In Part 2 of this asset allocation series I assumed 25% allocations for each asset class in the example portfolio. Selecting the target asset allocations for your portfolio is not a science – despite the “Risk Tolerance” surveys and formulae offered by many financial planners.
There are some basic concepts you should consider when setting asset allocations:
1. The closer you are to retiring the greater the allocation of your total assets to “safer” asset classes and the lower your allocation to “risky/aggressive” asset classes.
2. Money you expect to need within the next five to ten years (depending on which financial planner you listen to) should be held in cash or cash equivalents; money market funds, Bank CD’s (certificates of deposit), or laddered bonds (not bond funds).
3. A large enough allocation must be made to more aggressive asset classes to keep up with inflation because the average woman who retires at the age of 62 will live another 25 years; the average man another 20. Many will live 30 years after retiring and some will live 40. In 30 years even moderate inflation rates can be devastating to the value of your portfolio.
4. Emergency funds must be held in cash or cash equivalents that can be withdrawn quickly without penalties.
5. If allocations are too lopsided in favor of any asset class rebalancing will have little value.
6. You have to sleep at night. If your investments keep you from sleeping change your allocations to favor safer asset classes.
Planners advocate allocation plans that vary all over the place. I’ve read advice for twenty-somethings to be 100% in growth stocks. At the other extreme, I’ve seen advice that everyone, regardless of age, should be 50% in stocks and 50% in bonds.
Here’s my advice:
1. Have some money in cash, have some money in bonds, have some in stocks, have some in gold, and have some in real estate. Each of these asset classes should be at least 10% of your portfolio value and none should exceed 70%.
2. Your emergency fund is not part of your portfolio. It should be 100% cash and not count as the cash portion of your portfolio.
3. If you are within five years of retiring you should start building up the cash portion of your portfolio so that on the day you retire you will have enough cash in your portfolio to cover your expenses for five years – after subtracting expenses you plan to pay with money from Social Security, a fixed pension, or income from an annuity.
4. Within these constraints, design your portfolio to grow to meet or beat inflation not counting the new money you will invest – but with asset allocations that let you sleep at night.
5. Rebalance your portfolio annually – perhaps around your birthday.
6. Reconsider your asset allocations annually. You’re getting older and you may be getting wiser.
Risk tolerance and setting asset allocations is more art than science regardless of the research and the formulae used by financial planners.
Links to other Topics in the Special Report: Asset Allocation
Friday, September 25, 2009
Friday, September 18, 2009
Asset Allocation: Part 3 - Rebalancing
Having a mix of uncorrelated asset classes in your portfolio tends to protect the portfolio from downturns and to limit the gain from upturns in any asset class. Asset rebalancing is a powerful tool to improve your overall results.
Most financial planners recommend rebalancing annually. Others have data showing portfolio gains are higher when it is done less frequently – every two or three years. Yet another recommendation I’ve seen is to set gain or loss targets and rebalance only when one of the targets is attained.
Whatever rebalancing frequency is used, the act of rebalancing is the same. You choose an allocation percentage in advance for each asset class and, when you rebalance, you sell enough of the class that is above target to bring its actual portfolio percentage back to its target.
On the other side of the transaction, you buy enough of the classes that are below target to bring their portfolio percentages back up to target. For a portfolio in which you’re still investing new money, you can rebalance by buying only the asset classes that are below target.
When you periodically rebalance, you systematically sell investments that are up in value while their prices are high; and you systematically buy more of the classes that have declined in value while their prices are low.
The old truism is that the essence of investing is to buy low and sell high. Unfortunately, most people don’t have the self-discipline to execute that advice. Plus, nobody knows when the price has stopped going up until it goes back down. Nor do they know when the price is hits bottom until it goes back up. Consequently, most people invest by emotion and often buy high and sell low.
Asset rebalancing makes the “buy low, sell high” discipline much easier to live; you just move the money from one asset class already in your portfolio to others using pre-set rules for the transaction timing and amounts.
I’ve seen data that indicate regular rebalancing over many years increases the final portfolio value by 30% to 100%.
Asset rebalancing improves your investing results in a portfolio of uncorrelated asset classes.
Links to other Topics in the Special Report: Asset Allocation
Most financial planners recommend rebalancing annually. Others have data showing portfolio gains are higher when it is done less frequently – every two or three years. Yet another recommendation I’ve seen is to set gain or loss targets and rebalance only when one of the targets is attained.
Whatever rebalancing frequency is used, the act of rebalancing is the same. You choose an allocation percentage in advance for each asset class and, when you rebalance, you sell enough of the class that is above target to bring its actual portfolio percentage back to its target.
On the other side of the transaction, you buy enough of the classes that are below target to bring their portfolio percentages back up to target. For a portfolio in which you’re still investing new money, you can rebalance by buying only the asset classes that are below target.
When you periodically rebalance, you systematically sell investments that are up in value while their prices are high; and you systematically buy more of the classes that have declined in value while their prices are low.
The old truism is that the essence of investing is to buy low and sell high. Unfortunately, most people don’t have the self-discipline to execute that advice. Plus, nobody knows when the price has stopped going up until it goes back down. Nor do they know when the price is hits bottom until it goes back up. Consequently, most people invest by emotion and often buy high and sell low.
Asset rebalancing makes the “buy low, sell high” discipline much easier to live; you just move the money from one asset class already in your portfolio to others using pre-set rules for the transaction timing and amounts.
I’ve seen data that indicate regular rebalancing over many years increases the final portfolio value by 30% to 100%.
Asset rebalancing improves your investing results in a portfolio of uncorrelated asset classes.
Links to other Topics in the Special Report: Asset Allocation
Friday, September 11, 2009
Asset Allocation: Part 2 – Asset Classes
Asset Allocation is kind of like putting your eggs in several baskets and giving the baskets to people who take different routes to Granny’s house. The trick is to choose high quality baskets and to choose routes so the Wolf can’t intercept more than one basket.
The value of your investment portfolio should be divided among several different asset classes. Examples of asset classes are cash (bank or money market accounts), U.S common stocks, U.S. preferred stocks, U.S. corporate bonds, U.S. government bonds, commodities, international stocks, international bonds, and real estate. This is an incomplete list but covers the classes most commonly considered and bought.
Asset class subcategories include large cap stocks (big public companies), small cap stocks (relatively small public companies), growth company stocks, value stocks, and dividend paying stocks. Subcategories frequently overlap with a single company falling into more than one category.
Asset allocation is not just diversification. Diversification refers to owning multiple stocks or bonds with the objective being to protect your wealth in the event one of the companies you are invested in becomes worthless. To be sure, asset allocation also provides the protection of diversification. The difference is that in asset allocation you intentionally invest in asset classes that tend to increase or decrease in value independently from one another.
For example, usually as the price of stocks go up the price of bonds go down. The same is true of cash and commodities – when one goes up the other normally goes down.
Nowadays, there are ways to invest in commodities and real estate through stocks, ETF’s and mutual funds so even a modest portfolio, like mine, can take advantage of asset allocation using a variety of asset classes. A sample portfolio might consist of shares in an Extended Market Mutual Fund, a Total Market Bond Fund, a REIT (Real Estate Investment Trust) Fund, and a Precious Metals Mutual Fund. The allocation percentages might be set to 25% for each class.
The sample portfolio might behave in the following ways under the specified market conditions:
1. Conditions - slow economic growth with low inflation:
a. Extended Market Mutual Fund increases slowly
b. Total Market Bond Fund is stable and paying consistent dividends
c. REIT Funds increase slowly
d. Precious Metals Mutual Fund declines slowly
2. Conditions – slow economic growth with high inflation:
a. Extended Market Mutual Fund is stable
b. Total Market Bond Fund declines
c. REIT Funds increases rapidly
d. Precious Metals Mutual Fund increases rapidly
3. Conditions – recession with low inflation
a. Extended Market Mutual Fund declines
b. Total Market Bond Fund increases
c. REIT Funds decline
d. Precious Metals Mutual Fund is stable
Ideally, one or more asset classes will go up regardless of the market conditions. By itself, this kind of an asset mix will tend to preserve the value of the portfolio protecting it from big declines and also preventing big increases. A powerful tool to improve this result is “rebalancing”.
The next post will explain portfolio rebalancing.
Links to other Topics in the Special Report: Asset Allocation
The value of your investment portfolio should be divided among several different asset classes. Examples of asset classes are cash (bank or money market accounts), U.S common stocks, U.S. preferred stocks, U.S. corporate bonds, U.S. government bonds, commodities, international stocks, international bonds, and real estate. This is an incomplete list but covers the classes most commonly considered and bought.
Asset class subcategories include large cap stocks (big public companies), small cap stocks (relatively small public companies), growth company stocks, value stocks, and dividend paying stocks. Subcategories frequently overlap with a single company falling into more than one category.
Asset allocation is not just diversification. Diversification refers to owning multiple stocks or bonds with the objective being to protect your wealth in the event one of the companies you are invested in becomes worthless. To be sure, asset allocation also provides the protection of diversification. The difference is that in asset allocation you intentionally invest in asset classes that tend to increase or decrease in value independently from one another.
For example, usually as the price of stocks go up the price of bonds go down. The same is true of cash and commodities – when one goes up the other normally goes down.
Nowadays, there are ways to invest in commodities and real estate through stocks, ETF’s and mutual funds so even a modest portfolio, like mine, can take advantage of asset allocation using a variety of asset classes. A sample portfolio might consist of shares in an Extended Market Mutual Fund, a Total Market Bond Fund, a REIT (Real Estate Investment Trust) Fund, and a Precious Metals Mutual Fund. The allocation percentages might be set to 25% for each class.
The sample portfolio might behave in the following ways under the specified market conditions:
1. Conditions - slow economic growth with low inflation:
a. Extended Market Mutual Fund increases slowly
b. Total Market Bond Fund is stable and paying consistent dividends
c. REIT Funds increase slowly
d. Precious Metals Mutual Fund declines slowly
2. Conditions – slow economic growth with high inflation:
a. Extended Market Mutual Fund is stable
b. Total Market Bond Fund declines
c. REIT Funds increases rapidly
d. Precious Metals Mutual Fund increases rapidly
3. Conditions – recession with low inflation
a. Extended Market Mutual Fund declines
b. Total Market Bond Fund increases
c. REIT Funds decline
d. Precious Metals Mutual Fund is stable
Ideally, one or more asset classes will go up regardless of the market conditions. By itself, this kind of an asset mix will tend to preserve the value of the portfolio protecting it from big declines and also preventing big increases. A powerful tool to improve this result is “rebalancing”.
The next post will explain portfolio rebalancing.
Links to other Topics in the Special Report: Asset Allocation
Friday, September 4, 2009
Asset Allocation: Part 1 - Introduction
Financial Planners seem to talk about asset allocation all the time. They recommend percentage allocations to various investments (usually different mutual funds) based on some assessment of your “risk tolerance”.
Usually you end up buying some shares in a “large cap growth” fund, a “large cap value” fund, a “small cap” fund, an “international” fund, and a “bond” fund. The percentages vary with your age and your “risk tolerance”.
Asset Allocation is kind of like parceling your eggs out into three to six different baskets, giving each basket to a different person and instructing each person to take a different route to Granny’s house. Most of the baskets will get to Granny and miraculously, each basket that arrives at Granny’s house will have more eggs at the end than it had at the beginning of the trip.
Like most people, my first exposure to asset allocation was sitting down with a Financial Planner who was armed with a “Risk Tolerance Assessment Survey” and a “Financial Goals Survey”. I filled out the surveys and several days later a “Personalized Financial Plan” was delivered to my doorstep filled with monthly saving and investing targets, asset allocation percentages for each of the recommended mutual funds, and of course, Life Insurance.
It was a decent plan and I promptly filed it away where it would not likely see daylight again for several years. My budget couldn’t be squeezed enough to do half of the Personalized Financial Plan and the guy was obviously trying to sell life insurance so I did nothing. That was a mistake.
If I had done even a little of the investing portion of the plan I would be much wealthier today - some thirty years later. But I was young, foolish, over-confident, indestructible, ambitious, and over-whelmed by the whole “asset allocation” thing – plus suffering from sticker shock.
I can’t help you with the young, foolish, over-confident, indestructible, and ambitious parts. But I can help with the “over-whelmed” part and the sticker shock part.
The Asset Allocation trick is to choose high quality baskets and to select the various routes to Granny’s house so the Wolf can’t intercept more than one of them.
In Part 2, I’ll discuss selecting the routes – that is – selecting different types of investments that are poorly or even negatively correlated.
Links to other Topics in the Special Report: Asset Allocation
Usually you end up buying some shares in a “large cap growth” fund, a “large cap value” fund, a “small cap” fund, an “international” fund, and a “bond” fund. The percentages vary with your age and your “risk tolerance”.
Asset Allocation is kind of like parceling your eggs out into three to six different baskets, giving each basket to a different person and instructing each person to take a different route to Granny’s house. Most of the baskets will get to Granny and miraculously, each basket that arrives at Granny’s house will have more eggs at the end than it had at the beginning of the trip.
Like most people, my first exposure to asset allocation was sitting down with a Financial Planner who was armed with a “Risk Tolerance Assessment Survey” and a “Financial Goals Survey”. I filled out the surveys and several days later a “Personalized Financial Plan” was delivered to my doorstep filled with monthly saving and investing targets, asset allocation percentages for each of the recommended mutual funds, and of course, Life Insurance.
It was a decent plan and I promptly filed it away where it would not likely see daylight again for several years. My budget couldn’t be squeezed enough to do half of the Personalized Financial Plan and the guy was obviously trying to sell life insurance so I did nothing. That was a mistake.
If I had done even a little of the investing portion of the plan I would be much wealthier today - some thirty years later. But I was young, foolish, over-confident, indestructible, ambitious, and over-whelmed by the whole “asset allocation” thing – plus suffering from sticker shock.
I can’t help you with the young, foolish, over-confident, indestructible, and ambitious parts. But I can help with the “over-whelmed” part and the sticker shock part.
The Asset Allocation trick is to choose high quality baskets and to select the various routes to Granny’s house so the Wolf can’t intercept more than one of them.
In Part 2, I’ll discuss selecting the routes – that is – selecting different types of investments that are poorly or even negatively correlated.
Links to other Topics in the Special Report: Asset Allocation
Friday, August 28, 2009
Dollar-Cost Averaging
“Dollar-Cost Averaging” is one of the most commonly known and understood investing strategies. But everyone hears about it a first time, even you.
When I first heard about dollar-cost averaging I was attending a financial planning seminar in Killen, Texas. I was a young married Army Lieutenant with a mortgage but no children. The seminar was sponsored by Fidelity Investments.
A round wooden disk with the letters “TO IT” printed on one side in bold black letters was found on every chair when we arrived. After pitching the benefits of systematically making monthly purchases of the Fidelity Destiny mutual fund the presenter concluded the seminar by telling us that we had no excuse now that he had given us all “a round to it”. Then he scheduled home appointments with many of us, including me.
In the end, I signed up. For two and a half years a monthly allotment was automatically deducted from my Army paycheck and invested in the Fidelity Destiny fund. Because of the systematic dollar-cost averaging of my fund purchases and because I waited another two years before selling my shares this was my first, and for many years my only, successful investment. It was successful despite a 20% front end load which means 20% of every monthly purchase was skimmed off and given to the sales person (the seminar presenter) as a commission.
So what is this magic “dollar-cost averaging”? It is simply the fact that the price of your chosen investment instrument will fluctuate and if you make regular equal dollar amount investments in the same financial instrument you will sometimes pay a high price and sometimes you will pay a low price. When the price is high you buy fewer shares but when the price is low you buy more shares.
Because the average price you pay is always less than the highest price your investment risk is reduced. You will not inadvertently put all of your money into your investment at the highest price, nor will you get an accidental windfall by putting everything in at the lowest price.
For most people, like me then and now, dollar-cost averaging is not an intentional strategy. It is the result of a payday saving plan – like contributions to a 401k account.
However, if you happen to have a lump sum to invest, remember dollar-cost averaging and consider using it to put your lump sum into one or more investments using multiple purchases over an extended time period. Markets will fluctuate. What goes up must come down and what comes down is likely to go up. But don’t think you know what the market will do tomorrow. Sometimes you will be right. Sometimes you will be very wrong.
When I first heard about dollar-cost averaging I was attending a financial planning seminar in Killen, Texas. I was a young married Army Lieutenant with a mortgage but no children. The seminar was sponsored by Fidelity Investments.
A round wooden disk with the letters “TO IT” printed on one side in bold black letters was found on every chair when we arrived. After pitching the benefits of systematically making monthly purchases of the Fidelity Destiny mutual fund the presenter concluded the seminar by telling us that we had no excuse now that he had given us all “a round to it”. Then he scheduled home appointments with many of us, including me.
In the end, I signed up. For two and a half years a monthly allotment was automatically deducted from my Army paycheck and invested in the Fidelity Destiny fund. Because of the systematic dollar-cost averaging of my fund purchases and because I waited another two years before selling my shares this was my first, and for many years my only, successful investment. It was successful despite a 20% front end load which means 20% of every monthly purchase was skimmed off and given to the sales person (the seminar presenter) as a commission.
So what is this magic “dollar-cost averaging”? It is simply the fact that the price of your chosen investment instrument will fluctuate and if you make regular equal dollar amount investments in the same financial instrument you will sometimes pay a high price and sometimes you will pay a low price. When the price is high you buy fewer shares but when the price is low you buy more shares.
Because the average price you pay is always less than the highest price your investment risk is reduced. You will not inadvertently put all of your money into your investment at the highest price, nor will you get an accidental windfall by putting everything in at the lowest price.
For most people, like me then and now, dollar-cost averaging is not an intentional strategy. It is the result of a payday saving plan – like contributions to a 401k account.
However, if you happen to have a lump sum to invest, remember dollar-cost averaging and consider using it to put your lump sum into one or more investments using multiple purchases over an extended time period. Markets will fluctuate. What goes up must come down and what comes down is likely to go up. But don’t think you know what the market will do tomorrow. Sometimes you will be right. Sometimes you will be very wrong.
Thursday, August 20, 2009
Emergency Fund
“Save for a rainy day”. Everyone has heard it but few do it.
For many years my emergency fund was my credit card. When – not if – something bad happened I charged what was necessary on my plastic and then tried to pay for it over the next few months.
But when you spend pretty much what you make every month, paying off a credit card is difficult. Even making those pesky “minimum payments” takes a bite out of your “budget”. And consistently making minimum payments is a sure-fire way to stay in debt forever.
Worse, Mr Murphy invokes his infamous law and more financial emergencies (i.e. life) happen before you’ve paid off the first “emergency”. Your credit card bill grows and your ability to pay it off shrinks.
The best way out of this mess is to avoid it. Pay Mr Murphy before he invokes his law. Squeeze your budget for the “minimum payment” money before it must to be paid to the bank. If you pay Mr Murphy by putting that money in a savings account every payday then, when Murphy’s Law is invoked for you, the bill will already be paid. All you have to do is move the money from the savings account to the people who provide the products or services needed to correct the problem.
Note that it is now a “problem” not an “emergency”.
Financial planners recommend that you save enough money in an emergency fund to cover your expenses for three to six months. This is supposed to sustain you after a job loss until you land another job. That’s a good target although I think twelve months of expenses is an even better target. But whatever the target, don’t let the size of the number discourage you from starting.
Any positive amount is better than zero. Mr Murphy’s law covers a lot more than job losses. $500 in an emergency fund could go a long way toward repairing your car so you can get to work next week.
The key is to systematically put some amount away for Mr Murphy every payday. The more you accumulate the more you insulate yourself from the effects of Murphy’s Law.
Mr Murphy WILL BE PAID. Life happens! The only open questions are; (1) Will you live your life or will life happen to you? (2) Will the bank pay you or will you pay the bank?
You determine the answers by choosing – or not – to create and grow an emergency fund.
For many years my emergency fund was my credit card. When – not if – something bad happened I charged what was necessary on my plastic and then tried to pay for it over the next few months.
But when you spend pretty much what you make every month, paying off a credit card is difficult. Even making those pesky “minimum payments” takes a bite out of your “budget”. And consistently making minimum payments is a sure-fire way to stay in debt forever.
Worse, Mr Murphy invokes his infamous law and more financial emergencies (i.e. life) happen before you’ve paid off the first “emergency”. Your credit card bill grows and your ability to pay it off shrinks.
The best way out of this mess is to avoid it. Pay Mr Murphy before he invokes his law. Squeeze your budget for the “minimum payment” money before it must to be paid to the bank. If you pay Mr Murphy by putting that money in a savings account every payday then, when Murphy’s Law is invoked for you, the bill will already be paid. All you have to do is move the money from the savings account to the people who provide the products or services needed to correct the problem.
Note that it is now a “problem” not an “emergency”.
Financial planners recommend that you save enough money in an emergency fund to cover your expenses for three to six months. This is supposed to sustain you after a job loss until you land another job. That’s a good target although I think twelve months of expenses is an even better target. But whatever the target, don’t let the size of the number discourage you from starting.
Any positive amount is better than zero. Mr Murphy’s law covers a lot more than job losses. $500 in an emergency fund could go a long way toward repairing your car so you can get to work next week.
The key is to systematically put some amount away for Mr Murphy every payday. The more you accumulate the more you insulate yourself from the effects of Murphy’s Law.
Mr Murphy WILL BE PAID. Life happens! The only open questions are; (1) Will you live your life or will life happen to you? (2) Will the bank pay you or will you pay the bank?
You determine the answers by choosing – or not – to create and grow an emergency fund.
Friday, August 14, 2009
Airline Flight Vouchers
If you are flexible, you can occasionally pick up a windfall of several hundred dollars in the form of an airline flight voucher.
In July, while returning from a business trip, the flight I was booked on for the last leg of my trip home had to switch airplanes. Apparently, the originally scheduled airplane had a mechanical problem and the replacement airplane was equipped with fewer seats.
Consequently, the airline asked for volunteers to take a later flight. My traveling companions’ carry-on luggage was already stowed in the cargo compartment of the DeHaviland commuter plane so they could not volunteer. My bag was checked and I was pretty confident that even though it would arrive before I did that the airline would hold it for me. And, since I had no pressing schedule for that afternoon I raised my hand.
In exchange for waiting in the airport for two more hours I took home a $300 voucher good for any flight on that airline as long as I make the reservation within a year of the issue date.
My wife and I plan to use the voucher to reduce the cost of a future vacation trip.
Picking up a flight voucher is an uncommon event. But, there were about 50 people on that flight and most could not or would not volunteer. I could and did because I was flexible enough to adapt to the revised flight schedule.
Link to Other Topics in the Special Report: Cutting Expenses
In July, while returning from a business trip, the flight I was booked on for the last leg of my trip home had to switch airplanes. Apparently, the originally scheduled airplane had a mechanical problem and the replacement airplane was equipped with fewer seats.
Consequently, the airline asked for volunteers to take a later flight. My traveling companions’ carry-on luggage was already stowed in the cargo compartment of the DeHaviland commuter plane so they could not volunteer. My bag was checked and I was pretty confident that even though it would arrive before I did that the airline would hold it for me. And, since I had no pressing schedule for that afternoon I raised my hand.
In exchange for waiting in the airport for two more hours I took home a $300 voucher good for any flight on that airline as long as I make the reservation within a year of the issue date.
My wife and I plan to use the voucher to reduce the cost of a future vacation trip.
Picking up a flight voucher is an uncommon event. But, there were about 50 people on that flight and most could not or would not volunteer. I could and did because I was flexible enough to adapt to the revised flight schedule.
Link to Other Topics in the Special Report: Cutting Expenses
Friday, August 7, 2009
Shell MasterCard
We buy gasoline for $0.12 a gallon less than the posted price at every fill-up.
Our local Shell station usually has the lowest price for regular un-leaded gas in our community. Occasionally though, the Sheetz station down the block beats their price. But whether our Shell station is slightly higher or slightly lower than Sheetz we still get the best prices in town buying gas from Shell.
Shell Oil has a partnership with MasterCard that benefits Linda and I with a 5% rebate on all gasoline purchases made at any Shell station. With the current $2.40 per gallon price for regular un-leaded we get a discount of $0.12 per gallon.
The posted price is charged to our card then the rebate is calculated and automatically applied to our statement the following month.
It works. It’s reliable. And, since we use the Shell MasterCard for nothing else; and since we use it for all gas purchases, it’s easy to track our expenses and rebates.
Buying gas using the Shell card is like getting $15 cash in the mail every month.
Link to Other Topics in the Special Report: Cutting Expenses
Our local Shell station usually has the lowest price for regular un-leaded gas in our community. Occasionally though, the Sheetz station down the block beats their price. But whether our Shell station is slightly higher or slightly lower than Sheetz we still get the best prices in town buying gas from Shell.
Shell Oil has a partnership with MasterCard that benefits Linda and I with a 5% rebate on all gasoline purchases made at any Shell station. With the current $2.40 per gallon price for regular un-leaded we get a discount of $0.12 per gallon.
The posted price is charged to our card then the rebate is calculated and automatically applied to our statement the following month.
It works. It’s reliable. And, since we use the Shell MasterCard for nothing else; and since we use it for all gas purchases, it’s easy to track our expenses and rebates.
Buying gas using the Shell card is like getting $15 cash in the mail every month.
Link to Other Topics in the Special Report: Cutting Expenses
Friday, July 31, 2009
Choice Privileges
Occasionally, not often, I travel on business and my employer pays my travel expenses including normal hotel charges.
Many people take advantage of business travel to stay in expensive hotels and dine in expensive restaurants. I make these occasions a win-win for me and for my employer by choosing Choice Hotels who’s well known brands include, Sleep Inn, Comfort Inn, and Comfort Suites. These mid-priced accommodations are generally less expensive than rooms selected by my colleagues; reducing the travel expense for my employer.
However, Choice Hotels has a “loyalty rewards” program they call Choice Privileges. I have a Choice Privileges account and every time I stay at a Choice hotel I’m credited with 10 Choice Privileges points for every dollar of invoiced cost (not counting taxes). So, a typical one-night stay at a Comfort Inn at $79 per night will earn me 790 Choice points.
In addition, Choice Hotels frequently runs promotions in which they offer 10,000 to 14,000 bonus points if you stay in three different Choice hotels within a 30 to 90 day pre-defined period. The catch with the promotions is that they must be different hotels, so when I have a two-day event scheduled I have to check out of one hotel and into another (sometimes across the street) in order to qualify for the bonus points.
It’s worth the hassle though. I’ve already taken a couple of free hotel stays by using some of my accumulated Choice Points and I now have enough in my account to cover the five day vacation Linda and I are planning for next month.
A win-win business travel situation for me and my employer allows my wife and I to eliminate the cost of accommodations from our vacation budget.
Link to Other Topics in the Special Report: Cutting Expenses
Many people take advantage of business travel to stay in expensive hotels and dine in expensive restaurants. I make these occasions a win-win for me and for my employer by choosing Choice Hotels who’s well known brands include, Sleep Inn, Comfort Inn, and Comfort Suites. These mid-priced accommodations are generally less expensive than rooms selected by my colleagues; reducing the travel expense for my employer.
However, Choice Hotels has a “loyalty rewards” program they call Choice Privileges. I have a Choice Privileges account and every time I stay at a Choice hotel I’m credited with 10 Choice Privileges points for every dollar of invoiced cost (not counting taxes). So, a typical one-night stay at a Comfort Inn at $79 per night will earn me 790 Choice points.
In addition, Choice Hotels frequently runs promotions in which they offer 10,000 to 14,000 bonus points if you stay in three different Choice hotels within a 30 to 90 day pre-defined period. The catch with the promotions is that they must be different hotels, so when I have a two-day event scheduled I have to check out of one hotel and into another (sometimes across the street) in order to qualify for the bonus points.
It’s worth the hassle though. I’ve already taken a couple of free hotel stays by using some of my accumulated Choice Points and I now have enough in my account to cover the five day vacation Linda and I are planning for next month.
A win-win business travel situation for me and my employer allows my wife and I to eliminate the cost of accommodations from our vacation budget.
Link to Other Topics in the Special Report: Cutting Expenses
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