SmartMoney 2008 Broker Survey

Smart Money reviews brokers every single year and they recently just gave a preview to their results. Rather than give the straight ranking, they discussed some headline categories (Commissions & Fees, Research, Trading Tools) and then listed the best and worst from each category.

For best commissions and fees, they listed Interactive Brokers, a brokerage firm I hadn’t heard of but does charge pretty rock bottom fees (half a cent per share on equity trades). They also showed the spread was anywhere from $4.95 for TradeKing to $112.50 for Fidelity on broker-executed trades. Zecco was also mentioned with a $0 per trade but no discussion of why they didn’t take the top spot.

For research, my Roth IRA brokerage, TD Ameritrade, took the top honors with Zecco and SoGoTrade splitting the worst place ribbon. One interesting point made was that J.D. Power’s research showed that good research trumps trade execution and customer service with regards to overall satisfaction. I found that pretty surprising since there is a wealth of free investing information out there but trade execution and customer service is where the rubber actually meets the road. If they can’t execute your trade or if you can’t get on the phone with someone in a few minutes, that’d be a deal breaker for me.

Last but not least, E*Trade and TD Ameritrade snatched the number one and one-a spot for trading tools with Sharebuilder playing caboose. It’s not surprising because Sharebuilder isn’t for the typical trader, it’s for people looking for an easy way to reinvest their dividends back into equities. TradeKing’s social networking area got a shout out as did Zecco and WellsTrade, but that was because they offered less than half the thirteen tools their researchers were looking for. Thirteen tools? Wow.

Anyway, check out the preview, I’m eagerly anticipating their results and whether TradeKing will need to update their current banner and call it a three-peat.

SmartMoney’s 2008 Broker Survey

Check My Trip

To continue with travel related theme. There is a great website called Check My Trip.

Once you have made a reservation your travel agent will provide with you with a 6 Number (Alpha-Numeric) Reservation Code. With your reservation code you simply type in the reservation number and your last name on the main page of Check My Trip. Click Enter and the next page will bring you to your Reservation. This is the exact reservation your travel agent will see. It will tell you the type of plane you will fly on and your complete itinerary including your seat assignment. You can then take this information to Seat Guru (Check the previous post) and see what kind of seat you have been booked on.

How to get the Airline Seat you want

Have you ever wondered how you can get a good seat on plane? Take a look at Seat Guru.
You simply take your seat assignment if you have one---choose the Airline--choose the type of plane you are flying on--and you will see a diagram of that airline's seat configuration. You can then request the seat you want. I always check out the plane configuration prior to booking so I can get the seat I want. The site also warns of seats that are too close to the bathroom, in an exit row, and that does not recline all the way.

Brewing the Perfect Cup of Coffee

Ruling the Roast

It all starts with the freshest coffee you can find -- and by that, we mean freshly roasted beans. Coffee begins to lose flavor soon after it leaves the roaster, so that sack or can of pre-packaged supermarket grind stuffed in your cupboard is operating at minimum taste wattage. Find the nearest local coffee roaster, or an online source, and buy just what you need for the week.

The Daily Grind

Now that you've got the beans, it's time to get grinding. You can either ask the nice folks at the store to grind them to your maker's specifications (automatic drip, paper cone, French press, etc.), or invest in a grinder ($18 - $75). Blade grinders tend to be less expensive, but don't offer the consistent chopping of burr grinders. Once you've made your selection, read the manual to determine how long to grind.

If you don't have time to do this every day, figure out how much coffee you'll need for the week, and grind it all at once.

Airtight & Outta Sight

Whether you're grinding ahead of time or fresh every day, it's key to keep that flavor safe. Air and light are the enemy of coffee freshness. Store it in a dry, dark, cool (but not cold - the fridge and freezer are BIG no-nos) place, either in a cupboard or an opaque container. If you're storing it in a bag, make sure to force the air out before sealing it. Coffee, once ground, loses its maximum flavor after about a week, even under ideal conditions.

Proportionally Speaking

The ideal coffee-to-water ratio for the perfect cup is?

Well, that's up to your personal taste. A good starting point is 1 heaping tablespoon per 8 oz of coffee you want to end up with. Note - that's coffee coming out, not water going in. Experiment with your coffee maker to determine how much liquid gets lost in the brewing process, and add more or less coffee to suit your palate. This will also vary depending on the roast and grind, so have fun experimenting!

The French Connnection

Your best bet for major flavor is an inexpensive French press (a.k.a. press pot). Just measure your ground coffee into the carafe, bring water to a boil on the stove, remove it from the heat, and let it sit for a few seconds to bring it down a few degrees. Pour it over the coffee, not letting the water level rise above the press's metal band. Place the plunger top on the top, but don't press it down. Wait five minutes, stir with a plastic or wooden spoon, and then press all the way down. Presto! You've got a great pot of coffee. If your household has varied wake-up times, keep it hot in a thermos or air pot.

On a Different Note: Robusta v. Arabica Coffee

There are two major types of commercial coffee beans -- arabica and robusta.

Robusta (Coffea canephora) is the bean that's found in the majority of grocery store coffee blends. It's generally grown at low altitudes on massive coffee plantations, mainly in Vietnam, Brazil, and Indonesia. As it's grown in such large quantities, and the plant matures to harvesting age more quickly than arabica, robusta beans are much cheaper. They've got twice the caffeine of arabica, but produce a less flavorful brew.

Arabica (Coffea Arabica) tends be shade grown on mountainsides, and hand-harvested by families of farmers. These beans have been cultivated in Ethiopia for over a thousand years, and now thrive in Costa Rica, Colombia, Brazil, Kenya, and other nations around the globe. Coffee connoisseurs tend to favor the less bitter flavor of these beans.

The "beans" of both arabica and robusta are actually the seeds of the coffee fruit, or "cherry". Once they're harvested from the bush, the cherries are either air processed in the sun, or pulped with a water technique to separate the green beans from the outer fruit. Once they're dried, they're ready to be shipped and roasted.

Recommendations: Indonesia Sumatra, Mexican Altura, Kenya AA, Costa Rica Organiz

Dave Ramsay's 7 Essential Baby Steps to Financial Freedom

Dave Ramsay has an excellent way for people to get out of debt. He calls it the 7 Baby Steps:

1) Start by making sure you have $1,000 in an Emergency Fund
2) Pay off debt using the debt snowball
3) Save 3-6 months of expenses
4) Invest 15% of pre-tax dollars in a Roth IRA
5) For those of you with kids begin a college retirement account
6) Payoff your home early
7) Build wealth through real estate and mutual funds

The Importance of an Emergency Fund

Why You Need an Emergency Fund

Emergency funds are an absolute necessity for financial security because they give you funds to fall back on if you become ill or disabled and can't work, or if you or your spouse lose your job, incur large medical bills, or have an unexpected large bill such as a major car or home repair.

Without an emergency fund, you may be forced to incur credit card debt that could take you many years to pay off and end up costing you much more in the long run.

You never want to be in the position where you have to buy daily necessities like food, transportation, and housing on credit. Imagine still making payments on groceries you bought (and ate) three years ago, at 10-18% interest. Pretty depressing.

How Much You Need in Your Emergency Fund

The minimum amount in your emergency fund should be three to six months worth of basic living expenses. Singles who don't have dependents who rely on them may be able to get by with three months' worth (although it makes me cringe to say so), but couples or anyone with dependents should definitely shoot for six months worth. The more people you support, the more likely you are to have unexpected or unplanned costs.

Earth Class Mail

This is a really cool idea!!!

What are I Series Bonds?

I-Bond

This is a government bond that has two components which are adjusted every six months: the fixed portion and the inflation adjusted portion. The fixed portion remains the same over the life of the bond while the inflation adjusted part is changed every 6 months to the current rate of inflation. I-bonds serve as a hedge against inflation.

You must hold I-bonds 1 year but you can hold them up to 30 years. If you sell the I-Bond after holding it 1 year, but before 5 years are up, there is a 3 month interest penalty for the withdrawal.

I-Bonds have the following characteristics:

Federal Guarantee I-Bonds are completely guaranteed by the United States government. You earn a set variable interest rate which changes and is set every 6 months which varies depending on inflation.

Taxes Advantage You have deferred federal taxes until you sell the bonds. Also, the gains are completely state tax free! If you are in a high tax state, this is important. If you have children, I-bonds can be federal tax exempt if you fall into set income limits and use the proceeds for college expenses.

You can get more information on I-Bonds at I-BondRate.com

How long will it take you to double your money?

The rule of 72 is a very useful rule to not only figure out how long it will take you to double your money but it also helps demonstrate how 1-2% increase in interest rates can speed up accumulation of wealth. To quickly calculate how long it will take to double your money you simply take 72 and divide it by the interest rate or yield. So if you invest money in the stock market and get the traditional 12% return that the historical averages dictates it will take 72/12 = 6 years to double your money. But if you have your money in a 3% CD it will take you 18 years to double.

David Ramsay's New Book

David Ramsey's new book The Total Money Makeover is great. It is more geared to people starting out in investing and especially those in debt. It is clearly written and gives a realistic plan of how to get out of debt and begin investing.

Fund Advice

A great website for all sorts of Financial Advice is the podcast by Paul Merriman. It is free on itunes and they post about once per week. They also have model portfolio's on the website.