There’s nothing like being an American, right?  I mean, we’re only 5% of the population and enjoy 25% of the world’s GDP (while consuming 25% of the world’s energy of course).  That aside, in general, you don’t see people from around the world flocking to any country but America.  We have a vibrant job market (usually), the best opportunities for startups, education, freedom, and well, all kinds of other good stuff.

So, what would entice someone to renounce their US citizenship?  Cold hard cash.  That’s what one of the initial founders of Facebook has done, foresaking the US for Singapore (even though he’s Brazilian…long story, but it’s clearly a tax thing).  As widely reported in the media in advance of the Facebook IPO, Eduardo Saverin is now a proud citizen of Singapore (Mashable Story).

How Much Would You Need to Renounce Your Citizenship?

Obviously, it would be unlikely to find yourself if the same exact situation as Mr. Saverin.  For one, he wasn’t born an American, so perhaps he doesn’t have the same emotional or ethical attachments to remaining American as a lifelong American.  Additionally, his move was one of “incremental income” as opposed to a binary question like the one I asked.  While he’ll still have some exit taxes and others taxes to be sure, if his stake is worth $5 Billion and he would have paid say, $1.5 Billion in taxes as an American and $800 Million (both purely hypothetical guesses since no legitimate media outlet has actually shown the tax estimates) as a resident of Singapore, this is more an issue of walking away with a huge amount either way.  Greed?  Maybe.  Pragmatism?  Sure. Principal?  Perhaps.

But just for the sake of argument, if you had an opportunity to attain a large lump-sum payment by renouncing your citizenship, how much would it take?  $100,000?  $1 Million?  $10 Million?  What’s your number?  Think about becoming say, a Canadian or a Mexican.  You could easily cross the border somewhat routinely, still own real estate in the US; heck, you and your kids could even go to US colleges and get aide on the back of US taxpayers!  So, what’s stopping you?  Good old fashioned patriotism?  Objectively weigh the pros, cons and the value to you and let us know what your number is!

New Legislation Coming?

In their infinite wisdom, based on this headline, we’ll probably see Congress enact some sort of silly legislation to grab a headline, just like preventing lotto winners from collecting unemployment or eliminating tax writeoffs for corporate jets.  I could envision the “Citizen Renouncer Tax Dodger Act” or something along those lines to make it more difficult to avoid taxes for founders of IPOs where the US will recoup lower tax revenues than if the founder had remained a US citizen.  Of course, rather than addressing the real challenges confronting the nation, this will be a campaign check in the box for some senator somewhere that ends up generating no revenue.

Anyway, I’d Love to Hear Your Number and I’ll Share Mine.

©2012 Darwin's Money. All Rights Reserved.

A quick look at the market shows something fascinating: stocks continue higher while the 10-year Treasury yield creeps back to below 2%. Last week, yields on the 10-year Treasury fell to 1.84%. We seem poised to return to 10-year yields consistent with yields during the worst of Greek debt crisis fears.

So what’s up with the 10-year?

10-Years’ Signals to Investors

The 10-year Treasury throws off a variety of signals to investors including:

1. Implied inflation – If Treasuries are risk-free, a little conceptual algebra lets us know that the yield for any given US Treasury bond is pure inflation expectations.
2. Risk-appetite – When investors go risk-off, Treasuries are the place to be. Think of it like an FDIC-insured bank for investors with too much capital to go open thousands of $250,000 savings accounts.
3. Credit risk – The US dollar is still the most liquid currency in the world. When credit crises hit, they hit hard. While the US financial crisis and credit crunch hit the US, it hit non-reserve currency countries even harder. Keeping cash in dollars is a good way to make sure you can move it at a moment’s notice.

Investigating the 10-Year Yield Chart

The Chicago Board Options Exchange has a contract for the 10-year Treasury yield. You can look it up at Yahoo Finance under the ticker ^TNX.

Here’s a quick look:

As you can see, the 10-Year Treasury yield is retesting lows last seen during the Greek debt crisis. Greece’s debt crisis is hardly over. In fact, I spot a few interesting correlations between recent events and the 10-year yield:

1. March Peak – The March peak is consistent with a risk-on move to riskier assets, including stocks. The S&P500 rallied to year-to-date highs during the period.
2. European bailout – American investors hardly noticed what was going on in Europe in March. During the period, the European Central Bank loaned 529.5 billion Euros (roughly $890 billion) to banking institutions on a 3-year maturity at 1% annual interest. Likely, these loans allowed banks to temporarily move cash out of US Treasuries and into riskier assets.
3. Move back to safety – Following Greek elections of anti-austerity politicians and an election in France that gave an anti-finance socialist politician the French presidency, financiers around the world are worried Greece’s debt issues won’t be solved any time soon.

Low Rates: Use ‘Em or Lose ‘Em

For individuals, lower rates are a boon. As the US Treasury yield is the benchmark for risk-free lending, it is also the benchmark for mortgages, student loans, car loans, and other financing for consumers. Banks take the 10-year rate, slap a premium on top, and offer the rate to borrowers like us.

So how can we make the best possible use of low-rates and fears in Europe?

1. Refinance – Seriously, if you’ve yet to refinance, you’re missing out on what might be the best rate you have ever seen in your life (table to current rates in your state). Mortgage rates share a perfect correlation with the 10-year US Treasury, which rarely yields less than 2% per year.
2. Rebalance – Unless you’re nearing retirement, you have to start accepting more risk in your investments. The reality is that bonds are trading for very lofty premiums, while inflation threatens your total potential return. While no one wants to pay too much for stocks, no one wants to pay too much for bonds, locking in a guaranteed loss when one considers the rate of inflation going forward. Countless dividend-paying stocks yield more than the 10-year US treasury yield, and despite their own premium, dividend-paying equities still have the opportunity for capital appreciation if stock markets rise.
3. Leverage? – Those who haven’t been keeping pace with their retirement contributions might want to consider leveraging with a cash-out refinance or a longer amortization schedule on their mortgage. Given the tax benefits of mortgage debt and a paltry 30-year fixed rate of 4% for mortgage loans, it might be high time to think about playing catch up with other people’s money.

Events like these don’t happen very often. Generally, bond yields should rise as stocks rally, but the current market is breaking from historical norms.

How do you plan to use low rates?

Have you rebalanced your retirement to reduce bond exposure to increase stock exposure?

Do you think low rates are sustainable for the long term?

©2012 Darwin's Money. All Rights Reserved.

TIMBER!!! The timeshare market has really had a falling out – the resale value on a typical timeshare is falling faster than the value of a new car.

Thousands of timeshares are for sale at $1 or less! This isn’t Detroit, either; we’re talking about timeshares in some of the most popular tourist destinations in the country. So what’s going on in the timeshare market?

The True Cost of Sharing

In a perfect world, a timeshare would be the best of bargains. You’d own part of a luxury resort, have special claim to some of the nicest beaches in Florida, the best views in Hawaii, or the finest mountains in Colorado. And you’d be able to use it whenever you wanted, so long as you keep under your contracted use each year. If you couldn’t use your timeshare, you’d be able to rent it to someone else, pocketing the difference between rentals fees and annual maintenance.

Wait – maintenance?

And this is where the idea of sharing something all falls flat on its face. Whereas an owner of vacation property pays only for the maintenance on his or her individual unit, maintenance fees in a timeshare are effectively “socialized” and spread among every owner.

The problem is, though, that there are fewer timeshare owners today, and far more in delinquency. So while the true maintenance cost to maintain the property rises at the cost of inflation, the cost passed on to owners rises at inflation plus default rates. Someone has to pay the price, and it isn’t the people who refuse to pay – it’s the people who do pay. Each time one timeshare owner pays a maintenance charge, he or she pays for all the people who have no intention to mail in a check.

In just one year, from 2007 to 2008 (the very start of the global financial crisis) the average timeshare maintenance fee soared 12.3% to $646, according to the ARDA. This 12.3% industry-wide explosion in costs appears to have compounded for the last several years as more owners default on annual dues.

Don’t Fight the Fed?

Timeshares might be yet another example of fighting the Federal Reserve. In 2008 the average timeshare owner was 54 years old. The skew is naturally toward aging Americans (who are REALLY Screwed), as in 2000, the median owner was 54 years old.

Now, 12 years later and interest rates depressed, it’s only logical that the most important demographic for timeshare purchases, rentals, and resales faces crippling investment income.

Consider that in 2007 $1 million of risk-free assets (a popular asset class with retirees) would yield as much as $50,000 per year. Today, that same $1 million generates only $16,800 in income in the best 5-year CD on the market (see this CD Table for comprehensive quotes near you). As more assets are rolled over from higher fixed-rates from the housing boom years, disposable income available for vacations (and naturally timeshare maintenance fees) plummets.

Timeshares Really Are Worthless

I researched quite a few timeshares after hearing about the number of timeshares being sold for $1, or given away for free. There are literally hundreds of timeshares available for free – the current owners simply want a way out of their contracts.

• One listing offered a Florida timeshare for $1. The annual maintenance fees were $800, and the timeshare entitled the owner to a week-long stay, once per year. Interestingly, I found a timeshare available for rent in the same resort for $750 per week. To pay $1 for this timeshare would mean you would pay MORE for vacation, to vacation at the exact same spot year after year.
• Another listing offered a timeshare for $0. The same price discrepancy between rent and maintenance fees came in play here – $1500 in maintenance fees per year vs. $1200 to rent a similar unit for one week. Why would anyone want to lock in for life at $1500 per year when the same timeshare, rented with 100% flexibility and zero ownership, costs $300 less?

This problem appears to be industry-wide. Not to mention, timeshare owners are required to pay annual maintenance whether or not it is used from year to year.

Financial Suicide

It seems fairly obvious now why timeshares are never a good investment. The price of maintaining a timeshare can (apparently quite easily when others default) rise well in excess of expected rental costs. Over the long haul, the price of your timeshare is likely to decline in value, while the maintenance costs push higher and higher year after year.

Have you ever been suckered into the timeshare sales pitch?

Do you know anyone with a timeshare? Do you own one yourself?

©2012 Darwin's Money. All Rights Reserved.

I first tuned into Shark Tank at the end of last season and it instantly become one of my favorite shows.  I loved the business ideas, the pitches, and of course, the wheeling and dealing from “the Sharks”.  It was both entertaining and somewhat educational from a business savvy standpoint.  However, as the episodes progressed and I started talking to some other people, I’ve started to wonder if Shark Tank is a scam.

• Many “Deals” Are Never Consummated – This is the most appalling part of the show in my opinion.  I was initially a little suspicious when I would visit some of the company websites where “deals” were struck during the show only to find no mention of a partnership or investment from any of the Sharks on the show.  I figured surely these segments were filmed months in advance, so it would seem logical that by the time the show aired, there would be mention of a deal in the “About Us” or “Investors” sections on company websites.  But more recently, I was talking to a friend of ours who is an angel investor.  He’s often doing this sort of thing for real, where entrepreneurs pitch their business, deals get done, etc.  He said it was his opinion that the thing’s a total farce. Anecdotally (and this is his experience, not mine), he said two of the companies that pitched to him made it on to Shark Tank and struck deals and neither ended up going through.  He concurred with my hunch that many deals that are agreed on the show never actually happen.  He said in one company’s case, the Shark never even called them after the segment!  They were waiting around for a call and it never came.  That’s crazy!  I could understand that perhaps some deals don’t happen because of some critical flaw discovered during due diligence, but to not even call?  I wonder if there’s a statistic out there somewhere showing the actual percentage of deals consummated vs. claimed “deals” on the show.

• Contestants Clearly for Entertainment, Not Real Businesses – Some of the contestants clearly don’t belong on the show and seem to be there more for entertainment purposes than for an actual business deal.  I guess this is kind of like American Idol letting the really bad singer on as a joke or whatever, but in one example, this guy was completely pitching a scam energy bracelet thing which anyone with the slightest analytical ability would realize is purely a scam, yet the producers let this guy on.  Mark rightfully called it out as a scam, but why did they even waste viewers’ time with that one?

• No Rules – I find the utter lack of rules on decision making and deal-making to be relatively annoying as well.  I’ve seen some segments where a Shark says they’re out, then they come back in.  WTF is that?  Then on other occasions, a shark says they must decide immediately, within the next 5 seconds and then another shark yells out an offer and it goes to a commercial.  Then the entrepreneur gets to hear the pitch from the other shark.  On a recent episode with some wine in a glass company, Mark was about to do a deal and then withdrew his offer because the guy waited too long to decide (even thought he threw out no time limit and just pulled back his offer).  The only logical conclusion I can draw from such cavalier and random offers and withdrawals is that perhaps none of the sharks are serious most of the time.

I’m starting to wonder if the show’s nothing more than a crappy reality TV show.  If you were a shark and didn’t really plan on doing deals anyway but just wanted to make for some good entertainment, you could undertake all kinds of antics with no risk to yourself.  It would be for great television but not be authentic.  Is this really just a showcase for the Sharks to get publicity for their brands and the contestants to get on television so they can attract customers and investor attention after the show airs? Is that what’s going on here?

What Are Your Thoughts About Shark Tank? 

Realistic, Entertaining or Just Another Reality TV Scam?

©2012 Darwin's Money. All Rights Reserved.

For small businesses, reaching out to consumers is essential if entrepreneurs want to see the growth they want. Smaller companies cannot rely on massive advertisement campaigns like larger companies do, simply because they simply do not have the funding.

The good news for these small businesses is that the internet has dramatically changed how businesses and their customers speak to each other, opening up communication and the free flow of information. The result of this is an improved opportunity for businesses of this size to reach a growing market.

The platform for businesses to reach customers, to promote and engage already exists on a grand scale. The changes in social media in the last ten years, has given businesses a network they previously could only dream of. The mistake that many companies make however is to misunderstand the nature of the internet’s potential. The web provides a framework, but it does little more. It is up to businesses themselves to reach out to customers and to be pro-active in the promotion of their company.

Initiating the conversation between a business and its customers

This “conversation” between businesses and their customers is relatively new. Of course, the two have interacted before to some extent but the integration of social media into the world of marketing has allowed for a deeper level of communication which can range from exclusive promotional offers to consultation on elements of design and company practice. The key thing however is that whatever the content of the conversation, the initiative must come from the business as customers will rarely seek out a business on their own.

Because the market exists on the web; it is now simply up to businesses to use these tools at their disposal to give themselves a head start against their competitors. While the web offers businesses the most powerful tool for decades, it brings with it a number of potential difficulties which often arise from the free sharing of information and the ability to communicate so easily with large numbers of people.

Understanding Social Media

Reaching out to customers effectively requires a sound knowledge and understanding of the major social networking sites, as well as those on the fringe. Any business serious about connecting with their customers via the web should be considering accounts at least with the following social media sites:

- Facebook

- LinkedIn

- Twitter

- Pinterest

- Google Plus

- Tumblr (Or a similar blogging site)

- StumbleUpon

- YouTube

- Reddit

A company’s absence from one social media site is likely to have more of a negative impact on business than their presence, so it is best for businesses not to be too picky about which sites to create an account with. If nothing else, by spreading information about your business around the web you are increasing your overall presence. Inclusion on social media sites can also be of some help for search engine optimisation. Most customers will find the businesses that matter to them through search engines, so it is important for your business to be as accessible by this method as possible.

Being aware of the potential damages involved in using Social Media

While web presence is essential in any form, online behaviour is something businesses ought to look at carefully. Businesses should become familiar with user behaviour on social media sites before plunging in. Sites like Reddit can be particularly difficult for businesses to approach effectively, so taking the time to research online markets is of absolute paramount importance.

The way in which we use and share information online is different to the way that we use and share it offline and businesses should be respectful of this. Inappropriate posts on the wrong social media sites can be disastrous for a company’s reputation. Bad feedback for your company can spread like wildfire so businesses should seek professional advice before embarking on social media frenzies.

Advice from insurance companies about the coverage provided by policies like Hiscox – Public Liability Cover is advisable for companies looking to make their mark online. Online competition is vast and the most successful businesses will be doing something different based on in depth research.

For shrewd entrepreneurs the internet and social media growth is undoubtedly a major opportunity and while some will undoubtedly become very successful, others will be left behind, don’t let it be you.

©2012 Darwin's Money. All Rights Reserved.

The time has come for one of us to do something permanent.  We’ve now got 3 kids, we’re mid-30s, and we’re done.  I failed miserably at trying to convince my wife she should have it done.  I found some new lacroscopic procedure that was supposed to be pretty painless and cut out the article, but she wasn’t hearing it.  She reminded me of the 3 creatures she pushed out already and said it was my turn.  So, after much ado, I’ve undergone the consult and have the snip to look forward to.  On my way back from the consultation, I had varying thoughts on the topic and since I haven’t seen a post like this on a personal finance site, I thought I’d ramble a bit (and try to tie it all to finance in some way):

• The Cost To Us – Depending on your healthcare insurance (mine gets worse each year and my annual increase was insane this year), people would tend to pay varying rates of course.  In our case, I paid a $25 co-pay for the initial consultation and who knows what I’ll pay for the actual procedure?  We have some convoluted payment system now where there’s an individual deductible limit, and 80/20 component and then they always find a way to extract more money down the road with some errant bill for testing or some weird reason why part of the services weren’t covered.  So, at the end of the day, I’m guessing the whole ordeal would a few hundred bucks minimum.  I guess that’s cheaper than another 15 years of condoms OR a whoops!
• Whoops! – Speaking of “whoops”, I’d heard of this before but apparently, the tubes can regenerate, reconnect or whatever even after initial sterilization.  So, they make you come back months later and drop off some sperm (or fluid really) and make sure there are no viable sperm.  On that though; and I found this to be interesting – the doctor said that if the tubes grow back, they would redo the procedure for free.  That’s the first time I’ve ever heard of a offer like that in medicine.  See, medicine is so prone to litigation that usually any notion or a do-over implies some sort of malpractice, which opens them up to a lawsuit down the road.  Say you had some sort of cosmetic surgery and it came out looking like crap.  If they redid it for free, you could then sue using their offer as evidence of their screwup.  I assume this is probably commonplace for this type of procedure because if the body somehow reconnects the tubes (something like 1% of the time or less), it’s completely out of their control and it happens after their work was completed.  Just thought I’d share the only freebie I’ve ever heard of in medicine.
• 2nd Thoughts?  I had to sign a waiver that I fully understand that the procedure is meant to be permanent.  Evidently, men sometimes find themselves in some sort of life situation where they want to have the procedure reversed (like when they marry a hot young second wife who wants kids or whatever).  I don’t have concerns there so I consider it to be permanent, even though it can be reversed (but no guarantees hence the waiver).
• Societal Cost of Birth Control (or Lack Thereof) – Several weeks ago there was a big hoopla in the news over whether women should have contraception covered by health insurance and that somehow turned into “men controlling what women can do with their bodies”.  Umm, actually it was about whether men and women should have to pay for someone else’s birth control.  As annoying as it may sound to have to reimburse someone else’s sex, from a societal standpoint, it seems to be quite cost-effective.  Same with abortions.  While I find abortions of convenience (which most are; but I have no criticism of the health risk cases, rape, other situations) to be morally repugnant, the reality is that financially and societally speaking, legalized abortion (and probably their funding/subsidization) is actually beneficial to society on many levels.  If you haven’t read the shocking study outlined in Freakonomics, the premise (and he has the data to back it up), is that due to the passage of Roe v. Wade, we saw a subsequent drop in violent crime (from unwanted children that were never born – who have a higher propensity to end up committing crimes in their late teens onward) which in turn yields benefits from lower incarceration rates (which taxpayers fund), to all the other funding unsuccessful Americans draw on taxpayers.  It’s a complex argument and you can’t often put a price on your own ethical or religious beliefs, but the numbers speak for themselves.
• The Cost of NOT Being Sterilized – There are varying estimates of what a kid costs to raise and I tend to believe you “fit” spending per child into your life situation.  Huh?  This means if you’re pretty wealthy you’ll tend to spend a lot more than the government per-child estimates and if you’re poor you’ll spend less.  Additionally, a 4th kid to us would be MUCH less expensive than our first.  It’s incremental.  We have 2 boys and a girl, so either way, there would be plenty of clothes and toys to hand down and heck, we’d even have free babysitting down the road at this point.  However, college is a big one.  My 529 plan strategy has me planned at over $100,000 per kid in today’s dollars.  So, right now I’m saving for essentially another house (~$300,000) so I can put my kids through college someday since I’m not counting on any aide or scholarships.  I’m guessing over the first 21 years, with the $100,000 for college and probably at least another $100,000 for even an incremental child, a whoops would cost us over $200,000 easy.  That’ll make you think twice about unprotected sex, right?

Do You Have Any Financial Musings Related to Children, Sterilization or Population Topics?

©2012 Darwin's Money. All Rights Reserved.

Editor’s Note: I found this business model to be unique and like nothing I’ve seen out there before; check it out and provide your thoughts!

This article was written by By Paul Aitken, Founder, borro.com.  

The continued shortage of funding in the U.S. market combined with lengthy application processes are leaving small business owners with the stark reality that accessing cash quickly and effectively is a difficult, if not seemingly impossible task.

Traditional lenders often make short-term financing very challenging, which is a serious problem for more than 2.5 million small business owners and sole proprietorships in the greater New York metropolitan area, and many millions more across the country.

As an entrepreneur, I’ve experienced the challenges of building a small business, and I understand firsthand how business owners might not qualify for traditional lending, for the right or many times, the wrong reasons.  That’s why I founded borro in 2008.  Today, borro is a leader in personal asset lender, and recently opened our U.S. headquarters in New York City. Our approach is a little different. borro provides loans of up to $1,000,000 secured with high-value personal assets such as luxury cars, gold, jewelry, high-end watches, fine art, antiques and fine wine.

borro prides itself on very fast turnaround, and getting your money when you need it most.  The majority of our business is online; we don’t have a retail presence, which allows us to provide the best deal.  We also employ expert appraisers to ensure we can lend the maximum amount against an asset.

Today, business owners use borro for a variety of reasons: to help manage their cash flow, to refinance, to take advantage of business opportunities, purchase stock, pay tax bills and a number of other purposes.

In less than six weeks in the U.S. market, we’ve already lent more than $1 million, and that amount is rapidly increasing.  One of the reasons we’ve been so successful is that we’re very flexible and extremely transparent.  And, of course, we can respond very quickly.  We don’t have restrictions on our loans and we don’t do credit checks, so we can usually provide a business owner with their funding much faster than traditional lenders.

We make it easy for small business owners or high net worth individuals to work with us. Small business owners and individuals use borro for a variety of reasons, but the key benefits of personal asset lending are:

• You get your money within 24 hours
• Loans are secured based on the value of your personal assets, not on a credit check
• There are no extra charges if the loan is paid back ahead of schedule

Since opening our U.S. operations, we’ve provided loans against some interesting high value personal assets including, $140,000 against a Rolls Royce, $100,000 on a piece of fine art, $96,000 against a luxury watch collection, and $58,000 against two 1kg investment gold bars, to name a few.

All assets are stored in secure and insured vaults or specialty premises, provided for by borro. A transaction with borro is transparent, with all rates and processes made clear from the outset. There is no risk to your credit history and loans can be redeemed at any time without penalty.

For more information on borro, please visit www.borro.com, or call our New York valuation center at 1-800-953-6594 to arrange an appointment.

©2012 Darwin's Money. All Rights Reserved.

Does it matter if the professional you’re paying talks the talk but doesn’t walk the walk?  Sometimes when I’m at my gym, I take a look at the clients taking private lessons with a fitness trainer who would probably be classified as obese based on commonly accepted criteria.  On one hand, I sometimes wonder if the client is like, “this is who they assigned me?” or on the other hand, maybe they’re a great trainer and all that really matters is the result, right?  For all I know, they might be the best fitness trainer in the entire gym.  So who am I to judge?  I’ve also met people in the financial services industry who are horrible with their own money, lawyers with legal troubles, there are plenty of divorced marriage counselors and the list goes on.  So, the question is, does it matter?

Do You Expect Your Professional to Just Talk the Talk or Also Walk the Walk?

Would it Influence Whether You’d Use Them Once You Found Out?

©2012 Darwin's Money. All Rights Reserved.

The online discount broker tradeMONSTER is a newcomer, but its founders are anything but. The duo responsible for tradeMONSTER is made up of the same people behind optionsMONSTER, a media and reporting company that reports unusual options activity during the trading day.

Let’s review what tradeMONSTER has to offer to compare it to other online discount brokers.

Commissions

tradeMONSTER is right in the middle for commission pricing. The company charges a flat rate of $7.50 for stock trades. Stocks priced at less than $1 are met with an additional surcharge of .0005, or 1/20th of a cent per share. After-hours trades are also charged a 1.5 cent surcharge per share.

Options trades are charged a commission of $12.50, or $.50 per contract, whichever favors the trader. Options trading commissions at tradeMONSTER are lower than other brokers, especially in the range of 25-100 lots, trading sizes that are often hit with high flat-rate charges plus a per-lot charge at other online discount brokers.

Options commissions scale with the number of contracts traded per month. The company charges $.50 per contract up to 10,000 contracts per month; $.40 per contract from 10,001 to 50,000 contracts; $.20 per contract for 50,001 to 100,000 contracts; and $.10 per contract when monthly trading volumes exceed 100,001 option contracts.

Finally, tradeMONSTER offers futures trades to individual investors, charging $1.50 per contract, per trade. Other fees apply, depending on volume, but these fees are consistent from broker to broker. The NFA requires other trading fees to be assessed outside of the commission structure.

Margin Rates

Investors with strategies favoring leverage will appreciate tradeMONSTER’s low margin rates. The company charges the Fed funds rate plus:

3.25% for balances less than $50,000
2.50% for balances of $50,000-$99,999
1.75% for balances of $250,000-$999,999
1.00% for balances of $1,000,000 and more

tradeMONSTER Trading Platform

This broker absolutely excels when it comes to trading platforms. The proprietary tradeMONSTER platform is browser based, meaning that investors can make trades on whatever device they wish by logging into their account by phone or computer.

You will quickly find tradeMONSTER’s attention to detail to be very different from that of other brokers. The founders of the firm routinely appear on CNBC, a financial news network that encourages active trading. With each trade, the platform creates a risk-model, offering up easy to see graphs of profit and loss potential, as well as “if, then” modeling for various fundamental events.

The company also offers a service known as StrategySEEK, whereby traders can identify what interests them about a particular trade so that the software can come up with the best possible strategy. If a trader were interested in volatility on a particular stock ahead of earnings, for example, the StrategySEEK might recommend a straddle options trade. The tool is sophisticated enough to reconsider the same trade at a later time to offer new suggestions for hedging previously unseen risks or upside potential as the trader’s investment evolves over time.

Streaming News

Perhaps the best part about tradeMONSTER is that it is fed data from optionMONSTER’s database. As mentioned previously, optionMONSTER is an option research and media company that seeks out unusual options volume to find where the so-called “smart money” is making big wagers. These trades are outlined in real time directly on tradeMONSTER’s trading platform.

Social media fiends can also plug-in their favorite twitter users for live streaming tweets as they come out. As more news breaks first on Twitter, and traders become more active in using social media for a trading edge, this feature may become more and more valuable.

Bottomline on tradeMONSTER

Let’s conclude this tradeMONSTER review by weighing the pros and cons from a high level. The browser-based platform is executed amazingly well for a company like tradeMONSTER, which has a very low minimum deposit of only $2,000. Commissions, fees, and margin are well in line with competitors, and its platform really differentiates the company in the retail brokerage space.

Downsides include only the stock trading commissions, which, although reasonably priced, are beaten marginally by less expensive brokers. However, tradeMONSTER does not hide its obvious bias toward options traders, having developed a line of trading tools in its own platform for options transactions that go above and beyond most retail brokers. The platform’s vast trading tools are just another reason why tradeMONSTER was named as the best broker for options traders three years in a row by Barron’s.

Check out tradeMONSTER’s platforms, commissions and more here.

©2012 Darwin's Money. All Rights Reserved.

Occasionally my wife will comment on how our house is smaller than our friends’, we drive older cars or whatever. As corny as it starts to sound to her, I always remind her that we’re actually better off than most Americans. And most Americans are better off than the rest of the world. So in essence, as far as humankind is concerned, we’re doing pretty damned well. And then she says something like, “yeah but our house is still small” LOL.

Anyway, if it makes you feel any better, perhaps by seeing how you stack up against your fellow Americans when it comes to income, there are a few tools out there that can do the trick.  The Wall Street Journal has a nifty calculator showing where you rank (in the context of the 99% vs the 1%) so if you’re curious what it takes to be in the top 1%, it’s about $506,000.  And if you’re one of the 53% who actually pay Federal Income Taxes, share your story there too.  For the rest of us mere mortals, it’s still fun to find out where you rank and perhaps provide a goal to reach for the next echelon.

How Do You Feel About Where You Ranked?

©2012 Darwin's Money. All Rights Reserved.