I am currently working on the Cheaters Guide to all things IRA. I know you could probably google most of the information contained in the guide but my goal is to put it all in one place written clearly and concisely. This Cheaters Guide to IRAs will hopefully help you better understand what your employer may be offering you and for planning purposes how to best allocate your money now and down the road.

  In the Cheaters Guide to IRAs I will be covering the Roth IRA, Traditional IRA, 401(k), Roth  401(k) , and Non-Deductible IRAs. In a separate addition for the self-employed I will cover SEP IRAs and SEP 401(k)s . Even if you already have a good understanding, this reference should come in handy when you have a question and are not sure of the answer off the top of your head. I hope you will find it useful and will be able to download it shortly. Please leave any suggestions on this or anything else you see on the site that could be improved under the suggestions category. As always please be constructive and always do your own necessary due diligence before making any investments.

Thank you,
Matt

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   As I continue my quest to financially secure my future, I find myself searching for a safe but beneficial place for my hard earned dollars. This quest is partially sparked by my recent following of Ramit’s I will teach you to be rich blog and book. Also, it plays to my own philosophy of getting the most possible from every one of my hard earned dollars. Now granted any of these things can change as the underlying bank sees fit. But luckily that helps me as well because it means I can write additional posts updating everyone on the current rates and who has the highest.

   Currently as of June it seems that the best option is Chesapeake Bank’s Clear Sky checking and savings. This is entirely based on numbers which currently stand at 1.74 percent for Checking with a minimum balance of $1 and no monthly fees. The Clear Sky Checking account also includes waiving up to $20 of foreign bank ATM fees. Like many other online banks they offer free Bill pay as well. Ramit recommends Charles Schwab which from the demo looks very good but they only give you .75 percent interest. Granted neither of these options are even keeping up with inflation but why not get the 1.74 percent  for the same effort.

   The nice thing about Chesapeake Bank’s online offerings is they have one of the best Savings interest rates as well. With the Clear Sky Savings you get an annual percentage yield of  2.05 percent . As with their checking there is no fees and a minimum balance of a $1. Here is a post with varied comments to help you with your research, CLICKME. One of the comments includes the link to an outside party who rates banks and apparently they gave Chesapeake 4 stars. Someone mentioned that they compound monthly as being a negative but the fact is if you are comparing APY to APY , then daily versus monthly will have very little impact. Here is a great article that gives a more detailed example at MyMoneyBlog.com .

   To conclude my post, the Clear Sky savings and checking from Chesapeake Bank allows you to get a good interest rate and have your money in one place. You may want to say, “But Matt I have found better rates, what about SmartPig.” I checked it out and even though they are offering 3.05 percent it seems like they are looking to lock you in for a period of time. Because of this it does not see very useful since it appears they would discourage transferring money in and out before your savings goal has been reached. If you agree or disagree please let me know, and especially leave a comment if you know of better deals that we can utilize.

Matt

Small banks are now trying something to get depositors from the big names that have been decimated in the current economic crisis. They are offering something called Rewards Checking. Basically the promotion is, if you open an account and follow certain guidelines they will pay between 5% to 6% interest. In addition other banks are offering a sign up bonus. The amount varies but is roughly anywhere from $25 to $200 in cash or bonds.

    This can obviously be a good way to take advantage of the current environment to earn yourself a little extra cash. Remeber these two important things before signing up for any of these promotions. One, you must follow their requirements exactly or forfeit all the perks. Two, these are PROMOTIONS and in the fine print they remind you that they can change at anytime. What does this mean? As soon as things start improving and the big guys stop hogging the cash, these banks will have to turn your promotional account into a normal checking account to stay competitive. This of course is my opinion but please be aware these deals are not guaranteed for any amount of time. As always, I am constantly looking for ways for motivated people like myself to earn that little bit extra on our hard earned cash.

   You will also see that they all have a cap on the amount that can earn the Rewards rate. The cap for all of the banks mentioned in this post is $25,000. If your account exceeds that amount you will be paid whatever pitance they offer on the balance in excess of the cap. I provide the rates as of March 9th and the links for the aformentioned banks below. To see who is offering the sign up bonuses follow this link, Cash Bonus, and scroll down to the Cash Bonuses table.

Southern Missouri Bank   6.01%

Rocky Mountian Bank       6.01%

First Robinson Savings Bank    6.01 %

First Bank Des Moines  6.00%

Bank Of Blue Valley       5.51%

*Data from Money-Rates.com as of March 9th

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   The stock market ends the day almost up 380 points. I know most of us out there , including myself look at this with very little to no confidence. However, at the same time I would like the bleeding to stop.  I am young but the punishment that my 401(k) and investment accounts of friends has taken has been just as painful.

   Why did the stock market rally today? One big reason noted was the CEO of Citigroup, Vikram Pandit, announced that Citi has seen profits in the first two months of this New Year. Now I choose to take this with a grain of salt, but at the same time I would like to think the amount of money thrown at them is finally making a difference.

   AT&T announced that they are going to add 3,000 jobs to their broadband and wireless service. They also said they are on track to maintain last years budget of approximately 18 billion in spending. As a side note if you are looking for a stock still paying a solid dividend, AT&T is yielding 6.90% pay $1.64 per share. ( Note, for those investing, Verizon is yielding 6.40% with a $1.84 per share dividend. They continue to maintain a stronger balance sheet as well. I would not buy both and am not saying to purchase either without doing your own due diligence. )

   Finally, it has been leaked that the Fed may be reinstating the Uptick Rule. This is important as it was allowed to expire in 2007. Since then shorts have punished the financials and anyone else they could throw in their net. I am all for making money but since the SEC has proven itself mostly incapable of regulation speed bumps need to remain in place to slow these guys down.

   Just for your information, gold is down and oil is up. Take from this what you may. I am still investing, and learning. This lesson has been more painful than most but I know I cannot time the market. The current circumstances are more of an anomaly than the norm. I think if I could do it again I would hold more in cash. Unfortunately, cash offers such horrible rates now. Ironic, people are finally saving and the interest rates are so low. Any ways , fingers cross we have more positive news tomorrow. Take my poll at the end of this post

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   When planning your goals for 2009 knowing how much you can save is just as important as how much you want to save. If you are able to take advantage of the full limit of different programs, it is useful to know what the limits are currently. I wish you the best of luck with your goals and a very prosperous new year.

401(k) Limit
$16,500
( 50 and older can add a catch-up of an additional $5,500 )

Health Savings Account ( HSA ) Limit
$5,500

 
Traditional and Roth IRA Limit
$5,000
( 50 and older can add a catch-up of an additional $1,000 )

An important part of building wealth is obviously saving and investing. We are one of the worst nations in the world when it comes to saving. Please remember that the following is only my opinion and for reference only, not advisory purposes.

    The federal lending rate is zero , thirty year mortgage rates are back down to five and a quarter percent but what can you get for saving your hard earned cash? I am going to go from the perspective that our initial principal we have to save is a small amount , one thousand dollars . You may have much more and that is excellent.

    Let me just preface the following information is for those who do not want to put any principal at risk. The following accounts are FDIC insured up to the current $250,000 and then the $100,000 limit once the former sunsets. It is also important to note that they do not have any sneaky account fees and the minimum to open and maintain the account for each is a dollar.

FlagStar Bank – 3.00 % / $1.00 min ( as of 1 - 09 )
 Troy, MI
 Learn More

GMAC Bank – 3.00 % / $1.00 min ( as of 1 – 09 )
Midvale, UT
Learn More

iGObanking.com – 3.08 % / $1.00 min ( as of 1 – 09 )
Lake Success, NY * Division of Flushing Savings Bank
Learn More

FNBO Direct – 2.80 % / $ 1.00 min ( as of 1 – 09 )
Omaha, NE
Learn More

Amboy Direct – 2.79 % / $ 1.00 min ( as of 1 – 09 )
Oldbridge, NJ
Learn More

    Yes , I am aware that there are other accounts and investment vehicles with higher yields , but none that are insured by the FDIC and none that only require a minimum investment and balance of a dollar. It is important to note for this post that inflation was reported in November 2008 at 1.1 % and historically averages about 3.45 %  ( Average from 1913 - 2007 using data from Bureau of Labor Statistics ) . You want your money to, at the minimum match inflation and obviously beat it if you hope to build wealth successfully.

    I think most people are wondering at this point what is going on. It seems that our economy and business as we know it continues to crumble. Major banks and investment firms have faded into history. Now, the wolf is at the door and we are all left to wonder if it will hold.

    Many people will and have lost their jobs, many others have lost their retirement. Will punishing companies that are struggling help or taking back wall street bonuses put the $100s of billions of dollars we have lost back in to the market ? The easy answer, no.

    The really enemy here , the thing we should be most angry with is with our regulators and commitees that were created and paid to provide oversight. The problem is everyone had their hand in the cookie jar, and when times were good, it was one big cookie jar! Like any good snack it taste good at the time but soon you are hungary again.

    In this instance the cookies were mortgages that increasingly were given to people who did not have the means to repay such obligations. And not only did they not have the means but they were also given bad loans with outrageous rate resets. Money was also given freely to speculators, more often then not people with very little experience , who were looking to ride the gravy train.

   Lets fast-forward to the presence though because what is done is done, we just need to fight for tighter regulation going forward. Otherwise , as they say, ” history is doomed to repeat itself.”  A brief summary to provide some scope of our current situation; Bear Stearn’s is gone, Lehman Brothers is bankrupt, Washington Mutual is gone, Merrill Lynch will probably merge with Bank of America, Indy Mac is gone, Fannie Mae and Freddie Mac our in conservatorship, the government has more or less bought AIG, and Citibank has written off billions of dollars in assets.

   Now I hear people talk and I think many have this perception that in the past couple years this has happened. I think George Bush has let us down just as much as the next guy, but these companies have been operating dangerously for years in order for them to have so much of their companies worth tied up in assets that have no collateral. Greed , and the constant lack of the SEC to ensure that common shareholders are protected from poorly run companies. Especially those capable of halting the entire U.S. economy.

   What’s the good news you are wondering. It is a great time to investment. Their are some such as General Electric and Bank of America that have hit some real lows. Also, Research in Motion got hammered with a downgrade last week that as a technology person is completely unjustified. It is like their is a file sale in the stock market and the people with long-term vision will profit handsomely. *PLEASE NOTE THIS IS NOT A RECOMMENDATION TO MAKE AN INVESTMENT WITHOUT YOUR OWN DUE DILIGENCE AND OR SEEKING PROFESSIONAL ADVICE.

   On that note, I believe it will get worse before it gets better. I believe paying off debt is now more important than ever. I do think the bailout plan will pass and regardless of who gets elected our taxes will go up. Between the bailout plan, the war and the overall lack of financial control in Washington, there is no other way for this nation to continue operating unless we generate more cash. With that please see my poll below and cast your vote.  -Matt

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     As if on queue oil is already up $2 before the market open. This time I guess it is some thing going on in Nigeria.  As they say , if it is too good to be be true it probably is. So oil is heading back up which is no surprise to me. Like I said the hedge funds and market movers likely sold it off so they could move the price down to move it back up. As such i would not do your happy dance yet.

SINGAPORE (AP) — Oil climbed back above $130 a barrel Friday in Asia as news of an output cut in Nigeria helped to halt the steady decline in prices that began three days ago.

Eni SpA said Thursday that it had shut down pipelines carrying 47,000 barrels of oil a day after a “sudden drop of pressure.”

A Nigerian military official said an explosion had damaged an Eni pipeline in the country’s oil-rich south early Thursday, although he didn’t know how severely.

“I can confirm that there was an explosion, but we don’t yet know if the pipeline was vandalized or if it was an accident,” Col. Chris Musa, the head of the Bayelsa State military, told The Associated Press.

Eni said in a statement that the causes of the incident were unknown but that it had already call in units to start repairs.

“A lot of the threat to Nigerian production has already been priced in, but that explosion may create some interest,” said Mark Pervan, a senior commodities strategist with ANZ Bank in Melbourne.

Nigeria’s major militant group – the Movement for the Emancipation of the Niger Delta – denied any involvement in the blast. Armed gangs, some with political motives, regularly attack oil installations in Nigeria’s southern river delta region.

Attacks on the region’s oil industry infrastructure in the past two years have slashed oil output by almost a quarter in Nigeria, Africa’s top crude producer. The instability has helped push worldwide crude prices to historic highs.
Money.Cnn.Com – Click for Complete Story