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Financial Background – Post 1 of 4

April 8th, 2010 · 1 Comment · General, Review

One and Two Half DollarsI have received quite a few emails lately on real estate, finances, etc and it has led me to think about a financial blog post.  The more I thought about it, the more I realized my financial “technique” is quite involved and my method of squeezing power out of every financial transaction is more then just a one simple post.  So, based on that information, this is the start of a 4 part series on how to leverage your money, save money and a high level overview of what I do to make more money…The topics will be the following:

  1. Banking
  2. Debt
  3. Purchasing
  4. Leveraging Outside Resources

So, some background first.  I’m not a wealthy person and my wife and I work 40+ hours a week to keep the lights on and a roof over our heads.  But, I have a passion for finances and I do a lot of research and reading on how to best leverage our money to allow us to live a certain lifestyle.  But, we also forgo many things in order to achieve an end goal.  This does not mean we do not go out, we do not eat out at restaurants or anything like this.  Here are some of things we do in order to better make our money work for us.

Credit Union — Trumark Financial
I have been banking with Trumark (formally Philadelphia Telco Credit Union) since the late 1990s.  I previously banked with PNC Bank prior to Trumark .  Trumark now is available to all residents of Bucks, Chester, Delaware, Montgomery, and Philadelphia Counties.  But, Trumark is just one of many that are in the region.  My quick search revealed 35+ CUs in the Philadelphia region.  (Check here for the list)  Why bank at a Credit Union you ask?  Ahh, let me count the ways…

  • Lower fees/No fees on common services such as
    • Loan origination
    • Gift Cards
    • Travelers Checks
  • Online Banking
  • Online Bill Pay
  • Free ATM at other CU$ Locations, PNC Bank (including WaWa) locations and POS locations (Supermarkets, for example)
  • VISA Debit Card
  • Wireless Banking
  • Savings and Checking Accounts that offer higher interest rates then the big banks
  • Loan and Mortgage rates that offer lower interest rates then the big banks
  • A customer service/call center with people that actually care, answer the phone and help when there is a problem.

Online Savings Account — Emigrant Direct

I use Trumark Financial as my day-to-day banking.  I have CDs, savings, checking and my mortgage through them.  But, when I want to make a few extra dollars a month in interest, I move my money to an online savings account.  I choose Emigrant Direct because they had the highest interest rate at the time, which currently is 1.1 percent.  Trumark is giving me about 0.75 percent on my money, so we are not talking a huge difference here.  They may or may not be competitive any longer.  ING Direct, HSBC, ALLY Bank might be able to provide a few extra fractions of a point on your money.  I move any extra money I have into this account.  This has two benefits to me personally.  First, it earns more interest then Trumark.  Second, a more important to me, it makes the money a bit harder to access, thus making me less likely to spend it.

Investment Accounts — E*Trade
Beyond savings account, I also invest in the stock market.  This investing is outside of retirement investing, which I do as well.  I learned at an early age that investing in the stock market will return results.  You may not see then in 1 year, you may not see them in 20 years.  But, over the long term, the stock market is the most consistent and steady returns on your money.  Don’t believe me?  Lost your shirt?  Our stock market has produced returns, after inflation, of about 6.5% per year.

I have no more love for E*Trade (although I do like the baby commercials) then for any other site.  My only recommendation is to move to an online brokerage house (so much cheaper then a regular house) and invest in mutual funds.  When I wanted to live on the riskier side of the market, I invested in straight stocks.  I had some winners, I had some losers but most just stayed flat.  I now invest in mutual funds.  This is a bit of a controversial statement, because many like to invest in straight stocks.  I don’t know enough and don’t understand enough about what I am investing in to do it.  So, I moved to mutual funds a few years ago and I’m pretty happy with the results.

Here is a great site with graphs on the success of the stock market of the long-haul.  The very long-haul.  Want to make money?  Get your money out of the bank, out of your wallet and into good growth or growth & income mutual funds.  Buying individual stocks is risky unless you know what you are doing.  I don’t know what I am doing.  I’ll let the fund managers make the decisions.

So, that is it for now.  If you have any questions or comments, post them here.  I’ll do my best to answer.  Like I said above, this is the first in a four part series (no timetable on the other parts).  Hope you enjoyed it!

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One Comment so far ↓

  • Damian

    Interesting post. One clarification: if you’re just buying over-the-counter mutual funds, you don’t need a brokerage account. You can go directly to the fund manager (e.g. Vanguard, Fidelity, T.Rowe, etc). There are certain types of mutual funds that trade like stocks (ETF’s), or are only sold by brokers, but I would say most people are best served by low cost non-commission mutual funds. (Full disclosure: I’m not a financial professional, nor am I certified to give personal financial advice) . But if you do want to buy stocks, I can recommend ShareBuilder by ING. You can buy partial shares and set up an automatic investment plan. For example, buy $50 worth of Google each month.

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