Tips for saving for pet owners...

...or would be pet owners.

Jonesy offers the tip:

"Rescue your pets, don't buy purebreds. They will be better pets anyway."

Jonesy's supporting argument:

And Holly explores pet ownership in great detail.

My family's pet, Bilbo:

I have a pet squirrel that lives in my basement. And last summer I had a family of pet skunks living under my front porch. By pets, in this case, I mean "beasts that torment me."

Squirrels moments before they pried open the suet feeder and robbed a couple of woodpeckers of many scrumptious meals:


I actually did get rid of the animals without paying hundreds for pest removal. With the squirrel, I left the bulkhead open until it got hungry and found its way out (to the bird feeders) and then I sealed up the hole that the squirrel had made (to help me ventilate the basement) with some old bricks I had in the back yard.

With the skunk family (we saw at least three), after several nights of odoriferous entertainment, I simply started filling in the hole they made (to help ventilate the space under my porch). They would dig out or dig back in, depending on where they were when I filled in the hole and share their skunky smell to let me know how much fun they were having re-digging the hole. I did not try and permanently seal it up, because I did not know if they were under there when I was closing the hole and I did not want to trap them under my house. After a few days no new hole appeared so I determined the skunk was skulking off somewhere else and dug deep around the porch- I could then see up into the "den" and saw it was empty. I buried bricks in the ground so that the hole could not be easily re-opened.

I could have paid hundreds to have the skunks trapped and removed, but I paid nothing and have not been bothered again (yet!).

Ok, ok- pest removal has nothing to do with pet ownership, but my beta fish swam off to the great sea out west a while ago and the only "pets" I have now are the coyotes, foxes and hawks that live nearby (maybe there are other reasons the squirrels and skunks are not bothering me anymore).

Coyote sitting in my backyard in broad daylight:

Non-Retirement: Small Cap Blend Mutual Fund

Wylie Pick: Dreyfus Small Cap Stock Index DISSX

Selecting from mutual funds available through Etrade with no load or transaction fee and an initial $2500 investment or lower minimum and subsequent $100 or lower minimums, when looking for a Small Cap Blend fund, I use the Mutual fund screener to screen out options with 3, 4, or 5 stars and find a number of choices.

There are a few index funds and a number of actively managed funds two of which are recommend by Etrade. Like the Mid Cap Blend pick, I am going to pick an index fund in the Small Cap category for a couple of reasons. The Small Cap Growth and Value picks are both actively managed so if Wylie were to actually buy these funds, an index fund would be a good diversification next to these.

More importantly, the managed funds are more expensive, generate more tax exposure and have not consistently out-performed to overcome these negatives.

Allow me to illustrate:


The expenses and the turnover of the Index fund are less than half those of the two actively managed funds.

When you use Yahoo charts to look at the year to date performance of these three funds, the index fund (blue) is off to a rough start. It is upu for the year, but trailing the competition.


Jump back to mid 2002 and buy in and the index fund actually comes out ahead.


Looking at the performance record, each fund has underperformed the other two during one of the periods over 1, 3 and 5 years.

Given the solid long term record, lower expenses and turnover, Dreyfus Small Cap Stock Index is the Wylie pick.

Non-Retirement: Bond Inter. Term Mutual Fund

Wylie Pick: Managers Bond MGFIX

Selecting from mutual funds available through Etrade with no load or transaction fee and an initial $2500 investment or lower minimum and subsequent $100 or lower minimums, when looking for an Intermediate Term Bond fund, I use the Mutual fund screener to screen out options with 4, or 5 stars and find 6 choices.

Click the image for a larger view comparing the funds as of Etrade's data on 3/25/07:


Westcore Plus and Managers are the two 5 star funds and they have both been 5 star funds over 1 year, 3 year, 5 year and 10 year periods.

Westcore Plus Bond has trailed Managers Bond slightly and has slightly more risky holdings (A instead of AA) so despite higher expenses and higher turnover, Managers is the pick for this hypothetical portfolio as it has out performed all along the way and has more management expertise.

What investment records should you keep?

Keep them all.

Lots of financial sites and blogs post articles offering advice about what records to keep in general: bankrate, soundmoneytips, realsimple, even the IRS has made an attempt.

As is often the case, Morningstar has one of the best explanations for why this matters when it comes to investment records.

I keep every monthly statement from my brokerage and have a file over 2 1/2 inches deep to show for it. I wish this was an indicator of massive wealth, but really it is just a symptom of reinvested dividends.


If you put $500 in a growth and income fund and reinvest the dividends and capital gains, each payment- in cents, dollars, whatever, is a transaction on the statement. And at the end of the year, you pay income taxes on those payments, even though they are (re)invested, and not cash in your pocketses. So if you do not have a ton of money (yet!), but still want to diversify broadly and put a small amount of money in a number of funds instead of just piling it all into one, your statements get long.

Some of the new retirement funds like Vanguard Target Retirement 2050 are actually a collection of funds, so you can put all or some of your money in one of these, even if you do not plan to save it until retirement, and diversify that way, but I digress

Some brokerages are no longer sending paper statements automatically and actually charging investors for this 'privilege.' Here is Ameritrade, disclosing its fees:

So if you only get electronic statements, or opt to get electronic only, you have to keep those too. And back them up!

I finally got my 3rd and 4th brokerage account tax statements. One of these adjustments changed how $22.46 was allocated for tax purposes. I waited a month and a half to file my taxes because of how $22... good grief.

So anyway, I sold a fund last year and I knew how much I originally invested, and Etrade does a good job of keeping track of funds that have automatically reinvested since they bought my account from my previous brokerage. My old records, however, did not convert to my Etrade account so I had to go back through my paper records starting in 2000 when I bought the fund to calculate my actual basis. This took me about 3 minutes to do because I had all my records in order and this changed my basis by a couple of hundred dollars which lowered my tax bill enough to buy a decent bottle of wine! Or, if I shop at Trader Joe's, 3 or 4 decent bottles of wine!

So the lesson here is that you should keep your statements, paper or electronic, because your brokerage may be bought by a competing brokerage, or it may raise its fees and you may transfer your account to a better brokerage and all your details may not transfer over. And unless you want to pay the tax man (or woman) for the same profits twice, you'll want to be able to add up your actual basis, not just the amount you originally invested and having your statements handy and organized makes this pretty easy.

Non-Retirement: Foreign Emerging Markets Mutual Fund

Wylie Pick: SSGA Emerging Markets SSEMX

Selecting from mutual funds available through Etrade with no load or transaction fee and an initial $2500 investment or lower minimum and subsequent $100 or lower minimums, when looking for a Diversified Emerging Markets fund, I use the Mutual fund screener to screen out options with 3, 4, or 5 stars and include choices with higher expenses since generally, international funds have higher expenses.

I find three options: Excelsior Emerging Markets UMEMX, Managers Emerging Mkts Equity MEMEX, and SSGA Emerging Markets SSEMX.

Each has outperformed the other two in one of the standard periods used to calculate returns (1 year, 3 year, or 5 year). SSEMX is the only one with a 10 year record (10% average annual return).

I also looked at funds with very high turnover and find Amer Century Emerging Markets Inv TWMIX. It has an astonishing 115% annual turnover. Its one year return is 30%. Compare that to SSEMX at 16.83%.

TWMIX's top holding is an Emerging Markets ETF.


Its third top holding is a company that is the second biggest holding of that ETF.


Gazprom has been creating billionaires in Russia for several years as it is basically the largest 'privatized' company in Russia and is the biggest extractor of natural gas and the third biggest oil company (according to somebody who wrote it in wikipedia... hehe) . Note that Gazprom is listed under the country 'United Kingdom' on these charts. Welcome to the wild world of trying to invest in international businesses in emerging markets. I'm guessing this discrepancy is because shares of Gazprom are traded on the London stock exchange, but I could be wrong.

Regardless, TWMIX has an expense ratio of 1.85% compared to SSEMX at 1.25%. If I wanted to buy an ETF, I would pay $10 for the transaction, not pay some fund manager 1.85% annually to do it for me. And though TWMIX has been on fire recently, it is making up for lost time as it trails SSEMX over 5 years. If you want to chase hot returns, feel free to look into TWMIX. But TWMIX's high expenses and turnover steer me away.

So the other funds I originally pulled up also have expenses 1.75% or higher. MEMEX has a 3 star rating while SSEMX has 4.

And UMEMX has trailed the average Emerging Markets fund recently.


SSEMX with low expenses and a good long term track record looks like the best offering for this portfolio.

Non-Retirement: Mid Cap Value Mutual Fund

Wylie Pick: Marshall Mid Cap Value Inv MRVEX

Selecting from mutual funds available through Etrade with no load or transaction fee and an initial $2500 investment or lower minimum and subsequent $100 or lower minimums, when looking for a Mid Cap Value fund, I use the Mutual fund screener to screen out options with 4 or 5 stars and find 4 options.

I'm bummed about this pick. When I am done building the entire hypothetical portfolio I'll note which ones I own and which different fund I own instead, if I don't own the one recommended for this portfolio. In each case I am picking a fund I own or one I would buy instead if I was looking for a fund in that category today. With this category I will be noting that I own Janus Mid Cap Value Inv (JMCVX). I wish it was still open to new investors so I could recommend it. It has cheaper expenses and good long term performance.

Actually, I do not think this fund is closed. Morningstar makes no mention of it being closed. More to the point, Janus does not indicate they have closed this fund on their site. The Janus Small Cap Value fund is closed. And the Mid cap fund is huge as far as how much money it has under management so I would not personally be disappointed if it did close. But folks... closed it ain't.

Here is Etrade's info for fund JMCVX:


If anyone wants to call Etrade's customer service, and try to get to the bottom of this, feel free, but I would not expect much success. In fact, if this kind of discrepancy drives you nuts, you may want to pick a different brokerage as I find this kind of inconsistency on a pretty consistent basis with Etrade (of course I have not used a brokerage that I would recommend instead of Etrade as long as you meet the minimum balance requirements). I do find though, that the inconsistencies are consistently inconsistent. By that I mean, they may be wrong about the fund being closed, but I bet they are wrong about it throughout their site including the tool that would actually allow or restrict your purchase.

Anyway, one of the 4 funds available for purchase, is not your general Mid Cap Value fund. Fortunately its title indicates this: Icon Materials (ICBMX). Looking at the Industry allocation, you can see that this fund is focused on the Materials sector. If I add sector funds to this hypothetical portfolio, I will check this out again.


The remaining three funds have similar returns. But only one of the three (MRVEX- The one in the middle!) is solidly invested in Mid Cap companies (Medium Market Capitalization) while the other two (SMCDX and HRSVX) have more invested in non-medium size companies than they do in medium sized ones.


Fortunately it also has the lowest expense ratio so that makes it an easy choice since we are building a portfolio of funds that are more or less true to their categories and have lower than average expenses: Marshall Mid Cap Value Inv (MRVEX).

Non-Retirement: Foreign Large Cap Growth Mutual Fund

Wylie Pick: Janus Overseas JAOSX

Selecting from mutual funds available through Etrade with no load or transaction fee and an initial $2500 investment or lower minimum and subsequent $100 or lower minimums, when looking for a Foreign, Large Cap Growth fund, I include higher than normal expenses and turnover in the Mutual fund screener to find seven options.

One of the seven funds is picked by Etrade as an "All Star" fund. Basically Etrade identifies funds they like in each category and flags then as All Stars. Several of my picks so far have also been picked by Etrade as All Stars but in this case, I think there is a better option. They recommend Excelsior International (UMINX). I like Janus Overseas (JAOSX).

Etrade's pick has a 'moderate' risk assessment while the Janus fund is assessed as 'high' risk.

Just to be clear- investing in this category can be a wild ride. But despite the assessment that UMINX has less risk than JAOSX, the worst one year performances show that UMINX has had a worse one year downward run (-27.43) than JAOSX (-23.89).

And Janus has been very well rewarded for its approach. I by very well I mean spectacularly rewarded.

Since the Janus fund has crushed the Excelsior fund in every period- most importantly the 10 year period, it would have to have pretty high expenses or high turnover or a new manager or something significant to make me think twice about not choosing a consistent winner like this. I do not anticipate that future returns will be this good but a fund with a long track record of tremendous performance has a lot going for it.

Turns out JAOSX has 5 stars from Morningstar, UMINX gets 4. JAOSX has lower expenses: 0.9% compared to 1.5%! JAOSX does have higher turnover- it is 62% compared to UMINX's 26%. The other 5 Foreign Large Cap Growth funds that came up in my search have turnover ranging from 72% to 138%, all higher than JAOSX so I do not mind a little more churn if the performance is this much better.

Janus Overseas' manager Brent A. Lynn took control of the fund on 01-01-2001. Check out this chart (From Yahoo) and look at this manager's first two years! That must have been rough.


The manager of the Excelsior fund has not been at the helm for quite as long but he also started in 2001.

So crushing returns, the lowest expenses, etc. The Wylie pick is Janus Overseas JAOSX.

Government passes law to steal from citizens

So like I predicted, I got four tax statements from my brokerage account.

What a pain.

I received two statements because my old brokerage was swallowed up by my new brokerage and I got two more statements supposedly because recent changes in tax law have made it so difficult for companies to figure out how to report their profits that it takes over two months just to do the math.

That's right- I got home from work- after spending my day doing my part to keep the GDP strong while markets around the globe writhe in agony- to find two updated tax statements.

Thankfully, Etrade had alerts on its site indicating that this would happen so I avoided filing taxes only to have to refile.

And yes- the title of this post is a bit of a stretch, but here is my thinking:

The government has passed regulations so complicated that it now takes much longer to run the numbers so many investors find it more difficult to file taxes until much later meaning...

The government gets to keep my tax withholdings for longer. Since I am not being paid interest on this, this money can be put to use, grown, used as green wallpaper, whatever.

So rather than raise taxes- politicians should just continue to make regulations more and more difficult so that the government can hold tax payments for longer periods, collecting the interest on my money.

Wait a minute you say- Wylie does not usually rant and rave and spin conspiracy theories... Well I just picked a bond fund which is pretty boring, so I'm trying to be more... lively.

Plus, even the folks in Hawaii are agitated about this one.

Non-Retirement: Bond Short-Term

Wylie Pick: American Performance Short Term Income APSTX

Selecting from mutual funds available through Etrade with no load or transaction fee and an initial $2500 investment or lower minimum and subsequent $100 or lower minimums, when looking for a Short-Term Bond fund, I have five options.

Two options have a 5 star rating from Morningstar. They are both American Performance funds but one is called "American Performance Interm Bond Fund." This caught my eye because Intermediate Bonds are held for a longer term and ahve their own category and after jumping over to morningstar, I find that in December of last year, this fund switched from the Intermediate category to Short-Term.

Since I am looking for a Short-Term fund, I rule this one out as an impostor but it illustrates an issue- funds with categories in their titles can be deceptive when a category changes but the title does not.

So that leaves one 5 star fund and since it has low expenses, American Performance Short Term Income APSTX is our pick.

Non-Retirement: Foreign Large Cap Value Mutual Fund

My Pick: Harbor International HIINX

Selecting from mutual funds available through Etrade with no load or transaction fee and an initial $2500 investment or lower minimum and subsequent $100 or lower minimums, when looking for a Foreign, Large Cap Value fund, I have four options. Click the table below for a larger view:

American Beacon International Planahead AAIPX is appealing because of it's low expenses. Indeed, I picked American Beacon Planahead as a good Domestic Large Cap Value fund. Harbor International has a much lower turnover which should help keep taxes down and has performed better than American Beacon. Thomas White has also performed better, but its expenses are higher and turnover is the same as American Beacon.

Upon further research, I discover that .25% of Harbor's expenses are what is known as 12b-1 fees. I think of these fees as marketing fees and they have gotten a lot of bad press in the last few years. After all, why should fund holders shoulder advertising costs for fund companies?


In particular Dustin Woodard wrote at length about 12b-1 fees and how he feels the way Etrade handles them is deceptive and bad. While I understand Dustin's point, I disagree with his conclusion. Etrade rebates fund owners 50% of these fees. So for anyone buying Harbor International via Etrade, the expense ratio you will pay is not 1.30%, it is closer to 1.18%. Dustin's point is that this encourages folks to buy funds with bad fees, but it does not make sense to me to pick a fund with 1.30% that does not charge 12b-1 funds versus one with 1.30% that does since I will pay less fees by choosing the one that includes the 12b-1 fee all other things being equal. Perhaps Dustin's concern is that most fund consumers won't understand how to research the other things- Loads, transaction fees, etc. In this case, with the rebate, the fees for Harbor International are much closer to those of American Beacon and the turnover is half as much.

Actually, Morningstar reveals that Harbor's fees and turnover have both gone down even more since the beginning of the year. So due to slightly better performance, lower turnover and similar fees, I choose Harbor for this category.