I have been using Quicken Home & Business for investment tracking for years. It is a powerful and convenient tool that does a lot of other things than tracking stocks and mutual funds. However, the convenience comes with a price tag of $100. It’s not cheap for sure. If you only want to have a tool to manage your investments, then you don’t need Quicken. In fact, there are plenty of tools to help you do what you want to do for free. One of them is Google Doc.

I recently created a Google Doc Stock Portfolio Tracking Tool based on a Google Doc Template. What makes it easier to create such a tool with Google Doc is that I can simply use GoogleFinance functions to retrieve values I need. You can do the job with an Excel Spreadsheet, but then you will need to figure out where to get the data and so on. With Google Doc, a function call to GoogleFinance() is enough. Here’s how my stock portfolio tracker looks like.

In addition to the columns in the original Google template, I added Purchase Date, Purchase Price, Position, Daily Change, Total Market Value, and P&L into the spreadsheet. At the end, I also have total daily change ($ and %), market value of the entire portfolio, and profit & loss ($ and %). I have published the spreadsheet, so if you want to use it, you can download the spreadsheet and save it as your own copy.

Right now, the spreadsheet only has a few stocks I own. To track the stocks you own,

1. Delete rows from the top and only leave the last row (row # 4 as in the screenshot below);
2. Highlight the last empty row by clicking the row number from the leftmost (# 8 in the picture below);
3. Click Insert from the menu bar on the top and select Row Above;
4. Copy the last row that’s left in the spreadsheet from Step 1 and paste the entire row to the new row just created

Now that you have the new row with identical information as the last row, all you need to do next is replace Ticker Symbol, Purchase Date, Purchase Price and Position with the new stock you want to add to the spreadsheet. The spreadsheet then will automatically calculate the rest for you.

Remember, when you add new investments to the spreadsheet, always leave a blank row above Total and always insert a new row above the blank row and copy and paste the entire row to the new empty row you just created. Each row is only for one transaction, even if it’s the same stock (as I have two rows of C above).

I am sure there are other functions, such as Year-to-date return, etc., that can be added to the spreadsheet to make it more useful, I just haven’t figured out how to do it yet. If you have ideas on what to add, please let me know.

Original Post on The Sun's Financial Diary

Special bonus offers

• OptionsHouse 100 Commission Free Trades
• Lending Club $25 Sign Up Bonus
• TradeKing $50 New Account Bonus in November
• CollegeAdvantage $50 Bonus

The IPO stock I bought today is Dollar General (DG), the discount retailer backed by Kohlberg Kravis & Roberts (KKR). With more than 8,700 chain stores mainly in the south and midwest,  DG is the largest retail store by the number of stores operated. Though items sold at DG are mainly priced around $1, the retailer is generating $10 billion in annual revenue with positive same-store growth for 20 straight years. Even in this tough economic environment, DG has increased its sales by 11% so far this year, according to IPOHome. Despite the growth potential, the stock, priced at $21 a share, is rather rich with its 26.9 price-to-earning ratio, higher than its competitors such as Family Dollar Stores and Dollar Tree. A Morningstar analyst said the stock is only worth $18 a share.

Anyway, I bought 83 shares of DG at $22.69 apiece at Scottrade.

Speaking of IPO stocks, my purchases so far are a mixed bag. On one hand, I got China Life (LFC) and Visa (V) on the day they were issued and they are doing very good. On the other hand, I also had Black Stone (BX) and Giant Interactive (GA) which are total disasters. Let’s see how DG will do.

Another stock I bought today is Boston Properties (BXP) through its direct stock purchase plan at ComputerShares. I have been looking at BXP for a long time, mainly for its dividend payout (currently at $2 a share), like other dividend-paying stocks I purchased through ComputerShares (except Bank of America which cut its dividend to 1 cent early this year after receiving massive bailout from the government). However, since BXP’s DSPP program requires $250 for each recurring purchase, I am not able to set up an automatic investing plan as I did with other stocks.

photo credit: Karen Apricot New Orleans

Original Post on The Sun's Financial Diary

Special bonus offers

• OptionsHouse 100 Commission Free Trades
• Lending Club $25 Sign Up Bonus
• TradeKing $50 New Account Bonus in November
• CollegeAdvantage $50 Bonus

Anyway, my investments are not what I want to talk about here. It’s the platform that allows ordinary investors to buy stocks traded on exchanges outside the U.S. Until last week, the only broker that lets investors invest in international stocks directly is E*Trade as far as I know. But now, it has a competitor. On October 30th, Fidelity introduced its own international stock trading platform as the appetite for investing in foreign stocks grows. The move puts Fidelity in direct competition with E*Trade. So how are these two compared against each other? I took a quick look at Fidelity’s new platform and the following are what I found.

Eligibility

I opened my E*Trade Global Trading account without any eligibility issue. At that time, I didn’t have any account with E*Trade and there was nothing that prevented me from getting the account. However, that doesn’t seem to be the case with Fidelity, which requires to have a non-retirement account  that trades 120+ times per year and $25,000+ in assets, or
$1 million in household assets. Well, I have to say that the requirement is very high for a small investor like me. I may like Fidelity better than E*Trade, but I am not eligible to have Fidelity International Trading account for sure.

Foreign Markets

If you are eligible for trading with Fidelity International Trading, then you do have a wider selection of foreign markets offered through the platform. In addition to Canada, Hong Kong, France, Germany, Japan, and United Kingdom that are available at E*Trade, Fidelity also provides investors access to six more developed markets: Australia, Italy, Belgium, Netherlands, Norway, and Portugal.

Commissions

My biggest concern when trading stocks is how much a trade is going to cost me, whether it’s a domestic stock or a foreign equity. I am always looking for the cheapest brokers. However, there’s no such thing as cheap in foreign stock trading. It cost me a lot to buy ICBC and Alibab with E*Trade.  Here how much Fidelity and E*Trade charge to trade in a particular market:

So basically, E*Trade charges a lot more in commission than Fidelity does. However, if you are like me, who wants to buy foreign stocks but don’t like a lot of money to meet Fidelity’s requirement, then E*Trade is the only choice, despite the high cost.

Currencies

When I bought those two stocks through E*Trade two years ago, I had to convert my fund into Hong Kong dollars before I could use the money to purchase the shares because E*Trade requires all trades be conducted in local currencies. At Fidelity, it seems that things a little more flexible as you can settle your trades in both local currencies and U.S. dollars. But, there is a price on settling with U.S. dollars. According to Fidelity,

If you choose US dollars as the settlement currency for your international stock trade, a foreign currency exchange fee (in the form of a mark up or mark down) based on the size of the currency conversion will be charged when the foreign currency exchange executes.

So you still have to pay for converting local currencies into U.S. dollars, not that Fidelity will do it for you for free. Thus, Fidelity recommends that if you trade in a particular market very often, it’s better to exchange “a certain amount of currency to avoid currency exchange fees on each trade”.

Currencies Exchange Fees

Since you may need to convert your U.S. dollar into the local currency before making a trade with either E*Trade (required) or Fidelity (recommended), another cost of buying foreign stocks is the fee that you pay to make the conversion. I wasn’t able to find the exact mark-up at E*Trade, but last time it cost me $11 to convert $1,000 to Hong Kong dollars. At Fidelity, the more money you convert, the less fee it charges. For $100K or less, the fee is 1.0% of principal. So if I exchange $1,000 into Hong Kong dollars, pretty much the same as what E*Trade charges. However, I am not sure whether the fee is also proportional to principal at E*Trade as the information is not available.

Well, from what I have seen, even though it costs more to trade with E*Trade, but it is still an affordable choice if you want to invest in foreign stocks unless you have a lot of money to be eligible for Fidelity’s International Trading.

Original Post on The Sun's Financial Diary

Special bonus offers

• OptionsHouse 100 Commission Free Trades
• Lending Club $25 Sign Up Bonus
• TradeKing $50 New Account Bonus in November
• CollegeAdvantage $50 Bonus

Anyway, since I already have an account, I won’t be able to take advantage of this offer. But if you are interested in getting the free trades (valued at $295), here’s the information you need to open an account.

There are a total of nine steps to go through in the process. At first, you need to select the type of account you want to have, individual or joint account. Then you will need to create a profile by providing your email address and selecting a user name and password. You will use the user name and password to log into your trading account once it is established. The other information are pretty standard, such as employment and financial information.

After you agree the terms and conditions, you will need choose how to fund the account in the next step. OptionsHouse offers several options to make deposit to the account, by wire, ACH, check or ACAT account transfer (OptionsHouse can reimburse up to $100 account transfer fee). If you are not planning to transfer your account from another broker to OptionsHouse, then ACH may be a better choice. To set up ACH, you will need your bank’s routing number and your account number. And as you know, it takes some time to set up ACH transfer. OptionsHouse uses trial deposits to verify bank account ownership which takes a couple of business days.

The online application process is rather simple, but the application isn’t completed yet. Once you finish the online process, you can log into your account immediately. However, you will need to printout you finished application form and fax it to OptionsHouse before your account becomes active. If your account isn’t active, you won’t receive real-time streaming quotes (of course, your account also has to be funded).

Now that you know the whole process, are you ready to open an OptionsHouse account and get the 100 free trades?

Original Post on The Sun's Financial Diary

Special bonus offers

• OptionsHouse 100 Commission Free Trades
• Lending Club $25 Sign Up Bonus
• TradeKing $50 New Account Bonus in November
• CollegeAdvantage $50 Bonus

Early this week, Charles Schwab, who introduced Schwab S&P 500 Index Fund in May with 0.09% Expense Ratio (ER), launched its first batch of exchange-traded funds that are again featured with super-low expense ratios. Four ETFs debut this Tuesday are

• Schwab U.S. Broad Market ETF (SCHB): Index - Dow Jones U.S. Broad Stock Market Index; ER - 0.08%
• Schwab U.S. Large-Cap ETF (SCHX): Index - Dow Jones U.S. Large-Cap Total Stock Market Index; ER - 0.08%
• Schwab U.S. Small-Cap ETF (SCHA): Index - Dow Jones U.S. Small-Cap Total Stock Market Index; ER - 0.15%
• Schwab International Equity ETF (SCHF): Index - FTSE Developed ex-US Index; ER - 0.15%

So how are these ETFs compared against similar offerings from Vanguard?

• Vanguard Total Stock Market ETF (VTI): ER 0.09%
• Vanguard Large-Cap ETF (VV): ER 0.13%
• Vanguard Small-Cap ETF (VB): ER – 0.15%
• Vanguard Europe Pacific ETF (VEA): ER – 0.16%

Well, Schwab’s ETFs are cheaper, but the difference isn’t that significant (percentage wise it is) except the large-cap ETFs. However, the Vanguard funds have already established a track record (at least two years) in terms of returns. For the new funds at Schwab, there’s no way to evaluate the performance. So I won’t be jumping in any of these funds right away, despite the lower expense ratios.

In addition to the fee charged by the fund in the form of expense ratio, the other part of the cost of owning ETFs is the commission charged by brokers to invest in ETFs. Since ETFs are traded on exchanges the same ways as individual stocks are, buying and selling ETFs usually involve commissions, anywhere from $2.95 per trade to $10+ depending on which broker you are using. That’s why you can dollar-cost averaging mutual funds from fund providers (if you buy mutual funds from a broker, you may also have to pay a fee), but can’t DCA ETFs. However, there’s an exception for these Schwab ETFs if you also use Schwab as your broker because it appears that you can get these funds with zero commission. If you don’t have to pay any commission, then buying ETFs regularly with a small amount makes sense.

Original Post on The Sun's Financial Diary

Special bonus offers

• OptionsHouse 100 Commission Free Trades
• Lending Club $25 Sign Up Bonus
• TradeKing $50 New Account Bonus in November
• CollegeAdvantage $50 Bonus

Even though that I-Bonds purchased in the past six months didn’t earn me anything, I still kept my monthly purchase of $100 I-Bone intact because the investment was made through an automatic purchase plan and I was too lazy to cancel the orders that I planned for many years. Plus, since most savings account interest rates were below 2% during that period of time, it wouldn’t make much difference if I put the $600 somewhere else. So I decided to avoid the hassle and stick to my plan.

Now, six months later, a new I-Bond rate is announced for the next six months from November 2009 to May 2010 and it is too bad, at least for six months. According to the Treasury, the total earning rate for I-Bonds from November 2009 to May 2010 is 3.36%. The rate for I-Bonds consists of two part: A fixed rate plus an inflation adjusted rate. Of the 3.36% rate, 0.30%  is fixed throughout the life of the bonds, which is 30 years.  The inflation adjusted rate is 3.06%, not too bad but it lasts only 6 months.

I have been buying I-Bonds for more than 6 years, but I never maxed out (I believe putting the money in the stock market will give me a better return). Since I don’t have any bond mutual funds in our taxable investment accounts, I treat the I-Bonds I own as the fixed income portion (which they really are BTW) of our investment portfolio, even though I never really considered it in the asset allocation. However, I do want hold them for the long term

Original Post on The Sun's Financial Diary

Special bonus offers

• OptionsHouse 100 Commission Free Trades
• Lending Club $25 Sign Up Bonus
• TradeKing $50 New Account Bonus in November
• CollegeAdvantage $50 Bonus

Firstrade Commission

Firstrade, as a leading online discount broker, offers investors a wide range of investment products, from stock and options trading to mutual fund and fixed income investments. When I first opened my account with Firstrade, I was actually attracted to it by its free mutual fund trading. Unfortunately, that’s not the case any more.

The cost of trading with Firstrade is rather high compared with what other discount brokers charge. For example, the commission for stock trade is $6.95 at Firstrade, which is lower than Scottrade’s $7.00 per trade, but significantly higher than Zecco’s $4.50 commission and TradeKing’s $4.95. Options trading at Firstrade will add another $1.95 per contract, where at Zecco and TradKing, the extra cost is $0.50/contract. However, Firstrade does have an edge over these brokers when it comes mutual fund investment: Firstrade $9.95, Zecco $10.00, TradeKing $14.95, and Scottrade $17.95 for each no-transaction fee mutual fund order.

Firstrade Trading Platform

So what can you expect to see when you first log into your Firstrade account?

Firstrade’s main website isn’t very impressive and I find it also not very useful. At the main account page, I expect to see the status of my account and my holdings so I can have a clear idea of how my account is doing. But that’s not the case with Firstrade, as you can see from the above screenshot. What I really don’t like about Firstrade’s account main web page is that the Important Notices section, which is supposed to list important announcement to users, takes a large space right in the center of the platform. I don’t find those notices very important at all and many of them are outdated and rarely updated. In my opinion, that place can be used for information that’s more useful for investors.

Overall, I can’t do much on the account homepage alone because, as you may have noticed, what displayed on the homepage are not all related to trading, or even investor’s personal account information. There are only four pre-determined indices and two index charts to display. There’ s a list of stocks to watch, but it looks like I can only enter up to seven symbols. There’s even no list of positions on the homepage, only an account number with the current market value.

Other Tools

If you want to make a trade, you will have to go to a different page to place your order by entering transaction type (buy or sell), symbol, shares, and order type (market or limit). This is the same as most other web-based trading platforms. Though there’s no streaming quotes on its homepage, Firstrade does have another tool, called X-Stream, that provides real-time streaming quotes, which can launched by clicking the Real-time Streaming on the top right corner of the main page.

Firstrade’s java-based X-Stream tool allows you to track up to 20 stocks simultaneously (I’d say 20 is a quite small number). Every field and color is fully customizable and all quotes are updated in real-time as the market moves. In addition to quotes, you also have access to streaming charts with real-time technical analytics, streaming time and sale information, quick order entry, company profiles, and many other features. What I find weird is that though there’s a TRADE button in X-Stream, I can’t really trade from it. If I click the button, it takes right back to the same web page to make the trade. Not very convenient at all.

In addition, Firstrade also has another tool that allows you to track multiple portfolios in real-time and updates your profits or losses on each position and the entire portfolio in real-time without having to refresh. It’s called MarketAce Portfolio Manager. MarketAce shows you to track each stock’s performance for that day and from the purchase price. You can specify your portfolio name and customize all the positions for each portfolio. You may also enter the cash balance of your portfolio to get the total value of your account updated in real-time. This is a unique tool to Firstrade as far as I know.

So overall, Firstrade isn’t very competitive in terms of trading cost, unless you also want to buy mutual funds through the broker. However, it does have some features that you won’t find at other brokers. If you are interested in trading with Firstrade, the broker is running a triple-bonus promotion that will give you 100 free trades when opening a new account, plus $100 account transfer reimbursement (if you transfer from another broker to Firstrade) and $100 cash back, depending on your account value. Check it out to get more details on how you can earn the bonuses.

Original Post on The Sun's Financial Diary

Special bonus offers

• OptionsHouse 100 Commission Free Trades
• Lending Club $25 Sign Up Bonus
• TradeKing $50 New Account Bonus in November
• CollegeAdvantage $50 Bonus

I opened the account in June when I found that it charges only $2.95 per stock trade, much less than other brokers I use (Zecco offers free trade, but the requirement is rather high for small investors). However, it disappointed me when I found during my first trading experience that the broker required at least $100 be kept in the account to cover commission cost. I even wrote a post to complain about what I saw as a unfair and unnecessary requirement. Later on, OptionsHouse, after hearing similar complains from other investors, decided to remove the $100 minimum requirement, which was a welcome news as it means that every dollar in the account can be used to buy stocks. And at $2.95/trade, the commission is the lowest among other popular online discount brokers such as Scottrade, TradeKing, or Firstrade.

If you are considering open an OptionsHouse account, now there’s a good opportunity for you to do so. The broker is running a promotion for November and December which will give each new customer 100 commission free trades when a new account is opened during the promotion period with a minimum of $3,000. Sure, the account minimum is higher than what it usually requires for a new account at $1,000, but the value of the 100 commission free trades equals $295, so it’s still a very good deal if you have the money to meet the minimum requirement. One more restriction of this promotion is that the free trades have to be used within 60 days. That’s a lot of trades you will have to make in just two months to take the full advantage of the promotion if you are not a heavy trader.

Anyway, if you can use those free trades, or even a portion of it, you must use this link to open an account using promotion code FREE100 and fund your new account with $3,000 within 45 days of account opening in order to receive the bonus free trade. This offer will expire on December 31, 2009.

To learn more about OptionsHouse, check out my previous post on OptionsHouse review and first trading experience for details.

Original Post on The Sun's Financial Diary

Special bonus offers

• OptionsHouse 100 Commission Free Trades
• Lending Club $25 Sign Up Bonus
• TradeKing $50 New Account Bonus in November
• CollegeAdvantage $50 Bonus

I  have a bunch of brokerages accounts myself. Though I no longer actively use every one of them now, I did try every one in the past to make a trade. And from my experience, transferring fund from my bank account to the brokerage account and using the money to purchase the stock I want on the same day is NOT possible at other brokers except Scottrade. As far as I know, brokers like TradeKing, Firstrade, and Zecco are all having electronic fund transfer (ACH) as an option to fund the account. However, the ACH fund transfer all requires a period of holding times, from 3 to 5 business days. This means that you have to wait 3 or 5 business days for the fund to be cleared before you can use it to buy the stock today at today’s price. But even 3 business days later, the price may not be acceptable anymore.

When it comes to funding the trading account, Scottrade is quite unique. The system it uses, called Money Direct, is also an ACH system like what other brokers use (meaning that you have to follow the same procedure to setup the Money Direct as you do with ACH: bank routing number, your account number, etc.). However, with Money Direct, fund is available almost immediately and can be used to buy stocks that are priced $4 or more. This is one restriction on using the fund to buy stocks in cash account. If  you have a margin account and want to use the fund to satisfy margin sell letter, then you will have to wait for 3 business days, or if you want to buy stocks that are below $4.

Early this year, I bought quite some cheap stocks through Scottrade and most of the time, I had to use Money Direct to transfer money to the account first before making the purchase because I didn’t have the money in the account (I don’t want to have any significant amount of money in the account). It was impossible with other brokers.

Another reason why I trade with Scottrade

BTW, if you decided to open a Scottrade account, use promo code KGKP0724 to get 3 commission free trades.

Original Post on The Sun's Financial Diary

Special bonus offers

• OptionsHouse 100 Commission Free Trades
• Lending Club $25 Sign Up Bonus
• TradeKing $50 New Account Bonus in November
• CollegeAdvantage $50 Bonus

Now it seems that Prosper is back, finally. While I am quite with happy with the performance I have with Lending Club so far, a little competition is always good, even in the P2P lending business.

Speaking of competition, Prosper is now offering $50 bonus to lure more lenders and borrowers. I have opened my Prosper account a long time ago. However, because of my previous resident status, I wasn’t allowed to invest, the same as what happened to Lending Club before. Then after updating my address to Virginia the other day, I got my $50 bonus and am eligible to lend directly It basically doesn’t require anything to get the bonus, except one Financial Suitability Requirement, which is like this:

The Notes are being offered only to a lender (a husband and wife are treated together as one lender) who satisfies the suitability requirements set forth below. You must meet one or more of the suitability requirements (a-b) in order to purchase Notes from Prosper.

1. I have an annual gross income of at least $70,000 and a net worth as set forth below, of at least $70,000, and I will not purchase Notes that in the aggregate, exceed 10% or more of my net worth as set forth below, or
2. I have a minimum net worth of $250,000 and I will not purchase Notes, that in the aggregate, exceed 10% or more of my net worth as set forth below.

Note: Net worth is calculated exclusive of home, home furnishings and automobiles, and Lender members may not value assets included in the computation of net worth at more than their fair market value.

The bar seems to be a little high and I don’t remember I saw the same requirement at Lending Club. If the requirement doesn’t prevent you from becoming a lender, then open a Prosper account and get the $50 free money. I haven’t invested my $50 yet as I haven’t got time to go through Prosper’s lending process. But I do plan to use the money to test the water soon

Original Post on The Sun's Financial Diary

Special bonus offers

• OptionsHouse 100 Commission Free Trades
• Lending Club $25 Sign Up Bonus
• TradeKing $50 New Account Bonus in November
• CollegeAdvantage $50 Bonus

I downloaded the complete data the other day to play with it a little bit. My interest is those loans whose current status is either 31 – 120 days late, or charged off, or default. When I downloaded the data on the 24th, there are a total of 12,150 records in the file. Of them, only 6,922 loans, or about 57% of the total applications, were issued, all others are either being declined for various reasons or still the funding process. For the 6,922 issued loans, 535 of them show the current status as 31 – 120 days late, or charged off, or default. That’s about 7.72% of all issued loans.

Loan Default and Credit Score

First I looked at the loan default and the borrower’s credit score. Lending Club requires the borrower to have at last 640 FICO score to be eligible to borrow money. This helps reduce potential loan defaults by setting the requirement high.

From my analysis, the group with the highest default rate (including loans that that’s 31 – 120 days late, or charged off, or default) is those in the 679 – 713 credit score range, account for nearly 40% of the total default. It should be noted that this group is also the largest borrower group with a total of 2,438 loans. However, if looking only at loans in the same credit score group, the highest default rate is in the group with the lowest credit scores, from 640 to 659, at 18.22%. This explains why the focus in peer-to-peer lending should be on borrowers with good credit. Loans from borrowers with lower scores have better returns, but risk for lending to these people is also significantly higher.

Loan Default and Debt-to-Income Ratio

I also looked at the borrower’s debt-to-income ratio, which is a measure of a borrower’s debt burden. Using this ratio, you can have an idea whether or not the borrower can live up to his/her obligation of repaying the loan. However, what I found is a little interesting.

Overall, the loan default rates for DTI ratio from 6% to 20% are roughly the same, at around 20%, of all the loans issued. However, when looking at each particular DTI range, the default rate for DTI ratio below 5% is the highest among all groups at nearly 10%. Usually, the lower the debt-to-income ratio(DTI), the less likely the borrower will be late in making payment, but that’s clearly not the case as the above plot shows. Instead, when borrowers claim they have a higher DTI ratio (above 20%), the default rate for this group as a whole is quite low.

Looks like I may need to change the way I select Landing Club loans

Original Post on The Sun's Financial Diary

Special bonus offers

• OptionsHouse 100 Commission Free Trades
• Lending Club $25 Sign Up Bonus
• TradeKing $50 New Account Bonus in November
• CollegeAdvantage $50 Bonus

One of the online discount stock brokers I use very actively is Scottrade. When I first selected Scottrade as my broker 7 years, I didn’t not much about it other than that it was the winner of a J. D. Power and Associate award. Of course, back then the landscape of online trading was much different than it’s now as the selection of discount brokers was very limited. Now, seven years later, with some many online brokers to choose from, I am still trading with Scottrade and, frankly, I am very happy with the choice I made in 2002.

So what exactly do I like about Scottrade? Well, not the commission that Scottrade charges. At $7.00 for every online stock trade order, the commission is rather high among discount brokers. However, compared to other brokers, Scottrade has an edge in providing comprehensive services and tools to make investing easier.  And unlike many other discount brokers which operate solely online, Scottrade also has physical offices throughout the country, giving investors easy access to Scottrade staff for face-to-face help, should such help is ever needed. Even if you don’t need to meet a Scottrade employee when you have a question, knowing someone at your local office by name and always talk to the same person over the phone is still an advantage, isn’t it?

Anyway, let’s take a look at Scottrade trading platforms, the main subject of this post. I have talked about Scottrade’s trading platform when I compared discount broker web-based trading platforms some time ago. Here, I am expanding the discussion a little to include more information for those who want to know better about the broker before deciding whether to use it or not.

Currently, Scottrade offers investors two trading platforms. One is web-based and the other is a standalone, PC-based called ScottradeELITE, which can be downloaded and installed on local computer if you a minimum account balance of $25,000. ScottradeELITE is an ideal tool for those who trade a lot. If you are causal trader like I am, then the web-based trading platform is more than enough to get the job done.

Socctrade’s web-based trading platform is shown below.

The feature that is most appealing to me on the website is that it shows the total market value of my account graphically, giving me a clear picture of how my portfolio has been doing, even though the graphic only covers up to 6 months. As far as I know, this feature is not available at at any other brokers I am using.

Scottrade doesn’t have charts on its homepage. Quotes are given numerically only, even though it does have a separate page where I can get plots and all the technical analysis tools. Trading from the main web page is easy: Enter the symbol in the Quick Quote on the left first then provide all the necessary order information (or click the Trade tab on the top). What I would like to see here is that a Trade button next to all the securities I am currently own (Under Positions in homepage). Now even for those stocks, I have to go through the same steps (enter symbol and order info) to make a trade. Not every convenient.

Though, there’s no real-time quotes on its main web platform, Scottrade does have a free, Java-based streaming tool that opens in a new window (from the Streaming Quotes link on the left). The streaming tool looks a lot like ScottradeELITE, the stand alone software, you can even customize what you want to see in the interface, just like what you can do with ScottradeELITE.

While every broker has a web-based trading platform, not every one offers free, real-time streaming quotes. For most brokers, you can only get real-time quote when you enter the stock symbol and get the quote of the particular stock. With Scottrade, you can not only get real-time streaming quote for free, but also trade right from the window as well, no need to go back to the main interface. This is convenient.

And the streaming tool is not only a quote tool, but also a research tool, though just a very simple tool that doesn’t give you all you need to do a in-depth analysis of a stock because it only displays the volume information and moving average of the stock price for up to 2.5 days.

If you want to have a full fledged tool for your equity research, Scottrade has it under the Quotes & Research section on its homepage. If you don’t meet the requirement to have ScottradeELITE, the web-based research tool is still very decent, in terms of the usefulness of the tool (it has more than two-dozen indicators to help you research a stock or fund).

Even though I am not a heavy trader and don’t really use every tool Scottrade provides, from what I can see, Scottrade has a good collection of web-based tools that make the broker standout in the crowed. Even though the cost of trading with Scottrade is high, it doesn’t matter too much if you only trade a few times in a year, like I do

BTW, if you are interested in getting a brokerage account with Scottrade, here’s how you can receive 3 commission free trades ($21 value) when opening an accont

1. Go to Scottrade.com
2. Use the promotion code KGKP0724 to open an account. There’s no expiration date for the promo code.
3. Make a deposit of at least $500 is required.
4. Enjoy your commission free trades.

Original Post on The Sun's Financial Diary

Special bonus offers

• OptionsHouse 100 Commission Free Trades
• Lending Club $25 Sign Up Bonus
• TradeKing $50 New Account Bonus in November
• CollegeAdvantage $50 Bonus

In my previous post, I outlined steps I take when I evaluate Lending Club loans. That’s the procedure I usually take when deciding which loan to fund and which to stay away. However, for those who  are still considering whether peer-to-peer lending, such as Lending Club or Prosper, can be used as an alternative investment vehicle or not, the main concern is probably the collective performance of Lending Club: The total amount of loans funded, average interest rate, overall delinquency rate, and average borrower credit score, etc. For to-be lenders, a single borrower and loan request have much less meaning than the overall statistics of the all Lending Club borrowers.

To help those who are still making up their minds to better understand how Lending Club works and what a lender can expect from P2P lending, Lending Club has recently launched their improved statistics page, where a potential lender can find such information as:

• The average LC borrower FICO credit score is 724;
• LC average annualized return is 9.66% after fees and defaults;
• The average annualized default rate of all LC loans is 3.16% since inception.

And a lot more information including comparison of returns between Lending Club and stock markets and breakdowns of each loan category (LC has a total of seven loan categories, from A to G, where A is the highest loan grade, depending on the borrower’s credit worthiness). If you want to dig deeper into the data before making a decision, you can even download all the data in to Excel and do you own analysis.

Go to Lending Club and see if and how you use the new statistics to improve your P2P lending

Original Post on The Sun's Financial Diary

Special bonus offers

• OptionsHouse 100 Commission Free Trades
• Lending Club $25 Sign Up Bonus
• TradeKing $50 New Account Bonus in November
• CollegeAdvantage $50 Bonus

Currently, I have funded 103 notes with an average weighted rate of 12.97%. Overall, I am happy with the performance so far, though I also have some bad luck with a few notes. Two of them are late for a few months already and one is late for more than 16 days. The total value in these late loans is $112. No doubt that the losses will erode the profit. How much big of the hit isn’t clear yet since there’s still a slim probably that I may get some of the money back, though I am not very optimistic about the outcome.

Actually, the biggest problem of lending money to total strangers through social lending platform such as Lending Club and Prosper is the risk of losing money when the borrowers fail to live up to their obligations to pay. That’s the risk that I can try to minimize (see what I checked before investing in Lending Club loans) but can’t totally avoid because expected things, those you can’t by scrutinizing their credit file or employment history or income, do happen.

If you are also interested in investing through Lending Club, but have questions/concerns about the process, especially the risk involved and what LC is doing to reduce the lending risk before a loan is issued and recover your money after a  borrower failed to make payment, here’s an excellent webnair from Lending Club about LC credit rating and collection process. In the presentation, LC walks you through the process of screening each borrower and going after delinquent borrowers. At the end, a lot of real questions from concerned lenders are answered in the Q&A section.

Here are a couple of screenshots from the presentation to give you an idea what is covered in the webnair.

First, how Lending Club’s return compares with bank yields and credit card interest rates.

Then LC explains what defines the grace period, late and defaults and what they will do when any of these happens.

Check out the webnair. It is worth your time if you are considering become a lender (see how you can get $25 bonus to start lending).

Original Post on The Sun's Financial Diary

Special bonus offers

• OptionsHouse 100 Commission Free Trades
• Lending Club $25 Sign Up Bonus
• TradeKing $50 New Account Bonus in November
• CollegeAdvantage $50 Bonus

• Domestic stocks: SPDRs (SPY): 40%
• Foreign stocks: iShares MSCI EAFE Index (EFA): 30%
• Domestic REIT: Vanguard REIT Index ETF (VNQ): 5%
• Foreign REIT: iShares S&P World ex-U.S. Property Index Fund (WPS): 5%
• Precious metal: SPDR Gold Shares (GLD): 10%
• Domestic bonds: Vanguard Intermediate-Term Bond ETF (BIV): 5%
• Foreign bonds: SPDR Lehman International Treasury Bond (BWX): 5%

As you can see, the ETFs I picked for the portfolio are all index funds (of course, back then only passive, index ETFs are available. Now there are also actively managed ETFs). The reason for choosing index funds is obvious: To have as many securities in the portfolio as possible.

Now, one year later, after what the market has gone through in 2008 and early this year, I am curious about the performance of my portfolio had I followed my plan in making regular investments into each funds. Like I have been doing with my mutual fund investments for years, if possible, I wanted to buy each fund every month on the 5th, but the amount of each new purchase will be based on the pre-determined allocation, not the same amount for all funds, as I do with mutual funds. For example, I would invest $1,000 per month in this portfolio, then $400, or 40%, would go to SPY, and 30% would go to EFA, and so on. There’s no particular reason why I buy on the 5th of the month (that’s my date of making investments) and purchasing based on asset allocation is to have each asset in the portfolio stays as close to its allocation as possible (of course, rebalancing is still needed over time).

So how’s my all ETF portfolio doing? From August 05, 2008 to September 08, 2009, the total invested amount is $14,000 in 14 investments. As the following table shows, of the 7 funds, only 3 have positive returns over the past 14-month period, with the best performance being the gold ETF GLD. The worst performer is VNQ, the domestic REIT fund, which lost more than 33%. However, when purchases were made regularly, the picture changed completely.

With my plan of investing, the total market value on September 8th when I made last purchases was $16,007.15 without dividend reinvestment. With a total of $14,000 invested, the overall return is 14.34%, better than any single fund return. And looking at each fund’s return in the portfolio with monthly purchases, all but one had double-digit returns from August 2008 to September 2009 (the Portfolio Return column in the above table).

Why such a huge difference? It is because of the dollar-cost averaging (DCA) method used in making the investments. I have discussed dollar-cost averaging in details in the past when I looked at a much longer period of the broad stock market. My conclusion at that time was that DCA isn’t really the good way to invest as far as the performance is concerned because in a up market, shares purchased through DCA become less and less than through a lump-sum. However, it’s a different story in a down market, as the market in the past 14 months. In this case, DCA let me purchase more and more shares as the market kept going down until March when it started to rebound. And once the market starts to recover, the shares purchased when the market was tanking will have a bigger impact on the overall return of the portfolio, as it is clearly shown in the above table.

Of course, using dollar-cost averaging isn’t all about performance. Rather, it’s more about making regular investments a habit, in good time and bad, instead of trying to find out when to get in and when to bail out based on the market condition at the moment

BTW, it seems that making purchases based the asset allocation of each fund works pretty well. At the end of the 14-month period, the allocation of each fund in the portfolio only drifted a little bit from the target allocation, despite each fund’s drastic performance.

Original Post on The Sun's Financial Diary

Special bonus offers

• OptionsHouse 100 Commission Free Trades
• Lending Club $25 Sign Up Bonus
• TradeKing $50 New Account Bonus in November
• CollegeAdvantage $50 Bonus

1. Many investments in the 401(k) accounts don’t have standard symbols, making it almost impossible to use existing tools to look into the asset allocation of a particular fund;
2. All individual stocks were purchased without any asset allocation consideration, therefore, including these stocks will greatly skew the result. So instead, I decide to focus on the part that I have full control.

What I used in the past to determine the asset allocation of our mutual fund investments is a free total from Morningstar.com called Instant X-Ray. To use the tool to do the analysis, all I need to input are the fund’s symbol and its market value at the moment for every fund. Then the X-Ray will display the allocation in an easy-to-read pie chart. Even though each fund has a investment style, such as large-cap value or mid-cap growth, the fund’s style itself can’t be used directly to determine the allocation of a portfolio because each fund contains many, possibly hundreds (for example an index fund that tracks the S&P 500) or even thousands (such as a total market fund), individual stocks that belong to different categories. Therefore, a tool like Instant X-Ray is needed to get a complete view of the asset allocation of the portfolio.

While Instant X-Ray is easy to use, there isn’t much insight of the result such as what I can achieve if I maintain the allocation and the current contribution level or what will happen if I change the allocation to a different target. To get a better understanding of our portfolio, I recently started to play with a premium tool from Morningstar called Asset Allocator.

Create a Portfolio with Asset Allocator

One of the most significant difference between Instant X-Ray and Asset Allocator is how the data is entered. With Instant X-Ray, only the ticker symbol and market value of a fund are needed. With Asset Allocator, a portfolio is actually has to be built with all the transactions, if any, not the overall value. Fortunately, I don’t really have to enter every transaction manually (that would take a long, long time to complete since my first investments started in 2001). The Asset Allocator can import portfolio that was previous built with Excel, Intuit Quicken, MS Money, Money.com, Quicken.com or Yahoo! Finance. In my case, I just exported the transactions from Quicken into a .QIF file first (I have been using Quicken to track our investments from day one), then imported them to Asset Allocator to rebuild a transaction portfolio. Since the Quicken file contains investments that are no longer active at this moment (I have gotten rid of some funds that didn’t fit my investment goal any more), the Asset Allocator allows me to decide which funds I want to import so I don’t include any information that is obsolete.

After the selection, the portfolio can be viewed with only those funds I am investing into right now and the entire transaction history of each fund.

Predictions Based on Current Allocation

The next step is to use the portfolio, with the current asset allocation, to do some analysis (this the feature that isn’t available with Instant X-Ray). Right now, I am setting aside $800 each month for our mutual fund investments, roughly $100 for each fund. If I maintain this level of monthly contribution, which I think I will unless somethings extraordinary happens, and my goal is to have, for example, half a million dollars in this portfolio by the time I retire, can I reach my goal if I keep the allocation intact, which overwhelmingly favors stocks over bonds (43% in foreign stock, 42% in domestic stock, 9% in cash and 6% in bond)? Well, according to the Asset Allocator, I have a 96% chance of reaching my goal in 25 years and a 50% chance of getting close to $2 million at the end of the same time period. The chance of reaching the goal decreased to 70% if I shortened the time span to 15 years from 25.

Though I like my chance of success, there are a few observations from this prediction that make me feel it’s still a tough goal to reach. First, the result seems to be based on the expected annual return at 13.15%, which is pretty high in my opinion. The source of this kind of return is, I guess, my preference of investing in foreign stocks over domestic equities. As the asset allocation at the bottom of the above picture shows, with this portfolio, I currently have 43% invested in foreign stocks with the core holding being Dodge & Cox International Stock (DODFX), along with a couple of other funds which invest a significant portion of their assets in foreign stocks. International stocks have performed very well in the past, but they also took a much harder hit during the financial crisis (thinking about China for instance). Going forward, I will likely reduce our investments in foreign stocks to about 35%, which could have some impact on the expected annual return. Second, as I mentioned before, I don’t have any bond funds in taxable account, though I buy I-Bonds regularly. The one lesson can be learned from the 40% loss of the broad stock market last year is investing conservatively can save the portfolio from being ruined by a severe short-turn downturn. I certainly don’t want to lose half of my investments in one year when I don’t work any more though I can tolerate it now. So, as time goes by, I will need to adjust the allocation to hold more bonds than 6%. This will in turn reduce the expected annual return.

Adjust Portfolio Sector Allocation

And predicting the future result based on current investments isn’t the only function of the Asset Allocator. It also let me change the target allocation of each category and investment style and see different results. It even goes into such details as setting target allocations for sectors as compared to the S&P 500 Index (or any other benchmark).

Obviously, updating the sector allocations involves more than just putting in the numbers because figuring out exactly how much to invest in each sector that makes sense requires, I think, a clear understanding of the sector, its portion in the economy, and the growth potential, etc. So instead of trying something that’s far away from reality, I think it’s better to let the portfolio’s sector allocation resemble the a benchmark such as the S&P 500 or Russell 2000. In my experiment, I decided to use the S&P 500 as a reference. As the above screenshot shows, my current portfolio has too much in the manufacturing sector (particularly more in industrial material and less in utilities) but not enough investments in the information technology. Since the sector allocation of the portfolio comes from all the funds, it’s not straightforward to say which fund holding needs to be adjusted in order to meet the overall sector allocation target.

For now, I am not going to worry about the sector allocation as it seems to be a little bit out of my control. Instead, I will focus more on the overall asset allocation because that’s what will determine the performance of our investments

Original Post on The Sun's Financial Diary

Special bonus offers

• OptionsHouse 100 Commission Free Trades
• Lending Club $25 Sign Up Bonus
• TradeKing $50 New Account Bonus in November
• CollegeAdvantage $50 Bonus

• I have most of our investments with Scottrade, including regular brokerage account and IRA accounts;
• I am happy with their customer service.

Usually customer service doesn’t play a big role when I select a bank or a broker (it wasn’t a factor when I decided to use Scottrade). However, my experience with the company is very positive so far, making me feel I made the right choice back then.

The reason I want to write this post is an email and a voice message I got from Scottrade yesterday. As I mentioned early, I am in the process of updating my new address with banks, brokers, and credit card companies, etc. I made the change with Scottrade two days ago. Then yesterday, I first got an email from Scottrade which informs me that, because of our move, we now have a new Scottrade branch office to serve us, only a couple of miles away from where we live, together with the branch office manager’s name and phone number. When I got home after work, there was a message on the machine. It was left by the branch manager who introduced himself and offered assistance should we have any question.

I have written in the past what I like about Scottrade is that, unlike other pure online brokers, Scottrade has branch offices throughout the country so, if I have to, I can stop by at a local office and do business right there (though there was never an occasion that I had to go to the office). I have moved 3 times since becoming a Scottrade customer and every time, they sent me contact information of the new local office shortly after I updated my address. And since they always let me who the branch manager is, I had no problem getting my problem resolved with the same person who knows me and the issue. With other companies, it’s almost certain that every time I call, I will talk to a different person and have to repeat my case again and again. That’s not the case with Scottrade.

For those companies which I have updated my address with so far, a couple of them, such as Bank of America and Fidelity, also have local branch offices, though may not be in the same town. However, only Scottrade has contacted me. That’s the difference and that ’s why I trade with Scottrade.

Original Post on The Sun's Financial Diary

Special bonus offers

• OptionsHouse 100 Commission Free Trades
• Lending Club $25 Sign Up Bonus
• TradeKing $50 New Account Bonus in November
• CollegeAdvantage $50 Bonus

Early this year, Zecco introduced Zecco Forex Trading, a platform that allows Zecco customers to trade foreign exchanges. Now you can even buy gold and silver if you are interested in investing in precious metal, right from the Forex platform.

Gold has crossed the $1,000/ounce mark again last week after hovering between $900 and $950 this year. However, since the collapse of Lehman Brothers one year ago which triggered the meltdown of the financial market, gold has risen 30%. And silver performed even better with more than 40% return in one year. Is the upward trend of precious metals going to continue? There are predictions that gold can go as high as $1,100 an ounce as the US dollar keeps weakening (INO.com has a video explaining the recent movement of gold).

In the past, I have written about where to buy gold which covers investing in both the physical metal and paper gold such as ETF. Now with Zecco’s new service,  there’s one more way to buy gold and silver. Check it out. Of course, you will need a Zecco Forex Trading account, which is different from the regular brokerage account.

Original Post on The Sun's Financial Diary

Special bonus offers

• OptionsHouse 100 Commission Free Trades
• Lending Club $25 Sign Up Bonus
• TradeKing $50 New Account Bonus in November
• CollegeAdvantage $50 Bonus

Now, as I am resident of Virginia, I can finally use Lending Club’s primary market to lend directly

I cashed out some loans last month to reduce the risk of my portfolio after two of my loans failed to make payments. The  money from the sale has been sitting in my account idle for nearly a month because I was waiting to change my address so I don’t have to pay a premium to buy a loan. After I updated my address last night, I decided to put the money back into the market. Since I am eligible for direct lending, Lending Club’s LendingMatch tool is quite handy to help me find loans I want to fund.

Basically, LendingMatch screens Lending Club’s loan inventory and find notes that collectively meet my expected return. With LendingMatch, all I need to do is specify the amount of money I want to lend and the average interest rate I want to have, the tool will then pick up loans from different grades and show the distribution of loans and overall risk of the selection. For my investment amount of $500 and target rate of 12.35% (it’s just a number I picked without any specific ration why I want this rate), a total of 20 loans were chosen (it’s good that no $50 or more loan was selected) and the overall risk level is 0.29 out of 1. The risk is quite low in my opinion.

Before sending my order for processing, I went through the results (see how I screen Lending Club loans) and identified one loan that I considered as too risky and removed it from my order. For that particular loan, E2 grade loan with 16.70% interest rate, the borrower wants to get $18,000 to consolidate debt.  What worries me is the borrower’s credit history, which shows he has 23 open credit lines out of a total of 57 and a revolving credit line utilization ratio of more than 66%. Though the month income is good (more than $6,000/month), the borrower appears to be quite active in seeking credit lines. That doesn’t make me feel very easy about lending to him. So eventually I removed that loan from my list and ordered only 19 loans.

I still have some money left in my account that I want to lend, but will wait until this order is cleared because I don’t want to fund more than one loan from the same borrower. This is another way to reduce risk.

BTW, if you are interested in becoming a lender but haven’t started yet, see how you could win $2,500 from Lending Club.

Original Post on The Sun's Financial Diary

Special bonus offers

• OptionsHouse 100 Commission Free Trades
• Lending Club $25 Sign Up Bonus
• TradeKing $50 New Account Bonus in November
• CollegeAdvantage $50 Bonus

The popular peer-to-peer lending site is going to have its 25,000th investor some time this month. To celebrate this milestone, Lending Club announced yesterday that the 25,000th registered investor will receive a total of $2,500 cash from LC!

I started investing with Lending Club in February. In half a year, I have built a portfolio of 78 loans with total outstanding principal at $2,065. Though there are some minor setbacks recently (2 of my loans were late more than one month and are now in the hands of collection agency), I am still very optimistic about receiving good return from my investments (Lending Club the average net annualized return is 9.6%, which is much higher than bank savings account). And since we are moving to Virginia, I will soon be eligible to invest directly in the primary market.

If you are interested in investing with Lending Club and having the chance to win $2,500, use this like to open an account and receive $25 bonus just for becoming an lender, regardless whether you win the giveaway or not. Since peer-to-peer lending involves a greater risk than having the money in, say, a savings account, make sure you do your homework thoroughly before funding a loan. Here’s what I usually consider before investing in a loan.

Original Post on The Sun's Financial Diary

Special bonus offers

• OptionsHouse 100 Commission Free Trades
• Lending Club $25 Sign Up Bonus
• TradeKing $50 New Account Bonus in November
• CollegeAdvantage $50 Bonus

Zecco is one of the brokers which I have an account with and I have written about it quite frequently here (read my Zecco review and first trading experience for more information about the broker). Currently, Zecco charges $4.50 per stock trade. The commission isn’t the lowest as far as I can tell (OptionsHouse charge $2.95 for example), but it’s still fairly cheap to trade with Zecco. And if you have a big account ($25,000 or more) or trade a lot (20 trades per month), you can get 10 free trades per month from Zecco.

Special terms and conditions of this offer are as the following:

• New Zecco Trading accounts must be opened and approved by Sunday, September 13, 2009.
• The 20 free stock trades will be granted on or before September 16th, 2009. The free trades will expire 90 days after the date they are granted.
• Offer not eligible to existing Zecco Trading customers.
• Limit one bonus per house.

To take advantage of this offer, open an account with Zecco Trading with bonus code “bonus1” and get 20 commission free trades. You have 90 days to use the 20 free trades you receive from this offer.

Original Post on The Sun's Financial Diary

Special bonus offers

• OptionsHouse 100 Commission Free Trades
• Lending Club $25 Sign Up Bonus
• TradeKing $50 New Account Bonus in November
• CollegeAdvantage $50 Bonus

I opened an account with OptionsHouse in June after noticing that the broker has reduced its commission to $2.95/trade. However, when I was trying to trade stocks with OptionsHouse last month, I found I have to leave $100 in my account that basically does nothing in order to make a trade. That’s a very weird requirement by OptionsHouse to have $100 in the account to cover commission costs, but doesn’t allow customers to really use that $100 to pay for trade commissions. I then wrote about my experience and expressed my displeasure in the post.

After my post hit Twitter, @ShannonPaul contacted me and asked for my feedback. I basically told her what I said in the post, that the requirement doesn’t really make any sense and I feel it will only discourage small investors from using the broker even though the commission is really low compared to other discount brokers. Shannon said they will look into the issue and find the best way to address it. Then yesterday, Shannon brought the good news that OptionsHouse has already lifted the requirement last week after hearing feedback from customers. I am glad it’s gone.

Well, now that you can invest all your money, are you going to use OptionsHouse to trade stocks, given its low $2.95% commission? I know I will

BTW, it is still listed on their FAQ page the $100 requirement. I was told that it will be changed soon. So don’t be confused.

Original Post on The Sun's Financial Diary

Special bonus offers

• OptionsHouse 100 Commission Free Trades
• Lending Club $25 Sign Up Bonus
• TradeKing $50 New Account Bonus in November
• CollegeAdvantage $50 Bonus

Those two loans (C3 grade loan, 13.16% interest rate) were acquired in late February when I started to invest with Lending Club and they are among the first batch of notes I bought. Back then, I guess I was so eager to get the lending going, and start making money, that I didn’t realize that the two loans are from the same borrower until now. This, of course, is a big mistake because lending more money to the same borrower by funding multiple loans can only increase, not reduce, the risk.

For these two loans, they were both new loans when I bought them back in February and payments were made on time in the first four months from March to June. Then the borrower was late in July, then again in August. Meanwhile, Lending Club appears to be doing what they can to contact the borrower and collect the payment, but failed:

• 8/7/09 (Friday) Engaged external collections agency
• 8/4/09 (Tuesday) Attempted to contact borrower (left voicemail)
• 8/4/09 (Tuesday) Contacted a borrowers relative
• 7/31/09 (Friday) Attempted to contact borrower (left voicemail)
• 7/30/09 (Thursday) Contacted a borrowers relative
• 7/30/09 (Thursday) Attempted to contact borrower (left voicemail)
• 7/28/09 (Tuesday) Attempted to contact borrower (left voicemail)
• 7/28/09 (Tuesday) Sent email to borrower
• 7/27/09 (Monday) Attempted to contact borrower (left voicemail)
• 7/27/09 (Monday) Payment Failed
• 7/24/09 (Friday) Sent email to borrower
• 7/24/09 (Friday) Sent email to borrower
• 7/22/09 (Wednesday) Attempted to collect payment
• 7/20/09 (Monday) Attempted to contact borrower (left voicemail)
• 7/16/09 (Thursday) Attempted to contact borrower (left voicemail)
• 7/16/09 (Thursday) Payment Failed
• 4/27/09 (Monday) Borrower contacted Lending Club

Of course, I am quite upset about the possible default of these two loans and the loss of $100 (less than 5% of my total Lending Club investments). The borrower’s credit was quite stable initially, thus there wasn’t a red-flag as far as I can tell, but the credit score dropped more than 100 point in the latest assessment this month.

I was trying to sell those two loans at a discount after noticing payments were late. Unfortunately, there’s no takers, even though I have reduced the price a couple of times. At the same time, I also reviewed my loan portfolio and identified a few more loans that are from the same borrower, all purchased in the early stage of my P2P lending business. Too reduce the risk of my investments so what happened to those two loans will not happen again, I put all the notes from the same borrowers (a few $50 loans and the rest are $25 loans) up for sale at a small discount. Since all loans are still current, some of them have already been taken.

It’s unlikely that I will get anything back from those two loans (I hope I am wrong, but I don’t expect too much even with the involvement of the collection agency). Oh well, that $100 can be the price I paid for the lesson I learned from this:

• Never lend money to the same borrower;
• Never fund large loans.

Original Post on The Sun's Financial Diary

Special bonus offers

• OptionsHouse 100 Commission Free Trades
• Lending Club $25 Sign Up Bonus
• TradeKing $50 New Account Bonus in November
• CollegeAdvantage $50 Bonus

Recently, Morningstar gave its mutual fund quote page a major face lift (actually the beta version of the new interface has existed for a while), resulting a much cleaner and user friendlier interface that doesn’t require many clicks on the page to get most of the information I want about a fund.

If you go to Morningstar and type in a fund symbol (here I use DODGX as an example), you will be led to the new fund quote page, which will show you basics of the fund you are interested in.

The fund’s most important data is prominently displayed on top of the quote page, above the navigation bar. Here, before you get into details of a fund, you will find everything you need to know about a fund: Fund price, day change, star rating, yield, total assets, load (load fund or none load fund), expense, turnover, status (open to new investors or closed), minimum initial investment, category, and investment style. In the old page, these information is scattered, some are even one different pages. This alone makes the new interface much easier for investors to research a fund.

The center of the page is a growth chart of DODGX against the fund category it belongs to (large-cap value) and the benchmark (S&P 500). Before, Morningstar only shows fund performance in a few pre-defined time intervals, such as 1-yr, 5-yr, and 10-yr. The new chart tool, using a scrollbar at the bottom of the chart, lets you define your own time interval and plot the chart seamlessly. Both Google and Yahoo Finance have used this technique a long time ago. I am glad that Moringstar is finally on board.

The next feature that’s new is the graphic display of Morningstar Risk Measures of the fund, including Risk vs. Category and Return vs. Category. I like the graph because, like the growth chart, it gives me a quick idea of how the fund compares with its peers. If I want to know a little more about the fund’s risk, I can use the Ratings & Risk tab on top of the screen to find the fund’s risk and return rating for the past 3, 5, and 10 years, as well as the fund’s risk statistics, such as R-Squared, Beta, and Alpha.

Right below the growth chart is Morningstar’s Take of the fund, which includes opinioin of Morningstar’s analysts, role of the fund in the portfolio, and the fund’s stewardship grade. For DODGX, it’s one of Morningstar’s pick and it can be a core holding in the portfolio. Moringstar has an overall grade of A for DODGX (range from A to F, wich A being the highest and F the lowest) for the fund’s stwewardship, which measures the manner in which the fund is run, the degree to which the management company’s and fund board’s interests are aligned with fund shareholders, and the degree to which shareholders can expect their interests to be protected from potentially conflicting interests of the management company. However, this part of the information is not free. To access Morningstar’s analyst reports and grade, you will have to become a Premium Member.

While the first half of the quote page uses more graphs to show the fund’s performance, risk, investment style, and asset allocation, the second half is more of numerical presentation. In this part, you will find a fund’s performance, top holdings, and top sectors, all given in hard numbers. The new addition to the page is the Dividend and Capital Gains Distributions of the fund, which I find is very useful. In the past, I sometimes found it was quite difficult to a fund’s distribution information (distribution date and amount) unless I own the fund. Now, I can get this information conveniently at Morningstar.

I have mentioned in the Morningstar research post that I also look at the fund manager’s tenure when researching a fund. n the interface, Morningstar not only shows the fund manager’s start date, but also the assets under management. Unlike performance data which tells you directly how the fund is doing in the past and how it compares with other funds in the same category, the fund’s management information is more subtle. Generally, the longer the manager has managed the fund, the better the fund’s past performance can be as an indicator (of course, past performance can never guarantee future return and DODGX is a perfect an example of how a fund with a long tracking record can uncharacteristically underperform its peers).

The fund quote page itself contains enough information to give you some quick ideas about a fund. In you want to get into the details, each section on the quote page has its own separate page, which is accessible from the top navigation bar.

Overall, I think the new Morningstar mutual fund quote page is a big improvement over the old one. Have you tried it yet?

Original Post on The Sun's Financial Diary

Special bonus offers

• OptionsHouse 100 Commission Free Trades
• Lending Club $25 Sign Up Bonus
• TradeKing $50 New Account Bonus in November
• CollegeAdvantage $50 Bonus

While my main focus is always on the cost side when choosing a broker, I find that what a broker offers on its main account homepage also plays a role on whether I want to use the broker or not, though only a small one. If you also look at the broker’s interface, such as functions and user-friendliness, when choosing which one to use, here I have a quick review of discount broker trading platforms that I am currently use.

Scottrade: $7.00 Commission

The best feature I like about Scottrade is that it shows the total market value of my account graphically right on the home page. Even though the graphic only covers up to 6 months, it give me a clear view how my investments have changed over time. This is a feature that I didn’t find at any other brokers I am using.

Scottrade doesn’t have charts on its homepage. Quotes are given as numbers only, even though it does have a separate page where I can get plots and all the technical analysis tools. To trade a stock, I need to enter the symbol in the Quick Quote first then provide all the necessary order information (or click the Trade tab on the top). What I feel not very convenient is that for those securities I already own, I have to go through the same steps (enter symbol and order info) to make a trade.

Scottrade doesn’t have streaming real-time quotes on its main web platform. However, it does have a free, Java-based streaming tool that opens in a new window (from the Streaming Quotes link on the left) and trades can be made from there as well.

TradeKing: $4.95 Commission

TradeKing probably has the simplest account homepage among brokers I am using. If no buttons or tabs or links are clicked, then I will only see my holdings and account balance and gain/loss. The gain/loss is the one feature I like because it shows the gain/loss, realized and unrealized, since the account is opened, so I know how my trades are doing over all. For most other brokers, I can only see the daily gain/loss.

Though TradeKing also has streaming real-time quotes on its web-based platform, but it’s not available to just everyone. To qualify for the stream quotes, I have to make at least 25 trades per month. Well, that’s too high a bar to just get the streaming quotes. There’s no charts on the main page either. To trade a stock, I have to click the Trading tab from the top of the screen, then enter order information. Trading stocks that I already own is a little easier, though (click the arrow on the right of the symbol to make a trade).

I once used TradeKing’s Live Chat to resolve a problem I have with dividend reinvestment and thought it’s a quite useful tool to have.

Zecco: $4.50 Commission

When I first got my account at Zecco two years ago, the interface looked terrible and difficult to use. Though Zecco has done some improvements last year on its website to make it more user-friendly, the main color of gray still makes me feel a little depressed when using it.

While TradeKing displays the overall gain/loss of the account, Zecco shows P&L, in both dollar amount and percentage, of each individual security on this homepage. This is quite useful because I don’t have to go back to check the trading recorders to figure out whether I make or lose money on the stocks. Another big plus, I think, for Zecco is that I can trade a stock right from the homepage at the top of the screen. It also allow me to trade stocks I already own without having to enter the stock symbol. And unlike Scottrade and TradeKing, Zecco now shows the daily chart of a stock on account homepage. What I want to see is a watch list of stocks I am interested in, which isn’t available currently.

Since with Zecco I can get up to 10 free trades per month if I meet certain conditions (such as $25,000 in market value or 25 or more trades per month), the information on the number of free trades available for the month is also quite useful.

While I can get free trades from Zecco, many other services it offers are paid services, such as streaming quotes ($8.00/month) and GainsKeeper ($24.99 every 6 months).

OptionsHouse: $2.95 Commission

OptionsHouse is the latest broker account I got and the one with the lowest commission cost for stock trading. Though I am not happy with the broker’s requirement of having $100 in the account in order to make a trade (read my first trading experience for details), I am quite impressed by its interface, which looks like it’s a stand alone product.

OptionsHouse is the first and only broker I am using so far to provide free, streaming real-time quotes on the web-based trading platform (the account has to be funded to get real-time quotes). Once I enter a symbol, the quote just keeps coming in real time. No need to refresh. Also the SELL and BUY buttons in the quote section make trading the stock quite easier. As you can see from the screen shot, OptionsHouse also shows a stock chart, which time span from intra-day to up to 5 years, on its main interface, along with other information about the stock. The information is more comprehensive than what Zecco provides. In addition to the chart, the broker also provides traders with tools such as news, stock watch list, and index monitor without leaving the main window.

If OptionsHouse eliminates the $100 deposit requirement, I may use it a little more.

Firstrade: $6.95 Commission

Since I run a Firstrade referral bonus sharing program myself, I get some bonuses for referring new customers to Firstrade once in a while. I basically just use that money to make a trade once I accumulate enough bonus, so Firstrade is no longer very active for me.

What I really don’t like about Firstrade’s user account website is that the Important Notices section takes a large space right in the center of the interface. I don’t find those notices very important and they are not updated very often. I’d like to see that place used for information that’s more useful for investors.

Overall, I can’t do much on the account homepage alone because, as you can see, what displayed on the homepage are not all related to trading. There are only four pre-determined indices and two index charts to display. There’ s a list of stocks to watch, but it looks like I can only enter up to seven symbols. There’s even no list of positions on the homepage, only an account number with the current market value.

Even though Firstrade doesn’t have streaming real-time quotes on the account main homepage, it also has a free, real-time streaming tool that opens up in a new window from the link in the top right corner of the screen. The tool, called X-Stream Dynamic Real-Time Quotes, allows me to trade at most 20 stocks.

OptionsXpress: $14.95 Commission

I never used OptionsXpress to trade a stock or options, except running a referral program and using their practice account, I found that OptionsXpress’s new MyOX probably has the bast web-based trading interface that’s fully customizable. On the default MyOX page, I can see basic information of my account such as balance, positions, orders, stock/options watch list, and a quote of stock that’s not in the watch list. But that’s not all it offers. In fact, I can add a new tab if I want to have more contents, such as charts, options chain, financial news, RSS feed, etc, though they will not be on the same page.

In addition, OptionsXpress also has streaming real-time quotes in a new window (use the link at the bottom of the screen). Stocks in the watch list are added to the real-time quote window, where trades can be made right from the streaming quotes window (double-click any symbol in the quote list and the symbol will appear in the order form). It’s really convenient.

ShareBuilder: $9.95 Commission

ShareBuilder isn’t really a platform for real-time trade because of its high commission cost. I used the broker to make a few automatic investing before, but abandoned it a couple of years ago. The main account page is quite simple as you can see from the above screen shot. No streaming real-time quote is offered by ShareBuilder.

What I Want

Well, after going through all the trading platforms from brokers that I have an account with, what I want from a broker is clear:

• Low commission
• Customizable account interface
• Free streaming real-time quotes
• Free gain/loss tracker
• Free practice account
• Comprehensive research tools for stock and options trading

A little bit too much to ask?

Original Post on The Sun's Financial Diary

Special bonus offers

• OptionsHouse 100 Commission Free Trades
• Lending Club $25 Sign Up Bonus
• TradeKing $50 New Account Bonus in November
• CollegeAdvantage $50 Bonus