Mostly Managed Portfolio Loses Ground...

...but still remains in the lead!

First of all, last week I went to Etrade's office in downtown Boston and explained my issue to Justin, who forwarded it to the 'Mutual Fund Department' with a link to this site. So if you are here looking for the details of my issue, click here or on the link in the upper right corner. Basically your site is not allowing me to set up an AIP plan with the additional minimum for AIP plans for the fund SSEMX which is $100.

On to the competition!

As of today, the WylieMoney portfolio is still ahead, but not by much. I think today's slight under performance is due to some dabbling of a few of my fund managers in emerging markets which did poorly before American markets caught fire. The year to date totals for WylieMoney and Lazy are remarkably close. I wonder how long that will last.

Anyway, I made a little chart of the the random dates that I have managed to document the total value of the accounts. This does not represent day to day performance as I only have totals from 8 days over the last month, but once I have several months of data, the graph should be loosely indicative of trends.

Etrade, don't do this to me!

Arrrrggghhhh.

On this site I have put together a pretty detailed hypothetical portfolio available for purchase through Etrade. I have not gone into great detail about if I would actually buy these funds if I could or if I own any of them.

I do own some of them but I do not own all of them. Some of the categories I researched here, are categories for which I already own a Mutual Fund that I bought years ago. Even though the fund I picked for this hypothetical portfolio might look a little better than the fund I own, it is not worth it to me to sell my fund and pay the capital gains tax and then invest the leftover money in a new fund, at this point in time. Also I do not own funds for each of these 20 specific categories.

One of the funds I do own is SSGA Emerging Markets SSEMX. I bought it back in May of 2006. I have also managed to save enough to add $100 to my initial investment at a couple of points since then (not every month though!). Since I bought it, my holdings in this fund have increased 27.46%! Not bad for one year.

This is a risky fund and that risk has been well rewarded over the short term. I imagine it is only a matter of time before Putin does something so un-democratic that western investors balk and sell Gazprom in droves or China's speculators finally try and jump ship or Chavez convinces the rest of South America to 'reclaim' their private businesses. I do not know what it will be, but something will send emerging markets into a downturn.

In fact, yesterday, SSEMX was my second biggest loser down -2.03%. My biggest loser, if you're curious, was PNRZX. If you click that link, you'll see that PNRZX has been on fire over the last 5 years. I personally have only gained 10.30% since buying in just over a year ago. Not too bad, but not great given the recent gains I missed out on. My only fund that increased in value yesterday was BTTRX, a WylieMoney pick, up 0.14% on the day.

Even though I do not think it necessarily the best time to buy an emerging market fund specifically, I did try and add another $100 to my holding several days ago and was denied.

The entire reason I bought this specific fund and recommended each of the WylieMoney funds over sometimes better funds in each category is the $100 minimum for additional investments. I am still trying to figure out what happened here, but the last time I added $100 to this fund was in February. Now the minimum that Etrade is letting me add to my holding is $1000. So something changed in the last few months. Despite trying to save and invest as much as I can, I cannot afford to add $1000. And I should not have to darn it! Here is what Morningstar claims the fund allows:


What I suspect happened was that SSEMX changed its 'Additional Minimum Investment' to $1000 recently. You can see above it is $1000 now- I do not remember if it was that way before February. Fine. Gone are the days I can add $100 whenever I have the $100 to add and think the timing is right. I am willing to set up the Automatic Investment Plan or AIP for this. The Additional AIP minimum is listed as $100.

Etrade allows you to set up an AIP that invests in a few different intervals:


If I can come up with $400 a year to add to this fund, I could choose the "Quarterly" option and be all set, right? Not so fast! Here is a picture of the option I get when trying to set up the additional AIP investments:


So I called Etrade and here is what they tell me. Despite the fact that I already paid at least an initial $1000 when I first invested, to set up an AIP now, I have to pay another $1000 before I can reduce the AIP investments to $100. Since you can start and stop an AIP at anytime, this leaves me wondering if I should not have just bought the fund through this screen and set it up with an AIP plan for once a year that I never intended to make on that schedule and then just adjusted the frequency and amounts as desired.

But this does not make sense. I should not have to pay different amounts based on which screen I used to buy the fund. Does this make sense to anyone else? Do all brokerages and funds that have different minimums for AIPs and and non-AIP subsequent purchases make you pay a separate 'Initial Investment Amount' to both buy the fund initially and then set up the AIP as well?

This is not what is going on at Etrade either, at least not consistently. Another WylieMoney recommended fund I own is American Beacon Large Cap Value Planahead AAGPX. Here are the details for this fund from Morningstar:



So to set up an AIP to automatically invest $50, I should have to first pay another $2500. But I don't. Here is my option in the drop down menu:


I'm going to try approaching Etrade again and see if I can find out more.

Habitat for Humanity Project to Build a Musician's Village in New Orleans!

Berklee College of Music is sponsoring a group of employees to go to New Orleans and work with Habitat for Humanity on a project to build a Musician's Village in the Upper 9th Ward!

How cool is that?

Harry Connick, Jr., Branford and Ellis Marsalis came up with the idea to build 70 homes and a Music Center.

Many of my colleagues applied for this sponsorship I was fortunate enough to be one of the ones chosen! Yesterday, I met the other 7 people who are going and I am excited! We head down in June and will be there for a week.

Check out this video to get a sense of what we will be doing:

Mostly Managed vs 'Lazy' Vanguard Index funds

I promised weekly updates and failed. I'll try and come up with a good system I can keep on top of.

My negligence is not due to shame from the WylieMoney portfolio lagging behind. Far from it. Not only is the Wylie portfolio ahead since I 'hypothetically invested' in it, it has pulled ahead of the lazy portfolio year-to-date as well. Also, I realized that the reason the ETF portfolio appeared to be ahead of all the portfolios was that a few of the options, including two of the Bond funds, have not existed for a year and were being left out of the calculation so I am leaving out the ETF YTD number.

I included today's performance as well. The one-fund WylieMoney Slowly 'portfolio' is way ahead both year to date and since I 'invested' but note that its loss today is over twice that of the more balanced portfolios. And when I add the second fund in June, a Global Equity fund, I do not anticipate it will settle down...

Here are the details of each Portfolio. Click the image for a larger view:

WylieMoney

WylieMoney Slowly

ETFs

Lazy

If you want to sign up for Etrade, I've got a deal for you!

I know of at least two WylieMoney readers who have signed up for Etrade. I just got an offer as a current Etrade user- If I refer a new user I get $50 plus the new user gets up to 100 commission free stock trades to use within the first 30 days of opening an account. The offer lasts through June 30 and does not count toward IRA or other retirement accounts. So if you are thinking about signing up, let me know and I'll shoot you the details of the deal I have.

I don't know any folks who are gonna benefit from being able to buy or sell 100 different stocks in a month, but hey, you never know. And if you did want an account and wanted to buy some GE and AAPL stock right off the bat, well this deal would save you about $20 and give me $50.

Don't pick Etrade just for this. Pick a brokerage that best addresses your needs. I was chatting with a couple who recently decided to open a brokerage account and one of their needs was a direct connection to a person they could establish a relationship with to work with at the brokerage to help them through the process of opening and managing their account. Etrade does not meet this need and was clearly not the right choice for them! I'm sure Etrade would disagree and probably offers this kind of support for a fee, but finding a financial planner or analyst you trust is an entirely different matter. This couple has such a planner already so Etrade did not make sense.

I have shared some of my thoughts about Etrade before. The tools Etrade offers are simple and fairly sophisticated. They have been expanding functionality since I joined which is great. Calling customer service, however, is rarely an encouraging experience. It has taken me many months to resolve past issues. I imagine their service reps are good at explaining how to use the site. But when the site is not working like they think it should be, they are not good at finding out why. I will soon be writing a post about a new problem I am having with Etrade. Their interpretation of individual Mutual Fund policies does not consistently match how their tool interacts with those policies. More about that soon.

So, after this hard sell (hehehe), if you want to open an Etrade account, please email me at wyliemoney at gmail dot com. But do not open an account if you do not plan to maintain a $10,000 balance after the first year as Etrade will sock you with inordinate quarterly fees.

Is Netflix a Good Deal?

Netflix, Blockbuster, cable, going out to Theatres... there are many ways to get your fix, if you love the cinema.

I signed up for Netflix in August of 2005 about 21 months ago and have rented 154 movies so I watch on average 7.3 movies per month. I have 275 movies in my queue so I will not run out of films I want to see, anytime soon. I am on the '3 movies at a time' plan which costs exactly $18.89 so the cost of watching 154 movies has been $396.69 or $2.58 per movie. I have not paid that much however.

If you have family or friends who give gifts for birthdays or holidays, and you use and enjoy Netflix, if those family or friends like to give you gifts you will actually enjoy and ask you for ideas, you can suggest a gift certificate for Netflix. I am blessed to have such family and friends and clearly enjoy Netflix and have said as much and have gotten a few certificates as gifts since I signed up. Combining these gifts (Thanks again!) with the first two weeks I got free from Netflix (you can occasionally find a month free for new users) I have spent $170.01 so I have actually paid $1.10 per movie.

There are no good video stores near my house. There is a blockbuster, but it has terrible selection and is often out of new releases. Plus, Blockbuster is evil.

For a while they had a corporate 'values' issue with movies that included content too adult for Americans. As a result of this 'issue,' they used their clout to force film distributors to censor certain films. Bad Lieutenant and Last Tango in Paris are a few I tried to rent which is how I learned about this 'policy' from Blockbuster. These were not 'made for TV' edits or cuts the studio did on their own with or without the directors and producers approval. These were 'censored for Blockbuster' versions.

I have no problem with a video store only carrying titles it wants to carry, for values or profits or any other reason. But to carry a movie that does not fit with your values, so you can profit from it, but force the distributor to come up with a censored version to somewhat assuage your guilt strikes me as hypocrisy. Is hypocrisy itself a 'value?' Does using Blockbuster mean this is a value you support?

Blockbuster copied Netflix' idea and now rents movies through the mail. Plus, you can go straight to your local Blockbuster and turn in your home delivered movies and get new films without having to wait for the next home delivery. This is a great idea. The one friend I have who switched from Netflix to Blockbuster took two movies to Blockbuster, but only had one return envelop with her. You can actually stuff a couple of movies into a single envelope and return them no problem through the mail, but Blockbuster would not take both movies without individual mailers, apparently unable to pull off what the US Postal Service has mastered so she actually had to pay for the second movie she wanted. Also, she went in looking for a specific new release which they did not have in stock.

I imagine your mileage will vary depending on your local Blockbuster branch, but let me present an alternative approach.

I use and am a fan of Netflix but sometimes I too want to watch a movie at home that is not one of the three I have from Netflix. Instead of running to Blockbuster, I hop down to my local Library. Although it does not carry as many titles, it has far better selection including a wide variety of independent and foreign films as well as many of the more popular TV series on DVD. It carries uncensored versions of the films it stocks which is nice and I pay $1 per rental and can keep each title for a week. So while $1 extra is not the same as 'included in the price of my rental program' I'm happy to pay my local Library $1 per movie.

Netflix is not perfect. Sometimes the discs are scratched or arrive broken and sometimes returning a broken disc means getting the same broken disc in the mail a few days later. They have some videos available for streaming over the internet, but this service is not available on a Mac which is what I have.

Regardless, for me, Netflix is worth it. Since I can get most TV programs I am interested in on DVD via Netflix I actually do not need cable. More about that soon.

Are hybrids a good deal?

Wired recently ran a story on revised EPA miles per gallon estimates. In particular, the estimates for Hybrids were significantly reduced:


As an owner of the Civic Hybrid since 2001, I am happy to report, that the revised estimate is pretty much spot on.


What interested me the most were the revised estimates for the regular Civic. I knew the old hybrid estimates did not reflect my experience and assumed the regular Civic estimates were off as well so I never felt I had good data to answer the question: "Are hybrids a good deal?"

First of all, no one buys 'hybrids.' One buys 'a hybrid.' And as the chart above shows, not all hybrids provide the same benefit over their non-hybrid siblings. Speaking of siblings, both of my brothers have Toyota Priuses. The Prius has no exact non-hybrid counterpart, but it gets better mileage than the Civic Hybrid and the standard Civic is not a bad comparison to the Prius for comparison's sake. We are fans of the hybrid, but do the numbers back our enthusiasm?

I have 83,200 miles on my Civic Hybrid. Comparing how many gallons of gas I have used and how much it has cost me to buy that gas compared to how much gas I would have bought with a regular civic, I find I have saved a couple of thousand dollars. I used a gas price of $2.70 since that is the figure used in the Wired article. I also run the numbers at $2.50 a gallon.

83,200 / 42mpg = 1981 gallons @ $2.70 per mile $5348.70 (@ $2.50 = $4952.50)
83,200 / 29mpg = 2869 gallons @ $2.70 per mile $7746.30 (@ $2.50 = $7172.50)

I have used 888 fewer gallons saving $2397.60 @ $2.70 or $2220 @ $2.50 per gallon. The hybrid cost several thousand dollars more than the standard model, but I got a significant tax credit so I have basically broken even. And with gas now over $3 per gallon, I stand to come out solidly, if only slightly, ahead.

Part of the recent adjustment in gas mileage estimates for hybrids has to do with the impact of not idling. When I come to a complete stop, at a stop light for example, my engine shuts off automatically. The EPA used to consider this with Miles Per Gallon estimates. While I agree that this does not impact the miles per gallon rate, as I am not traveling, the gas I do not burn, sitting in traffic or at a stop light, IS gas I do not use. So the savings noted above are underestimating my actual savings a bit.

So I use less gas, save a little money, pollute less... but some of you are asking- why not take public transportation? I live outside of Boston, unwilling to pay half a million dollars for a home closer to where I work, and unwilling to pay rent when I could get a mortgage on a house with payments close to my rent (back in 2001) just outside the city. So biking or taking a bus is out of the question.

We do have a commuter rail station near our house. The monthly pass for this is $210. My wife and I work in Boston so we commute together. Our cost to use the train would be $420 per month or $5040 per year.

$5040 per year. I actually took the train this morning -we use it when we need to. It lost power and had to stop completely and restart twice so I was a bit late getting in.

$5040 per year. We bought our hybrid in 2001 and have used it to commute for 6 years. With the cost of using the commuter rail over that period of time ($30240), I could have bought a new hybrid, paid for all the gas and tolls and had money left over to buy a mutual fund.

The interwebs are sticky full of "hybrids are lame" and "hybrids rock" articles and now I have added another. My 2 cents are- it depends on which hybrid and how you will use it and what other options you have for transportation as to whether it is worth it or not. In some situations, like mine, I came out slightly ahead. If the car holds up, I'll come out moderately ahead. And polluting less and consuming less gas has its own value on top of the $ savings!

Oh yea... and Managed funds win again!

I was kinda curious what would happen when the US Markets took a dive like they did today. I am pleased to report that the Wylie Portfolio won, losing hundreds of dollars, but not losing as much as the "Lazy Portfolio" of Vanguard funds or the ETFs.

Saving money on home improvement

I have several posts mulling around in my noggin but I have been too tired at night to get them out this week as we have been getting home from work and going straight to work, scraping the old peeling paint off the side of our house.


You can tell from the second picture how high I up I have to go to clean up the second floor windows and and digging into the old paint with a hand scraper that high up is kinda not cool.


But we have been scraping and painting one side of the house each year for three years. I have not priced out how much we are saving, painting ourselves, but I imagine it would buy a Wylie fund or two...


I just realized I do not have a good picture of either of the two sides we are done with. This one shows the front which we painted last year. The new color we are using is similar, but a bit more blue. You can also see the bags of leaves and pine needles we raked up, waiting to be taken to be composted by our town. Yes, we also do our own 'landscaping' which probably saves us enough for a few months of subsequent investments in a Wylie fund or two.

Managed funds beat index funds and ETFs!

Nice title eh?

On 5/01/07 I hypothetically invested in a portfolio of mutual funds you can buy through a single brokerage for no commissions with a $2500 minimum in each. For comparison I invested in corresponding portfolios of Vanguard Index Funds- the "Lazy Portfolio" (which you can't do- they require $3000 each to start) and ETFs (which require commissions). I also invested in a single fund from the 20 mutual funds and plan to add an additional fund each month for 20 months.

I have not decided how often I will provide updates or in what format exactly so for now I will keep it simple and once a week.

For the first week, the Wyliemoney portfolio of mostly managed mutual funds, available through Etrade, beat the Index and ETF portfolios. Note that year-to-date, the ETF and Index portfolios win. I am not paying too much attention to the single fund or "Wyliemoney Slowly" portfolio until I add a few more funds.

Walk for Hunger photos!

Yesterday, my wife and I did the Walk for Hunger. Click on any of the images for a larger version.

We got up at the crack of dawn and took the pike into town.

We parked the car and registered at the Boston Common. When you get up this early, the crowd is pretty small. 43,000 people did the walk yesterday.

We walked down Comm Ave and saw some dogs.
We saw metal dogs. See the ball?

We saw big French dogs!

Then we walked under Mass Ave.

Some chipper volunteers guided us through Kenmore square...

...past Fenway Park.

We ran into a friend from Berklee!

Near Boston College, we saw some geese.

All along the 20 mile walk there were signs teaching us about hunger...

...about ouch...

...and about Soylent Green.

I never did figure out what "sunscree" was.

But I always knew how far we had traveled.

This sign was at about mile 10, the halfway point. If the "It" he was referring to was "walked half way", then he spoke the truth! Hard to argue with a pointer like this, regardless.

Soon after, the trail leads to the Charles river, where Harvard and MIT teams practiced rowing.

The views of downtown Boston were amazing, even in cloudy, windy weather.

Along the Charles River, there is a place where water fowl rule!

It never rained, despite the dark clouds.

We approached the Mass Ave bridge and prepared to cross it.

Once across the bridge, we were in the home stretch.

Back down Comm Ave, we passed statue after statue.
I was jealous of this guy, and ready to sit down!

Near the end, the sun started to break through.

We could see the finish line. Where did all these people come from? (cheaters!)

At each checkpoint, we got a mark or stamp.


And in the end, we made it. There were 43,000 walkers
and together we raised over $3.3 million!

Until next year...

100% Goal Achieved for our Walk Team on Sunday!

Thank you, thank you, thank you!

The Real Scoop- Managed Funds, Index Funds or ETFs?

I just invested $152,824.12. (Hypothetically)

As promised, I have invested $50,000 in the Wylie Portfolio, $50,000 in a portfolio of Vanguard Index funds, $50,000 in a portfolio of ETFs, and $2500 in the first Wylie fund of the Wylie Portfolio. By first fund, I mean the first fund I picked: NTIAX. The extra $324.12 comes from fees required for the ETF portfolio and the exact cost of each ETF position being a little more or less than $2500.

So we have a portfolio of assorted managed funds and a few index funds you can buy through etrade for no fees, a portfolio of Vanguard index funds that you can't buy through Etrade or Vanguard for any fee because each fund has a $3000 minimum. I only invested $2500 to make the comparison simple. We have a portfolio of ETFs you can buy through Etrade for $12.99 each. And we have a version of the mostly managed portfolio I will add to one fund per month.

The purchase dates for all these portfolios is the price as of closing on 5/1/07. So if you have your own portfolio you want to compare to these, go to morningstar and create your own portfolio and enter your purchase at the price from 5/1/07. It is easy to look up historical prices. One way to do this is to go to Yahoo Finance and look up your fund or stock and click the "Historical Prices" link.

So far, the Wylie Portfolio invested in just one fund is in the lead, up 1.44% and the entire Wylie Portfolio of 20 funds is up 1.09% compared to the Vanguard Portfolio which is up 1.02% and the ETFs which are up .46%. Note that Year to Date, the Wylie Portfolio is in last place:



Some of the ETFs have not been in existence since 1/1/07 so I am not going to put too much creed in that figure as it is not an equal comparison. I'm also not going to put much creed in performance of two days. We'll see how things look in a bit.

Here are the portfolios. Click the image for a larger view: