Here’s how you can get $50 bonus from CollegeAdvantage:

1. Follow the step in my previous post to open an account with reference code 2331122 before December 15, 2009;
2. Once the account is opened, set up a systematic saving program to invest in the plan automatically before January 31, 2010;
3. Receive the $25 bonus 90 days after the SSP begins.

Quite simple, right? In order to get the bonus, the following requirements have to be met as well:

• A minimum of $25 must be deducted per month.
• The EFT and payroll deduction must still be active at the 90-day mark.
• For EFT only, a minimum of three EFT pulls must have occurred within the 90 days.
• For payroll deduction only, at least one payroll check must be applied within the 90 days.

I have been using EFT to invest since I set up the plan more two year ago (I didn’t get any bonus back than). In my opinion, an automatic savings plan is all you need to put saving and investing ahead of spending.

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

Ohio CollegeAdvantage 529 Savings Plan, the plan that was rated as one of the best college savings plans by Morningstar in 2007 which is also the one we’re using to save for our daughter’s future education, has reinstated the $25 referral program. The program was first launched last December and from what I can see, it was a success. If you missed the bonus last time, here’s your chance again to earn $25 to jump start your college savings. I still have some referrals left from last time, so if you follow the instruction below to open an CollegeAdvantage account with reference code 2331122, both you and me a $25 bonus.

• Go to Ohio CollegeAdvantage and open an account;
• During the application, use reference code 2331122 in order to receive the bonus;
• Fund the account with at least $25 to qualify for the bonus;
• Receive the bonus in 7 t0 10 business days;
• Use the $25 bonus you just earned to start saving right away;
• Refer your colleagues and friends to CollegeAdvantage plan and earn more bonuses (up to $500) and save more for college

If you prefer, you can also the Contact form to request a referral link, but using the above reference code is much easier and faster. The bonus offer will expire on May 31, 2009 December 31, 2009.

Update:  The $25 referral bonus is back. You can follow the above instructions to open an account and get $50 bonus. Offer ends December 31, 2009.

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

Then how about using ETFs in college savings plans such as 529 plans?

Since I can control how often and how much to make a contribution in a 529 plan, the total trading cost can be reduced (trade less with a larger amount each time). So maybe it won’t be a bad choice.

I recently noticed that Barclays Capital, the creator of iShares ETFs, has teamed up with UPromise to offer iShares 529 Plan, a college savings plan that invests in nothing but iShares ETFs. Currently, the plan uses the following iShares ETFs to build its 20 investment portfolios (PDF file):

• iShares Russell 1000 Index Fund
• iShares Russell 2000 Index Fund
• iShares MSCI EAFE Index Fund
• iShares MSCI Emerging Markets Index Fund
• iShares Cohen & Steers Realty Majors Index Fund
• iShares Lehman Aggregate Bond Fund
• iShares Lehman TIPS Bond Fund
• iShares Lehman 20+ Year Treasury Bond Fund
• iShares Lehman Short Treasury Bond Fund
• BGI Institutional Money Market Fund

Some of the portfolios are age based, with target year from 2009 to 2024, some are investment style based, such as aggressive, moderate, and conservative.

Of course, when choosing a 529 plan, the number one thing comes to my mind is the cost. How much do the investments cost? Is there any administrative fee? Any sale load? As far as the cost is concerned, the iShares 529 Plan seems to be quite competitive. For all of its 20 portfolios, the annual asset based fees range from 0.50% to 1.1%, with most of them in the middle of 0.60% (still higher than the Ohio CollegeAdvantage plan that I am using). In addition, the plan also charges $10 annual account maintenance fee.

While the plan seems to be nice, there’s one catch: the plan is only available through a financial advisor, even though the advisor doesn’t earn any commission.

From what I was told when I called them, the reason for having to go through an advisor is that since the plan invests in ETFs, which may be new to some people, the advisor is to help plan participants understand the product. And the advisor only signs the forms. That’s all they do, they don’t earn any commission or collect any fee. In addition, the CSR on the phone also said the $10 fee will be waived if the account has more than $20,000 in assets.

Will you be interested in this plan if you already have an advisor? Or you’d rather stay will traditional low-cost investment such as mutual funds?

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, if you want to save for your child’s education by opening a 529 plan and decide to go with CollegeAdvantage plan as I did, then for a limited time, you can earn $25 bonus from now to May 31, 2009 December 31, 2009 to jump start your savings. CollegeAdvantage is now running a promotion that gives $25 to every new account opened through a referral. If you are interested in getting a CollegeAdvantage account and receiving the bonus, then

• Open a 529 savings account with Ohio CollegeAdvantage plan;
• Use reference code 2331122 during the application and fund the new account with $25 or more before May 31, 2009 December 31, 2009 in order to receive the bonus;
• Use the $25 bonus you just earned to start saving right away;
• Refer your colleagues and friends to CollegeAdvantage plan and earn more bonuses and save more for college

Sounds great, right? Then get the free money before it’s gone! The bonus offer will end on May 31, 2009 December 31, 2009.

Update:  The $25 referral bonus is back. You can follow the above instructions to open an account and get $25 bonus. Offer ends December 31, 2009.

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

Though participation rate in 529 plan has increased exponentially in recent years, according to Investment Company Institute, not every parent has taken the full advantage of the vehicle to save for college because of misunderstandings of the plan. Last week, I received an email from Fidelity which points me to an article on college-saving myths, which clarifies some common misconceptions of 529 plans. The following are the excerpt of the article.

Myth 1: Saving in a 529 plan will affect my child’s eligibility to receive financial aid
Truth: Assets in a 529 plan are owned by parents, not the child. Though the assets are only assessed at 5% when determining federal financial aid, as opposed to 20% for child-owned assets.

Myth 2: I shouldn’t risk investing my money in a college savings account when the market is so volatile
Truth: Trying to time market is never a good idea to invest in stocks. Instead, making contributions regularly (dollar cost averaging) help to smooth the ups and downs in the short-term.

Myth 3 : I’ll lose control over the assets in a 529 plan if my child decides not to attend college
Truth: Parents can eaisly change beneficiary if the child doesn’t want to go to college. In the worst case scenario, the money in a 529 plan can be withdrawn for purposes other than higher eduction at a 10% penalty.

Myth 4: 529 plans offer limited investment options
Truth: Though 529 plans don’t have the flexibility to offer all the investment options available, many plans do provide a wide selection of investments such as bonds, index funds and age-based portfolios at low costs.

Myth 5: I don’t have enough money to open a 529 plan
Truth: There are many 529 plans require a minimum initial investment as low as $50 and monthly contribution of $15 with an automatic investment plan. You don’t have to have a lot of money open a 529 account.
Myth 6: I don’t want to limit my child’s college options by having to invest in my state-sponsored 529 plan
Truth: Anybody can invest in any 529 plan, not just those sponsored by the resident’s own state, though some plans do offer extra tax incentives to the state’s residents.

Myth 7: The contribution limits of 529 plans won’t allow me to save enough for college
Truth: Unlike IRA accounts ($5,000 limit for 2008) and 401(k) accounts ($15,500 limit for 2008), annual contribution limits of many 529 plans can be as high as $300,000.

Myth 8: You can get a better return on your investments if you create your own portfolio of funds versus savings in a 529 plan
Truth: Because of the 10% penalty, a dedicated college savings plan can prevent parents from withdrawing money from the account for day-to-day spendings that are not related to higher education.

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, Morningstar yesterday published its annual ranking of the best and worst college savings plans. Five plans are chosen as the best 529 plans because of their superiorities in fees, investment diversification, plan flexibility and fund choices compared to their peers.

• llinois Bright Start College Savings Program (OppenheimerFunds): This plan charges 0.20% to 0.23% for index portfolios and 0.38% to 0.63% for actively managed portfolios and there’s a $10 annual fee for each index portfolio. It requires only $25 to start the plan and $15 minimum in subsequent investments. The plan is managed by OppenheimerFunds and Vanguard.
• Maryland College Investment Plan (T. Rowe Price): This plan is also one of the best in last year’s ranking. It charges $25 account fee annually plus 0.28% program fee. The underlying funds’ expense ratio range from 0.40% to 0.69%. The minimum initial investment is also $25. For Maryland residents, up to $2,500 contribution can be deducted from state taxable income.
• Virginia CollegeAmerica (American Funds): Another winner in the 2007 ranking, Virginia CollegeAmerica plan is a broker-sold college savings plan which offers 22 American funds. The plan charges $10 for opening an account as well as $10 annual account fee. The expense ratio of this plan ranges from 65% to 1.10%. Virginia residents who participate in this plan can deduct up to $2,000 ($4,000 beginning 2009) from state income.
• Virginia Education Savings Trust (Virginia): VEST plan give investors a large selection of index funds and actively managed funds in age-based portfolios. Plan managers include Vanguard, Templeton, and American Funds. The plan charge $25 when an account is opened plus $10 annual fee. Expenses of underlying funds are between 0.06% and 0.32%. $2,000 contribution to the plan can be deducted annually for Virginia residents.
• Colorado Scholars Choice College Savings Program (Legg Mason): This is another broker-sold plan. The plan doesn’t charge fee for opening an account, but there’s an annual maintenance fee of $20 for assets below $2,500. In addition to the funds’ expenses, the plan also adopts a portfolio-based fee structure, making more complicated than other plans. Contributions are tax deductible for Colorado residents only.

There are also five plans named by Morningstar as the worst:

• Ohio Putnam CollegeAdvantage (Putnam Investment Management)
• Mississippi Affordable College Savings Program (TIAA-CREF)
• Mississippi Affordable College Savings Program (TIAA-CREF)
• New York 529 College Savings Program (Upromise)
• Nebraska AIM College Savings Plan (Union Bank (AIM))

The main reasons for those plans being put on the worst list are: 1) high costs; 2) lack of diversification; and 3) quick management changes, which are bad for long-term investments such as saving for college. I am using Ohio CollegeAdvantage (now you can earn $25 referral bonus from CollegeAdvantage plan) but, fortunately, it’s not the Putnam broker-sold plan. For me, when the most important element to consider when choosing a 529 plan is costs, which include both the administrative fees and funds’ expenses, followed by investment choices. State income deduction isn’t really an issue as I didn’t want to be restricted to the state’s plan for the tax incentive. I’d rather choose a plan that’s available nationally with low costs and solid performance.

Which plan are you using?

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 529 plan I got for our first daughter was the UPromise College Fund which is tied to my Citi UPromise credit card. Though the fund is also managed Vanguard, its expense ratio (ER) is rather high (0.65% for aggressive growth portfolio) and it charges $20 annual account maintenance fee. For this plan, what I like is, through UPromise, it automatically invests rewards earned form the credit card in the fund. The $20 fee, however, is really annoying. So this time I want to get a different plan for our second daughter. And since New Jersey doesn’t offer any tax incentives for using the in-state plan, I am free to choose any plan I want, based mainly on the plan’s expenses and manager.

There were a couple of plans that I identified last year when researching for college savings plans for our first daughter, namely College Savings Iowa 529 Plan and Utah Educational Savings Plan. However, the Iowa plan charges 0.62% ER plus a $25 account maintenance fee, while the Utah plan has a lower ER (0.25% to 0.39%) , it also requires $25 annual fee that I want to avoid. Eventually, I followed Lazy Man’s suit and decided to go with Ohio CollegeAdvantage 529 Savings Plan for its lower fees (0.32% to 0.37% ER, no annual account maintenance fee). The Ohio plan is also managed by Vanguard.

The account opening process was quite simple, taking about 10 minutes to complete:

1. Account owner’s information, including name, DOB, SSN, driver license, and mailing address;
2. Email address and account user name and password;
3. Verification of email address;
4. Beneficiary information, including name, DOB and SSN;
5. Initial contribution selection, including amount, investment choice, and bank information;
6. Automatic contribution plan set up;
7. Successor owner information, in case, you know…

I made an initial investment of $1,200 just to make up the four months I missed and set up an automatic monthly contribution of $300, the same amount as we set aside each month for her sister. If the market can return an average between 8 to 10%, by the time they reach college age, they should each have between $14,000 and $180,000 in their college savings account if we can maintain the monthly contribution for the next 18 years. My parents supported my college education. So I feel I have the obligation to support my children as well, as long as I have the ability to do so. If they can find a job to pay part of the tuition, that’s great; if not, I want to be able to pay for the school at their choices, though $180,000 may not be enough at that time. This support, however, doesn’t come at the expenses of our own retirement savings. We both contribute close to the limit to our 401(k)s and maxed out our Roth IRA accounts every year.

The investment choice I made was Vanguard Aggressive Growth Index Portfolio, which has 85% in Vanguard Total Stock Market Index Fund and 15% in Vanguard Institutional Developed Market Index Fund. They also have aged-based aggressive portfolio, however the allocation shifts from 100% stocks to 65% equities 35% bonds when the age reaches only 6. That’s a little too fast in becoming conservative. With a 100% in equities allocation, I hope the money can grow a little faster. When our daughters get close to college age, I will do the adjustment myself to preserve the money.

Update: Open an account before December 31, 2009 and get $50 bonus.

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 followings are my experience with these two shop and save for college programs.

How they work

Both programs are free to join and work in almost identical way: join the program online (join BabyMint or UPromise), earn cashbacks by either shopping at their respective network merchants or in store using their respective credit cards, save and invest the rewards for future college education.

How to earn rebates

Both UPromise and BabyMint have their own network of merchants and, if you browse through them, you will find companies are likely to be in both networks. So if there’s no difference between network member merchants, how about the rebates one can earn to shop through them. That will depend on what you are looking for. Since I do most of my electronic shopping online, here are some the rebates offered by UPromise and BabyMint for some sites I used most often:

• CircuitCity: UPromise – 3%*; BabyMint – 1.5%
• CompUSA: UPromise – 1%; BabyMint – 2%
• Staples: UPromise – 4%*; BabyMint – 2.5%
• Buy.com: UPromise – 1%; BabyMint – 1%
• BestBuy: UPromise – 2%; BabyMint – 1%

From my experience, BabyMint offers slightly higher rebates, but UPromise has a wider selection and, from time to time, it runs promotions with extra rebates (they are currently offering extra 2%* rebates through March 31, 2007).

The two programs also offer their own credit cards for members to shop in-store and earn cashbacks. However, the BabyMint College Savings Credit Card, issued by MBNA, appears to be terminated as I am not able to find any active link to the card. On the other hand, the UPromise MasterCard from Citi is still available, which basically gives 1% back for every eligible purchase and 2% cashback for filling up your car at Exxon Mobil station. In addition, there are additional 10% savings when you buy items with “UPromise” sign at grocery and drug stores.

How cashbacks are credited

The cashback you earned either by shopping online or off-line through these programs won’t be available immediately. In fact, there are some lengthy delays before you notice the credits on your statement and that delay could be as long as two months. For example, I made a purchase on July 28, 2006 at Buy.com through BabyMint and the cashback was credited to my account on September 22, 2006. At UPromise, rebates for a transaction on January 31, 2007 was posted on March 6, 2007. However, at UPromise, a transaction made through the network shows up immediately with a “pending” status.

How to save for college tuition

What I like the most about these programs is that the cashback I earned can be automatically invested in a college savings account that’s linked to my UPromise or BabyMint account.

Every quarter, the cashback in the UPromise account can be transferred to either a UPromise College Fund managed by Vanguard or a state-sponsored 529 plan (Arkansas, New York, Iowa, Missouri, North Carolina, North Dakota, Pennsylvania, and Colorado). Similarly, rebates of $25 or more in a BabyMint account can be invested in any 529 plan or a Coverdell educational savings account linked to the account on a monthly basis. As you can see, BabyMint offers more investment choices (any 529 plan) with more flexible schedule (monthly). BabyMint, together with SAGE Scholars, also has a Tuition Rewards program that allows members to double their savings by redeeming the cashbacks as tuition credits at over 175 colleges and universities

In addition, cashbacks can also be used to pay off outstanding student loans.

How to save more

BabyMint has a referral programs that let members to save more by spreading the word. At BabyMint, every referral will receive 5 BabyMint Bucks when joining and after they accumulate at least $25 in their BabyMint account, you will receive 5 BabyMint Bucks as well. At UPromise, members can invite friends and family to join the program and allocate a portion of their cashbacks to your children’s savings account.

While both BabyMint and UPromise offer rebates when shopping through their member merchants, we should always look for the best price instead of having how much rebates we can earn as the first priority. After all, we don’t want to shop just for the sake of getting the cashbacks. Also, saving and investing for future college is a long-term project, and as any long-term investment plan, we should look beyond the returns to find the right plan. Other factors, mainly fees, are also critical in selecting a 529 plan (check out Morningstar’s best and worst 529 plans). It’s nice and convenient that BabyMint and UPromise allow us to transfer cashbacks to a linked college savings account, but that shouldn’t be the only criterion.

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 giving with state-sponsored 529 plans which offer tax-incentives remains the first choice for parents, Morningstar cautions that the incentives “don’t necessarily overcome the disadvantages of a poor or costly plan.” In reviewing more than 80 college savings plans offered in 48 states and the District of Columbia, Morningstar put a great deal of emphasis on such critical aspects as plan costs, diversification, and asset allocation (which also happen to be the core of building a sound personal investment portfolio). The top five 529 college savings plans are:

Among them the Colorado plan and Virgina plan are sold through financial advisors or brokers (therefore, the front-end load), while the other three are direct-sold plans. One of the main features of these plans is that they all have relatively low costs.

At the other end of the spectrum, the report also named 6 worst 529 plans:

and, as compared to the best plans, they all have higher fees and ERs. Also, as noted by Morningstar, these plans don’t offer an appealing line of products.

* $20 maintenance fee is waived for Colorado and Wyoming residents and for more than $2,500 account balance.
** $25 maintenance fee is waived for direct payroll contributions, or a balance of $25,00o.

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

Today, I received a letter from Fidelity about some changes to the plan:

• The annual account maintenance fee of $20 has been eliminated;
• Account minimums have been lowered from $1,000 to $50 – or $15 a month with automatic investment;

The elimination of the account maintenance is definitely a welcome change as the $20 is about 1.67% of the total annual contribution. I have another 529 plan with Vanguard which is linked to my Citi Upromise Credit Card. That account, however, continues to charge $20 maintenance fee, though it has a one-year return of 15.94% (I chose Vanguard Aggressive Growth Portfolio for my daughter’s 529). According to a BusinessWeek online article in May, “Vanguard and Upromise charge a premium.”

In 529s where Vanguard teams up with rebate-outfit Upromise to provide administrative services – or where Upromise runs the plan alone – account holders may be paying up to twice as much in fees as their counterparts in other plans with Vanguard funds.

The plan itself has another 0.65% annual plan fees, higher than what Fidelity charged for its 529 plans, though the rebates from Upromise can offset the fees a little bit.

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