Shane Ede — 3/120 — Beating Broke

Beating Broke Rules: Certificate of Deposit

April 28, 2016 By Shane Ede 1 Comment

What is a Certificate of Deposit? Certificate of Deposit (commonly called CDs) are basically a savings account that pays a set rate over a set term. The rate tends to be higher than a normal savings account rate because the money is locked into the CD for a set term. If you choose to withdraw your money before the term ends, you pay a penalty. The penalty is usually a preset number of months interest on the CD. At the end of the term, you can renew for another term at another set rate or keep your money.

Rules: Certificate of Deposit — Safe and Stable Investments

CDs are a very stable investment. They are also a very liquid investment. As such, they make for rather poor returns on the long term and they carry a penalty for withdrawal before the “maturity”. However, there are several uses that can make them a valuable part of your financial portfolio.

6 and 12 month CDs can be a great place to keep your emergency fund. Chances are you won’t need the money, so you might as well invest it. The key here is that the CD is a safe, stable, and easily accessible form of investment. You’ll still get the higher interest rates that you would expect from a high-yield savings and, depending on the term length, sometimes better.

As you get older, CDs can play an important role in your retirement accounts as a small percentage of your portfolio. Again, the stability and reliability of the nature of CDs makes is the key. As you age, a growing portion of your retirement portfolio should be in stable cash investments. Many will recommend something like a money market account or a high yield savings, but CDs are in that same group. And with a retirement account, you can usually tie the money up a little longer and get better returns. Look for something in the 2-5 year range for maturity.

As I mentioned before, one of the major drawbacks to CDs is the early withdrawal penalty. In most cases (consult your CD paperwork) the penalty is 3 months interest. So, if you were to withdrawal the money after only three months, you would only be able to withdrawal the original amount. If you withdrawal the money at only one month, you would get less than the original amount. Anytime after 3 months and you get the original amount plus any interest above the three months penalty.

While the penalty can be bad if you need the money early in the term, if you need the money for an emergency, it can be overlooked pretty easily.

Beating Broke Rule: CDs can be an important part of your investment portfolio

Investing for Social Good

March 8, 2016 By Shane Ede Leave a Comment

This post brought to you by American Century Investments. The content and opinions expressed below are that of Beating Broke.

What if you could invest your money knowing that your investments were making a difference? We all want to make a difference. We usually do so by volunteering our time or by making cash donations to a cause. We do it with intent. But, we have to actively do it as well. I’ve talked before about the benefits of passive income, or income that is generated with little to no work on your part. Can we do more through passive giving?

American Century Investments is an investment company. As of March 1, they manage nearly $140 Billion dollars in investment assets. But, that isn’t what makes them special. What makes them special is what they do with their profits.

ACI was founded by a man by the name of Jim Stowers in 1958. Jim was a cancer survivor, as is his wife. In 1994, they founded the Stowers Institute for Medical Research. To help fund that institute, they created an endowment of $2 Billion that was made up of some cash gifts, and a 40% equity (ownership) in American Century Investments. Why is that important?

Because of that ownership stake in ACI, more than 40 percent of American Century Investments profits have been distributed to the Stowers Institute for Medical Research, a non-profit basic biomedical research organization. The Institute is the controlling owner of American Century Investments and has received dividend payments totaling over $1 billion since 2000.

$1.2 Billion in dividend payments. I’m going to let you think about that for a minute.

$1.2 Billion dollars is a lot of money. And because of the social thinking of the Stowers’, that money is going towards medical research. Research that could provide clues to cure disease.

Now, I don’t want this to come out sounding like a sales pitch. I want you to do your research before you invest your money with anyone. I do. If you’ve got a financial planner, talk to them before you do anything. But, what I do want to say is that, all things equal, if you can invest with a company that does a great deal of social good and still get equivalent returns with equivalent expense ratios, then wouldn’t you do that?

Ultimately, any financial decision you make shouldn’t be based on emotion. It should be based on numbers and facts. 9 out of 10 times, if you make a decision based on emotion, it’s going to be the wrong one. I know that. You should too.

But, I also know that my grandmother is a cancer survivor. My mother is a cancer survivor. I lost an aunt to cancer. Knowing that a portion of the profits of the company that I invest my money with is going towards research that could someday make cancer a curable or preventable disease is a pretty powerful motivator. An emotional one, to be sure, but powerful nonetheless.

All things considered, when it comes time to choose investments in the future, I’m going to make sure that American Century Investments is included in the options. That doesn’t mean I’ll pick them every time (or at all), but because of their structure, and the chance to do a little passive social good, they’ve earned a spot in the selection process.

What about you? What do you think of the idea of passive social good? How about the idea of an investment company with a higher purpose?

Saving Money (and Possibly Your Life) With Vaping

November 8, 2015 By Shane Ede 7 Comments

I’ve written about cigarettes and smoking in an offhanded way a few times here. It doesn’t take an accountant to tell you how expensive of a habit it can be. I was smoking about a half pack a day. Sometimes more, sometimes less. Now, I save money with vaping, and I might just be saving my life too.

Why I Switched to Vaping

I was a smoker for almost 15 years. Over those years, I’ve attempted to quit a number of times. I tried the nicotine patches, Wellbutrin, and Chantix on several occasions. All with varying levels of success, and then failure. Of the bunch, Chantix was probably the most successful. I think I managed 6 weeks without a cigarette that time. But, you only take Chantix for about 6 weeks, and then the urge returned, my will power left, and it was back to it.

About a year or so, I started seeing, and reading, articles on Facebook and elsewhere about vaping. For the uninitiated, vaping is the act of vaporizing a liquid called e-juice. Technically, those e-cigarettes you see at the gas stations are vaporizers. Whomever decided that naming them e-cigarettes should be ashamed of themselves though. The e-juice that you vaporize is a mixture of Propylene Glycol and/or Vegetable Glycol, liquid nicotine, and various flavorings. The mix is added to a tank that wicks the e-juice to a coil. You press a button on your Mod (the device that holds the batteries and powers the coil) and the coil heats the e-juice to vaporization. You inhale the vapor, exhale the vapor, and get your nicotine fix without a lot of the chemicals you’ve been getting in your cigarette smoke.

As I read more and more of those articles, a recurring theme started to show itself. There were a lot of people who had started vaping and completely replaced their cigarette habit. And most of the reports I had read seemed to indicate that vaping was a lot safer than smoking cigarettes. I decided to give it a try.

Luckily, for me, I had a friend who I knew used a vaporizer, and I was able to ping him to get suggestions on equipment. If I hadn’t, I would have been completely lost, and probably struggled with the process a lot more. I might have even failed again and written off vaping entirely. I’m glad I had that help.

I ordered my equipment, and some e-juice to get me started, and on May 25th, 2015 I made the switch to vaping. I’ve had a total of two cigarettes since then. And they both tasted terrible. It’s been almost 6 months. The urge to have a cigarette is almost entirely gone. There are still a few triggers that spark the urge, but I can easily overcome those with a few quick vapes. I’m no longer a smoker.

Saving Money with Vaping

In a way, I’m lucky that I live where I do. A pack of cigarettes is only about $5 here. In neighboring Minnesota, a pack will easily cost you $7.50. There are places where it’s more expensive. For comparison sake, I can buy a 15mL bottle of e-juice for somewhere between $7 and $25 (the premium juices are the top end of that range. Average is closer to $10-12). On an average day, I vape my way through about 3-5 mL. So, that 15mL bottle lasts about 3 days. I used to smoke a half pack of cigarettes a day. The cost for e-juice is slightly less overall. Equipment adds a bit more, averaged over time. As the cost of cigarettes continues to go up, over time I’ll save more. That’s assuming that taxes and such aren’t applied to vaping products of course. They might be. If so, it might be a wash.

While some of this is unclear, what I’ve read so far indicates that vaping is a whole heck of a lot safer for you than cigarettes. I fully expect, based on that, so see a lot of the savings from making the switch through my health and health care costs. There’s really no way to calculate those savings, but I believe they are pretty huge. Those savings aren’t just in financial terms either. There’s a very real possibility that my health will improve, my quality of life will improve, and I’ll possibly have saved my life from some nasty cigarette related disease. That’s my kind of savings!

Over the last few months, I’ve found a few ways to apply some standard saving techniques to my vaping as well. I’ve used coupons and sales to buy e-juice at bargain prices. I’ve done the same for some of the equipment. I’ve started making my own coils which reduces the cost of the coils by a great deal. And I’ve found some nice subscription offers to get some good e-juice for a far cheaper price.

Ready to Save Money with Vaping too?

If you’re looking for equipment, I fully recommend an open tank vaporizer set up. All that means is that the tank is refillable unlike those disposable ones you find at the gas station. Reusable and refillable is excellent. I use the eleaf iStick 30w Mod. I wish I had the eleaf iStick 100W TC. It just adds some additional wattage and other options that I would have liked to have had. Cost made it a bit of a stretch though.

As for the tank itself, my favorite right now is the Kanger Subtank Mini. It will take premade coil units in a pinch, but also has the ability for you to build your own coils. It’s the best of both worlds.

e-Juices come in hundreds of different flavors. What you need to know is that you can adjust your level of nicotine. I started off with 18mg/mL and it was too much. Someone who was a heavier smoker might want it that strong. I’ve been using 12mg since, but recently started buying 6mg. One of the coolest things I’ve found is Zamplebox. It’s a subscription box where you get sent a variety of 15mL bottles each month. I’m subscribed to the 6 bottle package. It’s highly customizable, and allows for you to try some flavors that you might not have without. They offer a 3 bottle, 6 bottle, and 11 bottle subscription. They’re $19.99, $24.99, and $44.99 respectively. At $24.99, my 6 bottles are just a hair over $4 each. That’s a pretty good deal. If you’re just beginning, I highly recommend you give them a try for a few months.