Archives for November 2010

Ally Bank Review: High Yield Savings Accounts

For a while now I've been looking into all the online high yield savings accounts because we wanted to find a place to put our hard earned emergency savings.

As of this writing, because we're so conservative, we're currently sitting on close to 12 months of expenses in savings. As you might expect, 12 months of expenses is a nice chunk of change to be earning interest off of.

We wanted to make sure we were putting our money in a place where it would be earning good interest, but also that it was a solid bank with a good reputation.

Today I’m reviewing one of the banks that we ended up getting an account with, Ally Bank.

Ally Bank – Who Are They?

The brand – Ally Bank – has been around for a year or two now, although they aren't a new flash in the pan bank. A lot of people don’t realize is that Ally Bank is the new face of an old name, GMAC bank. They changed the name in May of 2009 at a time when they were giving the company a face-lift, and giving a promise to be the customer’s “ally”. While the old GMAC bank wasn't my favorite bank – and the fact that they needed a face-lift from the start had me skeptical. But when you also factor in the fact that they have one of the competitive bank rates right now, and that so far they've gotten good reviews – I was more than willing to give them a shot.

Kiplinger's Personal Finance named Ally Bank high yield savings account the “Best Internet Account” and “Best For Millennials” for 2018!

Is My Money Safe At Ally Bank?

Whenever you're considering signing up for a new bank account, it's important to find out if your money will be safe at the institution, and whether or not the bank is insured. Ally Bank is fully FDIC insured, and has been since August 2004 – under their old name of GMAC. If the bank has problems and goes bankrupt, you’ll be fine – as long as you don’t have more deposited than the FDIC insurance will cover. Currently that amount is $250,000 per depositor.

Fees, Minimums And Other Features Of Ally Bank

Ally Bank’s high yield savings account has low fees, no minimum balance and you can open with zero dollars if you want!

Open with $0
No minimum balance
No monthly fees
Ability to create sub-accounts with different names and account numbers.
Daily compounded interest for maximum earnings
24 hours a day, 7 days a week customer service at 1-877-247-ALLY (2559) for 24/7 assistance or by e-mail at customercare@ally.com
FDIC insured up to $250,000
Six withdrawals or transfers per statement cycle. (mandated by the government for savings accounts)
high level of online security

Open An Account With Ally Bank

I opened my account with Ally Bank about 4-5 months ago. It was pretty simple.

It’s a 5-step process. You’ll have to give them some basic information (including your SSN and drivers license), and they’ll do a hard credit pull. Then you just set up your initial deposit from your linked account, set up a few account options and you’re set to go. No fuss, no muss.

Open your account with Ally Bank. Easy 5-step process!

Other Ally Bank Account Types

In addition to it’s competitive high yield savings accounts Ally Bank also has other options available including classic CDs, no penalty CDs (ability to withdraw early with no penalties) and money market accounts. All of them seem to have rates that are currently competitive. For more details about their other account options, click here.

I Signed Up For Ally – You Should Too!

I've now been with Ally Bank for several months, and so far I've been extremely satisfied. They offer some of the highest interest rates in the country and all of their accounts are FDIC insured (to find current updated rates, go here). Add to that their solid 24/7 customer service (which I have used more than once) and other account type options, and you have a good solid bank that does what it should.

If you’re looking for a good high yield savings account where you can put your money, I think Ally Bank should be near the top of your list. I know it reached the top of mine, and was one of the accounts I ended up opening.

Open an account at Ally Bank. Click here for details!

Do you have an account with Ally Bank? How do you like them? What are the pros and cons of their accounts? Tell us your thoughts in the comments!

2011 Traditional And Roth IRA Contribution Limits And Account Phaseout Rules

By Mr. Money 2 Comments

At the end of last month the IRS put out their 2011 Traditional and Roth IRA contribution limits tables. It’s always good to plan ahead for the coming year and make sure that you're putting enough in your Roth IRA, especially in years that the limits go up. Keep up on your stock investing strategy!

Unfortunately, as most people expected for this year, the 2011 Traditional and Roth IRA contribution limits will stay the same for the upcoming tax year. Phaseout limits did change a little bit, however.

2011 Roth IRA And Traditional IRA Contribution Limits

The Traditional and Roth IRA 2010 tax year contribution limits are $5,000 for those under the age of 50.

If you’re over 50 you have the opportunity to make catch up contributions, up until the limit of $6,000.

Note: Remember, you can contribute to both a Roth IRA and a Traditional IRA in the same tax year, but you can’t go over your limit of $5,000-$6000 when the total contributions to the two accounts are added together. Example: If you were under 50 and contributed $2500 to a Roth IRA, you then be able to contribute only up to $2500 to your Traditional IRA.

Here’s are the Traditional and Roth IRA contribution limits for 2011, and for years past.

Year	Age 49 and Below	Age 50 and Above
2002-2004	$3,000	$3,500
2005	$4,000	$4,500
2006-2007	$4,000	$5,000
2008	$5,000	$6,000
2009	$5,000	$6,000
2010	$5,000	$6,000
2011	$5,000	$6,000

Traditional And Roth IRA Phase Outs For 2011 Based On AGI

Traditional and Roth IRAs have phase out limits where if you make to much money, you can't contribute to these account types. Those limits have risen between $1,000 and $2,000 this year.

For Roth IRAs single taxpayers with an annual Modified Adjusted Gross Income (MAGI) over $107,000 begin to see their contribution limit drop until at $122,000 it goes away completely. The limits for Married Filing Jointly investors are $169,000-$179,000.

For Traditional IRAs single taxpayers with an annual Modified Adjusted Gross Income (MAGI) over $56,000 begin to see their contribution limit drop until at $66,000 it goes away completely. The limits for Married Filing Jointly investors are $90,000-$110,000.

IRA Type	Single	Married Filing Jointly
Roth IRA	$107,000 – $122,000	$169,000 – $179,000
Traditional IRA	$56,000 – $66,000	$90,000 – $110,000

Contribute To Your Traditional Or Roth IRA Until April 15th

One of the great things about IRA accounts is that you can open a new Roth or Traditional IRA right up until tax day on April 15th. If you do make a contribution in 2012 before tax day, be sure to specify which tax year the contribution is being made for, 2011 or 2012.

Differences Between Roth IRA And Traditional IRA Accounts

The main difference between Traditional IRA and Roth IRA accounts is when you end up paying your taxes on the money. Traditional IRA account contributions are made with income before it has been taxed. Because the money is pre-tax your distributions will be taxed at withdrawal. Roth IRA contributions are made with income that has already been taxed. Because of that the money will grow and not be taxed at withdrawal.

For a complete look at how to open a Roth IRA, and where to open it, check out this article: How And Where To Open A Roth IRA.

Do you currently have a Traditional IRA or Roth IRA? Do you have both so that you can tax diversify? Are you contributing right up to the limit?

The Most Expensive Bottle Of Wine Ever Sold. Would You Drink It?

By Mr. Money 6 Comments

I was reading a post on the Wall Street Journal today about a recent Sotheby's wine auction in Hong Kong. The story discussed some of the amazing prices vintage wines direct from the wine maker are getting. To me it's amazing that even in this economy vintage wines can command such amazing prices.

What does a $29,000 glass of wine taste like?

An Asian buyer is about to find out–at least, if they decide to pop the cork.
Three bottles of Châteaux Lafite-Rothschild 1869 were just sold at a Hong Kong auction by Sotheby’s. The hammer price of $232,692 a bottle set a record for the most expensive bottle of wine ever sold at auction. It may well be the most expensive bottle ever sold, though there are no records of private sales.

“Wine history was made today,” said Serena Sutcliffe, head of Sotheby’s International Wine Department.

So some lucky buyer bought a bottle of wine for over $230,000 dollars – the most ever paid on record for a bottle of wine. Personally I'm not a big wine drinker so I can't really understand the attraction of a wine this old. Is it purely historical value of the bottle, or does the wine actually taste good after all that time? Would you even want to open a bottle that expensive? Or would you hold onto it for investment purposes – to resell down the road?

Top first-growth wines, of course, have had a huge run lately because of demand from Asia–primarily newly wealthy Chinese buyers. The Sotheby’s auction raked in a total of $8.4 million–more than triple the initial estimate. All 284 lots were sold. The wine came directly from Domaines Baron de Rothschild, giving them “perfect provenance,” in wine speak.

A total of seven bottles hit more than HK$1 million, or $128,205 each.

By way of comparison, billionaire William Koch paid $500,000 for the four bottles of Bordeaux (vintages 1784 and 1787) that many now believe to have been counterfeit.

At $232,692 a bottle, the Lafite 1869 works out to about $29,000 a glass, or more than $2,000 a sip.

Worth it? We may never know. The buyer is unlikely to ever drink them. More likely they were purchased as investments or well-lit and highly protected centerpieces to a wine cellar.

But if they do decide to take a sip, let us hope they post a review.

My, my, my. $2,000 a sip. No thank you. I guess the article does make clear that the buyers of such vintage wines usually don't open them, but hold onto them for investment purposes, and to have as a highly coveted centerpiece of a wine collection.

Do Most Millionaires Own Expensive Wines?

Reading this story reminds me of Thomas J. Stanley's recent book called “Stop Acting Rich: And Start Living Like a Real Millionaire“. In the book he devotes an entire chapter to those who aspire to be wealthy – and how for many of them – talking about wine, owning wine, having a wine collection and a wine cellar are cues to themselves, and they believe others, that they are successful. They think if they can talk about and understand wine, and display their importance through social cues like owning and talking about fine wines, that others will think that they're successful and refined as well.

Because having a big wine collection is thought of as an indicator of wealth by many, it is often included in marketing to wealthy individuals. For example, many custom homes include a wine cellar as part of the home.

Funny thing though – only a small percentage of millionaires actually own expensive bottles of wine. Thomas Stanley's survey of millionaires found that only 7.3% of the millionaires surveyed own a bottle of wine that retails for more than $100. But nearly 4 in 10 have wine of the $10 or less variety. In other words, while some of them may drink wine or have some wine on hand, only a minority own anything that might be considered “fine wine” or “vintage wine”.

So if you really want to be wealthy, my suggestion is to steer clear of silly status symbols like this expensive bottle of wine, and work on doing other things that millionaires do that lead to success.

What do you think about this expensive bottle of wine? If you had the money would you ever consider buying an expensive bottle of wine like this? Would you drink it? Tell us your thoughts in the comments.

Retiring Wealthy On An Average Salary: The Story Of The Saving Secretary

By Mr. Money 5 Comments

This post is another installment in our recurring series, “Retiring Wealthy On An Average Salary“. To see the other installments, please click on the link in the navigation bar above. The idea behind the series is to highlight the stories of average folks who made good decisions in order to be able to retire wealthy – even though they made an average salary during their working years. The hope is that it will help to inspire the rest of us as we continue on our own journeys of building wealth.

Today I want to highlight the story of one woman, who flew under the radar much of her life, only to give away millions of dollars when she passed away. I'm going to call this one “The Story Of The Saving Secretary”.

The Story Of The Saving Secretary

Grace Groner was a simple woman who lived a frugal lifestyle. She never owned a car, and shopped at rummage sales. She worked for many years as a secretary, and only after she passed away did people realize that she was a multi-millionaire.

She lived in a tiny one-bedroom cottage in Lake Forest, Ill.She bought her clothes at rummage sales, didn’t own a car and worked most of her life as a secretary for a pharmaceutical company.

Yet after her death at age 100, Grace Groner left Lake Forest College a gift of $7 million to be used for scholarships. The money came from three shares of stock she bought–and held on to–in 1935.

“She did not have the (material) needs that other people have,” William Marlatt, her attorney and longtime friend told the Chicago Tribune. “She could have lived in any house in Lake Forest but she chose not to.…She enjoyed other people, and every friend she had was a friend for who she was. They weren’t friends for what she had.”

Ms. Groner seemed to have plenty of friends, but they were close friends because of who she was and not because of what she had. Many of them didn't even know how much she had. Her lifestyle didn't really give any clues to the fact that she was wealthy.

While Ms. Groner did end up retiring wealthy, how she did so may not be something we would necessarily want to emulate. In some respects she ended up being very lucky.

Ms. Groner’s story might seem like a classic Millionaire Next Door fairy tale–the thrifty, conservative, hard-working saver who hoards pennies over a lifetime to accumulate vast wealth. And that is certainly part of the story. Aside from occasional trips, Ms. Groner was rigorously frugal due to her Depression-era upbringing. (Not having a husband or children may have also helped her savings rate.)

Yet the way Ms. Groner garnered her wealth was, in fact, more like one big, lucky gamble than a lifetime of scrimping and saving.Ms. Groner worked for 43 years as a secretary for Abbott Laboratories. In 1935, she bought three specially issued shares of Abbott for $180. She never sold a share, even after repeated stock splits. She also kept reinvesting the dividends. By the time of her death, she owned more than 100,000 shares valued at about $7 million.

As David Roeder of the Chicago Sun-Times points out: “It is a grave error to put your nest egg behind a single company, and it is worse when the company is your employer. Groner had a winner, but others have done this with Enron, General Motors or Bear Stearns.”The all-in-one basket strategy was, of course, a grave error for employees of Enron and others. And financial advisers love to herald diversification, which didn’t turn out so well for many investors during the financial crisis.

But Ms. Groner’s story shows that savings alone probably doesn’t get you to $7 million. It seems that loading up on a one single investment and getting tremendously lucky over a long period of time can get you there. But don’t count on it.

So basically she became so wealthy because she saved religiously, but especially because she bought 3 specially issued shares at $60 a piece back in 1935. She never sold the shares, and it doesn't sound like she diversified at all. In the end she was very fortunate that the company she worked for didn't have problems, because if it had she may have ended up losing her entire fortune.

While I wouldn't suggest others try to get wealthy in the way that Ms. Groner did, I still think her story bears out the importance of valuing relationships over money, of not buying things you don't need, saving and investing (although her specific strategy I wouldn't recommend).

What do you think about her story? What keys do you pull out of this story? Tell us your thoughts in the comments.

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