I am happy to be able to offer special Costco membership certificates again to MyMoneyBlog readers. Available only online, they are $50 each with free shipping, and are good towards new Gold Star memberships and also upgrades to Executive Membership. Just bring them into your local Costco to redeem.

This is exactly the same price as you would pay at a Costco store, but with each membership certificate you order, you will also receive a coupon booklet worth more than $50 by itself, including a FREE rotisserie chicken, FREE 100-print digital photo processing, a FREE Kirkland Signature™ 2 lb. bag of coffee, FREE Kirkland Signature 48 pk “AA” batteries – and more.

• Join as an Executive Member: Purchase two Membership Certificates at $50 each.
• To join as a Gold Star Member or upgrade your existing membership with one Membership Certificate at $50.
• Give the gift of Costco Membership Certficates for any occasion.

More details:

This offer is only valid online and is not available at Costco locations.

Restrictions: Valid for new memberships and upgrades to Executive Membership. See the Membership Certificate for details. Costco Membership Certificate orders are fulfilled by participating National Membership Program organizations. Please allow approximately 2 weeks for processing and shipping. Costco Wholesale Membership Certificates are not replaceable if lost, stolen or destroyed. Bring the certificates to your local Costco membership counter to activate.

Update: They added an initial front page verification system where you have to enter a captcha, but it still ends up at the same place and you can still read all the terms before buying. You can also read the reader comments from my older post with positive reviews.

Reward Checking Accounts
These are checking accounts, usually through local credit unions, that pay a very high interest rate if you jump through some hoops each month. However, if you make a mistake you’ll forfeit virtually all your interest for that month, so it can be tricky. But for the very diligent, their rates are still averaging around 3-5% APY usually on balances up to $25,000. A current example is FAB&T Kasasa checking at 3.50% APY on up to $50k, which requires 10 check card purchases each month, a direct deposit/auto-withdrawal, must log into your account once a month, and online statements only.

For more, see my review of rewards checking accounts and also this list of accounts by state. I’d stick with small local credit unions with limited membership eligibility if possible, as the rates tend to be more stable.

Online Savings Accounts Rate Updates

• Everbank is offering 2.51% APY for the first 3 months for new accounts. This rate is higher than any 3-month certificates of deposit currently available.
• ShoreBank Direct is offering 1.95% APY on its online savings account with $1 to open and no monthly fees.
• Ally Bank Online Savings recently raised their “no fine print” savings account rate to 1.64% APY. No minimums, no monthly fees.

Certificates of Deposit
As stated above, for 3-months or less go with Everbank. In general, CD rates have been very low, and given how fast rates can rise as compared to how much further they might fall, I don’t see the benefit in locking up for money for a slightly longer period of time. For example, a top 1-Year CD might get you 2% APY, while stretching out to 3 years might bump you up to 2.80% APY, according to CD “auction” site MoneyAisle.

If you are in a high tax bracket and have a 5-6 year horizon, you may also want to research the Vanguard Intermediate-Term Tax-Exempt mutual fund (VWITX). It currently has an average duration of 5.5 years and an SEC yield of 3.01% that is exempt from federal income taxes. In the 35% tax bracket, that is a tax-equivalent yield of ~4.61%. A top 5-year CD from MoneyAisle yields 3.39% APY. VWITX is not FDIC-insured and invests in high-grade municipal bonds, so weigh your options carefully.

Remember, the new $250,000 FDIC & NCUA insurance limits per titled accounts are currently extended through 2013.

If you don’t know what I’m talking about, see last month’s post on Using Google Voice To Enhance Your Cell Phone Voicemail.

I’ve been using it for the last few days, and I must say that I like it a lot. I can have unanswered phone calls to my cell phone number (not GV number) forwarded first to my home phone or office phone. Then, if still nobody picks up the Google Voicemail system kicks in, which records the message online and shoots me a transcribed text message about 30 seconds later. Transcription accuracy isn’t perfect, but for the most part it works well enough to get the point of the message.

Check out my post on Ways To Save Money With Google Voice for several other useful features! They seem to be giving out invites to everyone who asks right now.

I went home, and remembered the Costco Auto Buying Program that offered a no-haggle pre-negotiated price. Ideally in true Costco style, they would offer a “good” deal as opposed to a rock-bottom pitted-six-dealers-against-each-other-in-a-deathmatch price. I figured, why not give them a try?

I filled out the form, and the person calls me back. I was surprised to hear that he was an employee of Costco, not of the dealership. He gives me the spiel about how Costco is all about volume so he can offer a better price than a salesperson. However, it turns out that my Costco-affiliated dealership is the same one I went to for a test drive, and since I met with a salesperson they were not allowed to talk specifics with me for a period of at least 2 weeks after last contact. If I start up negotiations again, the date resets. I’m not in a hurry, so I’m just waiting around because the original guy definitely isn’t earning a commission from me.

Has anyone out there used this program before? How did you like it? I found this link which offered a mix of experiences.

At the end of trading yesterday 11/18, Berkshire’s A shares currently cost $103,100 apiece and B shares were $3,430. After a 50-to-1 split, a B share would cost about $69. Several news articles are talking about how this brings the share price down to the “common man”. For a $69 investment, you should able to attend the Berkshire Hathaway Annual Meeting in Omaha this May, although you could also buy tickets for $5 on eBay directly from BRK.

But wait, you may already own a piece of Berkshire… or you may soon.

S&P 500
Right now, Berkshire Hathaway is not part of the S&P 500. Many folks (including me in the past) thought the S&P 500 was simply the largest 500 companies in the US, but not quite. I’ve read that BRK is likely excluded due to inadequate trading volume of their high-priced shares. If the stock split occurs, it is possible that BRK will become part of the S&P 500 and thus be bought by every S&P 500 index fund out there. I’m sure Wall Street traders have already begun the speculating.

As of 1/18, the market cap of BRK was roughly $160 Billion. Looking at this chart of S&P 500 components sorted by size, BRK would actually be #9 on that list, as it is worth more than even Chevron or AT&T. If included, BRK would constitute about 1.65% of the index.

Total Stock Market
However, you may already own a piece of Berkshire if you own part of a mutual fund that tracks an index following the “total” US stock market. For example there’s the Vanguard Total Stock Market Index Fund (VTSMX), which is held within all of the Vanguard Target Retirement Funds. By my rough calculations, BRK is approximately 1.3% of the broad US market. So for every $10,000 of VTSMX or VTI you hold, you own $130 of BRK already.

Sharebuilder
Of course, for years now you could own $1 or $50 or $500 of BRKB by buying partial shares of BRKB through Sharebuilder ($25 bonus). You wouldn’t want to go too small as the $1 to $4 commission would take too big a bite, but it can be one way to gradually accumulate BRK shares. I think I have about $45 worth right now, myself, mainly due to an opening bonus.

However, Kiva may not work exactly like it suggests on their website. You’ll notice that they post up pictures and stories of people needing loans, and you get to pick the exact person you want to lend to. Back in 2007, I thought I loaned $25 to Vitolina:

Vitolina owns a set of beach fales that she rents out to back-packers or picnickers passing through the village and works hard to keep the structures in good condition. Fales are simple, small open huts with thatched roofs built in the style of the traditional Samoan house. Vitolina?s fales are situated on a white sandy beach on the Samoan coast. She readily welcomes guests and provides them with a simple roof, unbeatable views, and home-cooked meals. She will use the loan to renovate the beach fales.

However, chances are that the person you clicked on already got the loan months ago. Your money is simply going to the microfinance institution (MFI) who already lent to that person, and will use that money to lend to another future person or general project. The direct “person-to-person” link does not exist like it does, for example, at LendingClub.

There is a lot of recent discussion on the web on this issue. Thanks to the commenter who made me aware of it. Check out this NY Times article and the blog post by David Roodman that started it all.

After reading the posts and several follow-ups, it does make practical sense that Kiva can’t actually match a lender to a specific borrower - it would take too long for the borrower to get the loan. However, it does show that “good stories” do matter. Remember those “Save The Children” commercials where you’d get a letter from the child you helped? Same deal. Your money goes to the general organization, not any specific child.

As a result, Kiva has changed how it explains their loans and their homepage tagline went from “Kiva lets you lend to a specific entrepreneur, empowering them to lift themselves out of poverty.” to the more generalized “Kiva connects people through lending to alleviate poverty.”

The other common variable that is somewhat hidden away to new visitors is that while you loan money at 0%, the actual MFI will likely go on to loan money to the entrepreneur at around 30% APR. The difference pays the operational expenses of the MFI and may partially subsidize defaults in order to maintain the advertised tiny 0-2% default rates.

None of this means Kiva or microcredit is bad. Sure, it’d be nice if I could lend at 0% instantly to a borrower in Cambodia who could pay 0% interest too, but right now that’s not possible. I still plan on lending at both Kiva, but will no longer get the “warm fuzzy connection” feeling from Kiva and may direct more funds towards Microplace or Grameen Foundation.

Since P2P loan interest is taxed at ordinary income rates like interest from savings accounts, the ability to place them in a tax-deferred account is attractive. But since person-to-person lending is such a new asset class, I would hesitate to make it larger than say 5% of my portfolio, which would require a total portfolio size of $300,000. So, I’m out.

It is interesting that the custodian EntrustCAMA allows a lot of options in their Self-Directed IRAs like holding physical precious metals, investing in private small businesses, and investing directly in real estate. I’m not sure if you can only hold LC notes in this free IRA.

Human Capital
There are some differing definitions, but below is a brief explanation (taken from the magazine article above) of what is meant by human capital here:

Human capital is a measure of the present value of your client’s future wages, income and salary (net of any future income taxes and expenses). For example, if she is a doctor, lawyer, engineer or even a professor, she has probably invested an enormous amount of time, effort and money to finance her education. That investment will hopefully pay off over many future years of productive labour income in the form of job dividends over the next 10, 20 or even 30 years. Sure, clients can’t really touch, feel or see human capital, but like an oil reserve deep under the sands of Alberta, it will eventually be extracted and so it’s definitely worth something now.

Milevsky likes to talk about people as businesses and thus includes human capital on the balance sheet of “Me, Inc.”:

When you’re young, your human capital may very well dwarf your 401k balance. With this in mind, it may make you feel better about any short-term losses.

Your human capital can be viewed as a hedge against the losses in your financial capital. So, as a 50-, 40-, or especially 30-year old, you should be willing to take more chances with your total portfolio, perhaps even borrow to invest or leverage into the stock market, because you have the ability to mine more human capital if needed.

Am I a Stock or a Bond?
One characteristic of your human capital to think about is if it tends to act like a stock or a bond. As a tenured university professor, Milevsky offers himself up as a good example of a bond that offers a reliable and steady coupon (paycheck). However, an small business owner, investment banker, or even a car salesman would have an income that is much more correlated with current economic conditions - much like a stock would.

A common piece of advice that relates to this is when people are told not to hold too much of their employer’s company’s stock (often in 401k plans). Since your salary is already tied to that company, it would be wise to add some diversification so that all your eggs aren’t in one basket.

Along the same diversification argument, if you are a “bond” then you may be able to take more equity risk in your retirement portfolio. On the other hand, if you are a “stock” then you may want to reduce your exposure to stock market swings. “Your invested assets should zig when your salary zags… tilt your financial portfolio away from your human capital.”

Thoughts
Unfortunately, rarely are things so simple. Human capital is at best a guess of the future, and you could be really far off. And just because your income isn’t tied to the stock market, doesn’t necessarily mean you can stomach the swings of a highly risky portfolio. If you’re the type to panic and sell at the bottom, perhaps increasing stocks would only hurt your long-term investment returns.

I like to imagine a good financial couple as one that pairs up a stock and bond. Perhaps one person holds a steady government job with a pension and healthcare benefits into retirement, while the other is an entrepreneur that takes some risks and tries to strike it big.

Also, what if I don’t want take advantage of all my human capital? Sure I could work for another 35 years and consider a big chunk of human capital in my net worth, but I’d really rather not.

What do you think of this concept?

The code is good until November 30th (although try it anyways and see if it works after that date), so be quick about it. For the Equifax credit score only, you can get it for $10.95 using the code SW94608, which is over 30% off. You enter the promo code relatively late in the buying process, right before entering your credit card information. Look for this:

Experian no longer allows Fair Isaac to sell FICO scores to consumers at all (even though lenders still buy and use them). They sell their own “FAKE-O” version now. Lenders almost always use FICO scores in their decisions, so those are the only ones you should pay for if at all.

For the diligent, a cheaper alternative is to sign up for a free 30-day trial of Scorewatch, which includes two free Equifax scores and reports. Just remember to cancel as soon as you decide you don’t need it anymore. You are allowed to cancel online, without having to even call in.

You can always request your credit reports (not scores) once every 12 months at AnnualCreditReport.com. If you’ve already done that, you can still try these other direct methods for the unemployed, those denied credit, and victims of identity theft.

The book is primarily a straight transcription of the original handwritten journal, with a few editor’s notes to provide a little additional background when needed. Each entry is dated, and it is very interesting to see the first-person perspective unfold over time. Indeed, imagine a “blog” back then and you’d get this. Roth was not an economist or historian, and simply wrote down what he saw.

Historical Similarities
It is easy to find many similarities between the recession back then and now. The stock market and real estate market boomed, speculation was rampant, and then it all collapsed. Banks were stuck with mortgages that nobody could afford to keep up with, and foreclosures were everywhere. Unemployment was very high, although it was 25% back then as compared to 10% now.

[9/19/32] It looks as tho the Democrats will win because everybody wants a “change”.

Sound familiar?

Roth considered himself a Republican, and did worry a lot about “a shift towards socialism” and inflation always being around the corner. The government did end up spending a lot of money to stimulate the economy, although not exactly the same way as now. On the other hand, many things that seemed like radical changes back then are things that we almost take for granted today - including new institutions like the FDIC to provide bank deposit insurance, the SEC to regulate investments, and even Social Security.

Historical Differences
Throughout the diary, Roth is always talking about how numerous banks failed or re-opened temporarily only to close again due to rapid withdrawals. This led to even the strongest banks putting very tight restrictions on withdrawals (i.e. max 5% of deposits). Without something like the FDIC, people ended up selling their account balances for 40 cents on the dollar because they needed the money immediately or were afraid they’d never see it again.

Personal Finance & Investing
Roth often wrote about personal finance and investing as well. He really like the idea of saving up a lot of cash during boom times, and then investing it all at the “bottom” after a crash, although he gradually seemed to realize that predicting the exact bottom was impossible and that simply holding it for the long term might be more reasonable.

In normal times the average professional man makes just a living and lives up to the limit of his income because he must dress well, etc. In times of depression he not only fails to make a living but has no surplus capital to buy stocks and real estate. I see now how important it is for the professional man to build up a surplus in normal times. [...] His practice suffers and he has no chance of rising above the level of the ordinary practitioner who lives from day to day and from hand to mouth.

[5/9/1932] Those men who were wise enough to sell during the boom and then keep their funds liquid in the form of government bonds, etc. were not farsighted enough or patient enough to wait almost three years to re-invest. Most of them re-invested a year or more ago and now find stock prices have sagged to 1/3 of what they were when they thought they were buying bargains.

Of course, back then there was still the CNBC equivalent of various economists and business leaders sharing their “future economic outlook”. Roth recorded their predictions and always seemed to come back with a later follow-up note “…the predictions were wrong.” Some things never change!

If I were to levy a criticism of this book, it would be that it is more of a list of his observations, as opposed to his personal actions. For example, he often mentions how local Bank A or Bank B has failed or is restricting withdrawals. But Roth doesn’t actually share where he keeps his money, if he has moved it due to fear, or if he has had problems withdrawing his own deposits. He doesn’t share his personal investments, even though he records the share prices of many companies regularly. This ends up making the trip to the past a bit more dry than it could have been, but it was still a fun and enlightening trip to take.

Perhaps empty out that coin jar and cross someone off your gift list and well? Below is selected fine print from the official rules:

Obtain an official claim form when you convert in a single transaction at least 40 U.S. dollars (in coins only) into a gift card or eCertificate at participating Coinstar Centers. The claim form will be displayed at the end of qualified Coinstar® receipts.

General terms and conditions: the $10 holiday bonus offer ends 12/6/09. Offer valid in the U.S. only and excludes Puerto Rico. Offer good on qualified coin transactions made between 11/9/09 and 12/6/09. Transactions occurring before or after these dates are not eligible for this offer. Limit 1 per name, address, or household.

BBVA Compass Bank is offering a free 8gb iPod Touch when you open a checking account with $100 and set up direct deposit for 6 months. Unfortunately, there are a lot of restrictions. For one, you must reside in Alabama, Arizona, Colorado, Florida, New Mexico, or Texas. Secondly, the iPod is offered through a third-party fulfillment company (think mail-in rebates…) to which you actually have to pay the shipping and handling. Thanks to reader Susan for the tip. Selected fine print:

*To qualify for this offer, you must (1) by December 15, 2009, open a new BBVA Compass Build-to-Order consumer checking account with a minimum deposit of at least $100, (2) within 6 weeks of account opening, your paychecks must begin to be directly deposited into your new checking account at least once each statement cycle. At 6 months your account will be verified again to confirm you are still meeting the payroll direct deposit requirement. If not, BBVA Compass will debit $180 (the approximate cost of the iPod touch) from your checking account.

According to the Franchise Tax Board, previously a single taxpayer making $51,000 a year and claiming one withholding allowance would have had $40.58 a week withheld from his or her paycheck. After Nov. 1, withholding increased to $44.64 a week, an increase of $4.06. Taking an extra $20 a month from someone making $51,000 a year seems more annoying in principal than anything else.

If you want to “undo” this gimmick, you can increase the number of withholding exemptions you claim on form DE-4, Employee’s Withholding Allowance Certificate, from your payroll department. You can also increase the exemptions on your W-4 form as well, but that just decreases the amount of federal tax withheld.

Fool around with the calculator at PayCheckCity and see how changing the number of allowances changes things (I don’t know if they’ve updated their calculators to include this change, but you’ll get the general idea). Just be sure that you’re paying enough income taxes to avoid underpayment penalties.

A much more detailed (and long-winded) article can be found at SacBee.com. Thanks to reader Sharon for the heads up.

All of us here at Hawaiian Airlines are grateful to you — our HawaiianMiles members — whose loyalty has made our 80th anniversary possible.

To celebrate, as we near the big day, we’re giving every HawaiianMiles member 80 free miles or an $80 eCertificate towards a flight between Hawaii and the Mainland U.S. Everyone will receive 80 miles just for registering and every 80th person to register will receive an $80 eCertificate in place of the miles.

Q. What are you announcing?
In addition to working with Virgin America, Google has partnered with over 45 airports across the country to offer complimentary WiFi to travelers passing through these cities this holiday season (November 10, 2009 through January 15, 2010).

Q. Why is Google doing this?
We’d like to make the holiday travel crunch a little easier and more pleasant – and what better way to do it than with what we know best: the Internet?

Q. Who is powering this service?
We are working with Boingo, Advanced Wireless Group, Time Warner Cable, Electronic Media Systems, Lilypad as well as numerous airports that provide wireless services themselves.

4) To qualify for this offer, new accounts must be opened and funded with $2,500 or more. Account funding must occur within 30 days of account opening, and one trade must be executed within 180 days of account opening, for account to qualify. Offer is not transferable or valid in conjunction with any other offer. Open to US residents only. One offer per household. TradeKing can modify or discontinue this offer at anytime without notice. The minimum funds of $2,500 must remain in the account (minus any trading losses) for a minimum of 6 months or the credit may be surrendered. Other restriction may apply.

TradeKing offers $4.95 trades with no minimum balance requirement. I’ve been using them for a while, they are a good basic broker. For more information, please check out my TradeKing Review.

Original promotion
- Invest $1,000 to $4,999 by November 15, and you will still receive your 1% cash bonus by December 4.
- Invest $5,000 or more by November 15, and you will still receive your 2% cash rebate into your Prosper account by December 4.

Extended promotion
- Invest $1,000 - $4,999 by December 31 and receive a 1% cash rebate into your Prosper account by January 22, 2010.
- If you invest $5000 or more, you will receive a 2% cash rebate into your Prosper account by January 22, 2010.

Give a Gift that Keeps on Giving
Give a unique and special gift this holiday season. It is a gift of connection, a gift of hope, and a gift that believes that poor people can use their ingenuity and hard work to break out of the cycle of poverty.

Your gift can help fund loans to poor people who could start a business, save, and work their way out of poverty. And when you purchase a gift certificate of $20 or more on MicroPlace, we’ll give you a free gift certificate of $20 to send to someone else on your shopping list!

To learn more about Microplace check out these posts, including my last microlending update.

50,000 British Airways miles is enough for an economy class transatlantic flight from USA to their “Europe Zone 1″, which includes the United Kingdom, Belgium, France, Germany, Ireland, Luxembourg, Netherlands and Switzerland. Note that “all reward flights are subject to taxes, fees, charges and surcharges, including airline surcharges.”, which can add up. I did a quick search and for a random San Francisco (SFO) to London (LHR) flight in March 2010 that cost $807, the taxes and fees alone were $387.

You’ll also need to fly out of a major city that BA services (see route map). Still, two free flights from US to London even for a few hundred dollars each is a big discount for those looking to buy such a ticket anyways.

What if you like to fly in style? 100,000 miles is good for a single business class ticket from USA to Europe Zone 1… and the fees are more reasonable on a relative basis. A business class flight from SFO to Paris (CDG) in March 2010 would have cost around $4,700 in cash, but the fees/taxes are only about $400 as well:

Finally, if you can manage to spend $30,000 a year on the card, you can even earn a 2-for-1 companion voucher. Time to buy some coins? Thanks to reader Paul for the tip.

One thing that I did like was her discussion of planned vs. perceived obsolescence. Here are the definitions from the film glossary:

Planned obsolescence: designing and producing products in order for them to be used up (obsolete) within a specific time period. Products may be designed for obsolescence either through function, like a paper coffee cup or a machine with breakable parts, or through “desirability,” like a piece of clothing made for this year’s fashion and then replaced by something totally different next year. Planned obsolescence is also known as “design for the dump.”

Perceived obsolescence: the part of planned obsolescence that refers to “desirability”. In other words, an object may continue to be functional, but it is no longer perceived to be stylish or appropriate, so it is rendered obsolete by perception, rather than by function. Fashion is all about perceived obsolescence, and it could be said that perceived obsolescence is the number one “product” of the advertising industry.

Non-Consumer Alarm!
This made me think about how companies have made easy it is to identify “non-consumers”, which usually leads to them being mocked somehow. Let’s take cars. Models change very often, even if just slightly, so it’s very easy to tell that my car is 10 or 15 years old. My wife and I are often told by our friends and family that our cars don’t match our job titles/income levels. Same with cell phones. If your phone doesn’t have at least a QWERTY keyboard these days, it’s a freaking antique.

As for clothes, I’m always happy that I’m a guy because my closet of long-sleeved dress shirts, cotton polo shirts, slightly baggy jeans, and cargo shorts have managed to last me for over a decade now. Meanwhile, to be a mainstream woman, you went from flare jeans to low-ride jeans to the new thing - skinny jeans. I won’t even go into shoes (UGGs??).

Try it next time you’re in a crowded area, at work, or visit someone’s house. See if you can pick out who hasn’t bought the newest version of something in the last few years.

*You can either watch the video in Flash at the main site or below on YouTube. The part about planned vs. perceived obsolescence is at 12:35 (total length: 20 minutes).

Click below or on the thumbnail above to see the whole thing.

Credit to Scordit.

The way I see it, LendingClub (review, $25 bonus, performance update) basically looked at all the problems that Prosper had and tried their best to fix them. So now, Prosper is back, and in turn looks a lot like LendingClub. For example, LC requires a 660 minimum credit score to qualify for their lowest grade loan (amongst other things), and now Prosper requires a new borrower to have at least a 640 credit score with their new ratings system. With both, you can have them automatically construct a portfolio for you based on your risk/return preference, and you can buy/sell notes before maturity on a open trading market.

Prosper still has their “reverse auction” eBay-style method of determining the interest rate, but lenders are now are restricted to a specific range of interest rates. (LendingClub simply sets the interest rates for you.)

In order to stimulate lending activity, they have a few incentives going on. If you sign up as a lender and bid on two loans (minimum total investment of $50), they will provide you a free $50 bonus. Click here and on the orange “Invest Now” button and you’ll see it. You must reinvest this $50 by the end of 2009. On top of that, Prosper is also offering a 1% or 2% “rebate” back if you invest at least $1,000 or $5,000, which would help juice your returns. Details:

Starting on October 12 if you invest $1,000 - $4,999 you will receive a 1% cash rebate into your Prosper account or, invest $5,000 or more and receive a 2% cash rebate into your Prosper account. Lenders must invest the funds during the promotional period of October 12 through November 15 by being a winning bidder on loan listings that result in funded loans. Notes purchased through the trading platform are excluded from the promotion. Once you have bid and invested on the loan listings your 1% or 2% cash rebate will be deposited into your Prosper account by December 4.

As a long-term investment, a 0.3% real yield makes I-Bonds a slightly worse choice than Inflation-Protected Treasury Bonds (TIPS). As of yesterday, a 5-year TIPS had a 0.73% real yield.

As a short-term investment, it depends on how you think inflation will turn out in the near future. If you buy a new I-Bond in November, you will earn 0.3% fixed + 3.06% based on inflation = 3.36% for the first 6 months. The second 6-month rate will be 0.3% + a variable rate based on inflation from September 2009 to March 2010.

(Savings Bond Reminders: You must hold for at least a year (or 11 months and a day if you buy on the last day of the month). If you hold for less than 5 years, there is a penalty of the last 3-months interest. Savings bond interest is exempt from state income taxes, and all taxes can be deferred until the time of bond redemption.)

Worst case scenario, there is deflation of worse than 0.3% which makes the total rate zero for the 2nd six months. Earning 3.36% for 6 months with an 11-month holding period gives you an effective rate of approximately 1.83% APY. This is only slightly lower than the top yields for a 12-month CD. If the annualized inflation rate over the 2nd 6 months is just 1%, your effective rate after the 3-month interest penalty rises to 2.00%. It’s not a screaming buy, but if you are looking for 1+ year safe investment and haven’t exceed your annual purchase limits, I would personally buy them over a bank CD since you do well in cases of rising inflation and okay otherwise.

For more background, see the rest of my posts on savings bonds.

Here’s a timely offer, at least for me. New-ish online broker OptionsHouse is offering 100 free trades when you open a new account with at least $3,000 with the promo code FREE100. The 100 free trades work for both stock and options trades, and are good for 60 days after funding. On top of that, their regular price for stock trades is only $2.95, while their options trades cost a flat $9.95 with no additional contract fees. Finally, there are no monthly minimum balances and no maintenance fees. Not a bad price structure.

Quality-wise, they promote the fact that Barron’s rated them #1 in Trade Experience and in the top tier overall in their March 2009 broker review. Although not a big name yet, they do seem like they are ready for serious traders. Here’s a snippet of the review:

Pros: As its name suggests, Options House has a lot of great tools for the options trader. Backed by market maker Peak6, this broker lets its retail customers use quite a few professional-level tools. Building a spread is very intuitive on this system, as is rolling a call or put from one strike to another. The site’s motto is “Fast matters,” and that goes for everything from finding possible trades to populating an order ticket to executing the trade itself.

Portfolio-analysis tools are top-notch here, too. The Risk Viewer includes a what-if calculator showing what could happen based on various market scenarios.

Options House also offers the Maxit tax-management tool for free. Although this is a Web-based platform, it has the flexibility and power of many of the software platforms.

Cons: No mobile access yet. However, the company says it is coming later this year. Limited fixed-income and mutual-fund offerings.

As noted I am starting to invest in some ETFs, so I might give these guys a spin. After looking through their fee schedule I noticed that they all partial outgoing ACAT transfers for free, which means that it won’t cost very much for me to move my holdings out if I need to. (Just transfer the important holdings out, keep one unimportant holding, and then sell it later.) I hope their free tax-management tools does my Schedule D for me.

Update: I just applied - relatively straightforward application, at the end you need to fax/mail in a signature page and a copy of your driver’s license or utility bill. They allow ACH funding online.

The most commonly-noted drawback of ETFs is that you must buy them like a stock and thus pay trade commissions. However, if you buy these within a Schwab brokerage account, there are no commissions charged. Here is a chart comparing the new Schwab ETFs and their corresponding competitor from Vanguard. The ETFs don’t necessarily track the exact same index, but they are pretty similar.

This is definitely worth a second look. A possible criticism is that Schwab may increase expenses and reinstate trading fees in the future, which may lead to tax hits if you wish to switch back to other ETFs. Meanwhile, Vanguard has a long track record of rock-bottom expense ratios. However, it may also be that increased competition in this area by others like Fidelity and E-Trade will prevent this from happening.