Starting A Stock Portfolio? There Are Apps For That

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The following guest post on investing methods was written by Jim Cooper. Jim is a part-time freelance blogger who covers lifestyle, finance, and similar topics.

"Step 1: Open a brokerage account if you have several thousand dollars."

This is the first line I saw when, some time ago, I somewhat-embarrassingly started googling things like "How do I open a stock portfolio?" Literally speaking, it's a pretty logical first line in describing the process. But where I was concerned, it was immediately overwhelming. Full disclosure: I wasn't sure what opening a brokerage account entailed, and I wasn't sure if I wanted to commit "several thousand dollars" when I was really just looking to get my feet wet.

Let me back up a little bit. I think for the average young person, investing can seem pretty complicated. Not so for this lucky writer. I grew up in a household in which it seemed about as simple as could be. My mother was, for much of my life, a day trader who would sit in her home office listening to people yelling at her on CNBC and glancing at a few different computer monitors making snap buy or sell decisions. To me, it looked pretty straightforward: buy low, sell high, look for recognizable patterns in charts, and hope that the little number showing the change in the overall account for the day is green instead of red.

As it turns out, the average young person's understanding is far more accurate than my warped and simplified one. Sure, the trading process is more or less what I saw it to be once you're up and rolling with everything set up. But the part I never really witnessed (or, frankly, thought about) before I started to look into setting up my own portfolio was the logistical side of things. You have to choose a brokerage, set up your trading software, pay fees for transactions, and go about managing all kinds of other not-so-fun details as you go.

Perhaps it was silly of me to only see what was on the surface for all those years watching my mother, but then think about it with regard to other professions. If your parent is a lawyer, do you see the meetings and stacks of paperwork, or do you wonder how he or she went about obtaining PLLC status and renting out office space? If your parent is a teacher, do you envision the actual teaching and grading, or do you picture in-depth lesson planning and meetings with faculty and administrative people to outline a year's worth of education? I digress. But my point is these things can look a little simpler when you're close to them but not actually in them yourself.

The point is, I wasn't quite prepared for the involved process of setting up a trading portfolio through an online broker, even if it's something that millions of people learn how to deal with. And it turns out I'm not the only one. Having done a little bit more research on the topic, I've learned that a lot of so-called "millennials" (yes, I'm one of them) are weary of traditional investments.

What I also discovered is that my fellow millennials have gravitated toward alternatives more suitable to our general preferences as a generation. In a post specifically about how young people are approaching forex, it was mentioned that the availability of financial resources has surged as a result of companies developing new tech-based platforms to appeal to new audiences. In other words, financial apps are getting more popular because they speak the millennial language.


The first app I came across was Acorns, a clever tool that invites its users to experience "micro-investing." To be perfectly frank, it was the image and interface of the app that drew me in first. Like Monument Valley in gaming, Acorns stood out as a particularly beautiful app that I'd actually enjoy using. Make no mistake, in the age of instant gratification, you can judge a book by its cover; something that looks nice has a better shot at grabbing a young person's attention, and Acorns looks terrific.

As for what it actually does, it's kind of like a digital piggy bank that knows how to invest. This app links up to your cards to take small amounts of money (rounding up to the nearest dollar when you make a payment) and then place them into a portfolio that's already been compiled and is managed by professionals. You can choose from a few different portfolios by risk level and then simply watch your account generate income from your spare change. It's not going to double your bank account or anything, but it's completely effortless.

Two other apps that also popped up in my searches were Stash and Robinhood, which do largely the same thing. Basically, these are more hands-on mobile investing tools that actually challenge you to make your own buy and sell decisions. The fun part is that they don't charge fees for transactions and they're just a whole lot simpler than going the online broker route. Like Acorns, both are very attractive in a minimalist way, and both are simple to use. Robinhood and Stash offer real and active investing in addition to various tips and tools that can help you to analyze your own performance and learn on the go. So far I'm going with Robinhood, but it's only because I like the look of it a tiny bit more. Both apps have generated some really positive attention and strong reviews.

Overall, I'd file apps like these under the category of "life hacks" for anyone else, like me, who looks at traditional stock trading and sees something far more complex than it needs to be.

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Posted on September 13, 2016.

My Best Investment Idea Ever: Short Herbalife ($HLF) Stock

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I didn't plan to write this article today. I had hoped to write about EpiPens as I mentioned a couple of days ago. Unfortunately, once again, life intervened, so I'm pivoting to an article that is easier to write.

I ask that you please bear with me. I'm a little surly after spending yesterday responding to RainSoft's legal discovery of my Yelp-like review here. It's like this awesome true video:

... except imagine that everyone involved is from the 1800s and doesn't know anything about photocopiers. That was my day... in my opinion*.

(By the way, if anyone wants to help me protect consumers please see this link.)

Sorry for the long introduction... let's get back to the topic...

The best investment idea I've had in years, perhaps the in the entirety of this blog, is to short Herbalife ($HLF) stock... or perhaps buy puts on the stock.

Some will consider that a bold statement and it requires a bit of an explanation.

First, what is shorting a stock? I'll let Wikipedia provide a better explanation than I could. What is buying "buying puts" on a stock? Again, I'll defer to Wikipedia on the subject.

Essentially those two ideas are about making money by expecting the value of a stock going down.

In ten years of writing Lazy Man and Money, I never seriously considered betting a stock will go down. In full disclosure, I don't even know if I have an account that allows me to do so (I think it may require a margin account). That should make it obvious, but I don't have a position in Herbalife or a negative position in any other company. I might (and probably will) explore shorting Herbalife and/or other MLM companies in the future. The scale is likely to be weeks or months in the future, because, well, as I mentioned at the outset of this article, I'm fairly busy.

(I'm going to extremes on disclosures because of lawyers, such as Vorys, Sater, Seymour and Pease :: Attorneys-at-Scam... which is not my title or my article).

The Short Case for Shorting Herbalife

I haven't done a "deep dive" into Herbalife like some other MLM companies, but I have written: Pyramid Scheme Questions Cause Herbalife to Lose 3 Billion Dollars, This Herbalife Story is Amazing, and Herbalife Settlement: Quick Reactionary Thoughts.

My opinion is that Facts About Herbalife has shown numerous cases of fraud. I believe that the FTC settlement with Herbalife agrees as they write:

"This settlement will require Herbalife to fundamentally restructure its business... Herbalife is going to have to start operating legitimately, making only truthful claims... and it will have to compensate consumers for the losses they have suffered as a result of what we charge are unfair and deceptive practices."

Some will ask why the FTC would "settle" with Herbalife given that statement that essentially calls them out for fraud. As a long-time FTC insider explains the FTC needs to sue pyramid schemes which take years and millions of tax-payer dollars. Perhaps the LA Times didn't understand that, because they've asked why Herbalife is even allowed to conduct business. Perhaps the LA Times' writer did understand it but he wanted to emphasize the absurdity of the situation.

I believe that Wall Street has its head in the sand.

This is the second time that the FTC mandated an MLM company to make changes to "operate legitimately." The last time was Vemma about a year ago. What happened? You should read this Truth In Advertising retrospective on Vemma where the company has lost millions. The CEO has thanked people for continuing to buy its products because, in his words, "you have no idea how badly I needed your help and need, still need your help today."

My understanding is that Herbalife will be forced to make similar changes that Vemma had to make. I believe that starts in May 2017. I don't think Wall Street understands what has happened to Vemma... perhaps because Vemma isn't a publicly traded company.

I think that the FTC settlement will essentially suffocate Herbalife like it did with Vemma. I think the FTC moved towards this settlement because it is a lot of quicker and easier then spending a decade in court debating on what a pyramid scheme is. I think Herbalife agreed to it, because they weren't in a position to argue for anything better. This way they can at least buy some time.

In my opinion it is EXTREMELY notable that Herbalife didn't just say, "We'll put our products in stores and avoid this MLM/pyramid scheme mess." I can't imagine a legitimate company with legitimate products at fair pricing points, not embracing that. It seem to be common sense and I think a 5th grader could grasp the concept. However, if I were a company operating a pyramid scheme, I would probably fight tooth and nail to remain that way and avoid putting my products in a competitive free market situation. It seems that Herbalife is embracing that second path.

I don't see how this is going to end well for Herbalife. I think investors can take advantage of that.

* I've decided to include the words "in my opinion" in my articles involving scams or lawsuits in the future. (If I forget to include these specific words readers, agree to acknowledge this disclaimer.) I thought that this was understood, as this entire blog is about my opinion on things. It seems that lawyers like to argue otherwise. While in disclosure mode, I should upgrade my previous mention of "a little surly" to "very surly." Fair?

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Posted on August 31, 2016.

Rhode Island’s New CollegeBound Saver is Great!

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Editor's Note: While I usually try to write for a national audience, today's topic is more fitting for residents of my state, Rhode Island. However if you stick around until the end, you might have a chance at some free money.

It's good to be back to work after a week's vacation. We just got back from a trip that was very similar to last year's when we traveled from Rhode Island to kids' parks in New Jersey and Pennsylvania. Last year the stops included: Sesame Place, Hershey Park, Please Touch Museum, and the Crayola Experience.

This year we kept Hershey and Please Touch on the itinerary. We substituted out Sesame Place and Crayola for Diggerland and Knoebel's Theme Park. This article isn't about my vacation, but I do want to mention a couple of quick things. We should have waited until our boys were 5-7 for Diggerland as they weren't tall enough to do much. Knoebel's was much better than I anticipated, but we got a really hot day and it was last on the trip, so we couldn't really give it the fair shake it deserved.

When we got home yesterday, I noticed that the mail contained the new program description of CollegeBound Saver, Rhode Island's 529 plan. Rhode Island decided to change the management group of the 529 plan from CollegeBound Fund by AllianceBernstein to the new "Saver" by Ascensus. We were finally getting details about what the new program was about.

I knew much of the program wouldn't change. There are laws in place that govern the general details of the state's 529 plan. My biggest concern was that we'd have to leave the sweet, sweet, low expenses of the Vanguard funds at AllianceBernstein.

I'm a skeptic by nature and figured that because we were being thrust into this new system with no vote that it wouldn't be good.

I was wrong.

I found the CollegeBound Saver program description a little confusing. I think it was because it was designed to introduce people who are new to 529 plans and saving for college in general. The book is 80 pages long with some information about unrelated programs like Coverdells.

The "meat" of what I was interested in was the investing options. The new CollegeBound Saver program has three core "goals" which are each broken down into smaller investing options. There are target date portfolios, target risk portfolios, and individual portfolios. I can target 2030, an aggressive mix, or just choose the funds that I want.

I like to choose my funds, so that's the option I focused on. The CollgeBound Saver individual portfolios have names like "U.S. Stock Portfolio" and "Bond Portfolio." These are mapped to underlying funds such as Vanguard's Total Stock Market Index Fund and Vanguard's Total Bond Market Index.

It took a little digging, but I finally found what I was looking for. My assets were moved from my previous Vanguard Total Stock Index funds to the new Vanguard Total Market Index. I'm investing in the same thing!

The big change is that the expenses are estimated to be 0.04% which is the lowest I recall seeing outside of my wife's Thrift Savings Plan. The book includes a chart of hypothetical $10,000 investment cost chart. The easy math shows that I'll be spending a whopping $4 a year in management costs a year. In 10 years, it will be $51 total. The other investment options are also very low for the most part.

Years of reading personal finance magazine have drilled the following in my head: Control expenses, because you can't control the market and expenses add up over time. The new 529 plan has two funds with expenses over 0.16%: a 0.37% stable value option and a 0.61% Invesco Global Sustainable Equity option. As long as investors steer clear of those, the expenses mean almost nothing over the 15 years (give or take) that the money is going to be invested.

Now for that chance at free money. Later on this week, I'm going to be sending out my VIP email newsletter. It's free to join (of course). You can join it here. Readers of the newsletter will have a chance to win $25 (payable in Paypal or Amazon gift card, I haven't decided yet). I know it isn't life-changing money, but I will easy for even the laziest of people.

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Posted on July 25, 2016.

My Ideas for “The Big Short: Part 2”

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Last night, I finally got around to watching The Big Short. I had rented it on Amazon for a $1, but it sat around. Yesterday I got an email from Jim Wang of Wallet Hacks that he had just watched it on Netflix. He wrote the following:

"When it came out in 2015, I'm sure a lot of people got angry at bankers for living high on the hog, nearly imploding the economy, still getting paid off, but no one going to jail. I understand that's upsetting but being upset doesn't accomplish anything and certainly doesn't help you or me. What can? Learning something from it.

... The second takeaway is to challenge assumptions. Moody's and Standard and Poor's rated these financial instruments as triple-A, top notch, but they weren't. People assumed the instruments were safe because of the agencies...

All of this has all happened before and it will happen again."

[If you haven't seen the movie, this article might contain some minor spoilers. However, they'll be a little like the movie Titanic, right? We have an idea of what happened in these historical pieces (if we're interested in the events).]

We all view things through our own lens, right? I think my lens might be a little unique. It's unique enough that I'm going to make a pitch for a sequel. Because as far as I can tell (to paraphrase Jim), "all of this has been happening for decades." (Later, I support this with a quote from Dr. William Keep, a recognized expert in the industry.)

Hopefully someone out can put me in touch with Michael Lewis or Adam McKay who can take my proverbial straw and spin it into gold.

The best part of the sequel I'm proposing... is that you don't have to change much. It's like The Hangover sequels... they work well... so just leave them alone.

We can even begin it with the same quote: "It ain’t what you don’t know that gets you in trouble. It’s what you know for sure that just ain’t so."

The Big Short Part 2: Attack of the MLM/Pyramid Schemes

Yep, this article is about MLM. These are the kinds of things that you see crowding your Facebook. These are the things that typically collapse in about 5-8 years... or even faster. Over the years you've probably seen MonaVie, ViSalus, and Vemma. There's a bunch of smaller ones that you were most likely fortunate enough to ever encounter (Xowii and One24).

Fortunately, we can keep the same title and even the same Wall Street angle. Vanity Fair described The Big Short War. Here's a little snippet:

"[Bill] Ackman has called Herbalife a 'fraud,' 'a pyramid scheme,' and a 'modern-day version of a Ponzi scheme' that should be put out of business by federal regulators."

[The rest of the paragraph is great, but I didn't feel it was fair or fitting with the point to quote it all here.]

Yes, Bill Ackman has put a billion of his dollars (similar to some of the characters in the real movie) that there's something wrong here. The difference is that Ackman sees and documents the fraud he finds on Facts About Herbalife.

Celebrity Cameos to Explain MLM

The Big Short has a great gimmick of bringing celebrity cameos to explain complex financial topics. Anthony Bourdain, Selena Gomez, and Margot Robbie each come in for about 2 minutes.

In my movie, I'd get golfer Dustin Johnson and his fiancée Paulina Gretzky to explain it. This is a perfect fit, because I'll use a golf analogy to explain how I view MLM. It will go a little something like this:

[Dustin speaking]"Let's say that success in MLM is getting this golf ball in the hole. The first people joining get to take very short puts. So short that anyone, even Paulina, can make it. [Cut to her nailing an easy put.] However, it quickly gets exponentially more difficult since everyone is trying to recruit everyone else... and everyone interested would already be a part. So instead of a short putt, for more than 99% of the people, it's like trying to get a hole-in-one at TPC at Sawgrass's Island Green... during a hurricane. [Cut to show how difficult the hole is.]

The MLM recruiters like to show off Paulina's success as if it is representative of what will happen if someone 'plugs into the plan.' After all, if they explained that more than 99% of people are doomed to fail, they couldn't recruit anyone. They like to say things like, 'In MLM the only variable is you.' This is a way to make you feel like a failure if you quit and deflect blame from the scheme.

People typically lose money by overpaying for what they think is a legit business opportunity. You can buy a golf ball for 50 cents, but if you want to have success, you have to buy specific golf balls for $5.00 a piece. The MLMers will tell you they are much better golf balls, but typically only the people playing the game believe them, since they don't a good job at showing why they are better.

Month after month, people tend to hit dozens of golf balls into the water. Even with all the practice I've had over the years, I'm not likely to get a hole-in-one to succeed. Paulina's odds at the short putt are much higher than having years of practice and my circumstances.

Just like in the original The Big Short, the reality is more complicated with nuances, but I think this conveys a fair introduction.

Where is Law Enforcement?

We might be able to recycle part of this admission from an actress playing an SEC executive in the original movie:

"Oh we don’t investigate mortgage bonds. Truth is since we had our budget cut we don’t investigate much."

See this Bloomberg article: "An Insider Explains Why the FTC Can't Put an End to Pyramid Schemes"

It's a similar story with it costing years of the FTC's time and money to go after a single one. It's hard to put too much blame on the FTC, as they really need a Federal pyramid scheme rule according to the FTC insider. Let's just say that I haven't met too many people who have faith in politics lately.

The FTC does have some guidelines for consumers
about MLMs/pyramid schemes
, but the average person isn't likely to stumble across the article.

Imagine if law enforcement didn't go after murderers and instead gave you tips on how to avoid being murdered. Now imagine they took it a step further an implied that murder might be legit. That's how I feel.

And if that sounds crazy, please read Dr. William Keep's article on MLM here. He's just the Dean of Business at the College of New Jersey, and one of the foremost experts on MLM/pyramid schemes. I'd love to quote the whole thing, but I'll just stick to this:

"Business fraud undermines markets and misallocates financial resources. Managing it can be difficult. In the guise of MLM companies, pyramid schemes are the perfect fraud storm that has swirled around U.S. consumers for decades, transferring small amounts of wealth from hundreds of thousands of victims using face-to-face deceptive marketing. As a result, a small number of perpetrators reap large rewards."

Where Do I Stand on All This

I found myself identifying with almost all the characters in The Big Short. However, I particularly found myself identifying with Mark Baum played by Steve Carell. Almost everything he says is quotable, but there are a couple that caught my attention, and we can recycle them for the sequel:

" You have no idea the kind of crap people are pulling, and everyone's walking around like they're in a damn Enya video. They're all getting screwed, you know? You know what they care about? They care about the ball game, or they care about what actress just went into rehab."


"We live in an era of fraud in America. Not just in banking, but in government, education, religion, food, even baseball... What bothers me isn't that fraud is not nice. Or that fraud is mean. For fifteen thousand years, fraud and short sighted thinking have never, ever worked. Not once. Eventually you get caught, things go south. When the hell did we forget all that? I thought we were better than this, I really did."


The above is my opinion which I believe is protected under the First Amendment. As Homeland Security has trademarked, "If you see something, say something." I see something, so I'm saying it, which has thus far lead to four serious legal attacks (including three lawsuits) upon my free speech to express these views.

I leave you with two motto's:

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Posted on July 14, 2016.

I Just Made a Ridiculous Investment… Here’s Why

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I made a mistake in the title. Investment is the wrong word... gamble is better.

Bad gamble might be the best phrase.

To make matters worse, I invested money that wasn't mine.

I invested in an ETF focused on Greece (symbol: GREK).

Let me start off by explaining how bad this investment is.

Here's what Benzinga said about it a few days ago:

"Greece ETF Needs A Shot Of Confidence... There are problems aplenty for Greek banks, too, and that is problematic for GREK because the ETF allocates nearly 39 percent of its weight to bank stocks... The ratings agency's standalone viability rating on Greek banks is 'F.'... "

On the surface, it looks terrible. It reminds me of the time I put leftover Chinese food in the rice cooker (with rice) and my wife thought I had lost it by adding poop. If you take the time to understand, something that seems terrible can actually be delicious.

I may not be able to spin straw into gold, but I'm going to try to make this poop into delicious food.

The key to my success is the investment account. In this case it is (Disclaimer: I have received no money from or on behalf of Robinhood for this article.)

Robinhood is a brokerage that has no fee trading. Typically you may pay $8-12 for making a trade, such as buying or selling a stock. If you are using your money to invest a good-size chunk of money at once it's not a big deal. You want to be careful not to trade too often as those trading fees can add up.

With Robinhood, that's not a problem. Nonetheless, I intend to buy and hold for a long time.

You should now be saying, "But that poop isn't even close to dinner! And other people's money?!?!"

The money I invested was for my 2 and 3 year old. They don't any better. What? That doesn't make it any better?

Fair enough. I invested more than 95% of their money in Vanguard Total Stock Index (NYSE: VTI). That's a well-diversified investment that many readers will recognize as a core holding.

Why didn't I invest 100% of the money in VTI? I couldn't buy a fractional share.

I had less than a hundred dollars in uninvested money. With no trading fees, I can put what would have been idle cash to work. Unfortunately, it wasn't even enough to buy a share of Apple stock. I could have bought shares of another stock, but I liked the idea of gambling on GREK trading at $7.

In 2014, GREK traded around $24. I've been watching it for some time, simply because there are so many problems with it. I have a philosophy that a country is not likely to disappear. I believe that, given a long enough timeline, a strong beaten-down country will recover. I have several Greek friends and they are the strongest people I know.

At ages 2 and 3, my kids have the benefit of time. I'm thinking this money will help them buy a first car in 10-12 years. It can sit for even longer if necessary.

More importantly the investment is less than a hundred dollars. You can blow that kind of money on a round of drinks in New York City... and have nothing to show for it.

I'd rather accumulate shares of something that has a likelihood of appreciating, right?

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Posted on July 11, 2016.

Giving SodaStream Another Look

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I apologize for the lack of articles lately. I've been deluged with legal documents and requirements related to some of the companies mentioned in my GofundMe: Consumer Advocate Sued Into Silence posting.

That kept me busy up until a short family vacation where we went to the smallest city in the smallest state. They really have that book for everything, right?

Today's topic is SodaStream, a product, company, stock, and savings tool, that I've written about a lot in the past.

For example:

The last one is particularly interesting because I wrote about how I considered Facebook a bargain at $20, but not at $57. As I publish this, the stock is almost exactly twice that $57 number trading at $114. What a difference a couple of years makes!

While I was convinced I had picked a winning product on the upswing, it turns out I was wrong. The stock continued to tank even after it had dropped significantly. This is often called "catching a falling knife" in investing circles.

This is why, last week, I wrote that you shouldn't necessarily invest in what you know. Typically we know products and we may even love them, but companies and their execution can be mysteries. In extreme cases you may find yourself investing in the next Enron disaster where few people really knew what was going on.

This is all in the past. I sold most of my SodaStream stock when it had a brief bump on an acquisition rumor. I kept a very small amount simply because I still believe concept of making sparkling water at home for pennies.

That brings us to last week, where I read an interesting article on LaCroix sparkling water on Vox. It seems like this is the newest fad. The strange thing is that the flavored sparkling water has been around 30 years.

Why is it so popular? As the article says:

"Over the past decade, Americans have done something that would have once seemed downright un-American: They've given up soda. And when you’re craving a can of pop, LaCroix is a decent substitute. Unlike tap water, it has carbonation and a little flavor... Close your eyes, wrap your hand around the perspiring aluminum can, and you could be holding a Coca-Cola. LaCroix is succeeding as methadone for the soda addict."

In other words it's the right product at the right time. However, there's more to it:

"The secret behind LaCroix’s rise is a mix of old-fashioned business strategy and cutting-edge social marketing. When Americans wanted carbonated water, LaCroix was positioned to give them them fizzy water. Then, sometimes by accident, LaCroix developed fans among mommy bloggers, Paleo eaters, and Los Angeles writers who together pushed LaCroix into the zeitgeist."

It also has great marketing. It's easy to see why the right product at the right time with great marketing would be a winner. And I thought I had that with SodaStream.

I cut out one sentence in the first quote:

"Unlike a countertop SodaStream, it's cheap, readily available, and portable."

I'd argue that SodaStream is cheaper... especially if you use your carbonation as I do. I'd also say that it's just as portable... you can bring 500ml or full liters with you easily. I'd argue that it's readily available (it's at home and portable), but I could concede that point.

While SodaStream doesn't produced flavored carbonated water directly, it's easy to add a True Lemon, True Orange or True Grapefruit packet... or maybe a dash of cranberry juice for flavoring.

A strange thing has been going on with SodaStream's stock the last few months. You could have bought in at around $12 a share, but today it trades at more than $21. They had a great quarter that surpassed expectations. I don't know if they can continue to execute or not, but right now it looks like it's bubbling up nicely (terrible pun intended).

This experience has made me wonder if timing really is everything. Is it possible that I was just too early? Or is it that SodaStream had bad execution and is just now getting it figured out?

If anyone has answers or thoughts, I'm all ears. Hit me up the comments.

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Posted on June 29, 2016.

Thoughts on the Best Ways to Invest $1000

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Nearly a couple of years ago I asked the readers, what's the best place to invest around $1000?.

Earlier this week, Jim Wang asked 24 experts and a wannabe (myself) about the best ways for newbie to invest $1000. I figured he'd get the same two answers from everyone:

1. Vanguard Mutual Funds or ETFs
2. or a Robo-Advisor

And of course those were the two things I mentioned. (I may have cheated by giving two ideas.)

In fact a number of people echoed those thoughts. Since I expected those two, I'll give you some thoughts on the other ideas mentioned. Those ideas were largely thinking outside the box. Everyone has their opinion and that's what makes us (and life) exciting. So here are my thoughts on a few of the suggestions (for what it's worth):

  • Spend the money by Marginal Revolution - Simply because rates on investments are low right now. It's an interesting thought as much of the year the markets have been flat and interest rates are very low.
  • Pay down debt by The White Coat Investor - Love this, but I'd say pay down bad debt. There's a difference between Good Debt and Bad Debt
  • What's your goal by Investor Junkie - This was probably the best of the non-standard advice I had read.
  • Invest in yourself by Nerd’s Eye View financial planning blog - I've never been a fan of Invest in Yourself, because there are a lot of investments that give you no return and suck up your time and energy. It's really hard to know which are good investments... and if you did, you'd probably have already invested in them, right?
  • Invest in what you know by John Paul Engel - Not a huge fan of Peter Lynch's buy what you know as I mentioned before. I knew that everyone would carry internet phones in their pockets back in 2004 and bought Palm stock. How do you think that worked out for me? I'll cover another company that went similarly bad for me in a few days. There's a big difference between the idea and the execution of the company. It can be almost impossible to know how a particular company is going to execute, right Enron investors?
  • Save it in an Emergency Fund by Cashville Skyline - I kind of thought this went without saying, but when you assume that, you can get in trouble. Good idea on Kate for saying it.
  • Depends on the person by Three Nine Financial - This is almost like me cheating and offering a couple different options. Yes it does indeed depend.
  • Don't be emotional by Hylland Capital - Once again, this is a great suggestion and the kind of thing that I simply would have glossed over.

So what do you think? How would you invest $1000? Let me know in the comments below.

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Posted on June 23, 2016.

Happy 529 Day!

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May is known for one of the best date puns ever created.

No, it isn't that silly May the Fourth Star Wars day.

Star Wars day is extremely unlikely to put a dollar in your pocket. (Unless you are a Disney investor like a few of my friends.)

The best date pun in May is 529 day... which is today: 5/29.

Regular readers of personal finance blogs like this one know that 529 refers to Section 529 of the U.S. Internal Revenue Code that allows for a tax-advantage when investing for qualified education expenses (usually college).

That means that parents can at least get a small break when dealing with enormous, exploding college tuition prices.

It's also a well-timed reminder that now that tax season is over, it can be a wise move to start putting money into a 529 Plan. I started a 529 plan around 2007 or 2008 for my niece and nephew and one for each of my own children in 2012 and 2014.

It wasn't exactly easy picking the best plan either time. In fact, it reminds me of the NFL playoff rules where you get to the Nth tie-breaker and it's literally a coin flip that decides a team's entire fate.

To help people pick the best 529 Plan, I wrote this guide: 529 Plans: How Do you Choose?

Since 529 Plans are very state-specific, that should at least be a good place to start. Some of the specific data on plans are a little dated, but the concepts stand strong today.

Hopefully, today, you are enjoying a hamburger, hot dog, or whatever it is you like when you get to take a little time off of work. Let's put in a coupe of extra minutes to chew on the financial future of our children as well.

And certainly, please don't take my 529 Plan away.

This post deals with:


... and focuses on:

College, Investing

Posted on May 29, 2016.

Betterment: Investing the Lazy Way

Comment First
Written by

I'm testing a new writer today. I've been meaning to write about Betterment (and other Robo-Advisors), but I thought I'd get another perspective. Let me know what you think in the comments.

Betterment is a complete online investing company that assists you in tailoring and determining your financial future. Betterment takes a look at your current financial situation in relation to your fiscal goals and where you’d like to see yourself in the short versus the long term. From there, it develops a personalized plan so that you can achieve your specified financial goals. Award-winning experience, smarter automation and better retirement planning are all part of the Betterment experience.

Betterment Trading Platforms

Betterment capitalizes on an assorted selection of exchange-traded funds. What Betterment does is invest in fractional shares—a unique strategy implemented so that you can reevaluate your investment goals in a shorter time frame. You define the precise amount you would like to invest and Betterment takes cares of the rest. By looking at your dividends and deposits, the automated investment broker rebalances your objectives, all while maintaining a low tax bill by reducing the need to rebalance (via selling). Betterment's trading platforms work with six decimal points of accuracy, using all income funds to round up any imbalances in your situations

Betterment Fees

Betterment differentiates itself from competitors by utilizing an advanced technology which affords clients lower monthly and yearly fees. Where traditional account fees will run you approximately $83 per month at 1% annually, Betterment only charges $13 per month at 0.15% annually –a substantial difference, especially over a long period of time. The basic tenant of Betterment is that it lets you have more money to invest and the more you invest, the fewer fees you pay.

A few other advantages include no trade fees, no transaction fees and no rebalancing fees.

Betterment Account Minimums

Those who invest with Betterment have peace of mind knowing that they pay absolutely zero in commissions or transaction fees. Customers’ investments are collected via a three-tier foundation, which is dictated by account balance.

There is no account minimum with Betterment but it is suggested that you invest at least $10,000 in order to avoid paying additional management fees. Accounts that maintain a balance less than $10,000 are subject to an annual fee of 0.35% of the account balance, with a minimum of $100 a month in auto deposits. In the event that you cannot deposit $100 a month, a $3 monthly service fee will be charged. For those accounts of $10,000 to $100,000, the annual fee goes down to 0.25% and then down again to 0.15% with accounts that maintain more than $100,000.

Personalized Goals

We all have a vision of where we’d like to see ourselves during those retirement years. Betterment includes well thought-out goal-setting exercises so that the perfect investment plan can be determined for you. Factors such as age, current annual income, and expenses are all part of the questionnaire. Why do they ask? In order to determine your precise objectives.

The Smart Deposit feature that Betterment offers, takes out unnecessary funds from your checking account and automatically deposits them into your retirement investment. This is done through weekly monitoring where Betterment Smart Deposits looks at your weekly expenses and allocates how much you need. A determined sum of access funds are then transferred from your checking account to your investment account.


Betterment Investments offers three tiers to you: Builder, Better and Best. Builder offers 0.35% of average balance with $100 per month direct deposit required. Better offers 0.25% of average balance with a $10,000 minimum account balance. Best offers 0.15% of average balance with a $100,000 account balance minimum.

Feature of Betterment

Apart from being completely self sufficient in its investment plans, goals, strategies, objectives and projections, Betterment offers portfolio rebalancing, tax loss harvesting, goal setting, and automated deposits. Your funds are situated where they will be optimized and where they use low cost, liquid ETF's. You ultimately have complete control and the ability to maneuver your funds in any way you see fit with Betterment. Betterment simply suggests the best possible options for optimizing your funds. You maintain the freedom to adjust, change, eliminate or add anything you want to your investments whether it’s risk preference or smart deposits.

Betterment lives up to the utmost in security so rest assured that your accounts and investments are in compliance with the banking industry standards.

This post deals with:

... and focuses on:


Posted on May 18, 2016.

How to Build Growing Income Streams with Dividend Growth Investing

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This is a guest contribution from Ben Reynolds at Sure Dividend. Sure Dividend uses The 8 Rules of Dividend Investing to build high quality dividend growth portfolios.

Here’s a novel concept… Your investments should pay you money every year. Even better, your investments should pay you more money every year.

There was a time when most investors thought this way – and so did publicly traded companies. The S&P 500’s historical average dividend yield is 4.4%.

But things have changed. Lazy Man at "Let’s Generate Cash" sums the zeitgeist up nicely:

"Sometimes I forget that people once bought stocks to generate cash. Companies would pay out profits to shareholders and shareholders could use that money, to well, buy stuff they need. It was a good little system. I speak of it in the past tense because many companies stopped paying dividends and instead kept the money to grow profits."

Today, the S&P 500 offers investors a dividend yield of 2.1% - less than half of its historical average. You may be wondering “what happened”?

Why Yields Have Fallen

There are various contributing factors. The primary factor is a change in corporate policy. Share repurchases have dramatically increased. Instead of paying money out to shareholders in the form of dividends, businesses are buying back their own stock.

Don’t get me wrong, share repurchases are beneficial. When you reduce the number of shares outstanding, each share remaining entitles you to a bit more ownership of the business.

Share repurchases are great for managements. That’s because management compensation is often tied to share price increases. Share repurchases help to boost share prices – and trigger incentive packages for management... But they do not put cash into the hands of shareholders.

So that’s what happened.

The good news is, there are still many companies that pay high dividends and increase their dividends every year. This article explains how to invest in these dividend growth stocks to build growing income streams.

Where to Find Dividend Growth Stocks

Dividend growth stocks are companies that:

  • Are still growing
  • And paying dividends

Pretty straightforward, right? They pay growing dividends over time. The best dividend growth stocks increase there dividend payments every year.

The amazing benefits of compounding this creates will be discussed a bit later... For now, here are some places you can quickly find dividend growth stocks:

  1. The Dividend Achievers List: 200+ businesses with 10+ years of consecutive dividend increases
  2. The Dividend Aristocrats List: 50 businesses with 25+ years of consecutive dividend increases
  3. The Dividend Kings List: 15+ businesses with 50+ years of consecutive dividend increases

These are all great places to find high quality businesses with long histories of paying rising dividends.

Dividend Aristocrats in particular have done well for investors. They have outperformed the market by over 3 percentage points year over the last decade.
Source: S&P Dividend Aristocrats Factsheet

The real benefit to owning these businesses is how they increase your dividend income over time.

Investing Monthly & Compounding

You don’t have to be rich to start your dividend growth portfolio, you just have to be consistent. It pays to invest monthly.

Imagine you invest $600 a month into different dividend growth stocks. Now imagine that (on average) you are investing in businesses with 3% yields that increase their dividends by 6% a year. You are also reinvesting your dividends back into the market.

These are very reasonable targets when selecting from the lists discussed earlier.

After 1 year, you will have invested $7,200. Your investment will (on average – remember, the market fluctuates) be worth $7,492. That extra $292 is from both growth in the businesses you invested in, and the dividends they pay.

Now if you stopped saving after year 1 and spent the dividends on random expenses you’d get $225 in extra income every year… But you’d get a 6% raise (on average) every year without having to invest any extra money. The next year, you’d get $238, then $253, and so on. Your investment would keep paying you more every year.

That’s because the underlying businesses in which you invested in keep growing and raising their dividends.

That’s what would happen if you only saved one year and then stopped reinvesting your dividends. If you keep saving and reinvesting your dividends, you’d be a millionaire in 30 years – and would be generating over $30,000 a year in passive income that would still be growing every year.

Ideas To Start Your Portfolio

Here’s how you can start your portfolio.

  • Step 1: Get your budget in order. Start saving, today.
  • Step 2: Open a discount brokerage
  • Step 3: Being investing!

You probably have some questions on step 3. There’s 2 ways to do this. The ‘easy way’, and the ‘cost effective way’.

[Editor's Note: I'll give you what I believe is the perfect combination of "easy" and "cost effective" at the end of the article. You don't want to miss it.]

The easy way is investing in an excellent dividend growth ETF. The Dividend Aristocrats ETF (NOBL), the Vanguard Dividend Appreciation ETF (VIG), and the First Trust Value Line Dividend ETF (FVD) are all very good choices.

The downside to all these ETFs is that they have expense ratios – you have to pay every year to invest in them. You also don’t get to select what businesses you want to invest in. The upside is you save a lot of time.

The cost effective way is to select businesses from the 3 lists outlined earlier in this article. I recommend looking for the following:

  1. Businesses you understand well (the Coca-Colas and Procter & Gambles of the world)
  2. Stocks trading below a price-to-earnings ratio of 20 (at most), and preferably under 15
  3. Stocks with long histories of dividend increases every year (I prefer 25+ years)
  4. Stocks with dividend yields above 3%

If you invest in businesses like this every month, over time you will build a well-diversified portfolio of high quality dividend growth stocks trading at fair or better prices.

[Editor's Note: I highly recommend readers look into Motif Investing which is a perfect combination of easy and cost effective for dividend investing. Read my review here.]

This post deals with:

... and focuses on:

Income Growth, Investing

Last updated on May 3, 2016.

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