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One of the biggest problems in retirement planning is making sure a pile of money lasts through your retirement. I have read hundreds of articles about this topic, and still haven’t a perfect solution to this problem. Most recently, I looked into the idea of buying a ETF that tracks stocks with 10+ year histories of growing dividends.

The imperfect (!) solution I chose is to first build a portfolio designed for total return and enough downside protection such that I can hold through an extended downturn. As you will see below, the total income is a little under 3% of the portfolio annually. I could easily crank out a portfolio with a 4% income rate, or even 5% income. But you have to take some additional risks to get there.

Starting with a more traditional portfolio, only then do I try to only spend the dividends and interest. The analogy I fall back on is owning a rental property. If you are reliably getting rent checks that increase with inflation, you can sit back calmly and ignore what the house might sell for on the open market. With this method, I am more confident that the income cover our expenses for the rest of our lives.

I track the “TTM Yield” or “12 Mo. Yield” from Morningstar, which the sum of a fund’s total trailing 12-month interest and dividend payments divided by the last month’s ending share price (NAV) plus any capital gains distributed over the same period. (Index funds have low turnover and thus little in capital gains.) I like this measure because it is based on historical distributions and not a forecast. Below is a very close approximation of my investment portfolio (2/3rd stocks and 1/3rd bonds).

Asset Class / Fund % of Portfolio Trailing 12-Month Yield (Taken 6/13/19) Yield Contribution
US Total Stock
Vanguard Total Stock Market Fund (VTI, VTSAX)
25% 1.99% 0.50%
US Small Value
Vanguard Small-Cap Value ETF (VBR)
5% 2.20% 0.11%
International Total Stock
Vanguard Total International Stock Market Fund (VXUS, VTIAX)
25% 3.00% 0.75%
Emerging Markets
Vanguard Emerging Markets ETF (VWO)
5% 2.69% 0.13%
US Real Estate
Vanguard REIT Index Fund (VNQ, VGSLX)
6% 3.96% 0.24%
Intermediate-Term High Quality Bonds
Vanguard Intermediate-Term Tax-Exempt Fund (VWIUX)
17% 2.79% 0.47%
Inflation-Linked Treasury Bonds
Vanguard Inflation-Protected Securities Fund (VAIPX)
17% 2.66% 0.45%
Totals 100% 2.65%

Over the last 12 months, my portfolio has distributed 2.65% of its current value as income. One of the things I like about using this number is that when stock prices drop, this percentage metric usually goes up – which makes me feel better in a gloomy market. When stock prices go up, this percentage metric usually goes down, which keeps me from getting too happy. This also applies to the relative performance of US and International stocks. In this way, this serves as a rough form of a valuation-based dynamic withdrawal rate.

In practical terms, I let all of my dividends and interest accumulate without automatic reinvestment. I like to look at this money as my “paycheck” arriving on a regular basis. Then, as with my real paycheck, I can choose to either spend it or reinvest in more stocks and bonds. This gets me used the feeling of living off my portfolio and learning to ignore the price swings.

We are a real 40-year-old couple with three young kids, and this money has to last us a lifetime (without stomach ulcers). This number does not dictate how much we actually spend every year, but it gives me an idea of how comfortable I am with our withdrawal rate. We spend less than this amount now, but I like to plan for the worst while hoping for the best. For now, we are quite fortunate to be able to do work that is meaningful to us, in an amount where we still enjoy it and don’t feel burned out.

Life is not a Monte Carlo simulation, and you need a plan to ride out the rough times. Even if you run a bunch of numbers looking back to 1920 and it tells you some number is “safe”, that’s still trying to use 100 years of history to forecast 50 years into the future. Michael Pollan says that you can sum up his eating advice as “Eat food, not too much, mostly plants.” You can sum up my thoughts on portfolio income as “Spend mostly dividends and interest. Don’t eat too much principal.” At the same time, live your life. Enjoy your time with family and friends. You may be more likely to run out of time than run out of money.

In the end, I do think using a 3% withdrawal rate is a reasonable target for something retiring young (before age 50) and a 4% withdrawal rate is a reasonable target for one retiring at a more traditional age (closer to 65). If you’re still in the accumulation phase, you don’t really need a more accurate number than that. Focus on your earning potential via better career moves, investing in your skillset, and/or look for entrepreneurial opportunities where you own equity in a business.


“The editorial content here 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 the author's alone. This email may contain links through which we are compensated when you click on or are approved for offers.”

My Money Blog Portfolio Income and Withdrawal Rate – June 2019 (Q2) from My Money Blog.

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Updated 2019 with more websites. “People would care more about privacy if they knew how exposed they already are online,” says Geoffrey A. Fowler in his WSJ article Your Data Is Way More Exposed Than You Realize.

I hear this all the time: “I have nothing to hide.” The truth is, pretty much everybody does something online they have reason to keep private.

I would have to agree. These days, it just takes a few clicks to find out your age, current and past addresses, phone numbers, and the names of your parents, siblings, children, cousins, and in-laws (and thus all of their information). Try entering your own name and city into one of the first few websites on this list:

  • Peoplefinders.com – Public access to your current and past addresses, phone numbers, relatives and associates. Opt out at www.peoplefinders.com/manage.
  • InstantCheckMate.com – Public access to your current and past addresses, phone numbers, relatives and associates. Opt out at www.instantcheckmate.com/opt-out.
  • FamilyTreeNow.com – Public access to your current and past addresses, phone numbers, relatives and associates. Opt out at www.familytreenow.com/optout.
  • TruePeopleSearch.com – Public access to your current and past addresses, phone numbers, relatives and associates. Opt out at www.truepeoplesearch.com/removal.
  • MyHeritage.com – Must e-mail them at privacy@myheritage.com to remove information.
  • Geni.com – Must e-mail them at privacy@geni.com to opt out.
  • Spokeo.com – Public/paid access to birth month, email, current and past addresses, phone numbers, relatives, social networks and court records. Opt out at spokeo.com/optout.
  • Acxiom is a data broker that uses information to target ads and marketing. I found some unique data on there, although supposedly it’s not public (just up for sale). Opt out at acxiom.com/optout.

Opt out. For most of these websites, there is an opt-out option hidden in either their “Terms & Conditions” or “Privacy Policy” pages. Even though many of these sites appears to be clones of each other, you must opt out of each of them individually. The only “good” news is that where available, my opt out requests were fulfilled and I can’t find those records even a year later. It’s like stomping a cockroach but knowing there are more that you just can’t see.

Here are some related resources:

Facebook and Google serve as bottomless vacuums of your personal data. These tools help show you exactly what they keep.

  • StalkScan.com – Not public. Just links to specific parts of your own Facebook profile. Find out everything that Facebook stores about you, even if it’s hard to find otherwise.
  • Google Maps Timeline – Google may be tracking your location all day long and keeping records forever. Not public. You can log in and request your data to be deleted.
  • Google My Activity – Google may be tracking every search and your web browsing history and keeping records. Not public. You can log in and request your data to be deleted.

Free Consumer Reports. You can also get a copy of your data stored at official consumer reporting agencies via the Fair Credit Reporting Act (FCRA).


“The editorial content here 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 the author's alone. This email may contain links through which we are compensated when you click on or are approved for offers.”

Free Websites Reveal Your Address History and Names of Relatives (How to Opt Out) from My Money Blog.

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The Chase Freedom Card is a popular cash back rewards credit card. What makes it unique is the combination having no annual fee and the ability to get 5% Cash Back on up to $1,500 in combined purchases in bonus categories each quarter. Here are the highlights:

  • $150 cash bonus after $500 in purchases within your first 3 months.
  • 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate.
  • New 5% categories every 3 months like Gas Stations, Restaurants, and Select Grocery Stores
  • Unlimited 1% cash back on all other purchases.
  • Cash Back rewards do not expire as long as your account is open and there is no minimum to redeem for cash back.
  • 0% Intro APR for 15 months from account opening on purchases and balance transfers. 3% intro balance transfer fee when you transfer a balance during the first 60 days your account is open, with a minimum of $5.
  • Free credit score, updated weekly with Credit JourneySM
  • No annual fee.

Note the following text regarding the sign-up bonus eligibility:

This product is available to you if you do not have this card and have not received a new cardmember bonus for this card in the past 24 months.

2019 5% Cash Back Category Calendar

From April 1st through June 30th, 2019 you can earn 5% cash back on up to $1,500 spent in the following categories:

  • Grocery Stores (excludes Wal-mart and Target)
  • Home Improvement Stores

Activate each quarter at ChaseBonus.com, via your online account page, or call the number on the back of the card.  The categories usually include at least one big-spending area, and seem to go with the seasons (home improvement for spring, gas and travel for the summer). This is another “keeper” card for me, as I can keep it around and use it when the bonus categories fit my spending needs.

If you’d rather have “set it and forget it” rewards, compare with the Chase Freedom Unlimited Card, which offers a flat 1.5% cash back on everything (no special 5% categories) and no annual fee.

Synergy with Chase Sapphire Preferred and Chase Sapphire Reserve. Technically, you earn Ultimate Rewards points which can also be converted to airline miles or hotel points instead of cash if you have a Chase Sapphire Preferred or Chase Sapphire Reserve card.

This turns the 5% cash back categories into 5X Ultimate Rewards categories. That’s like earning 5 United miles per dollar spent, or 5 Hyatt points per dollar spent. With the Sapphire Reserve, 5X Ultimate Rewards = 7.5% back towards travel (flights, hotels) booked through the Chase travel portal.

Bottom line. The Chase Freedom Card is a unique cash back rewards card that lets you earn 5% cash back on select categories each quarter. It’s a little extra work to keep track of things, but it allows me to earn hundreds of dollars in extra cash each year without buying extra stuff I don’t need.


“The editorial content here 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 the author's alone. This email may contain links through which we are compensated when you click on or are approved for offers.”

Chase Freedom Card Review: 5% Cash Back on Quarterly Categories + $150 Sign-Up Bonus from My Money Blog.

Copyright © 2018 MyMoneyBlog.com. All Rights Reserved. Do not re-syndicate without permission.

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Here’s my portfolio update for the second quarter of 2019. Most of my dividends arrive on a quarterly basis, and this helps me determine where to reinvest them. These are my real-world holdings, including 401k/403b/IRAs, taxable brokerage accounts, and savings bonds but excluding our house, cash reserves, and a few side investments. The goal of this portfolio is to create sustainable income that keeps up with inflation to cover our household expenses for the next (hopefully) 40+ years.

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, adds up my balances, tracks my performance, and calculates my asset allocation. I still use my manual Google Spreadsheet (free, instructions) because it helps me calculate how much I need in each asset class to rebalance back towards my target asset allocation.

Here are my YTD performance and current asset allocation visually, per the “Holdings” and “Allocation” tabs of my Personal Capital account, respectively:

Stock Holdings
Vanguard Total Stock Market Fund (VTI, VTSAX)
Vanguard Total International Stock Market Fund (VXUS, VTIAX)
WisdomTree SmallCap Dividend ETF (DES)
Vanguard Small Value ETF (VBR)
Vanguard Emerging Markets ETF (VWO)
Vanguard REIT Index Fund (VNQ, 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)
Fidelity Inflation-Protected Bond Index Fund (FIPDX)
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 make a small bet that US Small Value and Emerging Markets will have higher future long-term returns (along with some higher volatility) than the more large and broad indexes, 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 based on a solid foundation of knowledge and experience.

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. I will use the dividends and interest to rebalance whenever possible in order to avoid taxable gains. (I’m fine with it drifting a bit either way.) With a self-managed, simple portfolio of low-cost funds, we minimize management fees, commissions, and taxes.

Holdings commentary. On the stocks side, everything has had a nice bounce back up since the drop in late 2018. I know that US stocks have beaten international stocks for a while, but I remain satisfied with my mix, knowing that I will own whatever successful businesses come out of the US, China, or wherever in the future.

On the bond side, my primary objective is to hold high-quality bonds with a short-to-intermediate duration of under 5 years or so. This means US Treasuries, TIPS, or investment-grade municipal bonds. I don’t want to worry about my bonds “blowing up”. I then tweak the specific breakdown based on my tax-deferred space available, the tax-effective rates of muni bonds, and the real interest rates of TIPS. Right now, it is roughly 1/3rd Treasuries, 1/3 Muni bonds, and 1/3rd TIPS.

Performance commentary and benchmarks. According to Personal Capital, my portfolio went up 9.9% so far in 2019. I see that during the same period the S&P 500 has gone up over 15%, Foreign Developed stocks up nearly 11%, and the US Aggregate bond index was up nearly 5%.

An alternative benchmark for my portfolio is 50% Vanguard LifeStrategy Growth Fund and 50% Vanguard LifeStrategy Moderate Growth Fund – one is 60/40 and the other is 80/20 so it also works out to 70% stocks and 30% bonds. That benchmark would have a total return of +10.97% for 2019 YTD.

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


“The editorial content here 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 the author's alone. This email may contain links through which we are compensated when you click on or are approved for offers.”

My Money Blog Portfolio Asset Allocation Update, June 2019 (Q2) from My Money Blog.

Copyright © 2018 MyMoneyBlog.com. All Rights Reserved. Do not re-syndicate without permission.

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A mortgage broker once told me that he didn’t care if rates were high or low. He just wanted them to change. As long as interest rates move enough in either direction, more mortgages will be created. He’s probably getting a lot of calls right now, as the average 30-year fixed mortgage has dropped down to 3.82% from nearly 4.5% over the last 3 months (source).

The result? Nearly 7 million Americans can now refinance and potentially lower their existing rate by at least 0.75% according to mortgage analytics company Black Knight (source):

According to Axios, the average principal and interest payment would be reduced by $268 per month. Your number may differ, but still that’s every month! If you are looking for opportunities with a high return-on-time-invested, this could be a big one.

Bottom line. If you have a mortgage, now is a good time to compare your existing rate with what is available. Run a quick online quote with a big network like LendingTree, or go local and call up your neighborhood broker. If you can save money, lock in the rate as they can pop back up quickly.


“The editorial content here 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 the author's alone. This email may contain links through which we are compensated when you click on or are approved for offers.”

Rates Drop = Refinance Check! 7 Million People Can Lower Mortgage Rate By 0.75%+ from My Money Blog.

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At every annual shareholder meeting, Berkshire Hathaway publishes an official reading list and sells discounted copies through a local Omaha bookstore called The Bookworm. Both Warren Buffett and Charlie Munger have consistently attributed a significant part of their success to their constant reading:

“I insist on a lot of time being spent, almost every day, to just sit and think. That is very uncommon in American business. I read and think. So I do more reading and thinking, and make less impulse decisions than most people in business. I do it because I like this kind of life.” – Warren Buffett

“In my whole life, I have known no wise people (over a broad subject matter area) who didn’t read all the time—none. Zero. You’d be amazed at how much Warren reads—and how much I read. My children laugh at me. They think I’m a book with a couple of legs sticking out.” – Charlie Munger

Here is the 2019 annual meeting handout. I couldn’t find the 2018 list or many other previous years’ lists, so I decided to track them here. I just bought a used copy of the Lowenstein biography of Warren Buffett from Amazon and the 50th anniversary book direct from Berkshire.

New additions for 2019

The Moment of Lift: How Empowering Women Changes the World by Melinda Gates. From the Amazon page: For the last twenty years, Melinda Gates has been on a mission to find solutions for people with the most urgent needs, wherever they live. Throughout this journey, one thing has become increasingly clear to her: If you want to lift a society up, you need to stop keeping women down. In this moving and compelling book, Melinda shares lessons she’s learned from the inspiring people she’s met during her work and travels around the world. As she writes in the introduction, “That is why I had to write this book?to share the stories of people who have given focus and urgency to my life. I want all of us to see ways we can lift women up where we live.”

Letters to Doris – One Woman’s Quest to Help Those with Nowhere Else to Turn. From the Amazon page: The Letters Foundation is a foundation of last resort that provides humanitarian grants to people experiencing a crisis when no other options exist. These one-time grants provide a hand-up to individuals as they work to stabilize their lives. Established by siblings Warren and Doris Buffett, the Letters Foundation reads and replies to letters from individuals living within the United States.

The Future Is Asian: Commerce, Conflict, and Culture in the 21st Century by Parag Khanna. (Charlie’s Pick) From the Amazon page: There is no more important region of the world for us to better understand than Asia – and thus we cannot afford to keep getting Asia so wrong. Asia’s complexity has led to common misdiagnoses: Western thinking on Asia conflates the entire region with China, predicts imminent World War III around every corner, and regularly forecasts debt-driven collapse for the region’s major economies. But in reality, the region is experiencing a confident new wave of growth led by younger societies from India to the Philippines, nationalist leaders have put aside territorial disputes in favor of integration, and today’s infrastructure investments are the platform for the next generation of digital innovation.

Saudi America: The Truth about Fracking and How It’s Changing the World by Bethany McLean. (Charlie’s Pick) From the Amazon page: Investigative journalist Bethany McLean digs deep into the cycles of boom and bust that have plagued the American oil industry for the past decade, from the financial wizardry and mysterious death of fracking pioneer Aubrey McClendon, to the investors who are questioning the very economics of shale itself. McLean finds that fracking is a business built on attracting ever-more gigantic amounts of capital investment, while promises of huge returns have yet to bear out. Saudi America tells a remarkable story that will persuade you to think about the power of oil in a new way.

Berkshire 50th Anniversary

About Warren Buffett

About Charlie Munger

On Investing

General Interest

Here are my own posts related to the books listed above:


“The editorial content here 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 the author's alone. This email may contain links through which we are compensated when you click on or are approved for offers.”

Official Berkshire Hathaway Book Reading List – Updated 2019 from My Money Blog.

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The most depressing thing I read today was Former Boeing Engineers Say Relentless Cost-Cutting Sacrificed Safety at Bloomberg Businessweek.

If you want to know why I am not part of the “I love what I do and I’m going to plan to work forever” crowd, this article pretty much sums it up. As someone who has an engineering background and has actually done work inside some of their facilities years ago (but never worked for Boeing), I also felt Boeing had the reputation of hiring the best aerospace engineers and thus made awesome airplanes. As a kid, that was a dream job. C’mon, you get to make airplanes!!!

Yet somehow a company renowned for its meticulous engineering installed software that drove the aircraft into the ground while the pilots searched desperately for answers.

Why? The answers to all your questions is money. At Boeing, the bean counters won and the engineers lost. It wasn’t overnight, but it like many things it seems gradually and then all at once. Even though the FAA basically let Boeing police itself, the FAA has still had to forcefully ground two of Boeing’s planes in the last 6 years. The last time a plane was grounded before that was 1979. The worst part is that they still don’t seem to understand their mistakes.

The relentless message: Shareholders would henceforth come first at Boeing. The important thing was not to get “overly focused on the box,” Hopkins said in a 2000 interview with Bloomberg. “The box”—the plane itself—“is obviously important, but customers are assuming the box is of great quality.” This was heresy to engineers, to whom the box was everything.

I can’t imagine how disheartening this would be to a Boeing engineer or factory worker. Their obsession is why the airline industry has become so commonplace and successful. We trust that we will land safely. They built up a great reputation. Now it appears that Boeing executives started trading that assumption of quality (reputation) in exchange for short-term profits (while firing many of the engineers). The product that they helped create had defects that killed people. Worker morale must be at an all-time low.

This is why building up a certain level of financial independence is important. Sure, your job right now is great. The pay is great. You’re building something cool. You like your boss. There is no end to the gravy train in sight, so why not buy the huge house, luxury car, and new boat? If you have the dream job and your specialized skills are highly valued, enjoy it but remember that if done properly you only need to get rich once! A dream job can turn into a nightmare. Read this article and watch out for those bean counters. I’m so glad that I never have to answer to one again.


“The editorial content here 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 the author's alone. This email may contain links through which we are compensated when you click on or are approved for offers.”

Boeing Engineer: From Dream Job to Nightmare from My Money Blog.

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Vanguard has a blog post about their Target Retirement 20XX funds (TDFs) with a few interesting stats (via Abnormal Returns):

  • 97% of all Vanguard retirement plan participants had a target-date fund as an available investment option.
  • 77% of all Vanguard retirement plan participants owned a target-date fund.
  • 52% of all Vanguard retirement plan participants owned a target-date fund as their sole investment.

These all-in-one funds are getting more and more popular. So what is the effect of owning these TDFs as compared to the old method where you had to do your own mixing and matching of various funds? In general, the effect was to nudge younger investors to own more stocks. Here’s their chart comparing asset allocation holdings by age in 2004 and 2018. (The earliest TDFs were born in 2003 and still had a small percentage of assets in 2004.)

I find the 2004 “hump” curve to be interesting. The average young investor in 2014 was risk-averse and increased their stock holding up until the peak at about age 40, gradually going back to owning more bonds after that. The youngest investors (under 25) used to only hold 55% stocks on average, as opposed to 88% stocks today (90% stocks is the what the current Vanguard target-date funds own at that age). On an individual level, did most of them hold a 50/50 split or were half of them 100% stocks and the other half 100% cash?

I have recommended the Vanguard Target Retirement Funds to my own family members for its low costs and broad diversification. Vanguard obviously thinks this modern glide path is an improvement, but I hope that young people will keep holding onto the fund during the next bear market. That’s the true test of whether this new system is better.


“The editorial content here 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 the author's alone. This email may contain links through which we are compensated when you click on or are approved for offers.”

Vanguard Target Date Retirement Funds Nudge Younger Investors To Own More Stocks from My Money Blog.

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Here’s my monthly roundup of the best interest rates on cash for June 2019, roughly sorted from shortest to longest maturities. Things are pretty dull this month – mostly small rate drops on CDs due to the inverted yield curve. 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. Rates listed are available to everyone nationwide. Rates checked as of 6/2/19.

High-yield savings accounts
While the huge megabanks like to get away with 0.01% APY, it’s easy to open a new “piggy-back” savings account and simply move some funds over from your existing checking account. The interest rates on savings accounts can drop at any time, so I prioritize banks with a history of competitive rates. Some banks will bait you and then lower the rates in the hopes that you are too lazy to leave.

Short-term guaranteed rates (1 year and under)
A common question is what to do with a big pile of cash that you’re waiting to deploy shortly (just sold your house, just sold your business, legal settlement, inheritance). My usual advice is to keep things simple and take your time. If not a savings account, then put it in a flexible short-term CD under the FDIC limits until you have a plan.

  • No Penalty CDs offer a fixed interest rate that can never go down, but you can still take out your money (once) without any fees if you want to use it elsewhere. Purepoint Financial has a 13-month No Penalty CD at 2.50% APY with a $10,000 minimum deposit. Marcus Bank 13-month No Penalty CD at 2.35% APY with a $500 minimum deposit. You may wish to open multiple CDs in smaller increments for more flexibility.
  • Comenity Direct has a 12-month CD at 2.86% APY ($1,500 minimum) with an early withdrawal penalty of 6 months of interest. If you have a military relationship, Navy Federal Credit Union has a 10-month special at 2.75% APY with add-on option.

Money market mutual funds + Ultra-short bond ETFs
If you like to keep cash in a brokerage account, beware that many brokers pay out very little interest on their default cash sweep funds (and keep the difference for themselves). The following money market and ultra-short bond funds are not FDIC-insured, but may be a good option if you have idle cash and cheap/free commissions.

  • Vanguard Prime Money Market Fund currently pays an 2.40% SEC yield. The default sweep option is the Vanguard Federal Money Market Fund, which has an SEC yield of 2.33%. You can manually move the money over to Prime if you meet the $3,000 minimum investment.
  • Vanguard Ultra-Short-Term Bond Fund currently pays 2.61% SEC yield ($3,000 min) and 2.71% SEC Yield ($50,000 min). The average duration is ~1 year, so there is more interest rate risk.
  • The PIMCO Enhanced Short Maturity Active Bond ETF (MINT) has a 2.71% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 2.69% SEC yield while holding a portfolio of investment-grade bonds with an average duration of ~6 months.

Treasury Bills and Ultra-short Treasury ETFs
Another option is to buy individual Treasury bills which come in a variety of maturities from 4-weeks to 52-weeks. You can also invest in ETFs that hold a rotating basket of short-term Treasury Bills for you, while charging a small management fee for doing so. T-bill interest is exempt from state and local income taxes.

  • You can build your own T-Bill ladder at TreasuryDirect.gov or via a brokerage account with a bond desk like Vanguard and Fidelity. Here are the current Treasury Bill rates. As of 6/1/19, a 4-week T-Bill had the equivalent of 2.35% annualized interest and a 52-week T-Bill had the equivalent of 2.22% annualized interest.
  • The Goldman Sachs Access Treasury 0-1 Year ETF (GBIL) has a 2.30% SEC yield and the SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a 2.24% SEC yield. GBIL appears to have a slightly longer average maturity than BIL.

US Savings Bonds
Series I Savings Bonds offer rates that are linked to inflation and backed by the US government. You must hold them for at least a year. There are annual purchase limits. If you redeem them within 5 years there is a penalty of the last 3 months of interest.

  • “I Bonds” bought between May 2019 and October 2019 will earn a 1.90% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. More info here.
  • In mid-October 2019, the CPI will be announced and you will have a short period where you will have a very close estimate of the rate for the next 12 months. I will have another post up at that time.

Prepaid Cards with Attached Savings Accounts
A small subset of prepaid debit cards have an “attached” FDIC-insured savings account with exceptionally high interest rates. The negatives are that balances are capped, and there are many fees that you must be careful to avoid (lest they eat up your interest). Some folks don’t mind the extra work and attention required, while others do. There is a long list of previous offers that have already disappeared with little notice. I don’t personally recommend or use any of these anymore.

  • The only notable card left in this category is Mango Money at 6% APY on up to $2,500, but there are many hoops to jump through. Requirements include $1,500+ in “signature” purchases and a minimum balance of $25.00 at the end of the month.

Rewards checking accounts
These unique checking accounts pay above-average interest rates, but with unique risks. You have to jump through certain hoops, and if you make a mistake you won’t earn any interest for that month. Some folks don’t mind the extra work and attention required, while others do. Rates can also drop to near-zero quickly, leaving a “bait-and-switch” feeling. I don’t use any of these anymore, either.

  • The best one right now is Orion FCU Premium Checking at 4.00% APY on balances up to $30,000 if you meet make $500+ in direct deposits and 8 debit card “signature” purchases each month. The APY goes down to 0.05% APY and they charge you a $5 monthly fee if you miss out on the requirements. There is also the TAB Bank 4% APY Checking, which I don’t like due its vague terms. Find a local rewards checking account at DepositAccounts.
  • If you’re looking for a high-interest checking account without debit card transaction requirements then the rate won’t be as high, but take a look at MemoryBank at 1.60% APY.

Certificates of deposit (greater than 1 year)
CDs offer higher rates, but come with an early withdrawal penalty. By finding a bank CD with a reasonable early withdrawal penalty, you can enjoy higher rates but maintain access in a true emergency. Alternatively, consider building a CD ladder of different maturity lengths (ex. 1/2/3/4/5-years) such that you have access to part of the ladder each year, but your blended interest rate is higher than a savings account. When one CD matures, use that money to buy another 5-year CD to keep the ladder going.

  • Hanscom Federal Credit Union has a 19-month CD special at 3.00% APY ($1,000 minimum) with an early withdrawal penalty of 6 months of interest. WebBank has a 3-year CD at 3.00% APY ($2,500 minimum) with an early withdrawal penalty of 9 months of interest.
  • 5-year CD rates have been dropping at many banks and credit unions, following the overall interest rate curve. A good rate is now about 3.25% APY, with Connexus Credit Union offering 3.40% APY ($5,000 minimum) on a 5-year CD with an early withdrawal penalty of 12 months of interest. Anyone can join this credit union by joining a partner organization for a $5 fee.
  • You can buy certificates of deposit via the bond desks of Vanguard and Fidelity. You must now log in to see the rates. These “brokered CDs” offer FDIC insurance and easy laddering, but they don’t come with predictable fixed early withdrawal penalties. Nothing special right now. As of this writing, Vanguard is showing a 2-year non-callable CD at 2.50% APY and a 5-year non-callable CD at 2.70% APY. Watch out for higher rates from callable CDs listed by Fidelity.

Longer-term Instruments
I’d use these with caution due to increased interest rate risk, but I still track them to see the rest of the current yield curve.

  • Willing to lock up your money for 10+ years? You can buy long-term certificates of deposit via the bond desks of Vanguard and Fidelity. These “brokered CDs” offer FDIC insurance, but they don’t come with predictable fixed early withdrawal penalties. As of this writing, Vanguard not showing any available 10-year CDs. Watch out for higher rates from callable CDs from Fidelity. Matching the overall yield curve, current CD rates do not rise much higher as you extend beyond a 5-year maturity.
  • How about two decades? Series EE Savings Bonds are not indexed to inflation, but they have a guarantee that the value will double in value in 20 years, which equals a guaranteed return of 3.5% a year. However, if you don’t hold for that long, you’ll be stuck with the normal rate which is quite low (currently a sad 0.10% rate). I view this as a huge early withdrawal penalty. You could also view it as long-term bond and thus a hedge against deflation, but only if you can hold on for 20 years. As of 6/1/19, the 20-year Treasury Bond rate was 2.39%.

All rates were checked as of 6/2/19.




“The editorial content here 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 the author's alone. This email may contain links through which we are compensated when you click on or are approved for offers.”

Best Interest Rates on Cash – June 2019 from My Money Blog.

Copyright © 2018 MyMoneyBlog.com. All Rights Reserved. Do not re-syndicate without permission.

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Updated for 2019. When choosing a 529 college savings plan, you can open a 529 plan from any state. However, each state can vary widely in what they offer in terms of tax deductions and/or matching grants. You may have to weigh your in-state benefits against the superior investment options from an out-of-state plan. Morningstar has just published their 529 College-Savings Plan Landscape report for 2019, which included a state-by-state summary of the tax benefits:

Based on a previous M* article, their conclusion is that if your in-state tax benefit is greater than 5% of your contribution, then you should stick with your in-state plan. For example, if you contribution $100 a month ($1,200 annually), the tax benefit should be at least $60 to offset the chance that another state has a plan with slightly lower annual costs.

If your potential in-state tax benefit is less than 5% of your contribution, then it is a close call. You should weigh various factors like relative fee amounts and quality of investment options. If your state does “tax parity” – meaning it offers the same tax benefits for any 529 plan – then you should simply choose the best nationwide plan.

It’s hard to cover all possible situations, but here is an older 2015 chart that quantifies tax benefits for a hypothetical family saving for college (two adults, two children, $100 per month savings per child) at both the $60,000 and $200,000 household income levels. Tax breaks do change regularly, so I would double-check before making a contribution based on these numbers.

For reference, here’s an older chart from 2014:

My observation as someone who has been tracking these plans for several years is that many of the factors considered here are subject to change. State-specific tax breaks may come and go. 529 plan costs and investment options also change from year to year, with the overall trend being that the worst plans tend to get better due to competitive pressure. (No state wants to be the “worst” plan, and an expensive plan can switch administrators and transform into a cheap plan within a year.) Meanwhile, the top plans tend to stay that way.

Therefore, I would also consider trying to grab any significant tax break that is available now and hope that the plan gets better in the future. Some states even let you grab the tax deduction and then immediately roll over the assets to any outside plan; other states “recapture” the tax deduction if do you that within a certain time period. Sometimes you can wait out the recapture period and then roll funds over to a better state 529 plan for free (once every rolling 12 months).


“The editorial content here 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 the author's alone. This email may contain links through which we are compensated when you click on or are approved for offers.”

529 College Savings Plans: All 50 States Tax Benefit Comparison (Updated 2019) from My Money Blog.

Copyright © 2018 MyMoneyBlog.com. All Rights Reserved. Do not re-syndicate without permission.

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