Ally Bank Account Reviews: Online Savings, 9-month, and 12-month CDs
You may have been seeing a bunch of purple ads for something called Ally Bank recently. Actually, this “new” bank used to be GMAC Bank. But besides a cosmetic name change, they have revamped the website and tweaked their product offerings. Their pitch: “No minimum deposits. No monthly fees. No minimum balance. No sneaky disclaimers.” Here are the products that are most compelling:
2.80% APY 12-month CD
2.80% APY is the best rate available for a 12-month CD with no minimum deposit restrictions. Interest is compounded daily.
2.50% No-Penalty 9-month CD
No early withdrawal penalty, daily compounded interest. With an uncertain future rate outlook, this seems like a good compromise between a savings account and a CD. If rates stay low (or get lower?!) you can stay in the CD and get 2.50% APY. If rates start rising, you can keep earning 2.50% up until you withdraw without penalty.
2.25% APY Online Savings Account
A competitive rate for an online savings account, a la ING Direct and such. No minimum balance, no fees, as you’d expect. Daily compounded interest. A differentiating factor to this account is their fast and easy transfers between Ally and your other banks. If you want checkwriting ability and ATM fee rebates, you can go with the similar Money Market Account at a slightly lower 1.90% APY.
FDIC Coverage & More
I noticed that they now also offer 24/7 telephone customer service and even share the current wait time online. Neat idea, I wish more sites did this:
Ally Bank is FDIC-insured, which means accounts are insured at least to $250,000. The new $250,000 limit was recently extended to at least the end of 2013, after which it is still $100,000.
Warren Buffett’s Original Money Management Fee Structure
Here’s a another little fact from The Snowball that I found interesting. When Warren Buffett set up his first investing partnerships where he agreed to manage other people’s money, he wanted a compensation agreement that was fair and equitable.
I got half the upside above a four percent threshold, and I took a quarter of the downside myself. So if I broke even, I lost money. And my obligation to pay back losses was not limited to my capital. It was unlimited.
The last part meant he could lose more money than he put actually invested into the partnership. He would cover a quarter of all losses from his partners, even if it meant selling his house or other assets. Now that is what I call a true alignment of interests.
Sure, half of the upside past 4% is a lot, but can you imagine any modern hedge fund agreeing to such a fee structure that would expose them to losses? Nope, they get “2+20″, which means 2% of assets no matter what plus 20% of profits, which really encourages them to just swing for the fences. If they implode (which many did recently), they simply pack up and open a new fund down the street.
It’s hard enough these days to find a mutual fund manager where a substantial part of their net worth is invested in the fund they manage.
CollegeAdvantage Refer a Friend Program Expires Soon
A quick reminder that the deadline for getting $25 for each of your kids from the Ohio CollegeAdvantage 529 program is May 31st, 2009. I contacted them about the referral program, and they said that just the application must be submitted by Sunday, May 31st. The opening deposits don’t have to post by then, but they will have to post eventually in order to get the bonus. This agrees with the fine print below. When you fill out your application, you immediately get an account number.
A new account with a valid referral code provided in the application must be established by May 31, 2009 in order for both the referring Account Owner and new Account Owner to be eligible for the $25 bonus.
Summer Is Coming: No and Low Cost Entertaiment for Kids
Summer is coming. By the time you read this, your kids or grandkids, if you have them, may already be on summer vacation. Back when I was a kid, that meant endless days of hiking in the woods with my friends, playing baseball, shooting baskets and generally trying to make myself scarce so [...]Power Link Dump: Gas Prices, Commodities, Asset Class Forecasts, & More
Here are some neat links from readers and interweb wanderings. I want to expand on them later as well.
Petrofix: Hedge and cap gas prices
A website that will let you control your cost of gasoline in the near future - for a price. If gas prices rise, they pay you the difference. If they fall, you are out the hedge price. The risk? Well, first I haven’t checked out the prices. Also you pay now, but who knows if the company will be around to fulfill their promises in the future. I’d rather hedge against higher gas by buying an oil ETF or use real options with better liquidity. (Disclosure: I did buy some OIL in my fun portfolio at end of 2008.)
The Great Commodities Debate with Larry Swedroe and Rick Ferri
A long multi-part series on HardAssetsInvestor about the role of commodities within a portfolio. Should you add them to your asset allocation? Swedroe and Ferri flesh out their arguments in a moderated battle, and I still don’t know who wins. However, I am glad I didn’t buy commodities the last two years or so when they were in vogue.
Jeremy Grantham / GMO 7-Year Asset Class Forecasts
Each month, Jeremy Grantham and GMO publishes on the web its predictions of the future return for various asset styles over the next seven years. You must register for free on his site to download them. Grantham has gotten increased publicity recently due to how accurate his previous predictions have been. You can read his 2009 Q1 newsletter “The Last Hurrah and Seven Lean Years” without registration. In the end, he’s just another guy with an opinion, but at least he is forthright about it.
Breakdown: The Credit CARD Act of 2009
Cap of StopBuyingCrap has a nice concise list of the changes to credit card laws coming in February 2010, in case you didn’t feel like reading the entire thing. It will be interesting to see how this shakes out. I think that rumors of annual fees or eliminating grace periods for people who don’t carry balances are just scare tactics by credit card lobbyists. They’ll continue to make money from merchant transaction fees, as always.
Google PowerMeter
An online tool that monitors your home’s power usage in real time. Currently only available in very limited areas where people have the right “smart meters” already installed. Sounds even cooler than my Kill-a-Watt energy meter.
Silver price is moving up
Revitalize Your Aging PC With a Fresh Installation of Windows
I apologize for the recent lack of posts, I’ve been having some computer issues. I’ve been experiencing the usual sluggishness that happens after you’ve had Windows for a while, but recently it had been unbearably slow. Even after running multiple anti-virus and anti-malware software, defrag utilities, registry cleaners, I just gave up and had to re-install the operating system. Of course, I’m bad and only make sporadic backups so it took me a while to organize my files and make proper backups.
Although not directly related to finances, I found that re-installing a fresh copy of Windows on your computer can make a huge difference in speed and usability, so much so that you can delay buying a new computer for a while (within reason). This post is somewhat specific to Dell laptops since that is what I have, but much of it is still applicable to all Windows PCs.
According to this How To Restore or Reinstall Microsoft Windows page at Dell, I had a few choices after backing up all my data:
System Restore
This is a Windows OS feature, so it should available across all PC laptop brands. It allows you to revert back to certain setpoints in your system’s past, hopefully back to a date in which everything was running smoothly. But I had been experiencing a slow and gradual decline, and none of the dates I picked improved my situation. It might work better for other folks. The good news is that you can also switch back to your original state.
Restore From Hidden Partition
Most recent Dell laptops have a hidden partition on the hard drive that contains a backup copy of your computer’s original factory software. The official name is Dell PC Restore by Symantec. You just have to hold Ctrl+F11 during start-up. I’m sure this would be great for most people. Unfortunately, my attempt failed. “Your installation was unsuccessful. Please call Dell Support”. Grrr.
Most other companies have a similar setup. For example, I did a successful factory reset on a family member’s Acer computer with Alt+F10. All I had to do was backup their pictures, and I was done in under an hour.
Restore from Recovery OS Disc
I was then left with the final option of manually re-installing the operating system with my Windows XP CD. Two houses and three years ago, I probably had it. Now, it’s nowhere to be found. (Side note: Some computer have you make the recovery CDs yourself. Do it before it crashes!) Luckily, I found that you can request a new recovery CD from Dell:
Dell Customers can now request a set of backup discs containing the factory-installed operating system as well as the device drivers and utilities specific to your system. Requests are limited to one (1) set of backup discs per system purchased.
There was no mention of needing a warranty, which made me hopeful since mine had already expired. After submitting my request, I received an e-mail saying that they would send me a Recovery CD for free, though they did make it very clear they didn’t have to since my warranty had expired. Still, they did FedEx it to me overnight at no charge, so I was very pleased with the service in this situation. Other brands may charge a nominal fee.
Final Result: Laptop that feels like new. Total Cost: $0. 
I am now back up and running, and it is amazing how much difference a fresh install makes. The cobwebs and grimy buildup is gone! I did spend hours on the backup and everything, but even if I bought a new laptop, I’d still have to spend hours reinstalling new apps and transferring files.
More Links
HP Notebook PCs - Repairing or Reinstalling The Operating System
The High School Class Reunion
Oh, the joy of a high school reunion. The time when you get to see that most of your former classmates have done better than you, at least on the surface. My reunion was last week (let’s not discuss how many years it’s been) and I debated long and hard about going. Part of me [...]Buffett on Charlie Munger: Work For Yourself An Hour Each Day
I’ve gotten to the part in The Snowball that involves Charlie Munger. A very interesting person, although probably not someone I’d like to have a beer with (I’d feel stupid), he is probably best known as Buffett’s long-time friend, business partner, and vice-Chairman of Berkshire Hathaway.
Even before meeting Warren Buffett, Munger was wealthy according to most standards from real estate investing. Here is a quote from a Buffett interview in the book:
Charlie, as a very young lawyer, was probably getting $20 an hour. He thought to himself, ‘Who’s my most valuable client?’ And he decided it was himself. So he decided to sell himself an hour each day. He did it early in the morning, working on these construction projects and real estate deals. Everybody should do this, be the client, and then work for other people, too, and sell yourself an hour a day.
Now, I’m sure just being a successful lawyer would be plenty for many people. But if you aren’t satisfied with your current situation, why not work for yourself an hour each day? Instead of just idle dreaming, set aside specific time for action. Perhaps the key is small chunks of time, but at regular intervals.
Finally, another quote from Charlie Munger about the desire for independence:
I had a considerable passion to get rich. Not because I wanted Ferraris - I wanted the independence. I desperately wanted it. I thought it was undignified to have to send invoices to other people. I don’t where I got that notion from, but I had it.
I think I’ll be buying a copy of Poor Charlie’s Almanack the next time I run low on things to read, even though it costs fifty bucks.
Transfer Between Delta and Northwest Frequent Flier Miles
Delta and Northwest Airlines are merging, and right now you can go ahead and transfer frequent flier miles between the Northwest WorldPerks and Delta SkyMiles programs with no fees. You can even move them back and forth as you like. This is nice if you don’t have enough of either individually to get an award, but after combining you do. Also, if you link your Northwest and Delta accounts by May 31st, you’ll get 500 bonus miles.
According to this timeline, they will eventually all be merged into SkyMiles anyway in December 2009.
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