An alternative to checking

[safari]

EverBank is currently offerring 6.01% APY for the first 3 months on newly opened FreeNet checking accounts. After the promotional period you'll be earning 3.41% APY on balances under $10,000, and if you have a higher balance the APY will be even greater. More info here. I think it's better than ING Electric Checking because you can write paper checks, too.

[kv968]

Well, I just got off the phone with the my rep. at UBS/Painewebber. He did admit that the 1.09% yield was low.

We talked for sometime about their services. I have always kind of wanted a professional to have in my corner (not that I don't value your advice here all. . .) but what it comes down to is 1.5% of my assets, maybe less as I accrue wealth.

My accountant is a CFP and we always talk about getting together and having him advise me that's more fee-based and independent. What he charges for his time/expertise, I don't know.

One thing that turned me off was he was saying that loaded mutual funds perform better. . .well, he didn't quite put it like that. He said something like, "Well, I don't care if a fund charges 4.5% load if it's earning 15% year and has a 5 star Morningstar rating." A subtle implication that expensive funds perform better.

Morningstar doesn't take into consideration load fees when figuring out the ratings. Their ratings are using returns after the load's effect has diminished.

He also said the load goes to paying the mutual fund manager - I thought the load was the sales commission for the broker? Isn't the management fee basically the cost of managing it? (the managers computer, his salary, his plush office, his hookers).

You're right, the load goes to the broker.

I have never been anti-advice but $1500.00/year to help me tweak my portfolio (assuming I reach 100K here soon) seems awfully high for advice. He was nice and all. . .I just think it may be time to part ways.

Although it's nice to have a professional's opinon and advice in your corner, you may be better off doing it all yourself.

[disneysteve]

Another alternative to checking is a money market mutual fund. For example, Vanguard Prime Money Market (VMMXX) is currently paying 5.09%. It has a $3,000 minimum. You can write checks for $250 or more. So this probably can't totally replace a traditional checking account, but it is a good option if you keep a larger balance on hand.

[Aleta]

I agree with Steve that Vanguard rate is good and it can be like a savings. I use it for the irregular bills that are mostly over the $250. required to write a check, plus I can transfer money out of there to fund our other funds. It's really convenient.

[Scanner]

DisneySteve,

Yeah, actually, the PaineWebber fund is a money market fund anyway, which is why I was surprised it wasn't getting a better return.

I wonder if we could do this (just a brainstorm) - get a Vanguard acct. and send checks for $250 to every utility we pay and just work off a credit (gas, electric, cable, water, sewer, telephone). So, if my gas in the summer is let's say $125.00 - we'd have 2 months credit.

I wonder if it would pay with the interest you would lose by not having the money in there until it was owed.

Just a thought - probably too complicated. Would still need a checking account for rinky-dink expenses like doctor copays, little league sign-ups, etc. Either that or do money orders, which I can't imagine is cost-effective.

[disneysteve]

Would still need a checking account for rinky-dink expenses like doctor copays, little league sign-ups, etc. Either that or do money orders, which I can't imagine is cost-effective.

Yes, realistically you need a traditional checking account for the little things. Also, I don't think you can do auto payments from an MMF like you can from a checking account. We have several of our monthly bills automatically deducted, so I keep funds in our checking account for that.

I used to use an MMF from Wells Fargo (formerly Strong). I've still got the account but their rate has been poor so I took it down to the minimum and really don't use it currently.