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October 2009 Unemployment Rate 10.20% – Chart of the Day

Sun — Fri, 06 Nov 2009 16:11:45 PST

The economy has grown again, but the labor market showed no sign of improving. Actually, if you look at the the unemployment report released this morning, you will probably feel things are getting worse, not better.

In the latest job report, the government said that the nation’s monthly unemployment rate reached 10.20%, the highest level in more than 26 years. For a long time, we have been warmed that the unemployment rate may reach double-digit, but it seems that it came a little earlier than expected.

Despite the huge amount of money the government has spent to pull the economy out of the deepest recession in 70 years, the job market is still very weak. In October, U.S. employers shed 190,000 non-farm positions. The number of jobs lost in a month is the lowest so far in 2009, but the number of unemployed person increased 558,000 in October, pushing the total number of people without a job to 15.7 million. Since the recession began in December 2007, more than 8.2 million workers have lost their jobs.

The economy may be recovering (GDP grew 3.5% in the third quarter), but we probably won’t feel any real improvement until we all have jobs.

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October 2009 Unemployment Rate 10.20% – Chart of the Day

Schwab Launches Extra-Cheap ETFs

Sun — Fri, 06 Nov 2009 09:50:09 PST

One of the biggest advantages of Exchange-Traded Funds (ETFs) over traditional mutual funds is that ETFs usually cost much less to own because of the way ETFs are structured. Also helping to reduce the cost is that not before long, all ETFs are passively managed, meaning that they all track their respective index, minimizing the amount of research the fund manager has to do to select which equities to invest. Among big ETF players, Vanguard has been known for offering funds with rock-bottom fees, not just mutual funds (which most are index funds), but also ETFs, until now.

Early this week, Charles Schwab, who introduced Schwab S&P 500 Index Fund in May with 0.09% Expense Ratio (ER), launched its first batch of exchange-traded funds that are again featured with super-low expense ratios. Four ETFs debut this Tuesday are

Schwab U.S. Broad Market ETF (SCHB): Index - Dow Jones U.S. Broad Stock Market Index; ER - 0.08%
Schwab U.S. Large-Cap ETF (SCHX): Index - Dow Jones U.S. Large-Cap Total Stock Market Index; ER - 0.08%
Schwab U.S. Small-Cap ETF (SCHA): Index - Dow Jones U.S. Small-Cap Total Stock Market Index; ER - 0.15%
Schwab International Equity ETF (SCHF): Index - FTSE Developed ex-US Index; ER - 0.15%

So how are these ETFs compared against similar offerings from Vanguard?

Vanguard Total Stock Market ETF (VTI): ER 0.09%
Vanguard Large-Cap ETF (VV): ER 0.13%
Vanguard Small-Cap ETF (VB): ER – 0.15%
Vanguard Europe Pacific ETF (VEA): ER – 0.16%

Well, Schwab’s ETFs are cheaper, but the difference isn’t that significant (percentage wise it is) except the large-cap ETFs. However, the Vanguard funds have already established a track record (at least two years) in terms of returns. For the new funds at Schwab, there’s no way to evaluate the performance. So I won’t be jumping in any of these funds right away, despite the lower expense ratios.

In addition to the fee charged by the fund in the form of expense ratio, the other part of the cost of owning ETFs is the commission charged by brokers to invest in ETFs. Since ETFs are traded on exchanges the same ways as individual stocks are, buying and selling ETFs usually involve commissions, anywhere from $2.95 per trade to $10+ depending on which broker you are using. That’s why you can dollar-cost averaging mutual funds from fund providers (if you buy mutual funds from a broker, you may also have to pay a fee), but can’t DCA ETFs. However, there’s an exception for these Schwab ETFs if you also use Schwab as your broker because it appears that you can get these funds with zero commission. If you don’t have to pay any commission, then buying ETFs regularly with a small amount makes sense.

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I-Bond Rate for November 2009 – May 2010 Is 3.36%

Sun — Thu, 05 Nov 2009 20:15:56 PST

The last time I wrote about I-Bond interest rate was last May when the Treasury Department set the total earning rate of Series I-Bond issued from May to November to 0.00% due to the negative annual inflation rate, which has already affected the contribution of 2010 401(k) plan.

Even though that I-Bonds purchased in the past six months didn’t earn me anything, I still kept my monthly purchase of $100 I-Bone intact because the investment was made through an automatic purchase plan and I was too lazy to cancel the orders that I planned for many years. Plus, since most savings account interest rates were below 2% during that period of time, it wouldn’t make much difference if I put the $600 somewhere else. So I decided to avoid the hassle and stick to my plan.

Now, six months later, a new I-Bond rate is announced for the next six months from November 2009 to May 2010 and it is too bad, at least for six months. According to the Treasury, the total earning rate for I-Bonds from November 2009 to May 2010 is 3.36%. The rate for I-Bonds consists of two part: A fixed rate plus an inflation adjusted rate. Of the 3.36% rate, 0.30% is fixed throughout the life of the bonds, which is 30 years. The inflation adjusted rate is 3.06%, not too bad but it lasts only 6 months.

I have been buying I-Bonds for more than 6 years, but I never maxed out (I believe putting the money in the stock market will give me a better return). Since I don’t have any bond mutual funds in our taxable investment accounts, I treat the I-Bonds I own as the fixed income portion (which they really are BTW) of our investment portfolio, even though I never really considered it in the asset allocation. However, I do want hold them for the long term

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I-Bond Rate for November 2009 – May 2010 Is 3.36%

October 2009 Score Card — Part I: Net Worth

Sun — Wed, 04 Nov 2009 07:12:09 PST

I feel that the last few days of October kind of ruined the whole month for investors. Even though the Dow closed above the physiologically important, but symbolic 10,000 mark for the first time in a year in October, the stock market sold off in the second half of the month. Major indices closed October on the negative territory with the exception of the Dow, which was break-even for the month. The Nasdaq was the biggest loser, giving up 3.64% in October while the S&P lost 1.98%.

As the stock market did poorly last month, so did our net worth as we have a large portion of our assets invested in the stock market. Fortunately, we got a huge boost from the proceeds of selling our house. So October still turned out to be a very good month for us as we saw our net worth grew $90, 460.66 (12.45%) from the month before to $817,099.39, another record high for us.

The following is the breakdown of the net worth:

Credit card balance(++): The total credit card balance increased another $308.71 (5.01%) last month to $6,468.15. The increase is entirely due to the whole month of tuition we charged on our credit card. Without that, the everyday charges is actually less than the previous month as we settled in our new home in Virginia. BTW, more than $1,800 of the credit card balance is from 0% loan. Subtracting that and the monthly tuition, we only charge about $2,700 a month for our daily expenses.
Cash(+++++): This is where the positive gain came from. We finally sold our house last month and received the payment of about $96K at the end of October after commissions and fees. Since we have lived in the house for more than 5 years and have done some upgrades, we actually didn’t make any from the sale. But we are glad that we sold the house in the tough market. At the end of October, we have $220,480.31 in our bank accounts. That’s an increase of $105,370.60 (91.54%) from the month before.
Taxable accounts(–): Our investments in taxable accounts didn’t do very well last month, in line with the performance of the general market. At the end of the month, the total market value of our taxable investments is $293,632.16 in various brokerage and mutual fund accounts. That’s was $4,009.63 (1.35%) less than what we had a month ago. Initially, I thought I may be a few IPO shares last month, but that didn’t happen. The only new investments made in taxable accounts last months were monthly mutual funds purchase of $600 and $400 in DRIP stocks.
Retirement accounts(—-): It kind of surprised me that the biggest loser last month is our retirement investments, despite that we made our last quarterly contribution to our IRA accounts this year. Overall, we lost $11,055.97 (4.00%) on paper in our 401(k)s and IRAs. The total market is $265,006.36 at the end of October. The good news is that we now both contributed to the maximum amount allowed in our IRA accounts.
529 plans(+): We got a few more bonuses last month from the Ohio CollegeAdvantage 529 accounts referral program (see how you can get $50 bonus from CollegeAdvantage), which helped this part of our investments to stay positive. On October 31st, we had $25,844.11 in 529 accounts, an increase of $238.03 (0.95%) from September.
Bonds(+): Our investment in bonds grew $154.68, (0.95%) last month to $16,384.24.

Year-to-date, our net worth has increased $344,339.08 (72.84%). Year-over-year, the net gain is $351,162.66 (75.37%).

Now that our *old* house is gone, we want to buy our next *new* permanent place next year before our current lease expires in September. For that, we have been saving quite aggressively for the downpayment, with a large portion in our savings accounts. Our goal before we buy the house is to have $1 million in net worth and $300K in cash for next house. To reach that goal, we will need to increase our net worth by a little short of $200K in about 8 to 10 months, which is quite ambitious. Is the goal reachable? I think we have a good chance given that we had increased our net worth by more $250 in the first 9 months of this year. Of course, we have to get a lot of help from the stock market to reach $1,000,000 next summer

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Firstrade Trading Platform Review

Sun — Mon, 02 Nov 2009 06:35:10 PST

Early last week, I took a look at Scottrade trading platform because it’s the broker that I use the most for stock trading (not that I trade a lot). As you know, Scottrade isn’t my only stock broker. In fact, it is one of many brokerage accounts I own. Another *old* account I have is Firstrade. Though I don’t use Firstrade as much as I do with Scottrade, I still keep the account alive and trade only when I receive referral bonuses from referring new customer to the broker.I have discussed Firstrade briefly in my broker interface comparison post. Now I am going to expand the discussion a little bit, like I did with Scottrade.

Firstrade Commission

Firstrade, as a leading online discount broker, offers investors a wide range of investment products, from stock and options trading to mutual fund and fixed income investments. When I first opened my account with Firstrade, I was actually attracted to it by its free mutual fund trading. Unfortunately, that’s not the case any more.

The cost of trading with Firstrade is rather high compared with what other discount brokers charge. For example, the commission for stock trade is $6.95 at Firstrade, which is lower than Scottrade’s $7.00 per trade, but significantly higher than Zecco’s $4.50 commission and TradeKing’s $4.95. Options trading at Firstrade will add another $1.95 per contract, where at Zecco and TradKing, the extra cost is $0.50/contract. However, Firstrade does have an edge over these brokers when it comes mutual fund investment: Firstrade $9.95, Zecco $10.00, TradeKing $14.95, and Scottrade $17.95 for each no-transaction fee mutual fund order.

Firstrade Trading Platform

So what can you expect to see when you first log into your Firstrade account?

Firstrade’s main website isn’t very impressive and I find it also not very useful. At the main account page, I expect to see the status of my account and my holdings so I can have a clear idea of how my account is doing. But that’s not the case with Firstrade, as you can see from the above screenshot. What I really don’t like about Firstrade’s account main web page is that the Important Notices section, which is supposed to list important announcement to users, takes a large space right in the center of the platform. I don’t find those notices very important at all and many of them are outdated and rarely updated. In my opinion, that place can be used for information that’s more useful for investors.

Overall, I can’t do much on the account homepage alone because, as you may have noticed, what displayed on the homepage are not all related to trading, or even investor’s personal account information. There are only four pre-determined indices and two index charts to display. There’ s a list of stocks to watch, but it looks like I can only enter up to seven symbols. There’s even no list of positions on the homepage, only an account number with the current market value.

Other Tools

If you want to make a trade, you will have to go to a different page to place your order by entering transaction type (buy or sell), symbol, shares, and order type (market or limit). This is the same as most other web-based trading platforms. Though there’s no streaming quotes on its homepage, Firstrade does have another tool, called X-Stream, that provides real-time streaming quotes, which can launched by clicking the Real-time Streaming on the top right corner of the main page.

Firstrade’s java-based X-Stream tool allows you to track up to 20 stocks simultaneously (I’d say 20 is a quite small number). Every field and color is fully customizable and all quotes are updated in real-time as the market moves. In addition to quotes, you also have access to streaming charts with real-time technical analytics, streaming time and sale information, quick order entry, company profiles, and many other features. What I find weird is that though there’s a TRADE button in X-Stream, I can’t really trade from it. If I click the button, it takes right back to the same web page to make the trade. Not very convenient at all.

In addition, Firstrade also has another tool that allows you to track multiple portfolios in real-time and updates your profits or losses on each position and the entire portfolio in real-time without having to refresh. It’s called MarketAce Portfolio Manager. MarketAce shows you to track each stock’s performance for that day and from the purchase price. You can specify your portfolio name and customize all the positions for each portfolio. You may also enter the cash balance of your portfolio to get the total value of your account updated in real-time. This is a unique tool to Firstrade as far as I know.

So overall, Firstrade isn’t very competitive in terms of trading cost, unless you also want to buy mutual funds through the broker. However, it does have some features that you won’t find at other brokers. If you are interested in trading with Firstrade, the broker is running a triple-bonus promotion that will give you 100 free trades when opening a new account, plus $100 account transfer reimbursement (if you transfer from another broker to Firstrade) and $100 cash back, depending on your account value. Check it out to get more details on how you can earn the bonuses.

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Quicken Giveaway Winners

Sun — Sun, 01 Nov 2009 18:18:00 PST

Thanks everyone for participating the 2010 Quicken Deluxe giveaway I ran last week. The contest received a total of 61 entries. Now the winners are selected by random number generator at random.org and they are:

Drew at 21 and Heather S at 38. Congrats to the two lucky winners! The Quicken software you won will be mailed to you shortly.

Weekend Readings

And some interesting reads from The Money Writers and beyond:

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OptionsHouse Promotion Code for 100 Free Trades

Sun — Sat, 31 Oct 2009 12:25:18 PDT

OptionsHouse is one of the discount brokers that I have an account with.

I opened the account in June when I found that it charges only $2.95 per stock trade, much less than other brokers I use (Zecco offers free trade, but the requirement is rather high for small investors). However, it disappointed me when I found during my first trading experience that the broker required at least $100 be kept in the account to cover commission cost. I even wrote a post to complain about what I saw as a unfair and unnecessary requirement. Later on, OptionsHouse, after hearing similar complains from other investors, decided to remove the $100 minimum requirement, which was a welcome news as it means that every dollar in the account can be used to buy stocks. And at $2.95/trade, the commission is the lowest among other popular online discount brokers such as Scottrade, TradeKing, or Firstrade.

If you are considering open an OptionsHouse account, now there’s a good opportunity for you to do so. The broker is running a promotion for November and December which will give each new customer 100 commission free trades when a new account is opened during the promotion period with a minimum of $3,000. Sure, the account minimum is higher than what it usually requires for a new account at $1,000, but the value of the 100 commission free trades equals $295, so it’s still a very good deal if you have the money to meet the minimum requirement. One more restriction of this promotion is that the free trades have to be used within 60 days. That’s a lot of trades you will have to make in just two months to take the full advantage of the promotion if you are not a heavy trader.

Anyway, if you can use those free trades, or even a portion of it, you must use this link to open an account using promotion code FREE100 and fund your new account with $3,000 within 45 days of account opening in order to receive the bonus free trade. This offer will expire on December 31, 2009.

To learn more about OptionsHouse, check out my previous post on OptionsHouse review and first trading experience for details.

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Transfer Fund to Scottrade Brokerage Account Is Easy

Sun — Fri, 30 Oct 2009 11:01:20 PDT

The stock is down pretty badly so far today. For some investors, this is an opportunity to buy stocks at a better price, given that the market was down four out of the six trading sessions. Suppose that you see a stock that you have wanted to buy and today it finally reaches the price you want, can you buy it right away with your broker if you don’t have the money ready and have to transfer the fund from your bank account to your brokerage account to make the purchase?

I have a bunch of brokerages accounts myself. Though I no longer actively use every one of them now, I did try every one in the past to make a trade. And from my experience, transferring fund from my bank account to the brokerage account and using the money to purchase the stock I want on the same day is NOT possible at other brokers except Scottrade. As far as I know, brokers like TradeKing, Firstrade, and Zecco are all having electronic fund transfer (ACH) as an option to fund the account. However, the ACH fund transfer all requires a period of holding times, from 3 to 5 business days. This means that you have to wait 3 or 5 business days for the fund to be cleared before you can use it to buy the stock today at today’s price. But even 3 business days later, the price may not be acceptable anymore.

When it comes to funding the trading account, Scottrade is quite unique. The system it uses, called Money Direct, is also an ACH system like what other brokers use (meaning that you have to follow the same procedure to setup the Money Direct as you do with ACH: bank routing number, your account number, etc.). However, with Money Direct, fund is available almost immediately and can be used to buy stocks that are priced $4 or more. This is one restriction on using the fund to buy stocks in cash account. If you have a margin account and want to use the fund to satisfy margin sell letter, then you will have to wait for 3 business days, or if you want to buy stocks that are below $4.

Early this year, I bought quite some cheap stocks through Scottrade and most of the time, I had to use Money Direct to transfer money to the account first before making the purchase because I didn’t have the money in the account (I don’t want to have any significant amount of money in the account). It was impossible with other brokers.

Another reason why I trade with Scottrade

BTW, if you decided to open a Scottrade account, use promo code KGKP0724 to get 3 commission free trades.

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Join Prosper, Get $50 Free Money to Start Lending

Sun — Thu, 29 Oct 2009 19:49:33 PDT

Prosper, one of the earliest players in peer-to-peer lending, was quite last year and early this year because it failed to meet regulatory requirements. It wasn’t allowed to keep operating until it was cleared by the SEC. Its chief rival Lending Club, on the other hand, was quick to get the OK from the regulator and has been expending its business while Prosper was waiting for the clearance.

Now it seems that Prosper is back, finally. While I am quite with happy with the performance I have with Lending Club so far, a little competition is always good, even in the P2P lending business.

Speaking of competition, Prosper is now offering $50 bonus to lure more lenders and borrowers. I have opened my Prosper account a long time ago. However, because of my previous resident status, I wasn’t allowed to invest, the same as what happened to Lending Club before. Then after updating my address to Virginia the other day, I got my $50 bonus and am eligible to lend directly It basically doesn’t require anything to get the bonus, except one Financial Suitability Requirement, which is like this:

The Notes are being offered only to a lender (a husband and wife are treated together as one lender) who satisfies the suitability requirements set forth below. You must meet one or more of the suitability requirements (a-b) in order to purchase Notes from Prosper.

1. I have an annual gross income of at least $70,000 and a net worth as set forth below, of at least $70,000, and I will not purchase Notes that in the aggregate, exceed 10% or more of my net worth as set forth below, or
2. I have a minimum net worth of $250,000 and I will not purchase Notes, that in the aggregate, exceed 10% or more of my net worth as set forth below.

Note: Net worth is calculated exclusive of home, home furnishings and automobiles, and Lender members may not value assets included in the computation of net worth at more than their fair market value.

The bar seems to be a little high and I don’t remember I saw the same requirement at Lending Club. If the requirement doesn’t prevent you from becoming a lender, then open a Prosper account and get the $50 free money. I haven’t invested my $50 yet as I haven’t got time to go through Prosper’s lending process. But I do plan to use the money to test the water soon

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Is Ally Bank in Trouble?

Sun — Wed, 28 Oct 2009 20:27:20 PDT

The bank itself may be not, but its parent, GMAC Financial Services, is certainly in a situation no bank wants to be in.

News came out this morning that GMAC, the recipient of billions of dollars of taxpayer money since last December, is going back to the government to ask for more money. That would be the third round of bailout for what used to be the bankrupted General Motor finance unit (GMAC Financial was approved to be a bank holding company in December 2008 for it to receive government rescue fund). This is quite unique for GMAC because no other banks, not even Citigroup and Bank of America which have received much more money from the government than GMAC did, have asked for more than two bailouts. At GMAC, however, the trouble doesn’t seem to end, even after $12.5 billion infusion from the government. You may think that a bank receiving so much taxpayer money should have a better chance of surviving when there are signs that the condition of the economy and the financial market is improving. Unfortunately, that’s not the case for GMAC, which is still struggling to deal with massive losses from subprime mortgages. Now it’s going to ask as much as $5.6 billion more.

While GMAC is still in trouble, its subsidiary, Ally Bank seems to be doing quite well, at least from the rates it offers (Online Savings Account 1.70% APY, 1-year CD 2.00% APY). Actually, the bank has been giving exceptionally high rates since it switched its name from GMAC Bank to Ally Bank six months ago. Today’s news makes wonder how Ally Bank can afford to offer such high rates (Bankrate.com average 1-year CD rate is 1.70% APY). And Ally Bank ads are everywhere. Is it actually because of the billions bailout money it received? Of course, paying a higher rate can attract more savers (I was one of those ), but it also add additional cost to the bank that is in such a bad situation, even if it is a pure online bank.

Now that you know GMAC, or Ally Bank, is not healthy, will it change your perception of the bank?

I still remember what Washington Mutual did the week before it collapsed. After giving it so much money, I don’t think the government will allow GMAC to go under, but the situation does concern me.

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Lending Club Loan Default and Credit Score and Debt-to-Income Ratio

Sun — Tue, 27 Oct 2009 09:16:00 PDT

In my post over the weekend, I took a quick look at Lending Club’s new statistics page. The improved web page offers potential lenders a range of tools to evaluate the overall performance and risk of lending money through Lending Club. In addition to statistics provided by LC, you can also download raw data from the new page and do you own analysis. The information is the raw data is quite comprehensive, including pretty much everything you need in order to perform a thorough analysis, such as borrowed amount, interest rate, loan grade, monthly payment, income, and credit score, etc. If you are the kind of person who like to dig into the raw data and extract valuable information from it, then new statistics page is for you. From there, you can download either the complete loan data from May 2007 to the current month with every piece of information included, or the date just for the funding loans or declined applications.

I downloaded the complete data the other day to play with it a little bit. My interest is those loans whose current status is either 31 – 120 days late, or charged off, or default. When I downloaded the data on the 24th, there are a total of 12,150 records in the file. Of them, only 6,922 loans, or about 57% of the total applications, were issued, all others are either being declined for various reasons or still the funding process. For the 6,922 issued loans, 535 of them show the current status as 31 – 120 days late, or charged off, or default. That’s about 7.72% of all issued loans.

Loan Default and Credit Score

First I looked at the loan default and the borrower’s credit score. Lending Club requires the borrower to have at last 640 FICO score to be eligible to borrow money. This helps reduce potential loan defaults by setting the requirement high.

From my analysis, the group with the highest default rate (including loans that that’s 31 – 120 days late, or charged off, or default) is those in the 679 – 713 credit score range, account for nearly 40% of the total default. It should be noted that this group is also the largest borrower group with a total of 2,438 loans. However, if looking only at loans in the same credit score group, the highest default rate is in the group with the lowest credit scores, from 640 to 659, at 18.22%. This explains why the focus in peer-to-peer lending should be on borrowers with good credit. Loans from borrowers with lower scores have better returns, but risk for lending to these people is also significantly higher.

Loan Default and Debt-to-Income Ratio

I also looked at the borrower’s debt-to-income ratio, which is a measure of a borrower’s debt burden. Using this ratio, you can have an idea whether or not the borrower can live up to his/her obligation of repaying the loan. However, what I found is a little interesting.

Overall, the loan default rates for DTI ratio from 6% to 20% are roughly the same, at around 20%, of all the loans issued. However, when looking at each particular DTI range, the default rate for DTI ratio below 5% is the highest among all groups at nearly 10%. Usually, the lower the debt-to-income ratio(DTI), the less likely the borrower will be late in making payment, but that’s clearly not the case as the above plot shows. Instead, when borrowers claim they have a higher DTI ratio (above 20%), the default rate for this group as a whole is quite low.

Looks like I may need to change the way I select Landing Club loans

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Scottrade Trading Platform Review

Sun — Mon, 26 Oct 2009 08:31:09 PDT

Sottrade is a online discount stock broker which offers investors, from big to small, a wide range of products and trading tools at a competitive price.

One of the online discount stock brokers I use very actively is Scottrade. When I first selected Scottrade as my broker 7 years, I didn’t not much about it other than that it was the winner of a J. D. Power and Associate award. Of course, back then the landscape of online trading was much different than it’s now as the selection of discount brokers was very limited. Now, seven years later, with some many online brokers to choose from, I am still trading with Scottrade and, frankly, I am very happy with the choice I made in 2002.

So what exactly do I like about Scottrade? Well, not the commission that Scottrade charges. At $7.00 for every online stock trade order, the commission is rather high among discount brokers. However, compared to other brokers, Scottrade has an edge in providing comprehensive services and tools to make investing easier. And unlike many other discount brokers which operate solely online, Scottrade also has physical offices throughout the country, giving investors easy access to Scottrade staff for face-to-face help, should such help is ever needed. Even if you don’t need to meet a Scottrade employee when you have a question, knowing someone at your local office by name and always talk to the same person over the phone is still an advantage, isn’t it?

Anyway, let’s take a look at Scottrade trading platforms, the main subject of this post. I have talked about Scottrade’s trading platform when I compared discount broker web-based trading platforms some time ago. Here, I am expanding the discussion a little to include more information for those who want to know better about the broker before deciding whether to use it or not.

Currently, Scottrade offers investors two trading platforms. One is web-based and the other is a standalone, PC-based called ScottradeELITE, which can be downloaded and installed on local computer if you a minimum account balance of $25,000. ScottradeELITE is an ideal tool for those who trade a lot. If you are causal trader like I am, then the web-based trading platform is more than enough to get the job done.

Socctrade’s web-based trading platform is shown below.

The feature that is most appealing to me on the website is that it shows the total market value of my account graphically, giving me a clear picture of how my portfolio has been doing, even though the graphic only covers up to 6 months. As far as I know, this feature is not available at at any other brokers I am using.

Scottrade doesn’t have charts on its homepage. Quotes are given numerically only, even though it does have a separate page where I can get plots and all the technical analysis tools. Trading from the main web page is easy: Enter the symbol in the Quick Quote on the left first then provide all the necessary order information (or click the Trade tab on the top). What I would like to see here is that a Trade button next to all the securities I am currently own (Under Positions in homepage). Now even for those stocks, I have to go through the same steps (enter symbol and order info) to make a trade. Not every convenient.

Though, there’s no real-time quotes on its main web platform, Scottrade does have a free, Java-based streaming tool that opens in a new window (from the Streaming Quotes link on the left). The streaming tool looks a lot like ScottradeELITE, the stand alone software, you can even customize what you want to see in the interface, just like what you can do with ScottradeELITE.

While every broker has a web-based trading platform, not every one offers free, real-time streaming quotes. For most brokers, you can only get real-time quote when you enter the stock symbol and get the quote of the particular stock. With Scottrade, you can not only get real-time streaming quote for free, but also trade right from the window as well, no need to go back to the main interface. This is convenient.

And the streaming tool is not only a quote tool, but also a research tool, though just a very simple tool that doesn’t give you all you need to do a in-depth analysis of a stock because it only displays the volume information and moving average of the stock price for up to 2.5 days.

If you want to have a full fledged tool for your equity research, Scottrade has it under the Quotes & Research section on its homepage. If you don’t meet the requirement to have ScottradeELITE, the web-based research tool is still very decent, in terms of the usefulness of the tool (it has more than two-dozen indicators to help you research a stock or fund).

Even though I am not a heavy trader and don’t really use every tool Scottrade provides, from what I can see, Scottrade has a good collection of web-based tools that make the broker standout in the crowed. Even though the cost of trading with Scottrade is high, it doesn’t matter too much if you only trade a few times in a year, like I do

Original Post on The Sun's Financial Diary

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American Express Premier Rewards Gold Card 15,000 Points Promotion

Sun — Sun, 25 Oct 2009 08:23:20 PDT

Now you can earn Membership Rewards Points even faster with the American Express Premier Rewards Gold Card. The new card allows you to buy the things you need and get rewarded with the things you want at the same time.

Membership Rewards

Here’s how it works. With the AMEX Premier Rewards Gold Card, you can earn points up to three times as fast. You can earn triple points on airfare and double points on gas and groceries, while continuing to earn points on all other purchases, such as double points on gas and groceries, and one point on every dollar spent on everything else. Best of all, rewards points have no expiration date, and there is no limit to the number of points you can earn.

For the Membership Rewards Points you earned, you can use them to redeem airline tickets to fly any airline, anytime with no seat restrictions or blackout dates. You can also book hotels, cruises and vacation packages. Use points to pay for your entire trip or a portion of it, and continue to earn points with your favorite frequent flyer and guest programs when you book. Points can also be redeemed for rewards from over 50 of the finest names in shopping and entertainment.

In addition, other membership benefits include:

Fraud Protection Guarantee
Return Protection
Extended Warranty
Purchase Protection
Baggage Insurance Plan
Emergency Check-In
Assured Reservations
Car Rental Loss and Damage Insurance
Travel Accident Insurance

All of these come with an annul membership fee of $175. However, the fee for the first year is waived.

15,000 Bonus Points Promotion

Right now AMEX is running a promotion for the Premier Rewards Card which will give you 15,000 Membership Rewards bonus points when you spend $1,000 in your first 3 months after becoming a cardholder. The rewards points can be redeemed to up for $150 gift card. If you spend $30,000 per calendar year, you can get an additional 15,000 Membership Rewards bonus points.

Original Post on The Sun's Financial Diary

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Lending Club’s New Statistics Page Looks Good

Sun — Sat, 24 Oct 2009 13:06:12 PDT

One of the biggest challenges when investing through social lending platforms such as Lending Club is evaluating loans to minimize, but not totally avoid, risks involved in lending money to total strangers. It’s not an easy task because, though Lending Club does its job to collect and verify the data, there’s just some much information you can access in the borrower’s profile. When I choose loans to fund, much of my research focuses on each individual borrower’s qualifications, such as credit, income, job and debt, etc., because these data in critical in selecting the right borrowers.

In my previous post, I outlined steps I take when I evaluate Lending Club loans. That’s the procedure I usually take when deciding which loan to fund and which to stay away. However, for those who are still considering whether peer-to-peer lending, such as Lending Club or Prosper, can be used as an alternative investment vehicle or not, the main concern is probably the collective performance of Lending Club: The total amount of loans funded, average interest rate, overall delinquency rate, and average borrower credit score, etc. For to-be lenders, a single borrower and loan request have much less meaning than the overall statistics of the all Lending Club borrowers.

To help those who are still making up their minds to better understand how Lending Club works and what a lender can expect from P2P lending, Lending Club has recently launched their improved statistics page, where a potential lender can find such information as:

The average LC borrower FICO credit score is 724;
LC average annualized return is 9.66% after fees and defaults;
The average annualized default rate of all LC loans is 3.16% since inception.

And a lot more information including comparison of returns between Lending Club and stock markets and breakdowns of each loan category (LC has a total of seven loan categories, from A to G, where A is the highest loan grade, depending on the borrower’s credit worthiness). If you want to dig deeper into the data before making a decision, you can even download all the data in to Excel and do you own analysis.

Go to Lending Club and see if and how you use the new statistics to improve your P2P lending

Original Post on The Sun's Financial Diary

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Wokai: Support Chinese Small Businesses through Microfinancing

Sun — Wed, 21 Oct 2009 21:19:41 PDT

I recently came across a website called Wokai.org. You may not familiar with the name (it’s the first time I knew it as well), but what they are doing shouldn’t be strange to you, if you know what Kiva is.

That’s right. Wokai is a charitable organization that microfinances small businesses, just like what they do at Kiva. However, Wokai has a much focused group that it supports, the rural poor in China, on a much smaller scale. The recipients of loans through Wokai are those live in rural China who want to start their own family business or simply improve their quality of life.

How Wokai Works

Founded in 2006, Wokai works with its Field Partners to distribute loans from contributors to those who applied and are approved for loans and monitor loan repayment process. The following from Wokai website can give you a better idea on hwo Wokai works.

Wokai’s due-diligence team visits, evaluates, and trains our microfinance Field Partners. Our Investment Committee must approve all new partnerships.
Our Field Partners screen and select recipients in their local communities, then post their profiles on our website.
Contributors browse through their profiles, and make tax deductible donations to fund their loans. These tax deductions are valid in the United States of America, per our 501(c)3 status.
Wokai distributes this money to our Field Partner for allocation to recipients.
Field Partners collect loan repayments from recipients, and send updates to Wokai about their progress.
Once the loan is fully repaid, contributors may reinvest their contributions to help fund a new recipient’s loan.
This cycle continues for three loan terms. Afterwards, contributions will be used by Wokai’s Field Partner as long-term loan capital.

Basically, contribution to Wokai is a tax deductible donation, not an investment that will give you a return. At the beginning, if you decide to become a contributor, you can select the recipient(s) you want to support and track loan repayment progress in your account. After three loan cycles, which I assume each loan cycle lasts one year, your contributions will be used solely by Wokai’s Field Partners who make the decision on whom to support and you will have no control on how the money will be used.

One of the biggest concerns when lending money to strangers, whether through peer-to-peer lending such as Lending Club or microfinancing such as Wokai, is what happens if the recipient fails to make repayment. Even though in the case of Kowai, there won’t be any monetary loss to the contributor as the money is donated, it’s still quite disturbing if the borrower doesn’t pay back the loan. At Wokai, they use a group guarantee program to make sure that each loan is fully repaid:

If a recipient at its institution is delinquent, the other recipients in her guarantee group must repay the recipient’s delinquent loan. If they fail to make the payment, then they will never be able to take out a loan again with the institution. This model is incredibly effective in rural areas of China where recipients have no other means of accessing credit.

From what I heard, this method works quite well because all group members share the responsibility of repaying the loan if one member fails to live up to his/her obligation. In one region, Wokai has distributed more than $10 million in loans with less than $5,000 delinquency.

How To Contribute

Contributing to Wokai is easy. You only need a user name and email address to register an account to become a contributor. Once the account is setup, you can use Google Checkout to purchase credit and use the credit to contribute right away (you do have to wait a few minutes for the Google Checkout purchase to go through). Loan amount starts as little as $10, with a $10 increment. Right now there are only 10 borrowers (one has already reached the funding goal), all form Chifeng, Inner Mongolia (two of my college classmates were from that area), so selecting whom to support is quite simple.

In my first contribution, I purchased $100 credit and used the money to support 5 out of 9 borrowers. Since this is the first time I deal with Wokai, I want to give it a little time to see how the process goes before making more contributions.

Original Post on The Sun's Financial Diary

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2010 Quicken Deluxe Giveaway

Sun — Tue, 20 Oct 2009 04:48:59 PDT

Are you using Quicken to manage your money?

After Microsoft pulled the plug on MS Money in the summer, Intuit’s Quicken is left as the only PC based personal finance software that helps people track their spending and manage their investments (of course, Quicken also does other things such as budgeting), unless you want to use a web-based tool. I have been using Quicken Home & Business to manage our finance (actually, it’s more like tracking than managing) for years. My general feeling of the software is that it makes managing money easier, especially when you have dozens of bank accounts, credit cards, and investments like I do. However, since I mainly use Quicken to track investments, I am pretty sure that I missed lot of good functions & features the software has to offer. Now that Intuit has released its latest 2010 version of Quicken, the popular software has got even more powerful and user friendly (see highlights of 2010 Quicken) with an array of new and improved features.

Last week, I had a post on Intuit’s ongoing promotion of a few Quicken products which will save you $20 if you purchase a qualified software before November 1st. It’s a nice deal if you want to purchase Quicken Deluxe because the discount is a third of the original price. Pretty good, right?

However, before you go ahead and buy the software, I have a better deal for you: Get a copy of 2010 Quicken Deluxe for free.

Intuit last week provided me two copies of 1020 Quicken Deluxe to let me run a giveaway to my readers. To enter, all you need to is leave a comment at this post with a valid email address before this Sunday, October 25th.

If you are a Twitter use, you are more than welcome to tweet or RT this message

Win a free 2010 Quicken Deluxe from @SunsFinancial http://is.gd/4skUZ

to increase your chance.

Good luck

Original Post on The Sun's Financial Diary

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2010 Quicken Deluxe Giveaway

2010 401(k) Contribution Limit Won’t Be Adjusted

Sun — Sat, 17 Oct 2009 15:34:32 PDT

If you are thinking of putting aside a little more for your retirement next year, you won’t get any help from the government because the 2010 401(k) contribution limit will remain at the same level as this year at $16,500 (the catch-up limit for workers 50 years old and order will also be the same as in 2009, at $5,500).

The reason for keeping the contribution limit steady for another year is that, according to Labor Department’s latest inflation report released on Thursday, Consumer Price Index (CPI) fell in the third quarter from the same period last year. Because there’s no inflation (at least as the CPI number shows), the annual contribution of 401(k) plan, as well as Social Security benefit, which is tied to the inflation, won’t be adjusted.

This isn’t the first time when the government maintained the maximum contribution of retirement plan unchanged. For example, the limit remained at the same level of $15,500 for 2007 and 2008. The maximum amount was adjusted every two years between 1994 and 2001.

While it makes sense to adjust the contribution limit based on the inflation, there are man people believe that CPI isn’t a good gauge for real inflation because goods that we consume every day, such as food and energy, are excluded from the calculation (the so-called core CPI) because they are volatile. Even though we spend a much smaller portion of our income on food nowadays than when CPI was first measured 90 years ago (the Labor Department started the statistics in 1919), food does become expensive year over year and the costs to fill up our cars and heat our homes also get higher and higher. Further more, since the Fed makes their rate decision based on core CPI, a low reading means the Fed can keep the interest rate low, which will lead to greater inflation risk, especially when the index doesn’t track the increase of cost of living quick enough.

Now that there won’t be any increase in contribution limit next year, it doesn’t seem to be a big deal for one year. However, it is a big deal in the long term for those who max out their contribution every year. Just consider this: How much will today’s $500 be worth 20 or 30 years from now?

Original Post on The Sun's Financial Diary

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Now We Really Sold Our House

Sun — Fri, 16 Oct 2009 19:18:03 PDT

It’s official. The house in New Jersey where we called home for more than five years is no longer our property.

Four months after we put the house on the market, the sale of the house was officially closed today. Though we haven’t got the money yet, all the paperwork are signed and the keys of the house are in the hands of the new owner now.

Overall, it’s a long process, but rather smooth one, except the first two and a half months when we had a lot of showings, but no offer. Just as we thought we might have to move to Virginia with the house still on the market (we were also preparing to rent it out at that time), all of a sudden, a flood of offers came in at the end of August and we were able to leave for VA with a solid contract and a target closing date.

Things went quite well afterward. The home inspection didn’t find any serious problems and we only needed to give the new owner $500 credit to fix a couple of minor issues identified in the inspection report. After we left, our agent helped us arrange a professional cleaning of the house and obtain necessary safety inspection from the township. Everything was done on schedule on our part. Though there was a little delay for the buyer to get the mortgage, nothing major happened.

The check will probably be mailed to us next Monday. Once we get the money, we can start to look for our new, permanent place

Original Post on The Sun's Financial Diary

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Firstrade Triple-Bonus Promotion

Sun — Fri, 16 Oct 2009 08:03:14 PDT

Online discount stock brokers Firstrade is having a triple sign-up bonus promotion. Open an account with Firstrade between now and December 31, 2009, and fund the new account, individual, joint, or IRA account, within 30 days after the account is opened to

Receive 100 commission-free trades for funds of $2,000 or more
Receive 100 commission-free trades and up to $100 ACAT rebate for funds of $25,000 or more
Receive 100 commission-free trades and up to $100 ACAT rebate as well as a $100 cash bonus credited to the account for funds of $50,000 or more

Firstrade charges $6.95 per stock trade (see Discount Broker Comparison for details about commissions charged by brokers). So the value of the free trades is at $695. The terms and conditions to receive the bonuses are:

To receive up to a maximum of 100 commission free internet stock trades (equivalent to $695 in free trade commissions at a value of $6.95 per trade), account must be funded with equity valued at $2,000 or more within 30 days of account open date. Eligible non-retirement accounts will pay the commission on all trades at the time of trades ($6.95 for stock and options trades plus an additional $0.75 per options contract), and the account will be credited with up to $6.95 per trade within eight weeks of qualifying (excludes option contract fees). Eligible retirement accounts will receive commission-free online equity trades at the time of execution for 30 days after account funding. Qualified commission-free internet stock trades must execute within 30 days of account funding. You will not receive cash compensation for any unused free trade commissions.

To receive up to $100 account transfer rebate in additions to 100 free trades, account must have transferred equity valued at $25,000 or more within 30 days of account open date. You must apply for the transfer fee reimbursement offer by completing and submitting a Firstrade Account Transfer Rebate Form and an account statement providing proof of imposed transfer fees. Account Transfer Reimbursement Request forms and proof of transfer fees can be mailed or faxed to Firstrade. Submission must be postmarked within 90 days of account opening. Reimbursement will be made to your account via a credit approximately 6 – 8 weeks after receipt of the Account Transfer Rebate Form and proof of transfer fees.

To receive a $100 cash bonus in addition to 100 free trades & $100 account transfer rebate, account must be funded with $50,000 or more in equity within 30 days of account open date. Cash back bonus will be credited to your account approximately 6-8 weeks after funding date.

IRA accounts are not eligible to receive the $100 transfer rebate or $100 cash back bonus.

The 100 commission free trades seem to be a lot for most investors. However, since the free trades must be used in 30 days, I doubt how much investors can benefit from the promotion, especially those who take the buy-and-hold approach when it comes investing. As for the $100 account transfer fee reimbursement, it is pretty standard (see How Much Does It Cost to Transfer A Brokerage Account?). As far as I know, many brokers, including Scottrade, TradeKing, and OptionsHouse, all offer at least the same amount of fee reimbursment.

Original Post on The Sun's Financial Diary

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Buy Quicken 2010 and Get Quicken WillMaker Free

Sun — Thu, 15 Oct 2009 19:59:47 PDT

Early this week, Intuit, maker of the best-selling tax preparation software TurboTax, released the 2010 version of Quicken, another popular product that helps users tracking their money and investments and making budget. According to Intuit, the latest version of Quicken comes with a long list of new and improved features such as:

By showing how much you’ll have left in your account until your next paycheck, the new Quicken can help you avoid overdraft fees and penalties.
The new Quicken home page puts all your most important financial information in one place so that you can quickly and easily see how you’re doing.
With improved menu and toolbar, you can easily find the tools you need to help you organize your finances.
The improved account registers make it faster and easier to review your downloaded transactions so you can ensure your data is accurate and quickly identify suspected fraud.
You can get help from Quicken Live Community without ever leaving Quicken.

I have been using Quicken Home & Business to track my investments for years and am quite happy with the software. Though I don’t use it for other things (just tracking investments, not spending, and not budgeting), I am still considering upgrade to the latest version (my current version is 2008) because of the improvements mentioned above. In fact, Intuit is offering a little incentive to promote the new Quicken. From now till November 1, when you buy a qualified Quicken product, you can get a free copy of Quicken WillMaker ($20 value), $20 off the regular price plus free shipping (all products also available in downloadable version). Products included in this promotion are:

Quicken Deluxe ($59.99, Promotion price $39.99): Makes budgeting and organizing your personal finances easy; avoid late fees and penalties, control spending, and reduce debt
Quicken Premier ($89.99, Promotion price $69.99): Makes budgeting and organizing your personal finances easy; Grow your net worth with help on maximizing your investment portfolio
Quicken Home & Business ($99.99, Promotion price $79.99): Easily organize and manage your personal and your home-based business finances, all in one place
Quicken Rental Property Manager ($149.99, Promotion price $129.99): Easily organize and manage your personal and rental property finances, all in one place

If you want to learn more about the latest Quicken products, there’s a short video from Intuit (go to the site if you can’t see the video) with highlights of each product.

Of course, if you don’t want to pay for the software, you can always use Quicken Online, which is free of charge for every one (see my Quicken Online review for details).

BTW, Quicken is running a Free Rent Twitter Sweepstakes starting today, October 15th, with $2,500 prize money up for grabs. Check out www.quickenfreerent.com for rules and how to participate.

Original Post on The Sun's Financial Diary

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Dow Closed Above 10,000 for First Time in a Year – Chart of the Day

Sun — Wed, 14 Oct 2009 19:08:15 PDT

It was October 3, 2008 when the Dow Jones Industrial Average closed above the 10,000 level at 10,325.38. In the following five trading sessions, the widely watched index lost 1874.19, closing at 8,451.19 on October 10, 2008. Actually, October 3, 2008 was right in the middle of a steep plunge of the Dow. The index closed at 10,850.66 on September 30, 2008. Eight consecutive losing sessions cost the benchmark 2399. 47 points. That’s more than 22% in eight trading days, one of the worst declines of the index in its history. Since then, the Dow was in a downward spiral amid the worst recession since the Great Depression. The decline accelerated early this year when big banks like Citigroup and Bank of America needed billions of dollars taxpayer money to survive. On March 9, 2009, the Dow closed at 6,547.05, a bottom that we can call only when looking back at the history.

Though the Dow has gained 3,468.81 points since its March low, it is still more than 4,000 points off its peak reached in October 2007. But, as it has already happened, these shouldn’t be any doubt that the initial rally was real now.

The question is: Did you miss it?

Original Post on The Sun's Financial Diary

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Dow Closed Above 10,000 for First Time in a Year – Chart of the Day

Chase Freedom Card $50 Bonus after First Purchase

Sun — Tue, 13 Oct 2009 12:05:41 PDT

The deal isn’t as good as what the card used to offer, but is still quite decent, if you are shopping for a new credit card that can actually becomes your everyday card.

Chase Freedom Card is having a promotion which will give new cardholder $50 bonus after the first purchase. I got the card back in early 2007 and since then, it has become the card for shopping at grocery stores and gas stations since I can earn 3% cash back in these categories. However, the card has recently undergone a lot of changes, mainly downgrades in rewards. For example, the card on longer gives 3% rebate on fixed categories, replacing it with rotating categories. And in the past, every $200 bonus can be redeemed for a $250 check. That is gone as well (I got my $250 check when the offer was still available early this year). Nonetheless, the card is still better than many other rewards credit cards which have scaled back their rebates recently due to the change of credit card regulations.

The fine print for the $50 bonus offer says that existing cardmembers are not eligible for the bonus:

You will receive $50 in bonus rebates with this bonus offer, which can be redeemed for a $50 check. You will qualify for and receive your bonus after your first purchase/first use of the card. First purchase/first use includes purchases, balance transfers, or any checks that are used to access your account, and excludes cash advances. After qualifying, please allow 6 to 8 weeks for bonus rebates to post to your account. This one-time bonus offer is valid only for first-time cardmembers with new accounts. Existing cardmembers/accounts are not eligible for this bonus offer.

In addition to the bonus, Chase Freedom cardholders can earn 1% cashback on every purchase with no limit on how much cashback you can accumulate. Plus, you can get 3% cashback in rotating categories like gas, home improvement and department stores. If you shop through Chase shopping network, the rebate can be as high as 20% at selected merchants. The card doesn’t charge an annual fee.

Interested? Get a Chase Freedom Card and enjoy the $50 free money

Original Post on The Sun's Financial Diary

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Current Bank & Broker Promotion Bonuses

Sun — Tue, 13 Oct 2009 07:36:10 PDT

If you are looking for a little incentive to open a bank or brokerage account, there are a few promotions currently running which will give you as much as $50 bonus for a single new account. Check them out. Maybe there’s something you need

TradeKing $50 bonus for a new account: Open an account before November 30, 2009, deposit at least $2,500 and make a trade, and collect $50 bonus.
CollegeAdvantage $50 bonus: If you open a 529 college savings plan with Ohio CollegeAdvantage, one of the best 529 plans, before December 15, 2009, you can receive $50 free money to jump start your college savings.
ING Direct Business Savings Account $50 bonus: Looking for a business savings account that pays a decent rate? Try ING Direct Business Savings Account and get $5o. No account minimum required.
Capital One Online Savings Account $50 bonus: A new reference code will give $50 if you open an account before November 25, 2009. Make an initial deposit of $10,000 and you can enjoy an annual yield of 1.60%.
ING Direct Orange Savings Account $25 bonus: This deal has been around for a long time and it’s still quite attractive to many savers, despite ING’s 1.30% APY. Make $250 deposit and get $25 bonus.
Prosper $50 bonus to start lending: Prosper, the peer-to-peer lending provider, is offering a $50 bonus if you open an account which no other requirement. That’s some easy money to get you started.
Lending Club $25 bonus to become a lender: If you are interested in becoming a lender, you can get $25 when opening a new account and start to lend ($25 is the minimum amount to invest in a loan). But remember investing in P2P lending involves risk.
Zecco Forex 20% deposit bonus: I don’t trade forex, but if you do, then you can receive up to 20% of the deposit you make to your account with this promotion.
OptionsHouse up to $100 account transfer reimbursement: OptionsHouse has a much lower commission for stock trading. At $2.95/trade, it beats many other popular online discount brokers. Transfer your account to OptionsHouse and get reimbursed for up to $100 account transfer fee.
OptionsHouse 100 commission free trades: And you can also get 100 commission free trades from OptionsHouse if you open a new account is November and December and deposit $3,000. That’s $295 value for your.
OptionsXpress $100 bonus: OptionsXpress isn’t cheap if you want to trade stocks or options with it, but its $100 bonus for just opening an account does look attractive if you want to have an account with the broker. Use the Contact form to request a referral link.
Firstrade triple-bonus promotion: Get 100 commission free trades, $100 account transfer fee reimbursement, and $100 cash back when you open a Firstrade account, depending on your account balance.
Zecco $30 bonus: I stopped the referral program some time ago because of problems tracking my references. Now I want to give it another try. Use the Contact form to request a referral link and get $30 Amazon.com gift card when you open an account and meet all the requirements.
Scottrade 3 commission free trades: At $7 per trade, the value of the free trades is $21, not very much compared with other bonuses listed above. However, I have had very good experience with Scottrade so far, despite the no-so-low commission.

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Learn More About Lending Club Credit Rating and Collection Process

Sun — Fri, 09 Oct 2009 07:40:52 PDT

I have been using Lending Club as an alternative investment vehicle for more than half a year now. At beginning, I could only invest in LC loans through their note trading platform because of the residency restrictions. Then since last month, I began to invest directly with Lending Club after moving from NJ to VA.

Currently, I have funded 103 notes with an average weighted rate of 12.97%. Overall, I am happy with the performance so far, though I also have some bad luck with a few notes. Two of them are late for a few months already and one is late for more than 16 days. The total value in these late loans is $112. No doubt that the losses will erode the profit. How much big of the hit isn’t clear yet since there’s still a slim probably that I may get some of the money back, though I am not very optimistic about the outcome.

Actually, the biggest problem of lending money to total strangers through social lending platform such as Lending Club and Prosper is the risk of losing money when the borrowers fail to live up to their obligations to pay. That’s the risk that I can try to minimize (see what I checked before investing in Lending Club loans) but can’t totally avoid because expected things, those you can’t by scrutinizing their credit file or employment history or income, do happen.

If you are also interested in investing through Lending Club, but have questions/concerns about the process, especially the risk involved and what LC is doing to reduce the lending risk before a loan is issued and recover your money after a borrower failed to make payment, here’s an excellent webnair from Lending Club about LC credit rating and collection process. In the presentation, LC walks you through the process of screening each borrower and going after delinquent borrowers. At the end, a lot of real questions from concerned lenders are answered in the Q&A section.

Here are a couple of screenshots from the presentation to give you an idea what is covered in the webnair.

First, how Lending Club’s return compares with bank yields and credit card interest rates.

Then LC explains what defines the grace period, late and defaults and what they will do when any of these happens.

Check out the webnair. It is worth your time if you are considering become a lender (see how you can get $25 bonus to start lending).

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Quizzle Offers Free Credit Score and Report

Sun — Thu, 08 Oct 2009 20:44:51 PDT

I have been using Credit Karma to get free credit score for quite some time now. What I like about Credit Karma is the I can update my score as many times as I want, though the score is unlikely to change if the update interval is too short. While Credit Karma is a nice alternative to paid credit monitoring services, the problem I have with it is that it hasn’t provided me the information I need: My credit score barely changed in the past 6 months. I expected my score to somewhat fluctuate over time, but that didn’t happen, making me question the usefulness of Credit Karma. Besides, with Credit Karma, though I can get a credit score, the TransUnion TransRisk score, for free, I have no access to any detailed credit information. Their new product, the Credit Report Card, does provide some information such as credit card utilization, average age of open credits, total accounts, the number of hard inquiries, and the debt-to-income ratio, etc., but what is missing is detailed information of each credit card I own and use to own. Not that I really need this information from Credit Karma since I get free credit reports every four months through AnnualCreditReport.com, it would be nice to have free credit score and credit report in one place.

If this is also what you want, then there’s one place where you can get both, for free, at Quizzle.com.

Getting free credit score & report from Quizzle is quite easy. Unlike at Credit Karma where you have to provide your Social Security number in order to let Credit Karma to pull your credit information, Quizzle doesn’t need your SSN to get your score. That’s a big plus in my opinion. One of the main reasons that I waited quite a long time before using Credit Karma was that I wasn’t very comfortable of giving my SSN to a new website. No such worry with Quizzle.

To get your score, you need to register first and providing information such as name and email address. After you create an account with Quizzle, it will send you a link to activate your account and once your account is active, you will be asked to provide your address and date of birth and that’s all Quizzle needs. It will then use only these information to locate your credit file at Experian and verify your identify by asking your a few questions based on your credit report. If everything goes well, you will have your free credit score in a minute.

The credit score range is from 350 to 850, different from FICO score which ranges from 300 to 850, also slightly different from Experian’s Score PLUS score.

Actually, I like how the score is presented at Quizzle better than at Credit Karma

In addition to free credit score, you can also get a free credit report every 6 months from Quizzle, something that’s no available at Credit Karma. Six months is quite a long time, but it’s only half the time you will have to wait to get a free credit report from the same agency through AnnualCreditReport.com.

The credit report isn’t as detailed as what you will find in reports purchased from the credit agencies or free reports from AnnualCreditReport.com, but it does contain basic information in all credit reports (as show above). Best of all, if you find anything wrong in the report, you can dispute the error with Experian right from within Quizzle. Very convenient.

What do you think?

BTW, I complained about the stability of my credit score at Credit Karma. At Quizzle, things seem going in the opposite direction. I got my first score 759 yesterday. When I logged into my account today, the score changed to 772. That’s a little too much too fast, isn’t it?

Well, since they are all free, I accept the fact that they are not *perfect*.

Original Post on The Sun's Financial Diary

Special bonus offers

Quizzle Offers Free Credit Score and Report