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We are all cylons now

May 7th, 2009 at 09:22 pm

Put my savings in the tip box early. I wanted to speed things up because I didn't want to make a special errand to deposit a $1.96 check into savings. Much prefer to combine it with what is in the tip box. Total = $45 + $1.96 was a bit better.

I went into the flagship downtown WaMu and saw the gigantic semi-futuristic clear and blue plastic Chase logo perched on a wooden platform. It was a good twenty feet high. All of the WaMu and Washington Mutual lettering was gone. Confirmed that with the ATM interface.

WaMu's bones are dissolving. If next week I have to stick my hand in some goo to interface with my Chase bank data, somehow that wouldn't surprise me a bit. But I have to see the sunny side. There are several Chase ATMs in Oshkosh and Milwaukee; there never were any WaMus there. Looking forward to no ATM fees on vacation.

On another cheerful note, the 403B is doing splendiferous. I'm up about 3% in real return, apart from putting in over $600/paycheck. I've been buying cheap in the 403B since October. From $64K at the end of December, I'm up over $76K right now.

Eating our fantastically tasty home grown lettuce tonight. We are catching up with it.

403B match is in

March 4th, 2009 at 10:19 pm

Saving log - $0
Spending log - $5 lunch + $13 groceries

Today was an off-site training day, and the training site was about a block away from Remo Borrachini's, so DJ friend and I bought and ate a lunch there at the little cafe, ferociously tempted by all the cakes and Italian pastries.

In more fiscal news, our contributions are matched .50:1, our max is 8%, so a 4% contribution. However, this match is put into our accounts yearly, in March. I looked and found that our match from the 2008 contributions was put in. Excellent timing because it bought stocks at a relative low.

spendy weekend

February 8th, 2009 at 09:05 pm

Saving log - $0
Spending log - $12 breakfast + $108 earbuds + $12 groceries

Saving log - $0
Spending log - $3.34 bagel, coffee + $13 conveyor belt sushi

Spending mostly on Saturday. DH bought a bit of stuff for kitty at Target including a large toy mouse ($2.50) which Morgan destroyed in two hours of pleasure. My very decent earbuds mostly gave up the ghost this week after Morgan clawed and bit 'em - the left ear cuts in and out and most songs crossfaded (separate tracks for the left and right ear mixed), it means that everything sounds even worse than 50%. The decent ear buds cost 100$, which seems atrocious, until you spend 20$ to 40$ a pop for cheap mistakes.

Last night I finally had to change my username online. Chase has been in the process of digesting WaMu - now only small WaMu logos are left, next to the big Chase logos. To the victor go the branding spoils.

Checked up on my 403B. You might remember that pre-October that my old money was invested conservatively (40% stock/60% cash & bond). In October I changed my new contributions to 90% stock and 10% bond. So far, I've made up my losses from last quarter.

devil money

December 8th, 2008 at 09:10 pm

Saving log - $5 tip box
Spending log - $0

I managed to work out during lunch, or more precisely, before lunch and I brought my own lunch - a ham sandwich - and used a gift card for the coffee, so no money was spent on my part. Nice to make up for the heavy-duty weekend spending. I will be spending tomorrow though.

Sister emailed me. In addition to the flooring, which I totally support, she also wants to replace the windows at the farmette. I support her far less on that project. There are some bad windows, sure, but replace those and wait for next year. The window guys I think are starting to apply some pressure on her. They are interested in a 2 yr contract. I can see that that would help them out more than it would us. It means that we are locked into a price, and if the price of the service rises, great. But what if the price falls? Best to do what absolutely needs to be done and wait until next year. 10K on the farmette is my spending limit for 2009.

The 2008 tax season is here. I got my first 1099 of the season, and at work we got the change-your-403B-withholding email. We can save up to $16,500 for the year in the 403B. This last year, as part of getting into a better tax situation, I hiked up the 403B withholding to the limit, and found that I got used to the much smaller check. Not to mention that this year its the golden opportunity to buy into equity-based mutual funds. I will continue for 2009.

As far as the title of my post - dividing $16,000 into 24 pay periods gave me an answer that made me smile.

403B doings, part 5

November 18th, 2008 at 09:12 pm

Now that you've set up your 401K or 403B, its time to maintain it.

This corny saying on Wall Street might help you: The trend is your friend, until the end.

To tell you the truth, I found that this post was the most difficult to write. And this is just the introduction. The classic advice: diversify and allocate according to your target age and risk, set up your percentages, check them every six months or yearly, then rebalance if your percentages get out of whack - definitely do if your target allocation is off by 4-5% or so. Rinse and repeat until retirement.

In these times, the classic advice - buy and hold with a touch of dollar cost averaging - is unsatisfying to say the least. The classic advice works if risk is unchanging, prices are gently variable, and the general economy is stable. Then the classic rules apply - stock prices and bond prices move in opposite directions, you can equities "buy on the dip" because you are confident that equities will come back up after giving you that buying opportunity. Once upon a time the trend, your friend, is gently up.

Unfortunately, while you might be stable and consistent as you put money in, the market that you are investing in is clearly not.

We are now at the end of the trend. We know now in late 2008 that risk was extraordinarily high when the general economy snapped. Now stocks are down over 40%, bonds are down over 6%. Both being down is unusual. Only cash is up, and only about 1-2%. The trend is volatile - downdraft, then up rally, then downdraft again. We know that a new trend will form, but when? And if the trend is gently down, what then?

To be fair, you can't time the market. You especially can't time the market in a 401K because, at best, your money is put in as you earn your paycheck. At worst, money is put in quarterly, even yearly, or worst of all, when your plan administrator damn well feels like it. Most people don't have the training or temperament to watch their accounts - I think of myself as a stable gal but heck I get excited (want to buy more) when things go up and bummed (want to sell) when they go down.

Still, there has to be something between the poles of set-it-and-forget-it and mad money trading. I'm trying to find a middle way.

403B doings, part 4

October 27th, 2008 at 09:06 pm

So in the other parts we discussed a bit about learning about the mechanics of your 403B (aka 401K), research into what individual funds comprise your 403B, general macro considerations - how much should you want in equities, how much in non-equities like bonds and ready-asset. The rest of the parts are in category 403B doings.

Now we come to the heart of the question - what equities funds do you want in your equities part, and what bond/ready asset funds do you want on your non-equities side?

If you are a new hire, you think you have to rush this decision. So many decisions - aurgh! Don't rush it. Pick a couple of funds or the retirement target fund, then do the research, and PROMISE yourself to research and revisit your 403b/401K and change it around if necessary. Frankly the most important task for a new hire is to set the account up and get the bucks out. Usually you can monitor and rebalance your account from the web. Check to see if you have to wait 30/60/90 days between changing your funds around. Those restrictions happen to prevent you from mock day trading.

So what funds should you pick? Here's where the research and the narratives about each of your funds comes in. If you see several funds that look alike and seem to invest in the same funds, don't invest in all of them ... invest in 1. Preferably the one that has the lowest fees, or has the largest number of Morningstar stars...which is also based on the fee structure.

In my case, MDLOX and THVRX are international. In picking one I'd lean to the MDLOX because of its lower fees, and since it has a strong position of bonds, I can drop the bond fund holding a bit.

MASRX, MDBAX, MDLRX are similiar. Again, I'd consider the funds with the lower fees first.

Can't stress checking the fees strongly enough, especially times like these where you want the lowest fees. Aim for under 1%. After all, when the stock market goes down in the dumps its not as if the fee administrator will give you a break on the fees. Hah hah. Nope, they plan on figuring out the fees the one hour that the stock market rallied and charge that. And in the 403B/401K land, often the fees are hidden - no line item that says: Fee! It means that your results are not going to be quite as good as the fund claims.

You also want to consider what funds seem to complement each other. Morningstar has a chart that shows where 75% of a fund stocks are in its "style" box. Often it shades a corner or an edge. Does another fund shade a different corner or edge?

In my case, RGACX and RIDCX seem to be such a pair. Between the two, they cover the upper half of the style box. The fees seem reasonable, and they are 4 & 5 star funds to boot.

Final piece of advice is to pick a fund or pair of funds that will serve as a "core holding", then juice up that core holding with specialties. A decent core holding is often an index mimicking S&P 500 or total stock. Again it is valuable to know what particular stocks are inside - just because GM is big, doesn't mean you should have a ton of it.

Specialities are just that - growth, or midcap or small cap or real estate or international or...whatever. How much you want as core and how much specialty is really up to you. Word of advice: specialties add up. 10% international, 10% mid cap, 10% small cap, 10% international, 10% growth, 10% value means that you suddenly have 40% core and 60% specialty in a portfolio that should be 70% stock. (so a final would be a percent of a percent - 7%, 7%, 7%, 7%, 7%, 7%, 24%).

Here's another case where the Morningstar x-ray feature comes in handy. Not only can you pump in what you have, try making a mock portfolio and see how you do.

For the record I went extreme - in the 40% equities I had (1/4 core, 1/4 small, 1/4 mid, 1/4 international).

In the non-asset 60% I had (1/6 gov bond, 1/2 bond, 1/3 cash)

After you make your picks & set your 403B/401K, that's not the end. Maintenence strategies next. Whatever you do, don't forget it!

403B doings, part 3

October 19th, 2008 at 11:32 pm

So in part 1, we studied the mechanics of the 403B; in part 2, we did a little bit of research into the funds of my 403B; in part 3, we'll go through the macro aspects of constructing a portfolio.

Constructing a basic portfolio is bit like making a stew or a curry - the idea is to make it rich (hah hah) and interesting. You need diverse ingredients, but you have to hit the basics, and the proportion of ingredients give you vastly different results.

All those funds that you can pick for a portfolio generally boil down to three types, two if you are unlucky, a rare four if you are lucky.

1. equities - individual stocks, mutual funds, index funds. (invest in the profit)
2. bonds - government, muni, currency, corporate, even a bond fund. (invest in the debt)
3. cash or ready asset
4. commodities (precious metals usually, other commodities tend to be very volatile).

A portfolio comprised of 100% of any of these 4 ingredients is a bad idea. This last month has taught many people why all in into equities (100%) is very risky. And 100% in company stock (often a company matches is in company stock) is geometrically more risky. A WaMu-er got triply hit: stocks are low, WaMu stock is 0, WaMu-er might not have a job. But 100% in bonds is bad - generally a bond is more stable than stock, but often the return isn't juicy enough and with this current credit crisis, investing in debt doesn't seem like a hot idea. 100% in cash and ready asset feels familiar, but again, its an electronic mattress - only a 1-2% return.

You tend to need at least two pieces: bonds and equities. You can make even finer adjustments with bonds, equities, and cash. Bonds stabilize returns, stocks juice your returns up (not this month), cash gives you a baseline and gives you flexibility to buy additional funds.

An old-style rule is that the % of bonds/cash should be about your age, rest in equities. I'm 46, so using the rule would be about 40-45% bond/cash and 55-60% stock. This is for an average to slight risk-adverse person. How much stock and bond is right for you is something that you have to establish on your own.

My current holdings are 60% bond/cash, 40% stock. I am a tinkerer, a watcher, and not that adverse to risk. So I'm investing like a 60-70 yr old woman and my portfolio could use a shot of Botox!

Another good strategy is to look inside your target year fund (eg Vanguard 2045 fund) by getting the ticker symbol, then putting it into Morningstar and seeing how much they put into equities and how much into bond.

Once you set the general proportion of bond vs. equities, its time to establish what kinds of specific funds you want to invest in. Next time.

403B doings, part 2

October 16th, 2008 at 10:08 pm

Saving log - $1 tip box
Spending log - $8 lunch

So in the last episode of 403B doings, I wrote out the basic rules of my 403 - when money gets put in, match mechanism, and what funds I can choose from.

Now comes the research. There are several reasonable places that I like to look at:

Value Line

And for a little bit of fun, useful for the larger stocks and funds -
Map of the Market (Stocks)
Map of the Market (Mutual Funds)

For all of these tools, I type in the ticker, and collect as much info as I can. I especially like the Data Interpreter tab in Morningstar, which talks about a fund in relatively plain English. I also pay a visit to the Top 25 holdings, because that is very instructive. Often you will find that large cap (capitalization) funds have similar blends of companies, so then you want to decide on other criteria - lower fees, or a higher fund rating...if you believe in ratings.

Right now, during my fact finding mission, I construct a note narrative...tell a story so I can tell the difference between my funds. And that can sometimes be depressing.

GCMAX - mid cap, above 1% fees, mostly utilities, gas, and chemicals
GSGOX - gov bond, 1% fees, 50% of the fund short bond positions
MASRX - S&P 500 Index, .35% fees, 3 star, many dividend stocks w/decent yield
MDBAX - value, .8% fees, similar to MASRX, P/Es lower
MDHQX - bond fund, .91% fees, top 2 holdings are long euros at 2010, short euros at 2009 (kiddies, long and short pairs like this are known as a hedge)
MDLOX - international, 4 star, 1.18% fees, multi-national, large position in US bonds
MDLRX - large cap core, 1.17% fees, 2 star, similar to MASRX, P/Es higher
MRAXX - cash, yield 2.21%, fees .65%, so really 1.55%
OPMSX - small cap, above 1% fees, 2 star, lots of little companies in energy consumer. Big Lots at top.
RGACX - growth, .93% fees, 5 star, google near the top along w/other software
RIDCX - income, .93% fees, 4 star, seems like a good pair w/RGACX more value-y
SPEGX - social choice, 2.93% fees, 4 star, but BP, Walmart, and Coke in a social choice fund???!!!
THVRX - international, 1.7% fees, similar to MDLOX

403B doings, part 1

October 13th, 2008 at 10:34 pm

Saving log - $0 tip box
Spending log - $11 (lunch, soda, Financial Times)

As threatened, since the financial climate has changed, I'm going to take another look at my 403B holdings. I'm not interested in "timing" per se, but I have to note that with a new macro-economic/financial wind, I have to trim my sails again. Buy and hold doesn't mean buy and forget.

So the first task in any job is to arrange your tools, figure out what you have and what sort of rules you have. One of the basic tenets of frugality is to use what you have. I'm just applying this to the 403B. YMMV.

We can contribute any amount up to the limit of $15.5K. Employee contributions go in monthly, we are matched .50:1 with a cap of 4%. (Means I have to contribute 8% to max out the match)

Actually, even if we do not contribute anything, our place of work will give the employee at least 1%. Those contributions are put in a second account (retirement fund), which go in yearly in March. Those are the monies that are fully vested after 6 years.

Like many small-ish workplaces, we are limited in the mutual funds that we can invest in in our 403B. Not really a surprise - the more choices, the fewer dollars in each choice. The more dollars that are in the total plan, the lower the fees are (R-type funds).

Our funds are, in a word, ... meh. The only advantage is that I don't have to research zillions of funds, I just have to research 12. (One is cash)

They are (ticker symbol):
American Fund Growth (RGACX)
American Fund Income (RIDCX)
Alger Green A (SPEGX)
Black Rock Basic Value (MDBAX)
Black Rock International (MDLOX)
Black Rock S&P 500 (MASRX)
Black Rock Lg Cap Core (MDLRX)
Black Rock Total Return (MDHQX)
Goldman Sachs Mid Cap Value (GCMAX)
Goldman Sachs Government Bond (GSGOX)
Oppenheimer Small Cap (OPMSX)
Merrill Lynch Ready Asset (MRAXX) - cash.
Thornberg International Fund (THVRX)

Important to know that mutual funds have a ticker symbol for the further research.

ran the numbers

October 8th, 2008 at 09:05 pm

Saving log - $1 tip box
Spending log - $13 lunch

I looked at the totals of all of my accounts and compared them to the numbers that I ran on my net worth on 6/30/2008.

I've lost $25.7K since late June.

Today, my dividend stock portfolio, about 4% of my total net worth, is down about 16%. KO is still showing a profit - my average share cost of KO is $42, so it has to drop a bit more before I lose money. WEC is also showing the barest of profit (8$). In other words, both have "the margin of safety".

If KO gets down to $42, I think that's when I will buy more. The rest of the DRPs I will maintain the discipline and dollar cost average. Dip implies a drop and then a rise. Well, while I believe in the rise, it looks far, far away.

In May last year, I re-allocated my 403B holdings to (for me) a very conservative mix - 30% bond, 20% cash, 10% gov bonds, 40% stock. (I was 90% stock, 10% bond). I blogged about it quickly, but didn't discuss it much in real life. I figured I would get teased for trying to "time the market". I'm glad I did, and would do it again - I'm down about 10% on the 403B holdings.

The rest is cash and cash equivalents (T-bills, I-bonds). Most of grandma's inheritance is still in a cash money market in Vanguard. Vanguard is participating in the Treasury Guarantee program, so if it "breaks the buck", we'll all be standing around burn barrels to keep warm.

So far I've kept my nose above water and have done much, much better than many. I do want to explore getting out of the very conservative mix of my 403B (stocks are about to get cheap enough for buying on that margin of safety), but I want to do so in a thoughtful, calculated way. I plan on blogging my thoughts, calculations, and analysis. I've been giving advice to others about looking into what they have in mutual funds and making reasonable decisions based on that. Time to practice what I preach.


August 24th, 2005 at 10:21 pm

Spending log:
Coffee - $1.65 + Lunch - $6.50

Saving log:
Tip box - $3

We have a lunch and learn at work - and today it was about our 403(b). We are lucky in 403(b) land in that we get a 3% match if we put in 6%. The choices are "okay". If I sound a little bitter, its because I'm of two minds. We used to have the choice of Vanguard fees, where the fees were about 0.2%. Right now we have Merrill Lynch-esque ones which are ranging between 0.7% - 2.0%. Bleegh! I put in 12% - I'm debating whether to drop it back down to 6%, get the match, and start an IRA (or a Roth IRA) back with Vanguard.

And then I have TIAA CREF money, where the fees are around 0.3%. A couple of people were asking about how to transfer into our funds. Yikes! I was going to ask if I can transfer *out* of them. Smile

The presentation was the same ol' same ol'. Put money in and let us manage it or else you're gonna live to be 100, but eating cat food for the last 20. Smile Not that I don't agree with that possibility, but frankly, just telling us everything's gonna be alright if you save at least 10% and forget it while we (*&% with you ... nope. I wasn't born yesterday.

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