Net Worth Update

May was a month of change for my personal economy and while I don’t always love change, I work to keep myself mentally ready for it because change is inevitable. This month I moved from Capital One/ Sharebuilder to Ally Investments.

While the process was painless, it was still a long process from start to finish. If you are reading this blog for the first time, I mentioned a few months back that Capital One sold off the investment arm of its business and has decided to focus solely on its banking and credit card businesses. The result, anyone with a Capital One investment account will automatically be moved to E-Trade by the end of the year.

Capital One was great because it was dedicated to the small investor. They provided automatic trades for $3.95/month. And if you signed up early enough the trades were only $1.00. The other great thing about Capital One, when they did eventually raise prices, the rate you received when you initially signed up was always grandfathered in. I know a lot of people that managed to build substantial and well diversified portfolios with Capital One. But alas, all good things do come to an end.

The truth is brokerages are not able to swindle customers out of millions with hidden management and trading fees, anymore (they still do but it’s not as easy as once was). The internet has done a great job of exposing most of their schemes. And with consumers being able to share information instantly, this has forced banks and brokerages into permanent price wars, if they want to compete for our business. So, the brokerage business just isn’t that lucrative anymore.

Why didn’t I just go with E-Trade? E-Trade is big and famous but it costs $7.95 to buy or sell a stock. They do offer packages that are cheaper but the packages only make sense if you are a high-volume trader (more than 25 trades a month). I only trade once or twice a month, at best. Maybe in the future that will change, but I still don’t see myself trading 30 times a month in any scenario. Then there was the money market account paying 1.60% with a $10,000 minimum. If your balance dropped below $10,000, your interest rate would drop to 1.00%, which is a big turnoff.

Why Ally Investment? Ally Investment costs $4.95 to buy or sell a stock and their money market rate is currently 1.65% with no minimum balance required. You earn the current interest rate whether you have $200 or $20,000 in the account. They also have excellent research tools and they do a great job letting you know when the stocks you own are about to payout dividends, how the much the dividend is going to be, and they provide the Date of Record (DOR). The DOR is the last day you can purchase additional stock and have it included in that quarters’ dividend payout.

The long transfer process from Cap One to Alley created two issues. First, I missed out on being able to purchase stocks by the DOR for a couple of stocks. This couldn’t be avoided because the statement of holdings needed to match the current holdings (for proof of ownership) or I would have to wait another month before making the transfer.

Second, I received dividends after the account assets transferred and I forgot to call and let Ally know I wanted all dividends reinvested. You are not able to purchase fractional shares but when dividends are received and automatically reinvested you end up with fractional shares.

An example of that their value is, when I transferred the account they would only transfer full shares and they liquidated the fractional shares which came to about $89. But I missed out on the dividends I would have received from those fractional shares. The worst part is some of those fractional shares were only one dividend payment away from being one whole new share.

Okay, time for the net worth update:

May 2018 Net Worth Update

Assets

SEP IRA:                    $7,348.10

IRA:                            $11,477.93

CASH:                        $3,108.07

MM/E Fund:               $5,908.14

Stocks (taxable)         $4,894.77

I-bonds:                      $9,900.41

Investing fund:            $250.00

Business                     $3,046.73

 Liabilities:

Credit Card:                 $5,750 @ 0%

• The SEP IRA has been retreating right along with the market but automatic monthly deposits have kept it going in the right direction.
• Traditional IRA has also kept stride with the market but once again auto deposits have kept it trending upwards, slightly.
• Cash holdings have increased by a little over a hundred since last month
• I-Bonds are on their way to a double figure milestone
• Finally, the old net worth is also headed to a milestone. It should be at the $50,000 mark in the next couple of months if the market cooperates just a little