What are Closed End Funds?

Closed End Funds: what the Heck are they?

Closed end funds are not the easiest concept to pick up by amateur investors. They are a little bit like stocks and a little bit like open-ended mutual funds (what most people commonly think of when they think of ‘mutual funds’). As such, they are a little off the beaten path for most investors. To understand what they are and how they are priced, you first have to understand how mutual funds work. Once you understand, you might be tempted to invest in them since they often trade at premiums or discounts to their values. If you’re an amateur investor, it could be a risky game to get into. They can also provide unique opportunities.

Closed End Funds vs. Open End Funds

Open-ended funds rule the mutual fund world. Most funds in your employer’s 401K fall into the open end category. When comparing open-end funds to closed-end funds there are two main factors to consider:

1. How many shares there are.
2. How they are priced.

How Many Shares

The first difference between the two is how many shares there are. Closed-end mutual funds are offered up in an IPO. This means that there is a set number of shares which are offered on a stock market. The number of shares does not change as a result of new investors putting money in the fund. If you buy shares, it’s because an investor was selling theirs. With open-end funds, on the other hand, there is a limitless number of shares. You do not need an investor to sell you their shares. You buy new shares, and new shares are created for you. There is no exchange of shares from one investor to another.

How Open Ended Mutual Funds are Priced

You may be wondering how the share price of open-end funds is calculated. Open-end fund share prices are bases solely on the net asset value (NAV). This is basically how much the total value of all its investments are worth, divided by the number of total outstanding shares. The NAV is the price you buy or sell a share at. This NAV is calculated at the end of each trading day.

How Closed End mutual funds are Priced

Much like with open-end funds, closed-end funds have a calculated NAV (total value of underlying investments divided by number of shares). However, this is often not what the shares are priced at. Since shares are traded on the open market, the shares can trade at a discount or premium to the actual NAV, based on perceived value of the investor.

Closed End Funds Trading at Discounts to NAV or Premium?

Common sense would lead you to believe that a closed end fund trading at a discount to its NAV would be a good buy. And especially one trading at a 5, 10, or 15% discount. Similarly, it would intuitively make sense that one selling at a 10% premium to its NAV would be ripe for selling.

So why do closed end fund prices vary so much from the NAV? That’s one of the true mysteries behind them – and probably a good reason why amateur investors should be careful in getting into that game. Who’s to say that a closed ended fund trading at a 5% discount to its NAV won’t end up trading at a 15% discount to its NAV? Not me.

Related Posts:

• Index Funds Vs. Mutual Funds
• ETF’s vs. Index Funds
• Zecco Review
• TradeKing Review

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CouchSurfing 101: 10 Tips for First-Time Surfers

CouchSurfing: 10 Tips for First-Time Surfers to Overcome Initial Hesitations via Proper Etiquette

A few weeks ago, I wrote a post on the basics of CouchSurfing – how to sign up, safety considerations, the benefits, and basically what it’s all about. What I didn’t do was highlight my first experience ‘couch surfing’ at CouchSurfing.org and some of the written/unwritten rules of etiquette for those interested in giving it a shot.

These rules are just my suggestions based on a combination of my experience and recommendations from the community, and are not meant to scare anyone off from the CouchSurfing experience. A lot of these suggestions are coming partly from the perspective of how I would want to be treated if someone ‘surfs’ at my house. You can also check out CouchSurfing.org’s surfer tips here.

1. Give your Host as Much Advance Notice as Possible

I let my first host know a month ahead of time when we were interested in surfing. If you ask the day or week of, odds are that someone is going to have to change their schedule in some way to accommodate your visit. And then you’ve already put your host in an awkward and inconvenient situation. Plus, you have to deal with the guilt of know that’s the case. Be considerate by planning in advance, especially since this person is welcoming you into their home.

2. A Small Gift or Act of Kindness

By rule, hosters cannot charge surfers for their stay. However, it is recommended that you give a small gift, which could be an act of kindness. I knew that my host was a wine lover, so my wife and I bought her a bottle of wine from a local winery. Couchsurfers have detailed profiles of their interests. If you’re staying with a host who loves thai food, for example, buying the ingredients and cooking up a thai dish for dinner would be an excellent way to show your appreciation.

3. Reimburse for Goods Consumed

The only thing my wife and I consumed from our host was a tea bag or two. However, I could see the circumstance where you eat a few meals or drinks. In that case, it would be kind to at least offer reimbursement, however, I’m guessing that in many cases, your host will politely decline. You should at least offer.

4. Work Around your Hosts Schedule

My biggest CouchSurfing surprise was that our host basically said “here’s a house key, come and go as you please”. That was a huge convenience for us, obviously, and there’s a huge amount of trust (or blind faith) involved there. I’m not sure if this is the standard in couch surfing or not. In the case of my host, it almost had to be, as she had social plans most of the time we were in town.

Despite this attitude from our host, it’s probably best if you at least give your host an idea of when you think you’ll be coming and going so that they can plan accordingly.

It’s important for you to be flexible with your hosts schedule, not force them to be flexible to yours.

5. Make an Effort to Build a Friendship

As I said in my previous CouchSurfing post, it’s not, nor should it be all about the ‘free ride’. If you’re just CouchSurfing to save a buck or two on your travels, you’re doing your host and yourself a disservice. This is a great way to meet and make friends with like-minded individuals around the world. We spent a few hours on multiple occasions chatting with our host about CouchSurfing experiences and our personal lives, learned a lot from each other, and made a new friend in the process.

6. Choose a Host that you Anticipate has Similar Goals

Right or wrong, I have a perception that there are two kinds of CouchSurfers, based on browsing through a ton of user profiles to find the best possible host:

• young drifters: college age easy-goers who may or may not have an actual couch for you to sleep on (and if they do you’ll have to move the pizza box elsewhere). Nice people, for sure, but if you’re a middle-aged couple, it might not be a good fit for you to host or be hosted by them. They are probably interested in partying in their hometown or yours and are more likely in it b/c they don’t have the money and want to give or take a free ride to others like them. Great for some people, not a good match for others.
• travelers/social butterfly’s: these are the people, mostly beyond the college years who want to travel the world, expand their social network, and want to provide the best experience possible for those they are hosting or surfing with. These people have the money to stay in hotels, but choose to surf or host for the experience instead (and see the ‘free’ aspect as a nice added bonus).

My wife and I fit into the second category and sought a host that we felt fit in that category as well. We were correct in our pick, and it turned out to be a great match.

You should also make an effort to include as much info. about yourself in your profile before asking anyone to host you. This way the host feels like they know you a bit better and will feel more comfortable in hosting you.

7. Leave no Trace Behind

This is all about being considerate. Make your bed, clean your dishes, throw out any trash, vacuum up any dirt you dragged in, etc. Treat others as your grandparents would want to be treated. It’s just the right thing to do. Plus you don’t want to develop a reputation as being an inconsiderate couch surfer.

8. Offer up your Place to your Host

If you live in Paris, Indiana and your host is in Paris, France, odds are they may never take you up on your offer to host them back, however, you should at least make the offer (and mean it) if your host provided a good experience for you.

9. Leave Good Feedback

There is an element of ‘review’ credibility on both sides on the CouchSurfing site. If you had a good experience with your host, make sure that you recommend them and talk about your experience in the CouchSurfing interface. Your host will appreciate and most likely reciprocate.

10.Your First CouchSurfing Experience may be Best with an Experienced Host

A tip here, if you’re a CouchSurfing newbie, is to find someone who has both hosted and surfed a number of times. They were in your shoes once and had the same questions/hesitations as you – and can get you up-to-speed by sharing their CouchSurfing experiences with you. Because we stayed with an experienced host, there were no awkward moments (i.e. where should we leave the key?). You want your first experience to be a good one, so pick a good host.

CouchSurfing Discussion:

• What funny/crazy hosting or surfing stories do you have?
• Have you ever had a bad CouchSurfing match? Or a great one?
• What other CouchSurfing etiquette would you recommend?

Related Posts:

• How to Avoid Theft When Traveling Abroad
• Using an ISIC International Student Identity Card for Travel Savings
• How to Find the Cheapest Flights

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5 Ways to Recession-Proof Yourself

With duration of unemployment becoming the longest during any recession on record, the continued decline in the housing market, and the threat of a double-dip recession, people are justified in their concerns about their employment and their investments.  After all, you can’t really control what is going to happen with the economy or whether the market will soar or plummet.

On my recent economy rant post, I went into some uncertainty about the stock market and economy as a whole and concluded with three recommendations on things that you can control:

1. Live frugally within your means

2. Save your money and have a big position in cash for emergencies and tough times

3. Build your skills and career to be economy-proof

The last recommendation prompted a 20somethingfinance reader, Jesse, to ask the following question:

“I would like to hear more about how you think one should economy proof your skills and career. I’m currently in a turbulent field, (marketing communications) and thinking about how to either make my job economy proof or changing careers. What are your suggestions?”

It’s a great question, and one that definitely deserves some focus. It’s true, you can’t control the economy as a whole, but what you can do is control how you economy-proof you are. So I put together 5 recommendations. What you’ll find in these recommendations is that many of them feed into each other. If you’re strong in all five areas, your fears about the economy should drift away and you’ll find yourself to be a much more well-rounded employee and human being.

1. Find a Career that is Indispensable, Even in Recessions

This will undoubtedly be the hardest one to come to grips with and take action on, but some professions are much harder hit in recessions than others. And your profession might just be one of them.

Looking for a recession-proof career? Find a profession that is indispensable to the public. If you’re an auto mechanic, a plumber, or a nurse – a recession should have little to no impact on you. People will always need your services, and demand in a recession might actually go up for people with these skills. If you’re in finance, retail, or home construction, the demand for your services will plummet in a recession. It doesn’t matter if you’re an all-star performer or not, in many cases. If your job is easy to replace by cheaper labor or when the economy rebounds, you will be one of the first to go and you will also have a harder time finding a new job.

As a real-life example that hits close to home, my wife is a landscape architect, and back in January of 2009, right after the beginning of the financial sector collapse, she and a good number of her co-workers were immediately laid off. Why? For starters, in a recession, nobody is building anything. Her second problem was the way engineering firms bill hours. If they have people on payroll whose hours can’t be billed towards a project, that worker becomes red ink. Her profession is the first to let people go in a recession. And that’s not a fun place to be.

2. Start Getting Paid to do the Things you Love Outside of Work

This suggestion is much easier to implement than the last, and the two combined will leave you in great shape.

There are lots of things that you love doing (I hope). And the odds are that there are a lot of people out there willing to pay you for doing those exact same things for them – just remember that prostitution is only legal in Nevada. I kid, I kid.

Here’s a list of 55 marketable hobbies that you can get paid for. What does getting paid to do things outside of work do for you?

• Multiple Income Streams: It goes without saying (but I will anyway), that added income streams outside of your day job are going to help as a safeguard in the event that you lose that day job. Huge benefit.
• When you have that added cushion and know that you can get paid for doing things you like doing, it starts to shift your perspective. Odds are that you won’t be as stressed out about losing your day job, and if things go really well, you might even voluntarily leave your day job, regardless of the economy.
• You start growing skills in areas that are in demand, which could lead you into your next career.
• It helps you build a network in those same areas.

3. Network Like Crazy

If you don’t have a LinkedIn account, start one today. Find anyone and everyone that you’ve ever worked or been friends with, and connect to them. Keep your profile up-to-date and add new connections as you make them. You never know when your social network will come in handy and if you wait until you get laid off to start putting one together, you’re at a big disadvantage. Focus on having genuine, positive interactions with other professionals, connect with them, and don’t feel shy about reaching out to them when needed.

4. Volunteer

Whether you have a job at the moment or not, start volunteering. I used to work in non-profit and two of the volunteers I worked with while there are now full-time staff. If you believe in a particular cause and work hard, that will be noticed by the organization and it will also be noticed by other volunteers you encounter. You’ll also often find that these volunteers are a very well connected bunch who might just be able to help you get your next job.

5. Perform

If you love what you do, are passionate about it, and make calculated risks, you’re going to stand out amongst your peers as a top performer. You want to make it hard for your employer to let you go, not easy. As I mentioned earlier, some careers are indispensable. Some employees are considered indispensable as well, even if their role is easily filled by others. If you hate your job and are not passionate about it, you might be in the wrong career or working at the wrong employer.

And the last thing you can do is just relax and not stress out. Until something bad happens, nothing bad has happened. Do the 5 things I mentioned not out of fear, but because they will make you a more well-rounded, happier, connected, and relaxed person.

Recession-Proofing Discussion:

• What steps have you taken to recession-proof your career?
• What careers do you think are indispensable?

Related Posts:

• Stop Dreaming & Start Retiring
• Get Paid to do what you Love
• 7 Lessons Learned After One Week of Unemployment
• Unemployment Benefits Extension

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Highlights, Favorites, Deals, & Oddities – Week of 8-23-10

For college football lovers, rejoice in this fact: This will be the final Saturday without college football until December. My prediction, on my beloved Michigan State Spartans: 10-2. Go green!

20SomethingFinance Highlights:

• Lawnmower Class Action Lawsuit: Get up to $75 cash back from lawnmower manufacturers if you bought a new lawnmower from 1994 to 2010. Must sign up by August 31st. Read all the details.
• 10 Cheap Summer Fun Activities: Don’t feel like you have to spend a ton of money to have fun over the quickly disappearing summer weekends.
• Zappos Free Overnight Shipping Membership: Unfortunately, this one day offer ended Tuesday.
• Mark Cuban, Tony Robbins, & My Personal Rants on the Economy: A few entertaining takes on the economy and stock market.
• I also wrote a post on WiseBread about how to do what the identity protection companies do for free.

Other Personal Finance Highlights & Oddities:

• Graduating from IOU (Mint): An infographic on student loan debt per student by state.
• Why the World is Running Out of Helium (Independent): We’ve heard a lot about running out of fossil fuels and what that might mean, but not much about things like helium. Surprisingly, the world will run out of helium within 25 years. So, you might want to think twice about filling up those party balloons next time, as that helium will be lost into the atmosphere forever.
• Worst Traffic Jam Ever (MSNBC): A traffic jam in China spans 60 miles and lasts 9 days. And you thought your commute was bad?

Deals of the Week:

• Just three more days to sign up for a new TradeKing account to get $50 cash back (ends August 31).

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Mark Cuban, Tony Robbins, & My Personal Rants on the Economy

A couple of big name people with a lot of money and friends with money, Mark Cuban and Tony Robbins, basically say that now is not the time to be putting money into the market. At the least, they bring up some interesting points that you might want to consider. And I have a slightly different take than either of them. But let’s start with Cuban.

Cuban’s Take on the Market

Back in May, I highlighted Cuban’s commentary on why the market is becoming harder and harder to make money in by investing in fundamentally strong companies.

This week, Cuban wrote a new post, poetically titled “The Stock Market is Still for Suckers & Why you Should Put your Money in the Bank“. Geez, Mark, could you be a little more direct, please?

The basic premise of his post is that ‘capital is no longer expensive and it is no longer scarce’, and until it becomes scarce, it’s going to be hard to make money in the market, or elsewhere, so you should hold on to your money.’

I think the points in his ‘what business is Wall Street in‘ post were a lot more spot on, but this one brings up some interesting points as well. Cuban thinks that the stock market is no longer for him or for any average investor. It’s too risky, too panicky, and too manipulated. Over the last few years, it’s hard to argue with that.

Tony Robbins Economy Rant

The next is Tony Robbins. Now, I’m not a big Tony Robbins fan, in the least, but his 23 minute rant is entertaining and he brings up some good points (unfortunately he rambles quite a bit).

Here’s the first of two videos:

If you don’t have the time to sit through all 15 minutes and 8 minutes in the sequel, here’s a summary:

• He has a lot of friends with a lot of money who correctly predicted back in early 2008 that the market was headed for a big crash. They are now saying the same thing again and getting out of the market.
• This is the longest period of unemployment (time it takes to get a job) in modern history.
• The housing market is absolutely horrible now that the stimulus money is gone, and it’s getting worse.
• The baby boom generation is no longer spending and they were the reason why we had such huge economic growth (financed by debt). Without them spending, there will not be a recovery in the near future and many companies will struggle.

I don’t take much stock in his first point, but the next two are true and backed up by statistical data. The last point is opinion mixed with some fact, but I think it’s a good point. When a generation fundamentally changes their consumption habits and over 70% of the economy is based on the previous consumption habits…. you’re in for some hurt from an economic standpoint, even if the fundamental switch to saving has its benefits. And we are seeing that happen.

And Here’s my Own Bigger Picture Rant…

I agree with some of Cuban and Robbin’s points, but I have a slightly different big picture take on what we’ve seen happen to the market over the last 10+ years now (where absolutely zero capital gains have resulted from the market as a whole) and where it might be headed.

The market gains over the last century have been driven by productivity increases. First it was the industrial revolution, airplanes and cars, advancements in health and medicine, then the computer and other electronic technologies, and finally the Internet and data/information advancements. And all of those things were driven by harnessing energy from cheap fossil fuels and the globalization of economies from around the world.

There’s still room for some gains in the market driven by improvements in all of these areas, and particularly at the micro level with individual companies, but I think we’re at a point in history where the gains are going to be minimal from the market as a whole. We’ve solved health. We’ve solved transportation. We’ve solved cheap energy. We’ve solved taking from the planet to create buildings and products that we can sell. We’ve solved data exchange. And we’ve financed it all with debt and played that game out.

We’re not going to see huge gains (as a whole) in equity markets until we see the next big thing that completely changes human life as we know it. When or what could that be? I have no idea. What should you do with your money? I can’t tell you that (because I have no idea). But what I can tell you is that living frugally within your means, saving your money and having a big position in cash for emergencies and tough times, and building your skills and career to be economy-proof are all things that you can’t go wrong with. Prepare for the worst and hope for the best.

What’s your take?

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Zappos Offers Free Overnight Shipping Membership (Ends Today)

As part of a back-to-school promotion, Zappos.com is offering up free VIP memberships, which gets you free overnight shipping. All you have to do is visit the Zappos VIP site and register. The deadline for signing up for this promotion is end of day today (August 24). And you don’t even have to buy anything right now.

It doesn’t seem like there is a catch to this, and Zappos is world-renown for their great customer service, so I doubt that would be the case. You sign up, you get free overnight shipping “until the cows come home”, as they put it. Of course, Zappos already offered free shipping both ways, now you can just snatch up overnight shipping for free on top of that.

It looks like students, or anyone can sign up for this. Not a bad deal, if you ever buy shoes or clothing online.

Just wanted to give everyone a heads up!

Related Posts:

• REI Membership Review
• Beginner’s Guide to Backpacking Gear
• Choosing the Right Backpacking Food and Clothing

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10 Fun Summer Activities for Under $10 that you May Have Forgot About

Summer Fun Can be Cheap

August is almost over, and that means there’s about two good months of summer left if you’re in a northern climate. Live it up before the cold and snow rolls in, and the regret that comes with it for not getting outside and having some fun while you had the chance.

Unfortunately, a lot of traditional outdoor summer activities can really cut into your entertainment budget. A round of golf, day at the amusement park, the ballpark, and outdoor concerts can run between $50-$100 per person. And other than going for a walk or sitting on your porch, there aren’t really any truly ‘free’ things to do when you factor in transportation costs.

But that doesn’t mean you can’t have some fun.

Here’s a list of 10 outdoor summer activities that will cost you no more than $10. Many of which, you’ve probably done at some point, but may have forgotten how cheap and fun they really were.

1. Pick Berries

U-Pick berry farms are awesome. You get ripe berries right off of the vine for 25-50% of what you’d pay in the store, you support a local farm, and you can have fun doing it. Two tips: Wear a mosquito net or bring bug spray (I got eaten alive the last time I did this), and try to find a local farm that does not spray insecticide on their berries.

Total Cost: $9 for 3 quarts

2. Dog Park!

If you have a dog (and even if you don’t) the dog park can bring hours of cheap entertainment and socializing – with humans AND dogs. Unless you have a super-submissive dog that is always getting beat up or an agressive dog that is always beating up others, it’s hard to leave the dog park without having a good time. Just make sure to bring plenty of cold water to keep your dog hydrated and cool, plus a poop bag (or three).

Total Cost: Free

3. Potluck BBQ

Invite your friends or neighbors over for a backyard BBQ. If you’re the host, buy $10 worth of hot dogs and burgers and use Google Docs to create a collaborative sign-up sheet with a list of stuff that people can choose to bring so that you have everything covered.

Total Cost: $10

4. Fly a Kite

If you’re a jaded, bitter adult, this may sound ridiculous. If you’re not, there’s something that brings the kid out in you when you get that cheap $7 kite you bought from Meijer or Wal-Mart up in the air for the first time.

Total Cost: $7 for a cheapie

5. Bike Ride

Mapping out a good bike ride to places you haven’t biked before is never time poorly spent. I have recently re-discovered by love for bike riding as a means of transportation to and from work. Going new places, getting that exercise, and building up a good sweat is a great way to spend a weekend afternoon in the summer.

Total Cost: Free,  minus the wear and tear on your bike

6. High School Football Game

High school football will be starting up soon and whether you recently graduated or not, it’s pretty good Friday night entertainment at a cheap price (if you like the game of football). Be careful though, those $4 cups of soda will really get ya.

Total Cost: $10/pair of tickets

7. Take a Dip in the Community Pool

Not every community has one, but those that do can provide a day of fun. My city has a 50 meter lap pool with a water slide. Admission for adults is $4/each and kids 3 and under are free. Don’t forget your towel, sunglasses, and sunscreen!

Total Cost: $8/pair

8. Walk a Dog or Comfort Cats at your Local Humane Society

Before we brought home our wonderful duck tolling retriever from our local Humane Society, my wife and I would volunteer dog walk every weekend for about a year. It was a great way to stay-in-shape, feel good about yourself, and give the animals a temporary reprieve from their stressful shelter environment. Most shelters also have ‘cat comforting’ as well (imagine being a cat in a shelter full of hungry, barking, stressed out dogs).

Total Cost: Free

9. Bottle of Wine at Sunset

I’m not advocating getting busted for public open alcohol container, but if you don’t have a view from your yard, you’ve got to go somewhere, right? Just make sure you have a way to get home safely.

Total Cost: $6-$10 for a decent bottle

10. Build a House

Habitat for Humanity is always looking for additional volunteers to help build houses. In doing so, you are demonstrating good will in your community, getting outdoors and meeting other like-minded folks, and learning or refining some pretty handy skills.

Total Cost: $3 for a good pair of work gloves

What cheap fun summer activities have you done this summer?

Related Posts:

• 5 Ways to Use Craigslist to Save & Make Money
• 55 Marketable Hobbies you can Get Paid for
• An Introduction to Urban Homesteading

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Lawnmower Class Action Lawsuit Could Bring you $75 (Sign up by August 31)

Lawnmower Class Action Lawsuit for False Advertising Claims

I use a good ole’ fashion push reel mower, so I’m not eligible for the class action lawsuit that I’m about to inform you about, however, if you bought an engine powered mower in the last 16 years, you might be.

If you are a resident of the U.S. or Puerto Rico and purchased a walk-behind or riding lawn mower from 1994 to April 12, 2010 with engines capable of up to 30 horsepower, you are eligible for some cash back and potentially an extended warranty via a little known class action lawsuit against lawnmower manufacturers. Owners may receive up to $35 for walk-behind mowers and up to $75 for riding mowers. But you must sign up by August 31 to be eligible.

According to the official lawnmower class action lawsuit settlement site:

The lawsuit claims that the Defendants sold certain gasoline-powered lawn mowers and lawn mower engines with false and misleading horsepower ratings. The Defendants deny these claims and deny that they did anything wrong. The lawsuit does not concern the safety of these lawn mowers. The parties have agreed to resolve this case by settlement.

In order to potentially claim the cash and/or extended warranty, 3 conditions must be met:

1. You purchased a lawn mower, for your own use, containing an engine with up to 30 horsepower in the United States or Puerto Rico and between January 1, 1994 and April 12, 2010.
2. Either the lawn mower or the engine of the lawn mower was manufactured or sold by a Company listed below.
3. You submit a claim by August 31, 2010.

Personal Note on Class Action Lawsuits:

• Are you eligible for this class action lawsuit?
• Have you ever received benefit from a previous class action lawsuit?

• Transunion class action settlement benefits
• Transunion settlement benefit claims
• Comcast Class action lawsuit

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Highlights, Favorites, Deals, & Oddities – Week of 8-16-10

Big news this week as I was recently asked to be a staff writer on the personal finance blog, WiseBread, and launched my first post (I had previously guest posted there). You can check out my first post “Making Personal Finance Fun while Fighting for Financial Freedom” – which is the story of how I started out with financial hardship and had no financial goals, and as a result, personal finance made me miserable – but over time, I started this blog and learned to get excited about setting and achieving financial goals. Now, I’m more focused and passionate than ever to reaching my financial goals.

In other news, here are the 20somethingfinance highlights of this past week:

20SomethingFinance Highlights:

• 2010 Roth IRA Conversion Rules: A look at why 2010 is such a big year for Roth IRA conversions and how you might be able to take advantage of the changes in IRS rules.
• What is Stopping you from being Self-Employed? (Poll): A reader poll that looks into statistics around how many people ARE self-employed and how many WANT TO BE self-employed – then asks the question, “what is stopping you?”.
• TradeKing Review: A full of review of a discount broker that I house my IRA’s in – TradeKing.

Other Oddities & Personal Finance Favorites

• Emergency Preparedness: How Does your Family Rate? (genxfinance): Not a fun topic, but one that is very under-rated.
• In a recent post that I wrote about the benefits of tiny homes, a few readers brought up some of the negatives associated with buying a tiny home. Here’s a great post from the Tiny House Blog which raises the concerns and how to deal with them.
• For anyone with kid’s, you might be surprised that summer camp might qualify for tax deductions and credits, according to Mint.com.
• 75 year old man with a walker robs bank (Montreal Gazette): I don’t get it, haha.
• Kiplinger offers up a fun Wall Street: truth or bunk quiz.

Deals of the Week:

Through September 30, you can earn a $50 Statement Credit with select Citibank credit cards, plus the following benefits:

• $50 statement credit when you make $50 in purchases within $90 days of being a cardmember*
• No annual fee*
• No cosigner required
• $0 liability on fraudulent charges

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TradeKing Review

TradeKing Review

Last fall I made the switch to TradeKing for my traditional and Roth IRA’s. I’ve been promising a TradeKing review for a while, so this is long overdue. Having held discount broker accounts with ETrade, Zecco, TradeKing, Scottrade, Fidelity, Schwab, and a few others, I have a little more experience in this area than I’d probably like to, so hopefully this review provides some useful discount broker comparisons and commentary.

What is TradeKing?

TradeKing is an online discount broker that has a low fee trading structure and strong customer service. Plain and simple. I’ll get into what types of accounts you may want to consider opening or moving to TradeKing in a bit. You can trade stocks, funds, options and other equities through TradeKing.

TradeKing Trading Fees:

Let’s cut right to what most of us care about the most when it comes to investing online with a discount broker – the fees.

• Stocks: $4.95 (online and even broker assisted on the phone)
• Options: +$0.65 per contract

Other than Zecco, which charges $0 for trades (for accounts over $25,000 in balance, otherwise they are $4.50 per trade), and OptionsHouse (geared towards options traders) at $2.95 per trade, TradeKing’s trading fees are the lowest price of any legit discount broker that I am aware of.

I have my non-retirement account with Zecco because of their low priced trades (check out my Zecco review), and my IRA’s with TradeKing. I’ll tell you why I went with both in the next section.

Other Fees:

Here’s where TradeKing really excels. Whereas some discount brokers try to nickel and dime you with account inactivity fees and IRA fees, TradeKing does not. If you trade lightly or not much at all, you don’t have to worry about getting an account inactivity fee or account maintenance fee (they don’t have either). They also don’t have an annual IRA fee (Zecco charges a $30 IRA fee, which is why I chose to move my IRA’s to TradeKing instead).

TradeKing’s price to buy in to mutual funds is a little bit higher than some discount brokers who offer a number of no-fee funds, at $14.95 to initially buy into a fund, but still very competitive to other broker’s funds with fees (i.e. E-Trade funds cost $19.99). If you prefer ETF’s over funds, that’s not really an issue. Here is a complete list of TradeKing fees.

Minimum Balances:

TradeKing has no minimum balance for their accounts. This is a key factor for someone just getting into investing for the first time, who might not have a lot of money to put into an account right from the get go.

TradeKing Customer Service:

The one time that I called in, I got someone on the phone right away, that person spoke great English, and they followed up with a promised email with documentation minutes after the call. This year, Smart Money rated TradeKing #1 in customer service in 2010 and gave them a 5 star (out of 5 ranking).

For those who like the chat customer service option, TradeKing offers live chat support 8 AM – 6 PM Monday through Friday. No complaints here.

TradeKing Trading Tools:

TradeKing certainly doesn’t skimp on their tools. With all of the discount brokers I’ve used and the tools included for free in their interfaces, TradeKing can’t be beat in this area. Quickly summarizing each of their tools:

• MarketGrader Research Reports: This is basically an analytical analysis tool that grades stocks (not dissimilar from Morningstar) and whether analysts predict then to outperform or not.
• Technical Analysis: For experienced traders who use the charts, TradeKing provides chart pattern recognition, price forecasting and full educational support.
• Interactive Charts: includes volatility and technical indicators.
• Maxit Tax Manager: A cost-basis and tax reporting tool to help make things easier around tax time.
• Other Tools: probability calculator, profit & loss calculator, options calculator, options scanner, and stock screener.

Banking Services:

This might be an area where you’d be disappointed if you were interested in banking services in addition to trading services. TradeKing is not a full-service bank, so don’t expect a debit card, checking account, mortgage loans, or other bank related services.

Final Thoughts:

It’s one of the two discount brokers I use at the moment, so obviously, I like them. Good service, account security, low trading fees, and no other fees to screw you over. I’d recommend using them for both a regular trading account and a retirement account.

TradeKing Promotions:

• TradeKing is currently offering $150 in reimbursements for those who switch a non-retirement account to them.
• They also offer a $50 referral fee if you refer a friend ($50 for both you and your friends).
• Through the end of August (this month), TradeKing is offering $50 when you start a new account (note, they usually only offer this promotion once a year). You are also still eligible for the $150 in reimbursements for switching to them with this promotion.

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