Tag: loans

Categories
Personal Finance

First Margin Call

This post was originally published on Mr. Cheap’s original blog.  When he brought over all his posts – some of them didn’t make it so I’m planning to publish a few of them over time.

I recently got my first margin call from E*Trade for about $3K. It scared the hell out of me, not because I could pay (I had the money sitting in a cash account and just transferred it over), but the call was unexpected and I was worried that I misunderstood the system to the degree that I had triggered it.

The day after the call, I got on the phone to E*Trade and admitted that I’d had a margin call, told them that it was no problem paying it (and I’d already transferred the funds), but that I didn’t understand what had put me into a margin call situation. The man on the phone didn’t apologise, but it turns out that the problem was on E*Trades end and they considered a bunch of “safe” stocks (which they’ll loan 70% of the stock value on) as “riskier” stocks (which they’ll loan 50% on). He told me the call wouldn’t be enforced, and after checking my account assured me I was fine (even if I hadn’t transferred the cash in).

I used the situation to get more details about margin calls and what would have happened if it had been a real call. Apparently the speed on which they’ll sell your stocks depends how far over the line you are (he said they’ll give you 3 or 4 days if you’re just a little over, bit will sell immediately if you’re significantly past your limit). I asked him for good customers with a conservative portfolio if they ever will waive a margin call or increase their loaned %, and it turns out that its actually a law how much they can allow people to buy on credit (so short answer, no).

In the end I was happy to have my understanding of the margin account challenged (and happy that it was a problem on their end and not in my understanding). I learned some new things about my account, which is always a good thing.

Categories
Money

When Will You Get Your Early Economic Stimulus Rebate Check?

“When will I get my economic stimulus rebate check?” is one of the big questions that Americans are asking themselves at the moment. Actually I’ve been asking that question as well but I’m not holding my breath for it!

The economic stimulus checks started on April 28 and will continue through to mid-July of 2008.

The schedule for people who filed their taxes by April 15 is based on the last 2 digits of their SSN – Social Security number. If you filed jointly then the payments will go out based on the person listed first on the return.

IF YOU USE DIRECT DEPOSIT

Last two SSN digits: Payments will be transmitted no later than:
00 through 20 May 2
21 through 75 May 9
76 through 99 May 16

IF YOU WILL GET REBATE BY MAIL

Last two SSN digits: Payments will be mailed no later than:
00 through 09 May 16
10 through 18 May 23
19 through 25 May 30
26 through 38 June 6
39 through 51 June 13
52 through 63 June 20
64 through 75 June 27
76 through 87 July 4
88 through 99 July 11

If you couldn’t get your act together to file your taxes by April 15 (but you did file since then right?) then you will get your rebate about 2 weeks after the scheduled date. You need to file your taxes by October 15 in order to get a rebate this year.

Here is the IRS online calculator to figure out how much your rebate will be.

If you are confused about whether this rebate is actually a loan then this post should clear things up.

Categories
Opinion

Investment Recommendations For Friends

Everyone always loves to say “do your own research before purchase”, “make sure to do your own due diligence” or “this is just for informational purposes, not to recommendation to buy or sell” and garbage like that. People are clearly reading investing opinion pieces because they can’t reach their own conclusions, and are prepared to defer to someone they feel is more knowledgeable. The disclaimer is just a cop-out to avoid blame if things hit the fan.

With that in mind, I’ve been happy to write about pretty much anything on this blog, and am equally open with thoughts and ideas about investing to my real life friends and family.

After reading about Lending Club, my best friend and I went 50/50 on a $500 investment. We discussed all the available loans, would send back and forth loan options to fund, and after we’d loaned out the $500, all the loans were doing very well. We’d originally planned to re-invest the proceed, but instead we borrowed more from Lending Club to re-invest (leveraging my friend’s great credit rating since I didn’t have any American credit at the time). Another $2500 in and we were collecting loan proceeds to pay off our debt (and Mr. Cheap was feeling like a tycoon).

Then our first “post Christmas” crash hit, a bunch of our loans went into delinquency, and eventually bankruptcy. Our money has broke even (with the high interest loans JUST covering those who have been defaulting), and our hope is to break even or at least have a bit of our originally $500 left when we pay off the loan we took out.

More recently, in the middle of the sub-prime shakedown, Washington Mutual was yielding over 10%. I talked to my friend about how I love dividend stocks, how stable banks are, and how much they value investors’ long term confidence in their ability to pay dividends. Trusting my judgement, my friend bought in to WaMu at over $30. The stock prompt started nose diving. Partly because I wanted to share her pain, and partly because I honestly thought it was unwarranted pessimism, I bought it myself at $21, buying on margin (which wasn’t terribly smart since I’m not working right now and will have a very low income when I’m back at school). Neither of us invested more than we could lose, but it really sucked when they started saying they’re going to cut their dividend by 2/3rds (I can forgive a low stock price, but if you cut your dividend you’re dead to Mr. Cheap).

Recently when I was talking to my friend I expressed my amazement that she’d still listen to me babble about money since the only thing I seem to be able to do is lose it for her. “Experience is a great teacher but she’s a costly one” rings in my mind, and more and more I see the wisdom of not providing specific financial advice to people you care about. Talking about the thoughts and philosophies are fine, but making specific recommendations just sucks if they don’t work out (and there’s always a risk they won’t).

Of course, do your own due diligence and acquire your own experiences before following any of my advice ;-). A wussy, garbage cop-out, but perhaps a wise one.