Robinhood for the Web: My Review

I've written several times about my experience with Robinhood, an online broker that allows investors to buy and sell shares of stock, ETFs, options and even cryptocurrencies without paying a sales commission.  Up until recently, the only weakness I found was that Robinhood required you to use a smartphone app; the website was not much more than a landing screen directing you how to download the app.  However, the last time I went to their website, I found something new, and it looked a lot like what you see above.  Yes,  you can now buy and sell via Robinhood's website.  So, let's take a look at the website and its features.

Appearance:

Beauty is in the eye of the beholder, and this beholder doesn't much care for the black background with white print.

What You Get:

The screen you see above is what I see once I've logged in.  You can see that my portfolio lost value today ($5.52) but then gained in after hours trading ($1.88). On the right side of the screen, you can see a list of the stocks I own, and how much each is worth, as well as a chart showing its progress today (green for gain, red for loss).  

If I click on the symbol for a stock, I am taken to a page like this.  You can see that today, AT&T decreased in value, per the red chart.  It shows that the current value of my AT&T shares is $316.26 and that my average price per share is $36.25.  This screen also tells me that I own 9 shares of AT&T and that they make up 19.04% of my portfolio.  From this screen I can both buy and sell my shares, and it tells me I have $4.12 buying power at this moment.  I would guess that this is all pretty standard stuff for a stock brokerage.

Robinhood has a couple of interesting things on this screen that due to the size of the screenshot, you can probably barely see.  Above where it says AT&T, are the words "100 Most Popular", "Telecommunications" and "Wireless".  These are what Robinhood calls "collections", groups of stocks that have something in common.  Click on "100 Most Popular" and  you get 

This particular collection is a list of the 100 stocks most popular with Robinhood investors.  Besides the current price and how the stock performed today, I can see what percent of analysts recommend the stock.  On the right side of the page is a simple stock screener that I can apply to the current collection. Of those 100 most popular stocks, only are recommended by more than half the analysts.  Of those, only four are small cap companies.  Three of those deal with drugs or health, and one, Plug Power, which I had never heard of before starting this article, provides alternative energy technology.  As happened when I clicked the AT&T symbol on my homepage, clicking the Plug Power symbol took me to a page about them.  

From the AT&T page shown above, if I click on Analysts' Rating, I am taken further down the screen where I see

I like the way it shows both points of view and tells you that 40% of analysts recommend buying AT&T, 57% recommend holding it, and only 3% recommend selling it.  I wish I knew how many analysts they polled, and who they were.  Perhaps Robinhood plans to monetize that information later, but right now, I don't see any way to access it.  Still it is good information to use to screen stocks to pick those worthy of further investigation.

As I continue down the page, I see what is above--a graph of AT&T's earnings per quarter and my history with the stock at Robinhood.  You can see that I will get a dividend on May 1 and if I click the word "Pending" it tells me that I'm going to get $0.50 per share for a total of $4.50.  

Some stocks also have links to articles about the company and its potential as an investment.

Finally, the front page offers me links to articles.  From what I can see, these, shown above,  are just articles of general interest to investors as opposed to articles about my stocks. 

Web or Phone?

I was a late adopter of smartphones--I got my first one a Christmas, and one of the reasons I wanted it was to run the Robinhood app.  At this point, the app is easier on my eyes but the website has more information.  Interestingly, the app also has the black background with white letters and it doesn't bother me.  

Neither "collections" nor analysts ratings have made it to the app at this time, so I think if you are looking for a company in which to buy stock, more information is available on the web (and I prefer a keyboard and screen for any serious research.  

How Does Robinhood Compare to Other Options?

Stockpile

Robinhood wins many comparisons to other online brokers. I have reviewed Stockpile, which offers gift certificates and supervised trading for minors. Robinhood does not offer either one, but it also does not charge $0.99 per trade, and it offers a much larger variety of investment choices.  Stockpile offers fractional shares, whereas Robinhood does not.  Stockpile engages in once per day batch trading, Robinhood offeres real-time trades.   I prefer the appearance of Stockpile's website.  If you want $5.00 worth of free stock, use this link to open a Stockpile account (and I get $5.00 too).  

Motif

Motif offers free first opening price trades, or you can pay for real-time trades.  However, if your account is under $10,000 Motif charges you a $10 account fee every other month.  Also, Motif has started charging a fee for owning one of the "motifs" or baskets of stocks that they designed.  Robinhood offers real time trades and no monthly account fees.  While Motif allows the purchase of factional shares, Robinhood, as stated above, does not.  

Vanguard

Vanguard is my favorite mutual fund company, hands down.  They have a large portion of my net worth under their umbrella.  However, I just "tried" to buy stock from them.  The interface was easy, and I had no problem setting up the order.  However, there was a $7.00 commission whether I was buying one share or a thousand.  Clearly buying individual stocks via Vanguard is not realistic for people who don't want to invest a lot of money in any one company.  

How Does Robinhood Make Money?

If a company is going to stay in business it has to make money.  Otherwise, it ends up going out of business, like Loyal3 did, or it has to change its business model and start charging fees.  Motif, for example, used to charge a $9.95 commission to buy or sell a "motif" or basket of stocks, but no monthly fee.  Now they've reduced sales commissions but added a monthly fee for small accounts.  

Robinhood says that they make their money by charging for Robinhood Gold, which is basically a margin account that allows after hours trading, and by the interest earned on uninvested money in stockholder's accounts.  

How to Get Started

If you would like to invest with Robinhood, use my link and we'll both get a free share of stock. The last free share I got was Sprint, which has increased in value by 15% in the last month.  Fill out a few simple forms, link your bank account and you are ready to go.  Robinhood will even let you instantly invest up to $1000 that is en route from your bank to Robinhood.  

While full service brokers may offer features Robinhood does not, if you are looking for a place to dabble in the stock market without paying a lot of fees, Robinhood is a great fit.  

*Part of Financially Savvy Saturdays on brokeGIRLrich.*

Low Cost Brokers: Robinhood vs Motif vs Stockpile

Until recently, one thing that kept small investors from investing in individual shares of stock vs mutual funds was the fees charged.  Most brokerage houses had a minimum fee per transaction and if that transaction only involved a few shares, the fees made it cost-prohibitive.  The advent of the internet and electronic trading has made it possible to reduce those fees considerably, to the point that it is possible to buy a single share of stock in one company or even fractions of shares.  Let's take a look at a few of the companies set up to serve small investors.

Stockpile:

Stockpile charges $.99 per trade, and offers a large selection of stocks, though not the entire market.  The market they seem to be trying to reach is that of the young and inexperienced investor.  Stockpile's website includes a "Learn" section which includes articles on such topics as "What is an Exchange?" and "What Is NASDAQ?".  The articles are short, informative and easy to read.

Another way Stockpile reaches small investors is by offering fractional shares.  As of this writing, Amazon stock costs $1448.69, which is more than I want to invest in any one company.  Stockpile allows me to pick any dollar amount to invest, so that I could invest $145 and get 1/10 of a share of Amazon, or $14.50 to buy 1/100 of a share.  

A unique feature of Stockpile is that they offer gift cards, either physical or virtual.  With Stockpile I can choose to give you stock in Disney rather than Disney bling.  However, when you go to redeem the gift card, you are allowed to invest that money in any stock you please, so if you prefer Universal to Disney, go ahead and switch (and you don't even have to tell me).  

Stockpile does not charge account maintenance fees and they do not offer IRAs.  However, they do offer custodial accounts for minors.  With these accounts, an adult custodian is responsible for the account, but it is owned by the minor.  Minors can be given their own log in information.  The only difference is that when a minor tries to enter a buy or sell order, the request is routed to the custodian for approval.  

If you want to get started with Stockpile, clicking this link will give you $5.00 worth of whichever stock you want.

The main disadvantage of Stockpile is that trades are made at the closing price the day you order them.  You cannot make a quick choice to get out NOW, and, if the market drops noticeably between the time you requested the trade and the time it executes, you may find that you don't get the price you were expecting.

Stockpile charges $.99 per trade, so if you are buying a very small amount of stock it could get expensive on a percent of assets basis.  I recommend a minimum investment of $100.00.  Other fees include a 3% debit/credit card fee (though you can transfer money from your bank account at no cost) and a $2.99 gift card fee.  While there are other fees, these are the ones most investors will be most likely to see.

Motif

Motif's claim to fame is enabling small investors to buy fractional shares of a variety of companies in one basket, dubbed a "Motif".  Motif offers some professionally designed motifs as well as many designed by ordinary people.  If you design a motif and convince others to buy it, you will get a sales commission.

The minimum amount of money necessary to invest in a motif is $300, and each motif can contain up to 30 different stocks.  

Motif recently changed its fee schedule.  Now, you can get commission-free next market open trades of both individual stocks and professionally designed motifs.  If you want to trade in real time, professional motifs will cost you $9.95 per motif, a motif you build is $19.95 per trade or if you want to trade single stocks, the fee is $4.95 per trade.

For larger or more active investors Motif offers "Impact" or "Motif Blue" accounts.  An "Impact" account is a fully-automated portfolio what is automatically rebalanced and which has a composition that changes as you age.  Regarding the cost of an Impact account, Motif says "The fee structure for a Motif Impact account, that provides a fully automated portfolio aligning your financial goals with your values, is 0.25%, expressed as an annual fee rate."  A "Motif Blue" account is one in which you pay a $19.95 per month fee in exchange for three "free" real time trades per month, plus real time quotes.  If you would like to try Motif Blue, click this link and you will get three months free.  

Motif is now charging $10 per quarter for each account that is under $10,000 and which has had no commissioned trades in the last three months.  In my opinion, that cost is high, percentage-wise, if your account is much under $5,000.  

Right now I own eight professionally designed motifs, most of which were purchased when Motif was offering them at no commission as "motifs of the week".  I also own one that I designed, which I did pay a commission to purchase.  Today I made my first use of the commission-free trade service and used my accumulated dividends to buy a fraction of a share of NVIDIA.  

If you would like to try Motif, use this link; you'll get three months of Motif Blue (and then you can decide whether to keep it or not) and I'll get one.

Motif's strength is allowing you to spread a moderate amount of money among a large number of stocks for a relatively low amount of money.  However real-time trading will cost you, and fees will disproportionately affect small accounts.  

Robinhood

Robinhood is a smartphone app only (for now) brokerage.  They are planning a webpage but it is not live yet.  The app is available for both Apple and Android phones.  

While Robinhood does not offer IRAs, it offers margin accounts and is in the process of rolling out options trading and crypto-currency trading.  

Stock trades on Robinhood are in real time but most users are not allowed more than three day trades (buying and selling the same stock on the same day) per five day window.  Trading on Robinhood is commission free, which makes it easy to buy and sell one share of stock at a time.  

One nice feature is "instant deposit".  Once your bank account and Robinhood are linked, you can deposit up to $1,000 into your Robinhood account and have instant access to it.  When the market fell quickly last week, I deposited an additional $200 in my account and went shopping.  I did not have to wait for the check to clear.

Robinhood offers a margin account, known as "Robinhood Gold" Besides allowing you to borrow money with which to buy stocks, a Robinhood Gold account allows you extended trading hours and a larger instant deposit.

I find the Robinhood interface to be easy to use.  When I log in I see my account balance, along with how much it moved that day.  As I scroll down I see each company in which I own stock with a notation of how many shares of each I own.  There is a small graph that shows whether the stock is up or down for the day, and the latest price per share.  If I click on any company, I get a graph that shows its movement in the last day, week, month, three months, year and five  years.  I can click to buy or sell.  I can scroll down and see what my equity value (shares times share price) is, and how much my average price per share was, and my percentage return both in total and today.  I can see my history with the stock, along with an earnings chart.  Often there are links to articles about company.

If you would like to invest via Robinhood, use this link and we both get a free share of stock.

So, Which Is the Best?

Honestly, it depends.  I have accounts with all three.  Right now, I have little reason to use Stockpile.  My Motif account is almost $10,000 and with their new pricing structure, I plan to bring it up to that level soon, thereby eliminating the quarterly charge.  For people who have an account big enough to avoid Motif's fee, I'd recommend using it to purchase fractional shares, as you can do so without commission.  If you do not have that much money and want to be able to purchase fractional shares, I'd recommend using Stockpile for that purpose.  

For purchasing shares in companies you can afford to buy full shares of, I'd recommend Robinhood.  It is free, easy to use and trades in real time.  The only downside is that you have to use a smartphone, at least right now.  

Motif is the only one of these companies that offers IRAs, but unless you have $10,000, the fees get high.

If you are interested in opening an account with one of these companies, please use my referral links.

From Free to Fee

Any business has to make money to remain in business.  That's a fact.  It is also a fact that small investors pay a larger percent of their investment dollars in fees than do larger investors.  Those two facts came into focus for me recently.

Loyal3 Shuts Down

Loyal3 is a commission-free brokerage firm.  They not only allowed investors to buy and  shares of stock without paying commissions, they also allowed the purchase fractional shares, so that investors can invest a small amount of money at a time, as little as $10. 

Loyal3 had three downsides:

• It only offered about seventy different companies, so if you wanted other stocks you were out of luck
• It saved costs by engaging in batch trading, only going to the market once a day.  You got the price at that time, not at the time you placed the order
• It did not offer IRAs

Last month Loyal3 investors were told that as of May 22, accounts would be transferred to FolioFirst, a low-cost brokerage firm that gives commission-free trades and allows the trading of fractional shares.  FolioFirst offers 200 different stocks.  However, it charges a fee of $5.00 per month.  Right now, my Loyal3 account is about $1500 so $60 per year means a cost of 4% per year, which is much higher than the average mutual fund or ETF.  I will not be moving to FolioFirst, and given the small size of my account, I didn't want to go to the hassle of moving the shares elsewhere, so I sold them.

Motif Institutes Yearly Fees

Motif Investing allows investors to purchase or sell  a basket of stocks for one fee of $9.95.  Until recently, that was the only fee charged by Motif.  However, starting May 15, Motif accounts under $10,000 that have had no commission trades in the last six months will incur at semi-annual charge of $10.  My Motif account is about $8200, so that cost is about .24%, which is in line with many mutual funds.  I have decided to move my Loyal3 money to Motif, which will cover my fee for this six month time period. I'll probably add enough to bring the account over $10,000 to get it back to fee-free status. 

While investing fees have definitely dropped over the last few years, the question is how low can they go and maintain a viable business.  What's your favorite low-fee or free investment platform? 

Another Look at Motif

I've spent the last two weeks reviewing no-commission stock brokers so I thought that I'd spend this week taking another look at a low-commission broker, Motif.  

When I started investing with Motif, they offered the ability to buy a motif--a basket of up to 30 stocks--for one commission of $9.95.  You could invest as little as $300 in the whole basket.  Now they have added the ability to trade individual stocks for a commission of $4.95 per trade.  Periodically Motif offers reduced commissions for certain activities.  For example, on Black Friday they offered 50% off all commission.  

How Does the "Motif" Concept Work?

Motif offers some professionally designed motifs--baskets of stocks based on a certain theme or investing goals.  I own two  motifs of dividend paying stocks, one of companies which have bought back stock, one that contains stock in companies involved in cyber security, one of stocks with low beta, one dealing with video gaming and one of stocks in companies with whom I do business.  The professionally designed motifs include companies I've never heard of, much less considered investing in.  The professionally designed motifs are rebalanced regularly, and investors are encouraged to rebalance their holdings in that motif accordingly (and to pay the associated commission) but they are not required to do so.  I have not chosen to rebalance my holdings and taking a look at all of them, using 20/20 hindsight,  at least so far, it has been the right choice. 

Does Motif Have Anything New?

The latest thing Motif is offering is "Motif Blue", which is a subscripton service.  Users pay a fee of between $4.95 per month and $19.95 per month based on the level chosen.  The starter level is for people who have only one motif and it  allows you to auto-invest in that motif and to auto-rebalance it monthly.  The mid-level "Standard" offering is $9.95 per month and allows auto-investing in any number of motifs, auto-rebalancing of all professional motifs and one commission-free stock or motif trade per month.  Users are also entitled to some market reports.  The $19.95 level gives real-time stock quotes and gives up to three free stock or motif trades per month.  If you'd like to try Motif Blue, use this link and you can try it for three months, free.  If  you do, I get free time too.  

Do I Recommend Motif?

Somewhat.  A motif is similar to a mutual fund or ETF in that it is a collection of stock shares.  It offers a level of diversification that purchasing shares in one company does not.  If you want someone to do the work for you and assemble a basket of stocks fitting a theme, then Motif can be a relatively inexpensive way to achieve that diversification.

However, unless you have an aversion to trading via smartphone, you can get lower costs (though not factional shares) via Robinhood.

For small investors though, due to fractional shares, you can get a higher level of diversification via Motif.  You can purchase a motif for as little as $300 and that motif can contain shares of as many as thirty different companies.  Obviously, $300 will not buy you anywhere near full shares of those companies but Motif allows the purchase of frational shares.

What Are My Plans With Motif?

My plans for my Motif account are to basically hold it.  I have eight motifs.  I created one of them, the other seven were "motifs of the week", offered for sale at no commission the week I bought them.  There are far too many companies involved for me to have a life and keep current on the details of each one.  

If I decide I want out, I can either sell the shares in a particular company in a motif, and pay a $4.95 commission or I can sell the whole motif and pay $9.95. Considering that a "large" position for me is $200, selling off share of individual companies is going to eat my profits quickly.  I plan on reviewing the motifs I own on a periodic basis and if they are not keeping up with the market, I will probably sell the motif as a whole and reinvest the money via Robinhood or Loyal3.  

Many of the companies I own via Motif pay dividends I have been withdrawing those dividends and reinvesting via Loyal3.  Now that I have a Robinhood account, it will be getting those dividends.  

Have you invested via Motif?  Do you think it is worthwhile?

Portfolio Update July 1

Wow, half the year has gone.  It is time to take a look at our investment portfolio, analyze it and decide if any changes are needed.

Vanguard:

We have Roth IRAs invested in Vanguard's S&P 500 index fund, plus regular IRAs and a taxable account that we tranferred to Vanguard from a financial advisor.  The advisor had us in a large number of mutual funds, and the cost to sell each one is $20 per account; therefore we have not been in a hurry to sell them.  We did move out of the worst performing ones late last year and we just analyzed what was left. We have several funds that are significantly underperforming their associated index and if that continues at the end of the year, they will be on the chopping block.  After anaylzing everything we did decide we were overexposed in US stocks and so we sold some of our S&P 500  fund and bought Vanguard's index funds for international bonds and for international stocks.  Overall, these accounts are up 5.23% this year. 

One of the things a lot of people track is the income generated by their portfolio.  So far this year, this portfolio has generated $2788 in dividends and capital gains.  I expect that amount to rise as we have increased the bond percentage in our portfolio from about 25% to about 30%.  My husband is 60 and I am 55; we are getting to the point that we need more stability and income in our portofolio.

My 401(k):

My 401K was invested 25% in MFS Agressive Growth Allocation Fund A, 25% in Franklin Total Return Fund A and 25% in Janus Triton, with 12.5% each in MFS Growth Fund-A and Delaware US Growth Fund A.  For the first six months of the year, the YDT performance was 1.77% which is lower than my other investments.  

I decided to re-allocate and now I have 38% MFS Government Securities Fund A, 20% Janus Triton, 19% Oppenheimer International Small Mid Co A, 11% Delaware US Growth Fund A and 12% Pioneer Fundamental Growth Fund A

For the first six months of the year, my dividends, capital gains and other earnings (as opposed to increases in share value) totalled $1,647.85.  I expect that to increase in the next six months due to the increased bond holdings.

Motif Investing:

This was a toy for me to play with.  Motif Investing allows you to invest in up to 30 different companies at one time, for one fee.  You can either assemble your own group (Motif) or buy one of theirs.  Once you own the stocks, you can sell them one at a time, or you can sell the whole motif for only one fee.  The motif I developed isn't doing very well--my $1000 is down to $960, though I have collected some dividends.  Overall, I invested $7,000.  My portfolio is worth $7223.69 and over the last few months I have transferred $320 in dividend income to Loyal3.  So far in 2016, I have earned $105.31 in dividends at Motif, for a yearly yield of about 3%.  If you want to invest via Motif, use this link and we both get $100.

Loyal3:

I started investing with Loyal3 as an incentive to bring lunch from home rather than to buy it from the lunch counter in my building.  I got tired of that, but have used the account as a place to invest the dividends I got from Motif.  Through Loyal3, which is a no-fee stockbroker, I own stock in AMC Theaters, Alibaba, Disney, Hershey, Intel, Kohls, Target, TimeWarner, Unilever and VF Corp.  So far, I've broken even; AMC, Hershey, Intel and Unilever are up, the others are down.  My $630 investment has garnered me $5.91 in dividends for an annual yield of about 2%.

Prosper:

So far this year we added $300 in new money to this account and we transferred $550 from Kickfurther to Prosper.  Our XIRR return on this account is 11.48%. Prosper shows my seasoned returns to be $12.85%.

Lending Club:

I'm not liking all the things I've been reading about the corporate troubles Lending Club has so I haven't wanted to invest more money with them.  I haven't pulled any out, but I'm thinking about it.  Right now my account value is $19,791.89 and my adjusted account value (Lending Club computes a hypothetical value based on the number of late notes and how late they are) of $19,173.84.  The increase is only $313 so far this year.

Kickfurther:  

Kickfurther says my profit since the inception of the accout is $382.17.  However, they have yet to subtract anything from that for bad debts.  They paid me for the first four bad deals I had, in the amount of about $175.  Right now I have about $260 in deals that aren't paying.  Some I think have some recovery potential--KF has indicated that it has the inventory and I personally think the inventory will sell at some price (bamboo kitchen drawer organizers and silk comforters); the others I suspect won't give us much if anything, but hopefully I'm wrong.  Bottom line, for in investment of about $2500 made in dribs and drabs, mostly from June-Dec 2015, there is a real possibility that the value of the investment is a $20-50 loss, if you consider the $175 that KF refunded me to be a loss, along with my predicted loss from the deals I have that aren't paying.  The real questioin is how much value can KF get out of the bad deals; and at this time we haven't seen evidence they can get any.  However, they have a legal team working on it now. I think Kickfurther has potential; I'm just not sure the pricing is right on it.  If you want to try it, use my link and you get $5.00 toward your first investment.  

*Part of Financially Savvy Saturdays on brokeGIRLrich, A Disease Called Debt and One More Broke Twenty-Something* http://diseasecalleddebt.com/extreme-saving-no-new-clothes/ 1. How We Avoided Buying New Clothes for a Whole Year http://brokegirlrich.com/the-little-costs-of-friendship/ 2. The Little Costs of Friendship http://familymoneyplan.com/interview-brokegirlrich/ 3. Behind the Screen Interview #7

Financial Update First Quarter 2016

Wow, it seems hard to believe that three months have passed in 2016, but they have.  This week's post will look at our financial status after the first quarter of 2016.

Bank Savings:

We haven't added any money to our savings account but our checking account is about $7,000 more than it was at the end of last year.  January, February and March are our saving months; we have no big periodic bill due during these months.  In April we pay car insurance.  May is summer camp.  Catholic school tuition is due in June, along with life insurance.  July is vacation.  August is college tuition and homeowners and flood insurance.  September is an "off" month, unless we are still paying the homowner's/flood; and car insurance rolls around again in October.  November is "off" and in December we pay for Christmas, college tuition and property taxes.  The point is that while it is much better to have saved the $7,000 than not, it has to help pay those big bills in months to come.

My 401K:

This is up, a little since the first of the year, which is a good thing since it was down almost 5% for the year as of the end of February.  I'm putting 11% of my pay into this account and the firm kicks in 5%.  

Our Vanguard Portfolio:

We have several accounts with Vanguard.  Our Roth IRAs are invested in the S&P 500 Index Fund.  We have a small taxable account that was moved from a brokerage firm to Vanguard, and my husband and I both have regular IRAs that were moved from the brokerage to Vanguard.  When we moved those accounts, we sold the funds that were significantly under-performing as compared to their index but we didn't want to sell everything because of the fees and taxes.  The investments brought over from the brokerage firm are a large collection of various styles of mutual funds.  We took the money from the funds we sold and used it to buy Vanguard's Total Market Index Fund, Total International Bond Index fund, Total Bond Market Index Fund and Total International Stock Market Index fund.  The total value of the account is up for the year, and it has paid over $1,100 in dividends.  

Motif Investing:

I've invested $7,000 in a variety of stocks.  Basically Motif lets you design your own ETF; you can buy shares in up to thirty companies at one time for one commission of $9.95 (and there are times they reduce that price for at least some transactions on a motif).  You can either pick your own stocks or buy a pre-designed motif, and I've done both.  I'm up about $200 since the beginning of the year, and that includes dividends. If Motif sounds interesting to you, use my link and we'll both get $100.00..

Loyal3:

I haven't been keeping up my Loyal3 Lunch portofolio; I got into a couple of busy weeks when I ate out way too much and my stats on those posts weren't all that great, so I kind of lost interest.  However, the portfolio I have is doing well; it is worth 6% ,more than what I spent on it.  I have invested in AMC, Walt Disney, Hershey, Intel, Kohls, Target and VF.  All are up except Disney and I plan to buy more of that this week.  

Lending Club:

My account value is up $321 this quarter which gives me an annualized return of 6.6 percent.  I have not added to this account, and do not plan to do so in the near future, just because I want to watch the returns without the addition of new money.

Prosper:

I added $300 to this account in January, and I plan to add some more once we sit down and look at those once a year bills and make sure we  have enough money to pay them.  This is where we are saving for our next car(s).  We have enough money in our savings account to buy those cars tomorrow if we had to (and we buy new (to us) cars when we need to and not before) but it would clean us out.  In Prosper the money gets more interest (we hope) and is reasonably liquid so would use Prosper money to rebuild our savings account.  The account value is up $323 (plus the $300 we added) for an annualized rate of 6.5%.

Kickfurther:

Kickfurther  is a crowdfunding site where investors help companies finance inventory by purchasing that inventory and then returning it to the companies to sell on consignment.  You can read a lot  more about Kickfurther in other posts on this blog.  So far this year I've added about $37.00 to my investments at Kickfurther.  I also continually reinvest returns.  My account is now worth more than it was January 1.  My lifetime investment is $2,691.67.  I've gotten $15 in bonuses and my lifetime profit is $184.23, or about 6.8% of my investment.  Considering I started with Kickfurther about a year ago, and didn't put most of the money in until late summer/fall, that's not too bad.  However, looking at my investment list, I think there is a decent chance I'm going to lose over $100 of that, depending on how much Kickfurther is able to make off repossessed inventory, and that is something that no one knows at this time.  If Kickfurther looks interesting to you, use my link and get $5.00 toward your first investment. 

Freelance Writing:

One of the companies about whom I wrote on this blog asked me to write a post for their blog.  Then I started soliciting clients and looking for work and so far this year I've earned over $200.  Considering there is no commute,  and I can do it in my pjs while supervising homework, it works for me.  At least at this point my boss doesn't have to worry about me quitting my job to write full time.  

Conclusion:

Things are pretty much on track.  That $7000 extra in our checking account will pay the car insurance and the Catholic school tuition.  We should be able to handle most of the other bills out of monthly income, but we'll need to save up for that August tuition payment and the homeowner's insurance payment.  The market is doing well so we are making money, and that's a good thing.  

5 Ways to Invest Your Tax Refund

It is always tempting to take a windfall and spend it on something fun, but if you are approaching retirement (and all of us should consider ourselves to be in that boat--just with different finish lines) investing at least part of it is a smart money move.  Here are some options.

1. Peer to Peer Lending:  If you have at least $2,500 dollars to invest, Peer to Peer Lending via Lending Club or Prosper offers returns between 5% and 8% annually, with decent, though not instant liquidity.  You can read my posts about Peer to Peer Lending here.  Statistics going back before the bear market/recession of 2008 show that less that 1% of people who have invested in at least 100 notes at $25 each have lost money.
   
   
2. Kickfurther:  Kickfurther is a platform by which investors finance inventory for businesses by purchasing that inventory and returning it to the company to sell on consignment.  When the inventory sells, investors receive an agreed-upon return.  There are two risks.  The first is that the inventory doesn't sell.  If that happens, the investors can vote to repossess the inventory and try to sell it in some other way to recoup their investment.  The second is that the business will sell the inventory and then use the money to pay the rent, and not have enough to pay investors. The advantage of Kickfurther is that you can invest as little as $20, and most offers are for much less than a year, and once the repayment term starts, payments are supposed to be made monthly.  I've been investing in Kickfurther for about a year and at this point I would classify it as a relatively high risk/high return investment.  Click here to get $5.00 towards your first investment.
   
   
3. Motif:  If you want to try the stock market, Motif is an interesting concept.  For one sales commission of $9.95 you can purchase one "motif" or group of stocks.  Motif has a wide selection of company-designed motifs, and it allows investors to design their own motifs and market them to other investors.  Most motifs have a theme, just as "Growing Dividends" or "Video Gaming" and the stocks in the motif reflect that theme.  I have written about Motif before.  If you invest via this link, we both get $100.
   
   
4. Loyal3:  Another option, if you want to pick stocks, is Loyal3.  While they only offer the stocks of about seventy companies, all trades are commission-free, and you are allowed to buy fractional shares.  This means you can use Loyal3 not only to invest a substantial sum, but also to purchase a few dollars with of stock on a weekly or monthly basis.  I'm using Loyal3 to invest the money I save by not eating out at lunchtime.  Read about my investments.
   
    
5. Mutual funds:  For people who don't really want to learn about the stock market or how to pick stocks, mutual funds allow you to outsource that job to either a professional or a computer.   With mutual funds, the money of many investors is pooled, and investments purchased.  If the investments increase in value, the price of the shares goes up; if the value of the investments falls, so does the share price.  While there are a lot of flavors of mutual funds they are basically divided into index funds, which purchase shares of stocks or bonds to mimic one of the indexes and actively managed funds which have a manager who, following the policies laid out for the fund regarding the types of investment it makes, buys and sells investments trying to beat the market as a whole.  Few succeed long-term.  All cost more than index funds.  One of the best place to get index funds or low-cost actively managed funds is Vanguard.

If you are investing adequately to meet your future goals, then spending a windfall on fun isn't necessarily a bad idea; however if you are behind on your retirement savings, you'll spend a lot more time wishing you had more money than you will spend at Disneyworld with your tax refund.

Why Are You Saving Money Anyway?

In picking investments, I believe it is important to keep your goals in mind.  While most of us would define our goal as "retirement", even those of us in our 50's and 60's have other goals as well.  Here is a description of my financial accounts, why I have them and what I expect to achieve:

Checking Account:

Used with Permission

This pays the bills day in and day out.  It is a no-fee account at a local bank where my family has five accounts.  While it pays a smidgen of interest my only real expectation from this account is that it doesn't cost me money.  If it get "too big" (a problem we haven't had in a while) the excess is transferred to a savings account. We do not run this account down every month and rarely to we have a routine expense (and I call replacing appliances and fixing cars routine expenses) that cannot be paid from this account.

Savings Account:

This is at the bank too, and while it pays more than the checking account does, the money is here for safety and accessibility.  This is where our next car is kept.  It is where the rest of the money for our bathroom renovations is sitting.  We are dollar-cost averaging some money from my inheritance into our Roth IRAs, and that money is in this account.  It is as close to an emergency fund as we have.

Peer-to-Peer Lending Accounts:

Our goals for these two accounts (I have one with Lending Club and one with Prosper) are both liquidity and growth.  We started with Lending Club about a year ago with a small investment to "kick the tires" and you can read some post I wrote about it.  To some extent, I am still "kicking the tires", trying different strategies to determine the results.  At one point I bought a bunch of notes with relatively few payments left, with a goal of getting some interest (I aimed for about 6%) with high monthly turnover of funds.  I figured that if we needed money, the payments could be withdrawn, and if not, they could be reinvested, but that the account would earn more than the bank pays.  Yes, there is more risk but so far I've had very few resale noted default as compared to those bought new.  In short, I am hoping to make money on these accounts, but I believe they are more stable than the stock market as a place to put money I may need in the next couple of years, though not immediately. If you want to invest $10,000 or more, use this link and get a bonus $50.00.

Kickfurther:

Right now, this is my financial toy.  I have $1,000 invested and the plan is to invest another $100 per month for the next year, and then re-evaluate its place in our financial future.  Kickfurther crowd-funds inventory purchases for small businesses.  Once the inventory sells, investors are paid back their investment, plus an agreed-upon percentage, whether that payback takes more or less time than anticipated.  The risk of course is that the inventory doesn't sell.  The risk is mitigated by the fact that the investors own the inventory, and if the vendors do not sell it, the investors decide as a group what to do with the inventory. Backers are also offered to opportunity to help sell the products for a commission. Here is one I'm backing and helping to sell:

Click here to go to my store to purchase

  Kickfurther is new and I have no idea what the default risk will turn out to be.  Returns vary depending on product and term but seem to be averaging about 1.5% per expected month until full payback. If this pans out, it could be a great place for both growth and liquidity as companies pay investors monthly.  The real question is what returns can the platform maintain and keep the supply of businesses and lenders in balance.  If you'd like to trying investing with Kickfurther, the minimum investment is $20.00 and if you use this link, you get a $5.00 credit, so your first investment could have quite an upside.  Also, if you have a business that sells a tangible product (as opposed to a service or intellectual property) you can use this link to see if Kickfurther makes sense for you.  According to things I've read, their rates are lower than On Deck or Kabbage.

Tax-Advantaged Retirement Accounts:

Our IRA's, Roth IRA's and 401(k)s are in this category.  They are invested in a diversified portfolio of mutual funds appropriate to our age and risk tolerance.  The goal is long-term growth moving toward income/stability in a few years.  We invest regularly in these accounts via payroll deductions and they are the bulk of our assets.  While some of the funds generate dividends, they are not our focus.  This is the money we expect to support us in our old age and to help support my son, who has autism, after we are gone.  Right now this money is about 80% in stock funds; about 20% in bond funds, but we will need to move to a more conservative allocation soon (my husband is 59, I am 54).

Motif Investing:

I only invested $5,000 in a variety of stocks, split between those oriented toward growth and those that pay dividends.  This is as much toy as investment right now, but it is interesting to see how my picks work out.  I wrote about Motif Investing here, and if you want to try it, click this link; we'll both get $100.00 if you invest via this link.

What type of investments to you have and why?

*Part of Financially Savvy Saturdays on brokeGIRLrich, GoldBean Blog and Debt Free Divas*

Also linked to Final Friday Finance

New Financial Products: Motif Investing ($100 free money)

In my head, when I'm being reasonable and logical, I really believe the best long-term strategy for wealth-building for those of us who do not own our own business is to buy into lots of other people's businesses via a diversified portfolio of mutal funds.  I back up that belief by investing most of my money that way.  However, there is that part of me that likes to play with money, that likes to try new things and to try to beat the system.  For some reason I've always wanted to own individual shares of stock in companies but I've never been willing to put all my eggs in one basket, and putting eggs in lots of baskets, unless you do it via mutual funds (and to some exent even then) means lots of fees.  The internet is changing that.  Today there are several different ways ordinary people can invest directly in stocks without paying huge transaction fees.  One is Motif Investing., which, if you invest via the links in this article, will give you and me both $100.00.  

The concept behind Motif Investing is simple.  Investors buy a "Motif" a basket of  up to stocks that represent some idea, concept, sector or whim of a developer.  Motif investing offers not only motifs created by professional staff but also those created by customers, ordinary people like you and me.  If someone chooses to buy a motif I create, I get a commission.  How cool is that? It is like I am a mutual fund manager!  Investors pay one commission per motif purchase--$9.95, whether they invest $200 or $200,000.  The purchase can include fractional shares.  Also, many weeks there is a Motif of the Week, and if you choose to purchase it, there is no sales commission. 

I've been reading a lot about investing in high-dividend stocks as a retirement income source and one week a motif named "High Yield Dividends" was the Motif of the Week.  I decided to make it my first purchase.  I now own shares of twenty-five different companies including Southern Company, AT&T, Verizon, Darden's Restaurants and McDonalds.  

I also developed my own motif, based simply on companies from which I like to buy, including Ascena Retail Group (owns Dress Barn, my favorite place to buy clothes) and Lending Club (ok, I don't buy from them but I invest with them). So far, Yum Brands and Panera Bread are leading the pack and beating the market.  Chipotele isn't doing so well.  Such is life.

Another week, the Motif of the Week was named Buyback Leaders and it was made of stock in companies which have bought back shares of their stock.  Some stocks in the motif are Dr. Pepper Snapple Group, Inc., Anthem Inc. and Gap, Inc. 

I'll be the first to admit that I know little about market capitalization, PE ratios, market cycles or any of those other technical terms that are supposed to define the best times to buy and sell stocks.  Corporate annual reports make my eyes glaze over.  I do not think I should be investing large amounts of money in stocks based on my "it looks interesting"  criteria but so far the motifs in which I have invested have about tracked the market which I guess means I'm not so dumb after all.  Given the low fees involved in Motif Investing, I think it bears a look by anyone wanting to manage his or her own investments. 

The links to Motif Investing in this article are affilliate links.  Use them to open your account and when you purchase your first Motif, we will both receive $100.00.

My Inheritance

My parents were financially successful.  They had some good luck and they made some good luck, and in the end were able to not only have a comfortable old age but were able to leave a substantial inheritance to their five children. While it is more money that I have ever gotten in one transaction, it will not be enough, in and of itself, to support us in our old age.  So, what did we do with all that money?

My 401(k): 

I got the first installment of my inheritance in June, and it was close to six months of take-home pay for me.  At the end of June we are allowed to change our 401(k) contributions and I changed mine to eliminate take-home pay, so in essence, that first installment of my inheritance went into my 401(k).  I was able to live off my non-taxable inheritance, and turn my paycheck into tax-deferred retirement money.

Marketplace Lending:

When the big check came in February, I put about 10% of it in marketplace or peer-to-peer lending, split between Lending Club and Prosper.  I have been investing with Lending Club for almost eight months now and I've been very happy with the returns.  Using XIRR, which is generally considered to be the most accurate way of computing returns with this investment, my returns are over eight percent.  One thing that can be an advantage or disadvantage to this investment is that it turns over a substantial amount of money ever month.  Looking at a random loan in my portfolio, I see that it has a monthly payment of $.62 on a $25 investment.  The first couple of months, $.36 is interest and $.26 is return of principle, so don't confuse payout with return, but the fact of the matter is that between my accounts at Lending Club and Prosper, if I choose not to reinvest my returns, I can withdraw close to my entire paycheck per month until some of the loans start to be paid off.  While it is not the instant liquidity of a bank account, it gives me access to some of my money without having to put assets up for sale--but if I do want to sell and cash out early, there is a secondary market for the loans. Depending on the costs of our other goals, we may add more money to this asset class.

Motif: 

I've always wanted to invest directly in the stock market, to pick my own stocks and to watch them (hopefully) grow and make me money.  My husband and I bought stock in Novellus quite a few years ago, watched it almost triple in price, and then we sold it when it had dropped to twice what we paid for it.  If only...  Honestly, I know mutual fund managers get paid big bucks to pick winners and few do better than the market as a whole.  That's why I can't justify the costs or risks of putting a lot of money into individual stocks.  However, there is a new player in the industry, Motif Investments.  Using a web interface, clients selected a basket of up to thirty stocks to purchase at one time.  You can pick a basket (Motif) that they designed, one that a fellow investor designed or one that you design yourself.  There is one $9.95 charge to purchase as much of the motif as you want. While this is an investment on which I hope to earn money, at this time I am only investing about $5,000 and I'm considering it to be a toy.  If I'm really successful, I may reconsider.  I haven't picked anything to buy yet.

Roth IRA:

Our Roth IRAs are with Vanguard and we maxed them out for 2014 and plan to use the inheritance to max them out in 2015 and 2016.  Right now, all the money is in their 500 Index Fund.   We are probably going to move future contributions to a dividend-centric index fund.

Home Renovations:

Our house is forty years old.  We've lived here for twenty and raised 2.5 kids (one is ten years old).  While we renovated the kitchen fifteen years ago, the rest of the house needs new floors, new paint and general freshening.  We plan to renovate both bathrooms with new tub surrounds, new vanities and new floors.  Hopefully the budget I have in mind will work; if not, we'll need to make some choices.

With Our Financial Advisor, In a Taxable Account:

As mentioned in other post, our financial advisor has us in a portfolio of many mutual funds.  We bought them all at one time, and since that time the market has gone down and not returned to that point.  We realize that part of the reason our 401(k)s look good next to these accounts is because funds are added regularly.  Therefore, we are going to invest about ten percent of the inheritance with our advisor, in two or three different chunks.  Hopefully it works for us.  

Bank Account:

We know we are looking at getting my daughter a car (used) when she graduates from college unless she does as she has said she wants to, and moves to New York City.  We know my husband is driving an old car.  We know my youngest will likely end up in a Catholic high school where tuition is approaching $10,000 per year.  We are going to keep the rest of my inheritance in the bank to help us  handle these expenses when they get here.

What did you do with your inheritance?