How to Earn More on Your Bonus with Max

Bonus season: It’s time to jet away.

It’s almost bonus season, which means it’s time to think about what you’ll do with the money you earn — and how you’ll get that money to work harder for you. In today’s rising-interest-rate environment, your bonus can earn more before you spend it. 

Where should bonus checks go? Researchers have found that it’s experiences that make people happy, not objects. Spending money on vacations, theater tickets, parties, and memorable dinners out can lead to more happiness than big-ticket purchases like cars, jewelry, or clothes. Some people also find happiness at the nexus of things and experiences, for instance with summer homes, which are both an asset purchase and a venue to get family and friends together.

Investing for the long term is also smart. A bonus is a good way to pre-fund a higher-education 529 account for college-bound children or grandchildren, for instance. Tax rules allow you to contribute 5 years’ worth of your allowable contribution at once; check the IRS website for details. Or set aside an amount you’d like to put into equities or fixed income investments, and use dollar-cost averaging to buy a small amount each week or month. This method allows you to you get the best average price for the whole investment.

Many choose to keep their bonus mostly in cash, either to wait for an investment opportunity to become available — if the market falls, for instance — or because they’re anticipating an expense in the future, like a tuition bill or a private-equity fund capital call. Some firms also have regulatory or compliance rules around what investments employees can buy, leading many professionals, like attorneys and traders, to keep their bonuses in savings accounts.

While that money is in the bank, it’s only smart to make sure it’s earning the most interest possible. Many investors may not realize it’s possible for a bonus check to earn more than 1% in interest in FDIC-insured savings accounts — ten times the national average.

At Max, the focus is on helping individuals and their financial advisors earn more on cash within their portfolios, while keeping within federal deposit-insurance limits for safety. Letting your bonus grow with interest means more money to spend later when you decide what to do with it. Learn how.

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The Gardening-Leave Guide to Organizing Your Finances

Hit the road, Jack: Gardening leave is an ideal time to reevaluate your finances.

Hit the road, Jack: Gardening leave is an ideal time to reevaluate your finances.

Congratulations! You’re leaving your firm and embarking on a short paid vacation before starting a new role. During this gardening-leave period, you’re not permitted to work for your new company, and technically anything you produce still belongs to the firm you’re leaving. That means this is a perfect time to travel, read, and tackle the personal projects that you never have time to handle. Take this opportunity to make sure your finances are in order. Ideally your new job will mean you won’t have time to do this again for a while.

Here are some ways to get the most out of your gardening leave when it comes to financial organization.

 

– Documentation

Check that your will and the beneficiary designations on all your accounts are up-to-date, especially if you’ve had them for some time. Make sure you have a centralized list of all your accounts and benefits along with contact information. If someone had to call those institutions on your behalf, would they know how to reach the right person? It’s useful to keep a hard-copy “doomsday file” in a safe place for emergencies.

 

– Fee Review

What are your financial institutions charging you to manage your money?  Now is the time to look at the fees that you are paying for mutual funds, hedge funds, asset management, and credit cards, and banking. Don’t think you’re paying a fee? Consider what amount of money you have to keep with an institution to get “fee-free” services. Could that money be better invested elsewhere?

A new service called FeeX scans your retirement accounts, shows you exactly what you’re paying, and suggests similar products that cost less. Over time, money not spent on fees can compound into an important component of your portfolio.

 

-Legacy

Take a look at your charitable giving as a percentage of your income and consider whether it’s at the level you want. Also think about how you’re structuring your donations. Depending on your pace of giving, you may want to evaluate setting up a family foundation or a donor-advised fund, like Fidelity Charitable. This may allow you to maximize the tax benefits of your gifts.

Now is also a good time to think about your charitable involvement. Ask yourself whether you want to join a nonprofit board, or continue with one you’re already on. If you’re anticipating a lack of time with your new job, this may be the time to step back from volunteering or find a less time-intensive way to help.

 

-Asset Allocation

Review how you are allocating your assets among stocks, bonds, cash, real estate, and other investments. Look also at retirement and educational savings. Talk to your financial advisor about areas where you should rebalance.

Few investors think hard about their cash. This is money on the sidelines that could be working harder for you. Take a look at the yield your cash is earning in the bank. If you prefer to keep this portion of your portfolio liquid, consider online savings accounts, which pay as much as 10 times the national average in interest.

A MaxMyInterest membership can help you earn dramatically more: our members now earn about 90 basis points – 0.90% – more on their cash than the average of 0.09%. For a member with $1 million in the Max system, that comes to an additional $9000 or so each year in extra interest. Gardening leave is the perfect time to make sure you’re not leaving money on the table before you start your new job.

 

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Stock Picking for a Cause: Q&A with Portfolios with Purpose Founder Stacey Asher

Portfolios With Purpose founder Stacey Asher (left) presents a check to the Jericho Project.

Portfolios With Purpose founder Stacey Asher (left) presents a check to the Jericho Project.

On a trip to Tanzania in 2011, Stacey Asher discovered that the charity food pantry where she was volunteering was vulnerable to shutting down in situations where it didn’t have enough money, leaving 250 local children hungry. Asher, on vacation from her job in hedge fund marketing in New York City, asked how much it cost to fund the operation for a month.  The answer: a mere $250.

Asher figured she would have no trouble canvassing her network of finance friends back home to ensure a steady stream of donations that could keep the kitchen open. Then she thought, what else could she do to support her friends’ favorite causes while asking them to back hers?

The model she came up with is a cross between fantasy football and stock-picking: a stock contest that lasts a year and involves choosing 5 stocks. Participants, 90% of whom are finance professionals, pay an entry fee and choose a charity to support. The money that’s raised goes to the charity chosen by the winner in each contest category.

Portfolios with Purpose launched in 2012 as a beta, raising $25,000 for charity; the next year, after a public launch, the nonprofit raised $185,000. Based in New York City, the nonprofit now attracts some of the biggest names in the world of hedge funds and Wall Street.

Basis Points asked Asher about her idea of linking stock picking and philanthropy, and where her nonprofit is headed next.

– Is stock-picking something you do yourself?  

One of the many reasons I started Portfolios with Purpose was to create a contest in which everyone with an interest in stocks and philanthropy could participate. I was always interested in the stock market, but never confident enough to actually invest outside a small investment account comprised predominantly of index funds.  Portfolios with Purpose offers a fantasy stock competition that is completely anonymous unless you are in the top standings.  I hope this provides even the most timid of investors to test their skills and see how they rank amongst the top investors in the world as well as against their peers.

– What are the most popular charities/causes for contestants to choose?

The three most supported charities this year include Wounded Warrior Project, New York Hedge Fund Roundtable, and St Jude Children’s Research Hospital. We have over 200 different charities represented in the competition. Each charity listed includes personal comments from each player about why he or she chose the particular charity as well as a direct link to each charity’s homepage.

– What’s next for PwP?

With the 2015 contest only a month away (registration opens on October 15th), we are working hard to make sure we have another successful year. We also have PwP Mini Games launching on Oct 1st. PwP will now allow friends, firms, schools and any other social groups to customize and host their own competitions throughout the year. Mini Games will open up more opportunities for people to compete, have fun and raise money for even more worthy charitable organizations.

 

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