Eric's Financial Page

Banks
Brokers
Credit Cards
Insurance
Investing
Internet Access
Loans
Long Distance Phone
Mutual Funds
Value Averaging investing

Banks — For non-Internet banks, I endorse USAA Federal Savings Bank of San Antonio, TX. They were named "Best Bank in America" by Money magazine in its June 1995 issue. "By our measures, USAA's combination of safety, generous savings rates, minimal fees, unparalleled convenience and five-star service beats the dividends off the competition," Money wrote. Because they have no branch offices, you need to be comfortable with banking by phone, Internet, and/or mail.  They reimburse you for any ATM charges you incur when using other banks' ATMs.  You can call them at 1-800-531-BANK.

If you are willing to consider the new "Internet banks", I currently endorse pcbanker.com, a division of American Bank. Their e-checking accounts pay interest rates superior to the best money market mutual funds. They reimburse up to $6 per month in ATM fees. They offer an on-line bill paying service for free. No per-check charges.

I recently became aware of an rating service for on-line banks at Gomez Advisors. They do not rate USAA Federal Savings Bank, however.

Brokers — Never listen to the advice of a broker! They have an inherent conflict of interest: they usually make money (on commissions) when they get you to make trades. They also often have internal incentives to "push" certain investments. Therefore, if you must deal in individual stocks, go with a discount broker that won't give you bad advice (because they don't give you any at all) and will charge MUCH less in commissions. Again, Gomez Advisors has a useful rating service. I suggest shopping for discount brokers by price.  Our current favorites include Scottrade, BrownCo,  Freetrade, and Ameritrade.

You might also check out the ratings that SmartMoney magazine did in 2002.  Here's the listing by price.

That said, I am in general against investing in ANY individual stocks due to the extraordinary risk it represents. It is just not a good idea to place all your eggs in one basket (or two or three). Even if it seems to be a very good basket! Much better is to use one or more well diversified mutual funds, preferably ultra-low cost no-load index mutual funds, such as those prominently offered by Vanguard.

Credit Cards — Note the advice in this section only holds if you pay off your balance every month.  If you don't, you should probably be using a debit card instead of a credit card.  If you can't pay off your credit card every month, I suggest that you only use credit cards for REAL EMERGENCIES. 

In general, I endorse:

I used to endorse Discover, because it has similar terms, but Discover doesn't give you a full 1% cash back on all purchases, only those in excess of the first $3,000 charged each anniversary year. For a good summary on credit cards that have associated benefits, see here.

Credit Union — I also endorse use of Credit Unions whenever possible -- they are an excellent way to get financial services at reasonable prices.

Insurance — Insurance is a necessary evil.

For auto insurance, I use the best Auto Insurance company in the world -- USAA (unfortunately, not everyone can get insurance with them -- you need to meet their eligibility requirements). Another great choice is Amica. Both USAA and Amica are mutually owned. In other words, they are owned by the people who buy insurance through them.

See here for more unbiased, objective info about shopping for auto insurance. For a rating of various auto insurance supermarkets, see here.

For health insurance, check the National Committee for Quality Assurance before selecting a plan. They accredit health insurance plans nationwide; check to see whether a particular plan is accredited. Here's another source of unbiased, objective info about health insurance. Many insurance plans require you to choose a primary care provider. Here's two resources to help you do that:

I don't have any life insurance because I don't need any -- most people who buy insurance either don't need any, buy too much, or pay too much for what they do buy. If you need any life insurance whatsoever, you should get term insurance -- and then only as much as you really need and only for as long as you truly need it. See Eric's Life Insurance Page for more information. Here's another source of unbiased, objective info about life insurance.

Internet Access — A relatively recent phenomena is the emergence of Free Internet Access. There are now at least a dozen providers of free Internet access nationally. In general, the way they work is as follows:

  1. You register and download the free Internet access provider's software.

  2. When you want to connect to the Internet, you use the software to make a connection. When you are connected to the Internet, the software brings up a small box on your screen and shows you advertisements. The box is always in the foreground (i.e., it is not possible to hide it beneath another window or to minimize it without killing your connection). This is how they can afford to give you free access -- the advertisers pay for the service in exchange for the guarantee that you will be forced to look at the ads.

If you can put up with the advertising banner on your screen, I see no reason not to use one of the FREE Internet service providers (I do). Why pay for something that you can get for free? Here's a pretty comprehensive search engine of free Internet access providers. Check for the ones with local phone access in your area.

If you are intent on paying for your Internet access, there are many alternatives. I haven't done much in terms of price comparisons here, but there are many, many good deals, especially small local companies if you don't travel much. Shop around, but be certain that the ISP you select has a phone number you can use to access it which is a local phone call for you. Here's a place to search for ISPs that serve your area (that search engine isn't very comprehensive). Here's among the good deals I've found, in order:

Investing — There is an excellent on-line book discussing most investment concepts in a wonderfully understandable method: Frank Armstrong's "Investment Strategies for the 21st Century". Here's another primer on investment concepts: The Vanguard University. See the Mutual Fund discussion below for more on investing.

Loans — Being in debt is usually a bad thing and I recommend avoiding it, with a notable exception: mortgages. Because interest paid on mortgages is tax deductible, the government is effectively paying about a third of the interest on your loan. It is difficult for most people to borrow money less expensively than with a mortgage. But it still is beneficial to pay down mortgages early, just as it is beneficial to pay back all loans early (unless there is a penalty for doing so). For more information on the phenomenal benefits of paying off loans early, see Eric's Loan Page.

Long Distance Phone — Long distance phone service is an incredible value these days. It should be comparison shopped, like any other commodity. I've done a lot of research into the best deals. See Eric's Phone Page for lots of detailed info comparing the best deals in Long Distance, Phone Cards, Free fax services, and cell phone service. The bottom line is that, if you are paying any more than about 5 cents per minute for state to state long distance, if you are paying a monthly fee, or if you are paying more than about ten cents per minute for a phone card, you are probably getting ripped off!

Mutual Funds — For mutual funds, I primarily endorse those of the Vanguard Group for most people — These guys are absolutely obsessive about keeping costs down and it shows. I strongly endorse these guys as a place to buy mutual funds, especially the Vanguard-Index 500 fund and the Money Market Reserve-Prime funds, both of which are the clear leaders in their respective peer groups of funds. All of their funds are no-load funds -- nobody should ever pay a load on a mutual fund! Here's an excellent (though long) article about the advantages of investing in index mutual funds. For more info. on the issue of Loads vs. No-Load funds, see Eric's Load No-Load Page. For a discussion of tax-deferred variable annuities, see Eric's Variable Annuity Page.

Value Averaging investing -- Much has been made of the simplicity, elegance, and benefits of the investment philosophy known as dollar cost averaging. A few years ago, I read of an improvement on this idea developed by Dr. Michael E. Edleson of the Harvard Business School which exaggerates the benefits of dollar cost averaging. To read of this improvement and my improvement on it, check out Eric's Value Averaging Page.

Eric's personal Home Page
Eric's Life Insurance Page
Eric's Load No-Load Page
Eric's Loan Page
Eric's Phone Page
Eric's Value Averaging Page
Eric's Variable Annuity Page

To send Eric an E-Mail, click here.

This page last updated 05/31/07

© 1998, 1999, 2000, 2001, 2002, 2003, and 2004 Eric E. Haas

1