Personal Finance Blog By MoneyRates - January 2008
An Online Bank Delivering High Rates on Deposits
January 11, 2008
Umbrella Bank is the online division of New South Federal Savings Bank (FDIC# 32276) a 75-year old bank based out of Alabama (See FDIC Report here). Umbrella Bank through their website Umbrellabank.com has been offering deposit rates ranking in the top 1% of all FDIC banks for over 5 years. Customers of UmbrellaBank have reported good experiences with their customer service and relative easy (by banking standards) in transferring funds out of UmbrellaBank. The recent rate cuts have not yet reduced some of the excellent deposit rates currently offered by the bank.
Current Deposit Rates (as of January 11, 2008):
Green Day Savings Account (<$25,000): 4.56%
Green Day Savings Account ($25,000-$74,999): 4.75%
Green Day Savings Account (+$75,000): 4.93%
Money Market Account (+$1,000): 5.00%
Regular IRA Money Market Account (+$1,000): 5.00%
Education IRA Money Market Account (+1,000): 5.00%
90-day CD ($1,000 minimum): 5.10%
180-day CD ($1,000 minimum): 5.17%
1-year CD ($1,000 minimum): 5.02%
IRA 1-year CD ($1,000 minimum): 5.02%
For more information or to open an account visit umbrellabank.com
Updated bank rates at money-rates.com.
Social Investing Sites
January 8, 2008
Social investing sites give investors a new way to invest their money, as socially-conscious lenders, either through small loans to third-world borrowers (Microfinance) or through peer-to-peer lending (Social Lending). Both types of social investing are aimed at helping entrepeneurs thrive. The sites below have been reviewed by money-rates.com:
Prosper.com
Prosper has 490,000 members and offers loans from $1,000 to $25,000.. If you are a borrower and your loan is funded, you will be charged a percentage of the amount borrowed (1% -2%) or $25, whichever is greater, depending on your credit grade. Borrowers must have a credit score of 520 or higher and pass identity verification and anti-fraud checks) Lenders earned an average of 9.12% APR on AA loans from June 1, 2006 to December 8, 200. Borrowing rates are as low as 7.70% APR.
Zopa US
Currently operating in United Kingdom the company is coming to the United States December 3rd, 2007. Zopa takes lenders who have placed one year CDs at participating credit unions and allows them to bid down loans placed at the same credit union. Zopa charges borrowers a fee of 0.5% of their loan amount and lenders a 0.5% annual service fee. Lenders pay an annual 0.5% fee on the amount they lend to borrowers.Credit score of 640. Borrowing rates currently range from 6.00% to 10.00%
Borrowers complete a loan request and instantly view the interest rate at which they pre-qualify. A minimum credit score of 640 is required. Borrower processing fees range from 0.75% (A) to 2.00% (G). Lenders pick a suitable portfolio of loans to fund. The average portfolio performance according to their site is 12.25%. 7.12% (A1 credit score) to 18.36% (G5 credit score).
MicroPlace is currently the only website that provides everyday investors with the ability to make investments in the microfinance industry. Through MicroPlace, an investor can make investments that earn financial returns while having a positive social impact. The program is designed for the working poor who use their loans to build businesses. They repay their loans and pull themselves out of poverty. Initial loan amounts are small, typically between $30 and $200, and have to be repaid in weekly installments within three to six months. As borrowers establish their credit, they become eligible for larger loans. Most of the loans do not require collateral. Borrowers will often form groups whose members guarantee each others’ loan payments. Some microfinance institutions require borrowers to establish a savings pattern before they can receive loans.
Kiva
Kiva lets you connect with and loan money to unique small businesses in the developing world. By choosing a business on Kiva.org, you can sponsor a business and help the world's working poor make great strides towards economic independence. Throughout the course of the loan (usually 6-12 months), you can receive email journal updates from the business you've sponsored. As loans are repaid, you get your loan money back.
Posted in: Loans & lending, Miscellaneous, Personal Finance
Investing in 2008
January 4, 2008
Many predictive models and some trading platforms like intrade.com are rating the probability of a recession in 2008 at greater than 50%. An outlook this for the coming year makes investing safely more of a challenge. When you consider that interest rates have fallen a point since last year and are expected to fall further, the safety investor has a challenge when finding their right balance of safety and yield in their savings portfolio. As a comparision guide for such an investor money-rates.com reports on a variety of safety-oriented model savings portfolios as listed below:
Model Bank Deposits Portfolio
A portfolio consisting of FDIC-insured bank deposits would achieve the highest possible level of safety as long as an investor limited their deposits at each individual bank to $100,000. This portfolio provides liquidity in the form of checking, money market, and savings accounts and monthly income streams from the certificates of deposit. By adjusting to the latest online bank deals this portfolio consistently outperforms many investments.
2007 Return: 5.43%
Current Yield: 5.32%
Model Money Funds Portfolio
A portfolio consisting of the money market funds issued by mutual fund companies this portfolio provides a competitive yield with limited risk. Mutual fund companies have a long history of protecting their net asset value of $1 in these funds, although investors have no federal insurance. The portfolio adjusts to the most competitive yields offered by major mutual fund companies who stay withing the parameters of typical safety-oriented money market fund investing.
2007 Return: 4.95%
Current Yield: 4.82%
See Portfolio Holdings
Model Commercial Paper Portfolio
A portfolio consisting private debt issued by corporation and available to individual investors. The GE Capital Plus Notes and Ford Interest Advantage act as bank money market accounts with check-writing privileges, but carry no federal insurance or backing. Investments are only backed by the financial stability of the underwriting corporation. The yields are higher due to the inherent risk over Treasuries or bank deposits.
2007 Return: 5.43%
Current Yield: 5.32%
Model Bond Fund Portfolio
A portfolio consisting of short-term government bond funds which typically do not show great price volatility. This model portfolio would allow an investor to hold a diversified portfolio of U.S. Treasuries reducing some of the price risk of holding a single Treasury Bill or Treasury Note.
2007 Return: 4.39%
Current Yield: 4.45%
Model Stock Portfolio
By investing in stocks this portfolio has the most risk inherent and was the only portfolio to produce a negative return in 2007. The portfolio held various bank stocks which provided low price-to-earnings ratios and high dividend yields after their stock price were hammered by the subprime lending crisis. Currently, the portfolio holds Citigroup (C), Washington Mutual (WM), and National City Corp (NCC) as speculative stocks trading well-below their 52-week highs in the anticipation that the banks will recover in 2008. In addition, the portfolio holds a pair of iShares exhange traded Treasury funds to help stabilize the overall return.
2007 Return: -4.99%
Current Yield: 7.38%
Investors should use the above models for information purposes only and should consult a financial advisor for the investment decisions.
