Picking up Nickels

Tuesday, April 15, 2014

March CPI-U numbers released: April 2014 issue I Bonds are a compelling buy

The U.S. Bureau of Labor Statistics released the March 2014 Consumer Price Index (CPI-U) inflation data this morning, which increased by 0.64% last month.

As always, now (along with the release of the September CPI-U) is one of the best times to consider purchasing I Bonds. The reason for this is that we now know what the rate of return for April 2014 I Bonds will be for both the first and second six month periods, which is important since I Bonds must be held for 12 months before they can be redeemed.

Using the CPI-U data from September 2013 (234.149) and March 2014 (236.293) (courtesy of inflationdata.com), we can calculate the variable rate for the second 6 month period for April 2014 issue I Bonds:



That means these bonds would earn a rate of 1.38% (using 0.2% fixed & 1.18 variable) for the first 6 months and 2.04% (using 0.2% fixed & 1.84% variable) for the second 6 months. Based on this, April 2014 issue I Bonds are a competitive investment when compared to something like the 13 month CD @ 1.25% APY currently being offered by Quorum Federal Credit Union.

The above average rates offered by April 2014 I Bonds over the next 12 months make them a compelling buy in my opinion, and I plan to max out my 2014 $10,000 annual limit at treasurydirect.gov by the end of April.  While I could get a better rate of return for the first six month period by deferring my purchase until May, I am unconvinced that the modest 0.2% fixed rate portion currently available (the first above 0% offered since May 2010!) will remain when rates are reset in May. If you have some cash that you're looking to put in a safe place where it can earn a competitive yield over the next year, then April 2014 issue I Bonds are worth considering.  They continue to be a pretty good deal for a government-backed security that can never lose money and is not subject to state and local income tax.

Friday, April 11, 2014

April 2014 Financial Asset Roundup

Here are my current financial assets as of the market close on April 10th, 2014:


Asset Mar
2014
Apr
2014
Change
Checking 2,680 6,585 3,905
Money Market 52,883 50,456 -2,427
Savings Bonds 81,945 82,067 122
Treasury Bills 0 0 0
CDs 62,300 62,477 177
Brokerage 118,830 120,249 1,419
401k 136,735 137,834 1,099
Roth IRA 89,245 87,884 -1,361
SEP IRA 444,793 433,380 -11,413
529 Savings 102,349 102,812 463



Total Assets $1,091,760 $1,083,744 -$8,016
   
 
-0.73%


After a volatile ride over the past month, the S&P 500 is down 2.35% since the last update:

(chart courtesy of msn.com)

On the jobs front, the unemployment rate for March was flat at 6.7% with 192k new jobs added. Oil prices are up a bit, rising from $101 to $104over the past month. The big news of the week has been the Heartbleed security vulnerability that has compromised the OpenSSL open source implementation of the SSL and TLS encryption protocols used by many web sites for secure http (https) communications. It's been difficult to know what sites may have been compromised, but mashable.com has a nice list of popular sites and their status. Interestingly, many financial institutions (Vanguard, Fidelity, Bank of America, etc.) claim that they are not affected by this security hole. That is somewhat comforting I suppose...

On the financial front, my only pending move at the moment is to watch the March CPI-U numbers due for release next week to help evaluate a potential Series I Savings Bond purchase. I'm currently leaning toward an April 2014 I Bond purchase due to the 0.2% fixed rate portion (it had been 0% for three years!), but I'll be able to make a more informed decision when the March numbers come out on Tuesday, April 15th. I also took a distribution from my S Corp's profits that currently accounts for the inflated balance in my checking account (more on that below).

Unfortunately, a large portion of my checking account balance will be used to pay my 2013 Federal and state personal income taxes. Mrs. Frugalson has already adjusted the withholding on her W-4 form, so I'm hoping that we won't be caught off guard (or subject to an underpayment penalty!) when our 2014 personal tax returns are due next year.

Tuesday, March 11, 2014

March 2014 Financial Asset Roundup

Here are my current financial assets as of the market close on March 10th, 2014:


Asset Feb
2014
Mar
2014
Change
Checking 1,558 2,680 1,122
Money Market 51,657 52,883 1,226
Savings Bonds 81,833 81,945 112
Treasury Bills 0 0 0
CDs 62,142 62,300 158
Brokerage 113,865 118,830 4,965
401k 132,566 136,735 4,169
Roth IRA 85,903 89,245 3,342
SEP IRA 422,228 444,793 22,565
529 Savings 99,250 102,349 3,099



Total Assets $1,051,002 $1,091,760 $40,758
   
 
3.88%


The S&P 500 has recovered nicely, rising 4.30% since the last update:

(chart courtesy of msn.com)

On the jobs front, the unemployment rate for February rose slightly from 6.6% to 6.7%. Oddly enough, the report was actually stronger than expected due to the number of new jobs being created. Oil prices were somewhat flat, rising slightly to around $101 over the past month.

On the financial front, the very cooperative stock market has helped boost my asset levels to a new all-time high. I've also made my final 2013 SEP IRA contribution for my S Corp and am awaiting the March CPI-U numbers due next month to help me evaluate a potential Series I Savings Bond purchase.

As for the rest, my 2013 business and personal tax returns are finally complete. Unfortunately the number of exemptions on Mrs. Frugalson's W-4 form were a bit on the high side and she ended up underpaying her Federal income tax by a good amount last year. The 2013 tax year was her first full year on the job since rejoining the workforce, so we ended up being caught a bit off guard. As a result, we owe a pretty good amount of Federal income tax for 2013. :( So, we'll write the Feds a nice check next month and I've already had her fill out a new W-4 form to prevent this from happening again next year (and help us avoid paying an underpayment penalty!). I'll also probably end up taking a distribution from my S Corp to help cover the cost. Good times. :p

Tuesday, February 11, 2014

February 2014 Financial Asset Roundup

Here are my current financial assets as of the market close on February 10th, 2014:


Asset Jan
2014
Feb
2014
Change
Checking 3,032 1,558 -1,474
Money Market 47,747 51,657 3,910
Savings Bonds 81,745 81,833 88
Treasury Bills 0 0 0
CDs 61,966 62,142 176
Brokerage 116,254 113,865 -2,389
401k 135,832 132,566 -3,266
Roth IRA 87,627 85,903 -1,724
SEP IRA 430,055 422,228 -7,827
529 Savings 98,669 99,250 581



Total Assets $1,062,927 $1,051,002 -$11,925
   
 
-1.12%


The S&P 500 has pulled back 2.31% since the last update:

(chart courtesy of msn.com)

On the jobs front, the unemployment rate for January fell one again from 6.7% to 6.6%, which is the lowest number in more than five years. Unfortunately, this has once again been characterized as a disappointing number due to the amount of people dropping out of the workforce. Oil prices rose to around the $100 level over the past month, which helped contribute to my $3.75 per gallon heating oil delivery a couple of weeks ago.

On the financial front, I'm moving into a quiet period as I work on my S Corp and personal 2013 income tax returns. I'll be making my final 2013 SEP IRA contribution soon since my S Corp returns are due next month, and I'll also be keeping an eye on the monthly CPI-U numbers when an eye toward a Series I Savings Bond purchase.

As for the non-financial, I'm getting quite sick of the cold and snowy weather during this fine winter season. I'm certainly tired of ruining the impeller belt on my trusty Ariens snow blower that I bought for a nicely discounted price nearly seven years ago. I've burned up four of them over the past few years during slushy conditions despite trying to be diligent about keeping the snow blower chute clear and unclogged. While annoying, fortunately it's a cheap fix (less than $10). :(

Monday, January 13, 2014

January 2014 Financial Asset Roundup

Here are my current financial assets as of the market close on January 10th, 2014:


Asset Dec
2013
Jan
2014
Change
Checking 3,068 3,032 -36
Money Market 44,861 47,747 2,886
Savings Bonds 81,626 81,745 119
Treasury Bills 0 0 0
CDs 69,878 61,966 -7,912
Brokerage 108,943 116,254 7,311
401k 132,908 135,832 2,924
Roth IRA 85,770 87,627 1,857
SEP IRA 420,002 430,055 10,053
529 Savings 96,292 98,669 2,377



Total Assets $1,043,348 $1,062,927 $19,579
   
 
1.88%


The S&P 500 is up 2.21% since the last update, continuing to hover around all-time high levels:

(chart courtesy of msn.com)

On the jobs front, the unemployment rate for December fell from 7.0% to 6.7%, which was yet again considered disappointing. Oil prices fell to around $92 over the past month, which I wish would translate to lower heating oil prices in light of the recent Polar Vortex that brought dangerously low temperatures to much of the country.

On the financial front, my asset levels have again surpassed the all-time high I reached last month. In terms of money moves, I did have a Penfed 1 year CD @ 1.25% APY mature last week and used most of the proceeds to pay for Christmas 2013 as well as the balance of my new central air conditioning system. I'm probably in a holding period for further money moves until April when I'll evaluate Series I Savings Bonds once the March CPI-U numbers come out though.

As for the non-financial, I'm getting started on my 2013 personal and S Corp income tax return prep. I'm also dealing with the personal hell that is the Registry of Motor Vehicles. Apparently the new car I purchased last fall wasn't titled properly and the RMV is making the process of getting this resolved as tedious as possible. If nothing else, it would be nice if the lady who answered the phone last week didn't act like I had interrupted her nap when I called. Fun, fun, fun...

Wednesday, December 11, 2013

December 2013 Financial Asset Roundup

Here are my current financial assets as of the market close on December 10th, 2013:


Asset Nov
2013
Dec
2013
Change
Checking 1,380 3,068 1,688
Money Market 52,374 44,861 -7,513
Savings Bonds 81,519 81,626 107
Treasury Bills 0 0 0
CDs 59,726 69,878 10,152
Brokerage 107,465 108,943 1,478
401k 131,342 132,908 1,566
Roth IRA 84,676 85,770 1,094
SEP IRA 415,116 420,002 4,886
529 Savings 94,531 96,292 1,761



Total Assets $1,028,129 $1,043,348 $15,219
   
 
1.48%


The S&P 500 is up 1.73% since the last update, clinging to near all-time high levels:

(chart courtesy of msn.com)

On the jobs front, the unemployment rate for November fell from 7.3% to a five year low of 7.0%. Perhaps our economy is finally over the hump? Oil prices rose slightly to around $97 over the past month, although I've observed a disproportionate increase in local gasoline prices.

On the financial front, my asset levels have again surpassed the all-time high I reached last month. This has been a very prosperous year for us here at Casa Frugalson, where my assets have grown 20%+ even while paying cash for a number of large purchases (including a swimming pool and central air conditioning). In terms of money moves, I did put a bit of free cash into a market-leading Penfed 3.04% APY 5 year CD after they sent me an email about the surprise rate increase. I don't imagine that this deal will last beyond the end of the year, so I would encourage anyone interested in a Penfed CD at this rate to act sooner rather than later.

As for general life happenings, I'm pleased to say that my central air conditioning installation has been completed. Except for some accidental drywall damage (which the HVAC contractor is in the process of getting repaired and repainted), I have to say that I've been very impressed with how neat and polished the install looks. There is a bit of work to be done to get reimbursed for some energy efficiency incentives, but we are at least prepared for the hot weather next year. Other than that, I'm focusing on getting the end of year items completed for my S Corp while trying to get a handle on preparations for the Christmas holiday. This year has been really good to us, and my hope is that the trend continues into 2014. To anyone reading this, I wish the same to you and yours.

Tuesday, November 12, 2013

November 2013 Financial Asset Roundup

Here are my current financial assets as of the market close on November 11th, 2013:


Asset Oct
2013
Nov
2013
Change
Checking 2,271 1,380 -891
Money Market 41,284 52,374 11,090
Savings Bonds 81,399 81,519 120
Treasury Bills 0 0 0
CDs 75,758 59,726 -16,032
Brokerage 103,576 107,465 3,889
401k 128,549 131,342 2,793
Roth IRA 77,329 84,676 7,347
SEP IRA 393,551 415,116 21,565
529 Savings 92,238 94,531 2,293



Total Assets $995,955 $1,028,129 $32,174
   
 
3.23%


The S&P 500 is up 3.61% since the last update, closing yesterday within a fraction of its all-time high:

(chart courtesy of msn.com)

On the jobs front, the unemployment rate for October rose slightly to 7.3% but more jobs were created than expected (surprising since a large number of federal workers were furloughed due to the government shutdown). Oil prices have continued to pull back from $102 to around $95 over the past month, and I've seen local gasoline prices start to fall to slightly above $3 per gallon.

On the financial front, my asset levels have surpassed the all-time high I reached last month. Even better, I have finally hit the $1m asset milestone! I've certainly come a long way over the past seven years since I started this blog in August 2006, and seeing my assets more than double during that time is a testament to my approach of saving, investing, and "staying the course". I did add some new money to my investments though, with full 2013 Roth IRA contributions for Mrs. Frugalson and myself plus an initial 2013 SEP IRA contribution from my S Corp.

The other big happening around here is that I've chosen an HVAC contractor to install central air conditioning in my home. It should hopefully be completed before the next update, which means we will be ready for any heat waves that may hit the Northeast in December. :p