Sending Money Overseas

August 11, 2011

For a long time, I’ve been planning on moving some money from our bank account in the U.S. to Sweden. Last week’s turbulence on the stock market, and especially the imminent margin call caused by the big dip in my favourite investment – BlackPearl Resources – made me finally take action.

One of the lessons learned turned out to be a big minus to be added to my review of using an out-of-state rewards checking account at JD Bank: they will not let you wire money out of your account without physically being present at the bank. This forced me to instead write a check to myself, deposit it to my Wells Fargo account here, and wait for the money to become available. Now, if you look at the hike BlackPearl Resources’ stock price took today, you’ll understand why I am unhappy with the 3 day delay. $50/month in interest is nice, but was it worth the lost opportunity here?

As a result of some research earlier, I had already signed up for an account with Venstar Exchange, specializing in forex and moving money around. That process was straight forward and free, all that was needed was a registration form for individual clients and scanned copies of my passport and a utility bill showing my address. Venstar also asks for a credit card number – I chose not to provide at that time, but ended up calling them and providing the information this week before doing the transaction. This makes it possible to get a quote of the actual exchange rate before hand, and lock it. The credit card itself is not used under normal circumstances – only if one fails to provide the agreed funds during the settlement period and Venstar ends up losing money as a result (caused by variations in the interest rate).

This morning, when the money was finally available at my Wells Fargo account, I called the Venstar account specialist assigned to me and initiated the transaction. The information he needed was the amount in USD and the desired currency. He gave me a quote, and a few minutes later, I received instructions via e-mail regarding how to proceed. Thirty minutes later I was at the Wells Fargo branch and wired the agreed amount to Venstar’s account at Barclays in London. As a final step, I filled an online form with the beneficiary information, designating my investment account with Avanza Bank as the final destination for the money. Next time I need to send money to this account, I can reference the information I submitted today – it is kept on file by Venstar.

The main reason for going through all this instead of just wiring money from Wells Fargo to my Swedish bank account is the lousy exchange rate they provide.

1 USD in SEK:

Google: 6.5532 (reference)
Venstar: 6.4353
PayPal: 6.3333
Wells Fargo: 6.1881

Venstar charges no fees when the exchanged amount exceed $10,000, which it did today. The only fee I needed to pay was to Wells Fargo for wiring the money to Venstar in London, which ended up being  $30.

To state the obvious: the more money you need to move, the more you’ll save by using Venstar instead of probably any traditional bank. With the amount of money that was exchanged today, choosing Venstar instead of Wells Fargo ended up saving me very close to $1,000.

Rewards Checking at JD Bank

December 12, 2010

In April, after reading about the so called “high yield rewards checking accounts”, I found myself looking for a checking account that would offer a better interest rate than the 2.00% we were currently enjoying at Alliant Credit Union. Unable to find any in the Denver area where we were living at the time, or even in Colorado, I was excited to discover (via CheckingFinder) the Louisiana based Jeff Davis Bank and Trust (JD Bank) that was accepting clients who were not local. Their offer was 4.01% APY on balances up to $15,000. The catch? A pretty typical list of requirements for a rewards checking account:

  • 10 Debit Card transactions posted
  • One direct deposit or ACH automatic payment
  • Receive e-statements
  • Access Online Banking

We were already qualifying on all points with our current usage at  Alliant, so I decided to sign up for my third checking account, this time in Louisiana. The initial part of the straight-forward process was handled by Kasasa, and a few weeks later we were all set with the account and new Mastercards both for myself and Mrs. Plainfield. Everything was done online or via e-mail (except for mailing the debit cards of course). In order to maximize the gain, we moved our emergency fund from a savings account at Alliant to the new checking account.

Fast forward 8 months to today.

Overall, I’ve been very happy with the choice, and haven’t looked further for better options. Since April, we have met the requirements for the high yield every month. In return, we’ve been paid $240 in interest. This is far less than the theoretical maximum, which reflects the 4-month period I spent “between jobs”, during which we had to dip into our emergency fund. This current period, however, we’ve been able to keep the balance at just above $15,000, and should see a ~$50 interest payment show up on the account next week (the periods end on the 4th Thursday every month).

One concern I had initially was keeping our emergency fund on the account we use for our daily expenses, thinking that keeping so much money so easily accessible would result in unnecessary spending. I am happy to note that these worries have not come true (kudos to Mrs. Plainfield for being so agreeing when it comes to our domestic fiscal policy).

Finally, a few random remarks on the account:

+ Works with Mint, and Mint accessing the account to get the saldo and the transactions seems to satisfy the requirement of monthly Online Banking access.
+ Fast and courteous replies to e-mails, I have sent a few e-mails directly to the customer service representative that contacted me during the sign up process.
- The transaction descriptions for purchases made with the bank’s Mastercards that show up on Mint are horrible, and require manual categorizing most of the time.
- Online Banking looks hideous and provides only the very basic functionality,  moving money to other banks is not possible.

UPDATE: A $45.51  interest payment showed up on the account on 12/22.

Thoughts on the USD

September 28, 2010

The U.S. economy is in a lousy shape. There is no shortage in articles about unemployment, foreclosures and the rapidly growing federal deficit. The recovery from the aftermath of the recent financial crisis is lagging and the government is using money it doesn’t have to prevent the situation from getting worse, with modest sustainable success.

Many are concerned about the government’s ability to ever repay its creditors by honest methods – by spending less than it earns and using the profits to pay off the debt, that is. The raises in income tax rates and cuts in benefits such as social security it would take are simply considered to be too much for any government to actually try to implement.

What remains is borrowing more money – as long as other countries are willing to come up with it – or printing more dollars and using them to pay the debt. Should the government resort to the last method on a large scale, the subsequent inflation would have a dire effect on the value of the U.S. dollar as a currency.

While an imminent hyperinflation in the U.S. is a topic for conspiracy theorists, I see no real reason to expect the USD to gain over currencies such as EUR and SEK over the longer term – on the contrary. I also doubt that the historically low income taxes we’ve enjoyed during the past 2 years will be extended for much longer.

A weak USD interferes with our plans to save money while living here in order to jump-start our life when moving back to Scandinavia.  With the majority of our cash flow in USD, and the majority of our investments priced in CAD, which in turn is very closely tied to the USD – we’re exposed to it in more ways than I’d like. While we may be able to choose to stay here and avoid having to exchange our savings to another currency, significant raises to income taxes would eradicate one of the main reasons we’ve wanted to be here.

For the next year or two, our plan is to enjoy the ride, rebalance at least a portion of our investments to assets less dependent of the USD, and keep an eye on the exit.

In Hindsight: Good Time to Invest in Greece?

May 10, 2010

In late January the Greek stock market was down about 30% after a three month decline, following what at the time was referred to as a local financial crisis. As rumors on an EU bailout started to emerge, some – myself included – were wondering if we were about to see the market’s reaction go on reverse. But did it?

The global financial turmoil we saw last week is the exclamation mark in the answer: a resounding no!

The above chart of the Athex 20 index says it pretty well. I have also been keeping an eye on the virtual portfolio consisting of 4 Greek ADRs I created on January 29th. While it hasn’t been a straight path down, I’m happy the portfolio is just that – a virtual one. As of now, it’s down 24.59%, and would be much more so without Coca Cola Hellenic Bottling (NYSE:CCH) which is down a mere 3.4%.

Tonight, as news are breaking on a whopping $971 billion bailout plan, not just for Greece, but for euro zone in general, I find myself asking the same question: Would this be a good time to invest in Greece?

I am especially curious about the National Bank of Greece (NYSE:NBG), down 68.06% since mid-October. We’ll see how it does on the European markets when they open in a few minutes.

Sweden vs. USA: Tax Filing

May 2, 2010

Having done both mine and Mrs. Plainfield’s taxes in both Sweden and USA this year I thought I’d summarize how the countries compare in this regard. The comparison is to be seen from the perspective of someone who has income from employment, some capital gains, only the most common deductions and gets a tax refund.

E-filing

USA: Many options, varying levels of complexity. I started out by clicking on a “Free” link at TurboTax, only to find out it would cost me $90 to actually submit the federal and state forms. IRS provides a Free File program for those with up to $57,000 in adjusted gross income. I ended up using Free File Fillable Forms for federal forms and NetFile for my Colorado state forms – both were simply electronic versions of the forms with little or no enhancements.

Sweden: No reason to look any further than skatteverket.se; the Swedish tax agency provides a free and very easy-to-use system for everyone to use. Skatteverket also sends out pre-filled tax forms in the beginning of April, and if there are no changes to be made, the filing can alternatively be done simply by texting a verification code found in the forms to Skatteverket’s short code.

USA 0 – 1 Sweden. Sweden takes the lead; dead-simple and free for all. Makers of personal tax software, if you’re looking to expand internationally, look elsewhere!

Time Frame

USA: IRS E-filing opened 1/15 and taxes are due before 4/16. Getting a six month extension is as simple as submitting a form to the IRS. The earliest I could have filed, however, was on 1/22 when I received my W-2.

Sweden: Skatteverket’s E-filing opened on 3/23 and taxes are due before 5/4.

USA 1 – 1 Sweden. USA scores, I like not having to wait (I did wait this year, but only because I did not realize I could have done it earlier).

Level of Effort

USA: The information for filling the tax forms needs to be gathered. Some of it, such as W-2s,  can be imported automatically by tax software such as TurboTax. The fact that federal and state taxes are filed separately complicates the process a bit.

Sweden: In many cases, Skatteverket already has all the information it needs – salaries, withheld taxes, paid and received interests, securities sales etc. The forms are automatically filled out and all one has to do is accept.

USA 1 – 2 Sweden. I really like how most of the process is automated in Sweden; less paper, less hassle, less error-prone.

Returns

USA: Returns are done continuously: I filed both Colorado and federal taxes on 3/28 and the returns showed on my bank account on 4/7 and 4/9, respectively (IRS does tax returns on Fridays).

Sweden: The earliest one can get the return is during week 23 (6/7 – 6/11).

USA 2 – 2 Sweden. Tax returns are the fun part, getting your money back fast is HUGE.

Summary

Both countries have their advantages. The price American filers pay for the early returns is either an accountant fee or going through a more complex process. Many of my acquaintances here take the first route, whereas in Sweden, I don’t know a single person who doesn’t do their own taxes.

Followup: W-4 Update

May 1, 2010

Yesterday I found myself reading a MarketWatch article titled Give money to unemployed relatives? Maybe not – an interesting topic which also spurred a good conversation with Mrs. Plainfield. The topic itself aside, this witty comment reminded me of a follow-up post I had been planning on doing:

I am kind of getting tired of lending my Uncle Sam money. How do I terminate that relationship? I think he has developed out of control spending habits he needs to break.

The spending habits of the federal government are what they are, but besides paying the taxes we really have to pay, many of us are lending even more money to “Uncle Sam” by having more dollars than necessary withheld from our paychecks. I write “many of us”; the $2,645 federal tax return we received in April definitely classifies us as lenders to Uncle Sam.

In January I wrote how an updated Form W-4 was a way for us to realize the tax related benefits of us expecting our third child this summer. It resulted in a $165.35 increase in our bi-weekly take-home pay since February. By the end of the year, we will have kept more than $4,000 of our money from Uncle Sam.

After assessing the outcome of the direct deposit setup we did just before submitting the W-4, we decided to split the increase in two; $100 to our savings account and the rest to our day-to-day expenses account (not that we’re planning on spending more – we just found ourselves dipping into our savings to cover all of our daily expenses).

As a consequence, I’m expecting a very small or no tax return in 2011. Just the way I want it.

Why we are NOT saving for college

February 3, 2010

Recently, Mint posted an article about some of the intricacies of the American college savings vehicle known as the “529″. Yesterday, a link to the article coupled with the following question showed up in their Facebook fans’  feeds:

Mint.com asks: Are you saving for college?

The majority of the comments were on the positive note. While I did not comment, my simple answer would have been “no”. Why?

Read the rest of this entry »

Fidelity Introduces Flat Fees for All

February 2, 2010

I guess the early upgrade of my Fidelity account to their Silver level yesterday isn’t such a big deal after all!

Fidelity, my favorite U.S. brokerage, announced today that starting tomorrow, online trades will be subject to a $7.95 flat fee for all customers (press release, commissions page). This is great news for anyone doing less than 120 trades a year or with less than a million dollars in assets – the previous requirements to be eligible for this low fee, or the Gold commission level.

Fidelity is obviously responding to other online brokerages, such as E*Trade, AmeriTrade and Schwab (as recently as last month), providing flat fees for the random investor. No time is wasted in touting that Fidelity is now cheaper the others:

Also, the new commission scheme removes a disparity between the Bronze commission level and the commission levels in Fidelity’s global trading platform, which I heard was one of the reasons their international trading was by default only available to customers on the Gold level, and only enabled to customers on the Silver level if asked for. A possible consequence of the new commission scheme is Fidelity opening the international trading to all users as well. Should that happen, I could not come up with a single reason for choosing E*Trade over Fidelity.

25 Commission Free iShares® ETFs

In another press release today, Fidelity announced that they have teamed up with the global ETF leader  iShares® to provide commission free online trades of 25 of their exchange traded funds. The ETFs are a mix of funds focused on domestic equity, international equity and bonds, with the domestic equity dominating.

I will definitely start looking into one or more of these to identify a monthly savings target.

What’s Your Investing Behavior?

February 2, 2010

In a NY Times article titled Your Investing Behavior Costs You Plenty by Mr. Carl Richards from the Behavior Gap explains the reasons behind investor returns being smaller than investment returns:

An investment return is what you get if you invest your money at the start of a period and then don’t touch it. You don’t buy or sell. You just buy and hold. But real people in the real world don’t invest that way.

Real people are always chasing performance and investing by looking in the rear-view mirror. The result of this never-ending hunt for the best investment causes us real trouble.

I have certainly contributed my share to the underlying statistics by behaving like “real people”: I have sold when I shouldn’t have, I haven’t always sold when I should have, I have bought when I shouldn’t have, and I haven’t always bought when I should have (duh).

I’m not going to end this with a cheesy comment about making mistakes. What I might do is follow up later with a post where I tear down a real life example from one of those four categories.

Online International Trading With Fidelity

February 1, 2010

As of tomorrow, I should be able to use Fidelity’s online international trading platform! My account was upgraded today, but according to a customer service representative, it will take an overnight update before the international stock research is available.

The requirements they place on eligible accounts are quite strict:

Eligible Accounts

Non-retirement brokerage accounts at the gold commission level, which requires either:

  • 120+ trades per year and $25,000+ in assets, or
  • $1 million in household assets

However, I am not planning on doing 120+ trades per year. Does that mean I have a million dollars in household assets? Unfortunately – no. I just contacted them and managed to talk them into upgrading my account accordingly.

They seemed willing to make the exception for anyone who qualifies for their Silver commission level. Just give them a call and ask for it. For those on their Bronze commission level, the international trading platform’s flat fees might translate to cheaper trades abroad then here in the U.S., and it may be difficult to persuade them to go that far. However, if one can convince them about being en route to the Silver level – an early upgrade may be just a phone call away. At least it was for me.

Their international trading platform is still very new, and based on what I heard, Fidelity is monitoring it closely to see if it proves to be a profitable business for them and also to make sure it functions correctly under all circumstances. Who knows – if the demand is there, maybe they will integrate the different commission levels with their international trading platform, allowing anyone who’s willing to use it.

To me the take-home message of a major player such as Fidelity not introducing online international trading until October last year (press release) is that the interest in such has been scarce in the U.S. In some ways it makes sense – the American investors are a bit spoiled with their large and very liquid stock exchanges filled with global companies. With Avanza in Sweden, for example, international trading in select markets has been available for years, at no extra cost, to all of their customers.

While I can use my Avanza brokerage account to invest internationally, now that my main income is in the U.S., it just makes sense to have the same options available here. Moving money between the countries is both expensive (wire fees) and a delicate timing issue (exchange rates), definitely not something I wish to do often.

Why Invest Internationally?

The aggressive growth of the emerging markets has been one of the hottest financial topics for years. When launching the online international trading, Mr. Burton from Fidelity stated:

When you consider that over the past 10 years, 80 percent of the world’s best-performing stocks were listed outside the United States, it is understandable why investors are increasing their focus on international investing.

For me, a major reason for international trading is market and company knowledge. Why then would someone who is most familiar with the American market want to invest internationally? Diversification. In a recent Wall Street Journal post, The Intelligent Investor: Picking the Right Countries, Mr. Zeig elaborates on the possible dangers of what he calls the Americans’ “home bias” when it comes to their investmenting. Consider the following comment:

Living in the U.S. and keeping most of your stock money in the U.S. is much like working at Lehman Brothers or General Motors and loading up on the company’s own shares. Plus, holding stocks denominated in other currencies could help safeguard you against a future decline in the value of the dollar.

Alternative Ways to International Investing

If, for any reason, investing directly to foreign stocks is not an option, there are of course many other options such as ETFs and mutual funds. A good place to start exploring alternative routes to markets beyond the U.S. is Morningstar’s International Investing Center.

If one is interested in buying international stocks, but Fidelity is not an option, E*Trade and Interactive Brokers are two online brokerages to look at. I haven’t tried Interactive Brokers myself, but prefer Fidelity over E*Trade because of a much better online interface and the fact that I have my 401k and Roth IRA with Fidelity. For a more objective comparison of Fidelity vs. E*Trade in this regard, check out The Sun’s Financial Diary.


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