## Etrade Lowered My Commission From $9.99 To$7.99

When I first opened my account with E*TRADE, the trade commission was $12.99. You needed to have a minimum balance of a certain amount to qualify for a$9.99 commission. Sometime later, the commission was lowered to $9.99 for everyone. Currently the pricing rate is like this: the standard commission is$9.99 per trade for 0-149 trades a quarter, and $7.99 for 150+ trades a quarter. Last week, I received a call from an E*TRADE representative. He told me that because of a negative feedback I gave them on a survey, they decided to lower my trade commission from$9.99 to $7.99, which, according to him is more in line with industry. The representative told me that my trade commission can be lowered further, but I need to have a certain number of trades a quarter. He just had to have someone with a higher clearance to speak with me. I don’t trade frequently with my E*TRADE account, so I declined, but I am still really happy that they lowered my commission cost. I don’t remember when I filled out the survey, but it was at least a couple months ago. If you are an E*TRADE customer, occasionally you get an email asking you for your feedback through an online survey. If you complete the survey, you will be entered into a drawing for some prize money. Sometimes it’s$1,000, sometimes it’s $2,500. I filled out the survey because I was tempted by the prize money, but I never expected they would actually lower my trade commission based on my feedback! One of the questions asked me to rate the commission cost on a numerical scale, and I gave them a low rating. I might even have complained about their commission is in the comments section. However, I remember filling out another E*TRADE survey more than a year ago with similar feedback, but I didn’t get a call from them back then. So I don’t know if they call me based solely on my feedback. Maybe it’s the account balance? It did increase between the time I filled out the surveys. Or maybe it has something to do with the trade frequency? I only made three trades so far in my E*TRADE account this year, which is down from around 20 trades last year. Or maybe it’s because this time I told them that I am using another online brokerage as my main trading account. I am not sure what finally trigger them to offer me the$7.99 commission, but if you are with E*TRADE, it might be worth your time to fill out their survey.

I am aware that there is another way you can get the $7.99 trade commission. You can call and ask them. The steps are listed out in this post on Epic Finances. The post was written back in 2012, so this is not new information. I also have friends of friends who really did wanted to transfer from E*TRADE to another brokerage firm and got the$7.99 commission rate when they called them. I guess I could have done that a year or two ago too, but I didn’t bother to do so because I have never intended to close my E*TRADE account, and I am not a frequent trader.

For the purpose of disclosure, I am not getting paid to write this post. I am writing about this because I am very impressed that E*TRADE took the initiative to call me to lower my commission. It really made me feel that they do value me as a client. Kudos, E*TRADE. Kudos.

## My Trading Account Status 7/12/2014

Here are the holdings in my trading account as of July 12th, 2014.

DescriptionSymbolQuantityDate AcquiredCost BasisMarket Value
TOTAL$17,000.73 AFLAC INCAFL10001/31/14$6,278.95$6,266.00 AFLAC INCAFL8903/27/14$5,540.75$5,576.74 NELNET INC CL ANNI12112/11/13$4,970.79$5,066.27 CASH$91.72

The DOW fell below 17,000 this past week, but the total value of my account remained above $17,000. I made no trades this past week. Again there is nothing exciting to report. For some reason NNI jumped$1.10 a share on Friday 7/11 with no news. During after hours trading, it fell by exactly $1.10. Trading volume on Friday was 212.9k, which is double the trading volume on a normal day, but it is not unusually high. It does make me wonder what’s going on with this stock, even though I still like the long term prospects of NNI. My real bottom line on 7/12/2014:$17,000.73

## Checking The Math On My Ally CD Interest

I blogged about my experience with closing an Ally CD account a while ago. But as I was writing that post, I found that I had a hard time reproducing the numbers on my statements.

Here are the facts:

• 4/9/2013 – I deposited $7,000 into an Ally CD account • 12/31/2013 – Interest paid in 2013 is$55.73 per the 2013 1099-INT
• 4/21/2013 – I closed my account. Per the April statement the interest paid in 2014 is $23.09, and the early withdrawal penalty is$12.57.
• The annual percentage yield is 1.09%

Total interest paid is $55.73+$23.09 = $78.82 First, let’s check the math on my 1099-INT. I am using this formula: $A(t) =A_0(1+\frac{r}{n})^{nt}$ Where: $A_0$ = principal amount $t$ = time period the intial amount is deposited for in years $n$ = number of times the interest is compounded per year $r$ = annual interest rate $A(t)$ = total amount accumulated after t years The principal amount is $A_0$ =$7,000 and the interest is compounded daily, $n$ = 365. Assume that the interest earned during the day is credited at 0:00am the next day. Then interest is compounded 266 times in 2013 from 4/9/2013 to 12/31/2013. So we have:

$A(266)=\7,000(1+\frac{1.09\%}{365})^{(365)(\frac{267}{365})}=\7,055.83$

So, should the interest for 2013 be $55.83 instead of$55.73? But wait, the $7,000 was not in the account for the entire day on 4/09/2013. I check my account activity and it turns out that I transferred the money into my CD at 11:59am. On 4/09/2013 only$7,000 x 1.09% x (0.5/365) ~ $0.1045 of interest is earned. Using $A_0 = A_1$=$7,000 x 1.09% x (0.5/365) , the total amount from 4/09/2013 to 12/31/2013 comes out to be:

$A(265)=A_1(1+\frac{1.09\%}{365})^{(365)(\frac{265}{365})}=\7,055.72$

Okay, much better. Now it is only off by only 1¢, which is probably due to rounding error.

Let’s apply this to 2014. I am going to use $A_0 = A_2$ = $7,055.73 as the principal amount. Interest is compounded 110 times from 1/1/2014 to 4/21/2014: $A(110)=A_2(1+\frac{1.09\%}{365})^{(365)(\frac{110}{365})}=\7,078.95$ There is a difference of 13¢ when compared with the statement amount of$78.82. I am already assuming that no interest is earned on 4/21, the day that I called customer service, but somehow my number is still more than the one on the statement.

What about the penalty? It doesn’t seem like the penalty is the interest that I earned in the last 60 days:

Using $A_0= A_2 =\7,055.73$

$A(110) - A(50) = \12.68$

The penalty is closer to the first 60 days of interest had the initial deposited amount been in the account for a full 60 days.

$A(60) -\7,000 =\7,000(1+\frac{1.09\%}{365})^{(365)(\frac{60}{365})}=\12.55$

But my calculation is still off, this time by 2¢.

I am really bothered by the fact that I cannot arrive at the exact amount on the 1099-INT and on the April bank statement. All my calculated numbers are a couple pennies off. I am not sure if it is due to rounding error or if my math is incorrect.

If you are not interested in checking my calculation, it is still a fun exercise to check the math on the interest in your own online banking account. Let me know what you find out!

## It’s Over 17,000!

The total value of my trading account is over $17,000! Oh, and coincidentally, the Dow Jones Industrial Average broke the 17,000 mark and closed at a record high of 17,068.26 on July 3rd, 2014. DescriptionSymbolQuantityDate AcquiredCost BasisMarket Value TOTAL$17,072.61
AFLAC INCAFL10001/31/14$6,278.95$6,329.00
AFLAC INCAFL8903/27/14$5,540.75$5,632.81
NELNET INC CL ANNI12112/11/13$4,970.79$5,019.08
CASH$91.72 This is not the first time that the total value of my account is over$17,000. It was $17,068.98 on 6/10/2014. Which just shows you that the value of my holdings is pretty much the same since I started this blog. Roughly 2/3 of my holdings are in AFL. A very good article was published yesterday on Seeking Alpha on why the stock price of AFL has been flat even though all the indexes are hitting new highs. The main factor seems to be that Aflac does about 75% of its business in Japan, and the weak Yen impacts the numbers on their financials. AFL is one of those buy and hold forever stocks in my opinion, maybe it wasn’t a good idea to buy it for trading. With a P/E of 9.80, it just looks so cheap. As for NNI, I don’t see much news about this stock. I bought it because it also looked cheap. It’s a good thing both AFL and NNI pay out a dividend, so I do get some dividend income while I wait. No trades again this past week. My real bottom line on 6/10/2014:$17,072.61

Side Note: I am including a link to Seeking Alpha in my resources page. Seeking Alpha is one of the sites I visit often to research ideas on investing and trading.  My favorite author on the site is Chuck Carnevale. I have learned a lot about investing (NOT trading/speculating) through reading his articles. I highly recommend anyone to check out his articles if he/she is serious about investing in stocks.

## The Capital One 360 Promotion Bonus – Friendly Tax Reminder

I added a blogroll to this website about a week ago. It lists several blogs that I often read. I find the blogroll to be a handy tool for myself because it let me use my own site as the main hub to open up these blogs on my browser.

As I was going through these blogs a couple days ago, I was a little surprised to find that three of these blogs were writing about the same topic, the Capital One 360 Financial Independence Day Promotion.

They are probably getting compensated if anyone sign up for an account through the links on their post. This makes me wonder if Capital One 360 is aggressively reaching out to bloggers to advertise their promotion. Or maybe these bloggers got  an email about the promotion because they have an account with Capital One (I did, I have a savings account with Capital One), and the promotion is attractive enough that they independently decided to blog about it.

The nitty gritty of the promotion are covered very well in these posts, so there is no need for me to go over them here. The promotion ends on July 3rd (which is tomorrow as of this writing), but if you do sign up for a new (taxable) account or have done so already, remember that you have to pay taxes on the promotion bonus.

The bonus is not interest, so it will not show up on a 1099-INT. You might get a separate 1099-MISC instead. It is also possible that you won’t get a 1099 at all. (It happens. I have signed up for a Forex account solely for the purpose of getting a promotion bonus, but the 1099 never came.) However, not getting a 1099 doesn’t mean that you don’t have to report the bonus income.

You will have to report the promotion bonus under other income:

The bonus will be taxed at your marginal rate. Oh right, and your state probably wants a piece of your bonus too.

Am I trying to discourage you from opening an account and taking the bonus? No. If someone comes along and present you with a money earning opportunity, would you refuse on the basis that you will have to pay taxes on the money you received?

The 360 Savings and 360 Checking accounts offer very competitive interest rates. It is a great place to put a sum of money such as an emergency fund. If you do decide to take advantage of the promotion, please do not forget to report the bonus on your 2014 tax return.