Motif Investing $100 Referral Bonus

A motif is a carefully researched and balanced collection of stocks/ETFs that reflect a specific idea or trend. You can begin by selecting a motif that intrigues you from their catalog. If it is right for you, you can purchase it as is, or customize it to meet your particular investment objectives. It costs $9.95 to buy or sell a motif. Motif Investing Referral Link

You can also build your own motif from scratch, with up to 30 stocks or ETFs of your choice. Just click “Build a Motif” in the top navigation to get started. It cost $9.95 a trade to buy or sell a motif. An interesting option they offer is their Creator Royalty Program. Through this program you can build your own motif and when someone else buys the motif you created you get a royalty of $1 paid at the end of each quarter. You aren’t likely to get rich from building your own motif, but it is a nice way to make a little extra money. If you are already planning on building a motif for yourself, you might as well sign up for the Creator Royalty Program and make a little extra money.

To make this even a better deal Motif Investing is currently offering a couple of bonuses for signing up. I think the referral bonus is the best deal. If you sign up through my referral link you can get a $100 bonus for funding it with $1000 or more and executing at least one trade. This is a pretty good deal and I signed up through a referral link myself in order to get the $100 bonus. Here is my referral link if you would like to sign up. I will make money for you signing up as well so I appreciate any signups through my link. If you would rather get a link by email just leave a comment and I will send you a referral link.

They also have a different bonus that is available through the affiliate link below. This deal isn’t quite as good since it requires more trades. If for some reason you don’t want to go through my referral link this is another option.


Letting Compound Interest Work for You

The rich seem to keep getting richer without having to work harder than anyone else. But just how do they do that? One of the secrets the wealthy use to create more wealth is to invest their money wisely. In fact, they even earn more money from the interest on the money they’ve invested. Surprise! Money can grow on trees after all.

You can do the same with your money by depositing it into accounts that pay compound interest. Here is how compound interest works and how it benefits you and your finances.

Let’s begin by looking at how basic interest works. Basic interest is paid on the amount deposit into your account. Even when interest is applied and the amount in your account grows, the interest is still only applied on the principal – the amount without the interest. You won’t earn a lot this way because you’re only earning interest on the principal amount.

It is much smarter to put your money in an account that pays compound interest. This is where you can really watch your money grow, and make more money from your initial deposit.

Compound interest is basically interest that is collected on the original amount you deposited plus the interest that has already been applied to that amount. So, whenever interest is applied, the amount of interest is added to the principal for the next time interest is applied. Unlike basic interest that is applied only to the principal, compound interest is applied to the entire amount in the account, not just the principal. The act of applying interest is also known as “compounding.”

Your money can earn more in a compound interest account than in other types of accounts because you’re earning interest on a greater amount of money each time the interest is compounded. This is a very smart way to invest your money and watch it grow and even double.

You can find out how long it will take your money to double in a compound interest account by applying a very simple calculation. Take the interest rate you’re earning for your money and divide it into 72. For example, if you’re earning four percent interest, you would divide four into 72 and learn that it will take 18 years to double your money. If your money is in an account that pays six percent compound interest, it would take 12 years to double your money.

These examples illustrate how your money will be compounded on an annual basis. Some financial institutions will compound your interest on a more frequent basis, such as quarterly or monthly. Some even compound it daily.

Putting your money in an account that will earn compound interest is a wealth-generating secret you can’t afford to neglect. There is no easier way to increase your wealth than just letting your money sit there and watching it grow.

Investing With Lending Club

Since savings accounts and certificates of deposit have average interest rates of less than 1% right now, it is tempting to look at other places to put your cash in order to get a better rate of return. One possible place to invest your money for a better return is Lending Club Investing. The median rate of return at Lending Club for loans between 12 to 18 months old is 7.7%. Of course, there is also much more risk investing in peer to peer loans than there is just stashing your money in an FDIC insured savings account.

I have invested with Lending Club in the past and was very pleased with my results. My returns were about 10%, which is better than average and probably was a result of being lucky. You shouldn’t expect to get similar returns, but getting better returns than a savings account is very likely. If you do invest with Lending Club you should make sure to spread out your loans. You can invest as little as $25 in a loan. That is how I made my investments. I broke up my investments to $25 a loan so that even if a particular loan went bad the most I would lose in that loan is $25. I did have some loans go bad and if you invest in very many loans you will likely have some loans default as well. If you are diversified enough with your loans though, you should still have a good rate of return even if you have some loans default. On the Lending Club site they show that having 100 loans or more greatly reduces risks in your returns.

If you have $5000 or more to invest you can use PRIME to invest for you. Picking loans can take quite a bit of time, but using PRIME makes the process automatic. You just set your investment criteria and it will do the investing for you.

If you would like to learn more about Lending Club Investing you can just click one of the affiliate links in this post or the one below.

Motif Creator Royalty Program Plus $100 Referral Bonus

A motif is a carefully researched and balanced collection of stocks/ETFs that reflect a specific idea or trend. You can begin by selecting a motif that intrigues you from our catalog. If it is right for you, you can purchase it as is, or customize it to meet your particular investment objectives. It costs $9.95 to buy or sell a motif.   Motif Investing Referral Link

You can also build your own motif from scratch, with up to 30 stocks or ETFs of your choice. Just click “Build a Motif” in the top navigation to get started. It cost $9.95 a trade to buy or sell a motif. An interesting option they offer is their Creator Royalty Program. Through this program you can build your own motif and when someone else buys the motif you created you get a royalty of $1 paid at the end of each quarter. You aren’t likely to get rich from building your own motif, but it is a nice way to make a little extra money. If you are already planning on building a motif for yourself, you might as well sign up for the Creator Royalty Program and make a little extra money.

To make this even a better deal Motif Investing is currently offering a couple of bonuses for signing up. I think the referral bonus is the best deal. If you sign up through my referral link you can get a $100 bonus for funding it with $1000 or more and executing at least one trade. This is a pretty good deal and I signed up through a referral link myself in order to get the $100 bonus. Here is my referral link if you would like to sign up. I will make money for you signing up as well so I appreciate any signups through my link. If you would rather get a link by email just leave a comment and I will send you a referral link.

They also have a different bonus that is available through the affiliate link below. This deal isn’t quite as good since it requires more trades. If for some reason you don’t want to go through my referral link this is another option.


Doing Nothing – The Best Reaction to a Falling Market?

In my post last week I shared that I had moved my money out of my bond fund. A record amount of money was moved out of bond funds as other investors reacted to falling prices. A lot of people took their money out of the stock market in May when the market dropped sharply. According to a blog post at Betterment.com the smartest thing to do during a market dip is nothing.

They share that a surprising 98.7% of Betterment investors didn’t withdraw money during that time. The post shares four lessons to be learned from the recent decline. The first lesson is that recent declines do not predict future declines. Another lesson is that you should pre-act rather than re-act. The article also reminds you of the tax implications of moving your money out of the market. And finally, you need to consider that when you cash out you will eventually need to figure out when to get back in the market.

These are all valid points. I don’t need to worry about the tax implications since my money was in an IRA. Only time will tell whether moving my money out of the bond fund was a good move or not. What do you think, is doing nothing the best move?

Investing your money with a company like Betterment can make it easier to keep your emotions out of investing since they allocate the money for you. If you would like to find out more about Betterment or open an account just click on one of the affiliate links in this post or below.

Getting Out of Bond Funds

Bond funds are losing a ton of money since interest rates are rising and bond prices are falling. Many investors are moving their money out of bond funds.  A record amount of money was moved out of bond funds in June.  I have moved my money out of bond funds as well but I probably should have moved my money out of bond funds a few months ago.  Since I knew that my bond fund would decline in value when interest rates started rising again and I knew that interest rates would eventually have to rise I switched the bond allocation of my portfolio to a short term bond fund to lessen the eventual loss.  If I would have instead moved my money completely out of bonds and into a money market fund I would have saved myself several hundred dollars.  Of course, it is always easier to see what the correct move is in hindsight.  I’m not a proponent of market timing in general, but since it seems likely that bond funds will continue to decrease in price for a while I’m staying out of them until I think they have bottomed out or are at least close to bottoming out.

I need to figure out what to do with the bond portion of my portfolio.  I currently have it in a money market fund.  That is not a great option though, because the fund is paying basically 0% interest.  The only thing having my money in a money market fund does for me is ensure that I don’t lose money.  Although I’ll still be losing money when inflation is taken into consideration.  I don’t want to have 100% of my money in stocks so I’m not sure where else to invest the money.  Unfortunately, the bond portion of my portfolio was in my IRA with a mutual fund company and they have a limited selection of funds available.  I’m thinking that I might put that money into a stock mutual fund and use my TradeKing.com account to invest new money in something other than stocks or bonds. What do you think I should do with the bond fund money? Invest in stocks, leave it in the money market fund, put it back in a bond fund, or something else?

E TRADE Open an IRA and Get up to $600 Bonus

Open an IRA at E*TRADE Securities and Get up to $600 You can receive up to $600 when you open an IRA at E*TRADE. Offer valid for one new E*TRADE Securities Individual, Joint or Retirement account opened by 12/31/2013 and funded within 60 days of account opening with at least $10,000. Other restrictions may apply.

You will receive up to 500 free trade commissions for each stock or options trade executed within 60 days of the deposited funds being made available for investment in the new account (excluding options contract fees). You will pay $9.99 for your first 149 stock or options trades and $7.99 thereafter up to 500 stock or options trades (plus 75¢ per options contract). Your account will be credited for trades within a week. Account must be funded within 60 days of account open.

Credits for cash or securities will be made based on deposits or transfers of new funds or securities from external accounts made within 45 days of account open, as follows: $1,000,000 or more will receive $2,500, $500,000 – $999,999 will receive $1,200; $250,000 – $499,999 will receive $600; $100,000-$249,999 will receive $300; $25,000-$99,999 will receive $200. Your account will be credited within one week of the close of the 45-day window.

You will not receive cash compensation for any unused free trade commissions. Excludes current E*TRADE Financial Corporation associates, and non-U.S. residents. This offer is not valid for Unincorporated Organization or E*TRADE Bank accounts. New funds or securities must remain in the account (minus any trading losses) for a minimum of six months or the credit may be surrendered. One promotion per customer. E*TRADE Securities reserves the right to terminate this offer at any time. Consult your tax professional regarding limits on depositing and rolling over qualified assets.

If you would like to open an account or get more information just click on the affiliate link below.

Why I Bought KMI

The most recent addition to my dividend stock portfolio is KMI. Kinder Morgan Inc. or KMI is engaged in pipeline transportation and power storage. It is the chief supplier of the colorless, odorless gas known as carbon dioxide which is utilized in the improved oil retrieval jobs in North America. Kinder Morgan Inc. is an American company.

I have been interested in investing in Kinder Morgan for a few years but didn’t want to invest in KMP since it is a limited partnership unit and issues a K-1 which could complicate my taxes.  It probably is not that big of a deal to report the K-1 on your taxes but since there are lots of other dividend stocks available that wouldn’t require the extra tax complication I avoided KMP.

Since I first looked at Kinder Morgan they have added the KMI option to allow investing in their company.  This option is not a partnership unit but shares in the general partner interest and the investment is treated like a regular stock purchase.  The KMI option allows me to invest in Kinder Morgan and receive an approximately 4% dividend yield with great potential for dividend growth.  I’m predicting that natural gas will become a much greater used source of energy in the next few years.  Even if I’m wrong I think KMI will at least maintain their dividend and KMI doesn’t need the price of natural gas to rise in order to increase their profits. I’m not an investment expert and I’m obviously biased since I own KMI but I believe it is a great dividend stock to own both for its current dividend yield and its potential for future dividend growth.

Net Investment Income Tax Basics

The new Net Investment Income Tax that went into effect this year is a source of confusion for some investors.  The IRS has answered some of the more common questions about the tax which should help resolve the confusion for most investors.

The Net Investment Income Tax is imposed by section 1411 of the Internal Revenue Code (IRC). The NIIT applies at a rate of 3.8 percent to certain net investment income of individuals, estates and trusts that have income above the statutory threshold amounts.  The NIIT will affect income tax returns of individuals, estates and trusts for their first tax year beginning on (or after) Jan. 1, 2013 calculated using a tax return calculator.

Individuals will owe the tax if they have Net Investment Income and also have modified adjusted gross income over the following thresholds:

Filing Status

Threshold Amount

Married filing jointly

$250,000

Married filing separately

$125,000

Single

$200,000

Head of household (with qualifying person)

$200,000

Qualifying widow(er) with dependent child

$250,000

Taxpayers should be aware that these threshold amounts are not indexed for inflation.

If you are an individual that is exempt from Medicare taxes, you still may be subject to the Net Investment Income Tax if you have Net Investment Income and also have modified adjusted gross income over the applicable thresholds.

In general, investment income includes, but is not limited to: interest, dividends, capital gains, rental and royalty income, non-qualified annuities, income from businesses involved in trading of financial instruments or commodities, and businesses that are passive activities to the taxpayer (within the meaning of IRC section 469). To calculate your Net Investment Income, your investment income is reduced by certain expenses properly allocable to the income.

In order to arrive at Net Investment Income, Gross Investment Income (items described in items 7-11 above) is reduced by deductions that are properly allocable to items of Gross Investment Income. Examples of properly allocable deductions include investment interest expense, investment advisory and brokerage fees, expenses related to rental and royalty income, and state and local income taxes properly allocable to items included in Net Investment Income.

The Net Investment Income Tax is subject to the estimated tax provisions. Individuals, estates, and trusts that expect to be subject to the tax in 2013 or thereafter should adjust their income tax withholding or estimated payments to account for the tax increase in order to avoid underpayment penalties. For more information on the Net Investment Income Tax visit IRS.gov.

Get Started Investing When You Don’t Have a Lot to Invest

If you want to get started investing, but don’t have a lot of money to invest it can be difficult to get started investing because many mutual funds have large minimum investment requirements. Fidelity requires a minimum $2500 investment for most of their taxable accounts and many large fund companies require a minimum investment of $2500 to $5000 to invest with them. That can be a lot of money for a small investor to come up with.

One way to get started investing with a little money is to open an IRA. Many companies have lower minimum investment requirements for their IRAs. You can get started with as little as $1000 at Vanguard for several of their target date retirement funds. I have one of my IRAs at T. Rowe Price and they also allow investors to open an IRA for just $1000 for many of their mutual funds.

Opening an account with a discount brokerage is another way to get started with a small amount of money. I have my other IRA with TradeKing.com which has no minimum investment amount. You can also open an E*TRADE IRA with no fees and no minimums. An IRA with optionsXpress requires just a $200 minimum equity balance. Although, you can open these accounts with a low balance you would want to build up your balance before making trades in order to keep your trading fees reasonable.

You can also open an account with a different type of investment company such as Betterment.com which has no minimum investment and no minimum balance requirement. Money you invest with Betterment is invested in ETFs. When you don’t have much money to invest ETFs can be a good option because many of them have very low expense ratios. When yo don’t have much money to invest you can’t afford to spend much of it on expenses.

One last way to get started investing is with an automatic investing program (AIP). I actually started my IRA with T. Rowe Price by making $50 monthly investments through their AIP. Unfortunately, they no longer offer their AIP. Janus funds allows you to use their AIP with monthly investment amounts of $100 and Buffalo funds also allow you to use their AIP for a monthly investment of $100. If that is still too much, the AIP at Ariel funds and Artisan funds let you make a monthly investment of just $50.

These small investments may not seem like much but they are a start. Getting in the habit of investing now can lead to bigger investments as you make more money. If you wait until you have enough money to invest you might not ever get started investing.