believe this link asks for a Visa Infinite card number either.

nationalex

Status match. Once you obtain your status and/or membership kit, you can also ask for a status match with Hertz, Avis (request via email), or Enterprise. For example, based on the qualification criteria, it appears at Emerald Club Executive lines up with Hertz Five Star, while Emerald Club Executive Elite lines up with Hertz President’s Circle.

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