We're Moving!!

Announcement - Due to popular demand we are moving to our own domain site! We are still working out a few details but we are pleased to welcome all readers to the new site:

http://milkyourmoney.com

RSS feeds should remain the same but if you notice any problems please don't hesitate to contact us.

Participate in your Employers 401(k) Match Program

Employers are slowly moving away from the traditional pension plans that many of our parents enjoy and now offering an employee match program. This means employees can no longer sit back and let others make their retirement decisions for them, but must be proactive in planning their futures.



What is an Employer Match Program?
Participants of an employer match program will receive a dollar for dollar match on money taken out of each of their paychecks up to a certain percentage that is then placed into a sponsored retirement plan (ex. 401k or 403b). It’s important to understand that companies will offer a 100% match on your savings up to a certain percentage of your salary, usually, anywhere from 4-6% of your pretax salary. For example, if you make $50,000/year and put 6% of your salary into a 401(k) account, you would save $2,000/year. Now, add the 6% match from your employer and now you saved $2,000 from your employer to give you a yearly savings/investment of $4,000.

Take it, it’s Free Money!
While we can understand the hestitation of putting money into a savings plan bi-weekly because your paychecks will shrink, it’s important for you to understand that by participating your paychecks actually increase! Keep in mind that an 8% return on an investment in one year is considered a good investment. When your employer is offering you a match on your savings, you are already up 100% on your investment for the year. Just to try to stress the point even further, consider the example above, if you participate in your employer match program for 30 years, earning an average of 8% a year on your investments and make $50,000/annually with 6% match you would accumulate $496,289 over the 30 years. Only $60,000 of the $496,289 is actually coming from your check, the rest is employer matched and interest. Take it, it’s free money! $

Warning: Tax Economic Stimulus Rebate Fraud

If you haven’t heard the good news, Congress has approved a measure that will put money into your pockets starting sometime in May. In a previous post, we discuss how big of a rebate you should expect to receive as well as possible financial savvy ways to spend them. The bad news is, wherever there is money, there are scammers. Scammers are posing as the IRS through emails and phone calls promising earlier delivery of your rebate checks, in addition to direct deposits. Milk Your Money has come up with some warning signs to be appraised of in order to avoid becoming a victim.

Phone Calls from the IRS
First, the IRS is not going to be cold calling taxpayers in an attempt to pay them earlier or to offer some type of a direct deposit of your rebate. Last time I checked, the Federal Government has never being itching to put more money into our pockets. Hang up on these phonies. Common sense will prevail, if you let it, when dealing with fraudsters like these.

Emails Requesting Personal Information
A true warning sign of fraudulent emails are ones asking for you to reveal personal information. Financial institutions or government entities will never send you an email asking for things like your social security number, bank account numbers and address. Keep this in mind to avoid frauds down the road. Taxpayers are now receiving emails from IRS posers promising, again, earlier delivery of your stimulus rebates if you give up some personal information. Do not reply to these emails, report them and delete. The most important thing to remember is if you qualify for a rebate, you will receive a check sometime this summer and all you have to do is cash it, no strings attached.

You can report suspicious phone calls and emails to IRS web site.$

Where to Bank Online?

One of the main reasons we decided to start putting together a blog for people was because of the idea that you could make your money work harder for you, hence milking it. One of the best ways to do that obviously, is to put your money into a high interest bearing account so that the snowball effect of compound interest will, eventually, accumulate more than what you spend.

The easiest place to start something like this is online. NOTE: Any rates we discuss are active at or near the time of writing, please be mindful of the dates. Lets take a quick look at some of the major players:

ING Direct
They have a wonderful marketing campaign and very secure clean online banking interface. Their rates have dropped since the Fed has dropped rates across the board but what can you do to prevent that? Here are the rates for the different tiers they offer for an online checking account:

Balance....................................... APY*..

$0 - $49,999.99.......................... 2.25%

$49,999.99 - $50,000.00 .............3.75%

$100,000.00 + ............................4.00%
APY*

Now I am sure you are thinking, I will never have $100,000 in my checking account to get access to that percentage rate. Well you never know and you can still use it as a bench mark for other online banks. ING does not have a minimum to start an account, has a debit Card, free ATM access (32,000 select locations), free electric checks, automatic protection from overdraft, and is of course FDIC insured. ING has also recently merged with Sharebuilder but the accounts are not connected (yet?). There is also no real convenient way to deposit checks. Read more here.

Schwab Bank High Yield Investor Checking

Schwab has had some changes as of late. I found their online banking to have a huge interest rate and I was very tempted to try them out, but was left with a bad taste in my mouth as they required a $3,000 minimum to deposit. Now I see as I write this article, the minimum has gone away and the interest rate has dropped from a little over 5% to the now 3.01% for all sums in any account. The other features that are inherent with ING, are also shown here, for example, no ATM fees, free online checks/bill pay, etc. There is no way to deposit (like with ING) with them however unless you mail in a check or if you have direct deposit. So your paycheck is ok but if you get a check from someone else you'll be mailing it in. Read more here.

Bank of America Online Banking

BofA is known to be the largest bank in the US and it just might be. They have more locations that I know of and seem to doing very well for themselves, regardless of the financial crunch out there. I make this statement about BofA and not the first two because they are more of and esatablished brick and mortar, lending type of bank. Not to mention the huge bailout that they are attempting with Countrywide. That is another story however, we have quite a bit to say about that in a later post.

Over all, the online banking experience was a bit of a disappointment, with respect to interest rates in the other checking accounts. They have virtually none for checking accounts and for savings, if you maintain $300 or $25 deposit every month, theres no charge with an APY of 0.20%. Wow. That is compounded daily and paid monthly. They nickel and dime you for not maintaining minimums. They do comply with Check 21 (as do all financial institutions, effective October 28, 2004) where you can, supposedly, scan both sides of your check and send it in to be processed/deposited. BofA's website was lackluster in toting that as a feature however. Not sure if they are running into problems with that. Either way, they are just a regular bank and have virutally no interest rates on their checking platforms. Read more here.

That's about all for now, check back soon for another slew of online bank reviews. $

Look Up a Broker or Securities Firm Before Investing

As the subprime crisis continues to impact our equity markets, many investors see the glass half full and consider this a great buying opportunity. However, some investors are getting out of the market as they fear things will only get worse. Regardless of your risk tolerance and buying strategies, now more than ever should you be cautious before getting into any new investments. The fear of a possible recession runs parallel with panicked investors and scamsters working overtime trying take your fear and capitalize on it. Milk Your Money has come up with a few things you should do before you make any big investment decisions.

Check Your Broker

The Financial Industry Regulatory Authority (FINRA) – the largest non-governmental regulator for all securities firms doing business in the United States – has an easy to use tool that allows you to do a background check your on your current or future broker and financial institutions. This simple two minute process can save you from losing your nest egg and allows you to invest with confidence. FINRA’s report will tell you if your broker is currently suspended or has recent enforcement actions taken against them etc.

If it Sounds too Good to be True, it is.

You have heard this over and over again; well here it is one more time. If an investment is pitched to you and sounds too good to be true, it most likely is. Use your common sense when you are investing and in our opinion great investment products will sell themselves with their record and satisfied customers, not by aggressive sales people. Remember, growing wealth is not going to come overnight with a risky investment, rather from making smart everyday money decisions and investing with the goal of long term growth.

Leave New Investment Products Alone

The innovation of the markets is amazing and new products are continuously being offered to the public. In our opinion, it’s best to leave these new products alone and wait for them to acquire a track record. Patience like this, gives you time to truly understand what the product actually does and whether or not it fits into your investing strategy. We are willing to bet that you are unlikely to be the guinea pig that will take medication for a medical breakthrough. Why, because of the fear of undetected side affects; carry this thought process with you when investing.

Call Your State Regulator

Whichever state you live in, you have a regulator working to protect you from investment scams and frauds. Before reaching into your pocket, call your regulator and see if they and the product they are selling are registered. Obviously if they are not, report them and steer clear. You can get the contact information of your securities regulator here. $