In this blog, I’m going to cover who I use for investing, savings, and investing research. I’m not going to go into the history of these companies as all of you know how to use Google. However, I will go into why I have picked each service and my experiences in using them.
For my finances, I use USAA Federal Savings Bank. I have been nearly a life-long member of USAA because my parents bought me a whole life insurance policy shortly after I was born. USAA started off as an insurance company and continues to offer insurance to those who serve in the United States military and their family (To learn more and find out if your eligible for USAA Insurance, visit usaa.com/join). They still require a military service connection for the insurance, but their banking and investing services are open to the public. I mostly mention the insurance connection because it will help to explain why I use them.
- Customer Service
- Stability
- Competition stinks
Customer Sevice: USAA is the type of insurance company that goes over and above the basic needs of their members. My parent’s home was damaged by the Northridge Earthquake in 1994. An insurance adjuster came out and examined the damage. Instead of just covering the obvious damage, or only investigating what my parents pointed out, the adjuster went through all of their policies to determine how they may apply to the damage in the house. Additionally, several weeks later, the adjuster contacted my parents and came out to see if there was any new damage from the aftershocks! This was unprompted and my parents never even thought about this. There had been additional damage and USAA made sure they were covered. My typical experience with USAA is that they will do what is best for their members and they are always friendly and knowledgeable. Thanks to their impeccable customer service, USAA has earned our trust. My parents, my wife, each of my kids, and even my sister-in-law all have accounts with USAA.
Stability: USAA neither pays the highest rates for savings account/checking account interest rates nor do they offer the lowest fees for their brokerage trades. However, they do offer decent interest rates and reasonable brokerage fees. They neither offer the highest credit limits for their credit cards nor the lowest rates for insurance. Yet they offer reasonable credit limits and competitive insurance rates. All very boring, but boring is great for a financial institution! They have solid financials and did not come close to requiring a bail-out during the financial crash in 2008-2009. They don’t spend too much money on advertising and definitely don’t waste money on excessive branches. They have one (1) branch at their Headquarters in San Antonio, Texas and two ATM machines – one at their HQ in San Antonio, Texas and the other at the US Naval Academy in Annapolis, Maryland. Yet the lack of branches and ATM machines has never been a problem! USAA is a member of several ATM networks and also refunds most ATM fees. In the more than 25 years that I have been using USAA, I have never paid for an ATM fee and I only had one problem using my ATM card. In Japan, I did not pay enough attention to the logos and could not withdraw Yen from my account through an ATM for one of the Japanese banks. I then simply went to the ATM right next to it with the right logos and I was in business!
Competition Stinks. When I went off to college, I had a checking account with my local bank, Security Pacific Savings & Loan. I was reasonably happy with them. Then they were purchased by Bank of America. It was also OK, but I was poor and had trouble keeping the minimum balance to avoid monthly fees. Eventually, it made me so angry I started looking for alternatives and found USAA – which doesn’t charge monthly fees for their accounts or require minimum balances! Fortunately for most people, online competition has created a large number of banks that also offer no fee/no minimum balance accounts, but I’m sticking with USAA. It offered these options many years before it was in fashion because it was the right thing to do for their members (see #1 and #2).
For full disclosure, I run the risk that USAA’s credibility from their insurance and banking may incorrectly bias me regarding their brokerage service. Additionally, USAA recently sold off most of their brokerage services to Victory Capital and Charles Schwab, it is possible for bad changes to be coming.
USAA used to manage their own mutual funds, Exchange Traded Funds, and 529 college savings plans. These have been sold to Victory Capital, an investment specialist who now will merge the USAA funds with their own. The USAA funds have been around since the 1970s and had a great track record. Victory Capital is moving from Cleveland, Ohio to USAA’s home town of San Antonio, Texas and many of the existing “USAA investment professionals and the member service representatives… have joined the Victory Capital team.” For now, I’m taking this to mean they will continue to treat me right and invest well.
I have a diversified portfolio, so only some of my money is invested in USAA funds. The rest of my money will be moving from USAA to Charles Schwab. This doesn’t worry me too much because overall, this likely improves the stability of the brokerage holding my funds. In fact, Charles Schwab is so large, it may increase the number of options for investing. On paper, this also increases the number of options I have for consulting financial experts (aka: wealth management advisors), but as noted elsewhere, I tend not to use these services…
This is where I have my money. But where do I go for information regarding how to invest my money? For stock research, I have one paid service and five free resources.
In 2008, I decided to try the paid investment advice service, the Motley Fool. The Motley Fool is an investment investigation and advisory service started by David and Tom Gartner on AOL in the early 1990’s. They have steadily gained reputation by recommending ‘multi-bagger’ stocks such as AOL, Amazon and Netflix that have grown 10x or more since they first recommended them.
Of course, my experience wasn’t 100% positive. There were several turkeys covered in the Hidden Gem newsletter and I tended to buy into them because they were cheap. I also failed to buy into several stellar recommendations because the stocks seemed expensive – particularly Buffalo Wild Wings and Chipotle Mexican Grill. Chipotle was recommended at $30 a share and I chickened out at $40 – and the stock now trades at nearly $800 per share! Despite a less than perfect track record (at least half my fault), I definitely would have recommended the service.
In 2010, I ran out of time to keep up with the service and allowed my subscription to expire. In 2017, I managed to cave out more time and this time subscribed to a bundled deal that provided me with access to the Motley Fool Rule Breakers and Motley Fool Stock Advisor premium services. While I felt these subscriptions were a decent value, they tended to recommend stocks that I was just not that comfortable with pursuing.
I feel strongly that Chinese-based corporations do not have sufficient transparency and that the Chinese government has too much arbitrary control over their fate. Thus the recommendations to purchase Baidu, AliBaba and other prominent Chinese corporations was not suitable for my investment tastes.
Likewise, I prefer stocks that actually are profitable. While I will occasionally act the fool and fall in love with certain products and leaders (hello Elon Musk and Tesla!), typically, I demand that my investments be reserved for companies that know how to make a profit. Thus the recommendations for Uber and other non-profitable internet darlings frustrated me on a regular basis.
Were the Motley Fool recommendations poor? No. The performance of their stock recommendations remain strong and convincing. If these types of stocks appeal to you, I highly recommend subscribing to their service.
However, since I was not comfortable with their recommendations, I began looking for an alternative. The Motley Fool offers an assortment of services from $149 / year to $8,499 / year (for all of their premium services as one bundle) as well as a managed portfolio services for people who just want the Motley Fool to manage their money.
Personally, I was more interested in the Total Income service which focuses on investments that pay monthly dividends (dividend stocks, Real Estate Investment Trusts, bonds, etc.). However, I choked on the $1,999 annual fee and said so to my customer service rep at the Motley Fool. They were able to find me a promotional price that combined the Total Income and Options services at a much more tolerable subscription price! If you decide to consider the Motley Fool, I recommend contacting a customer service rep to explore if they have any bundles or multi-year specials that will lower your costs.
I timed my subscription to the rollover of my 401K and was able to use their advice to purchase a portfolio of income stocks that have already returned enough profits to exceed my Motley Fool subscription price! As you can tell, I am quite the fan.
As a subscriber to any service, you also get access to periodic bonus reports and to the Motley Fool community message boards. On the message boards, you can connect with like-minded individuals and fellow subscribers (AKA: ‘Fools’) and see other people’s opinions about many different types of investments. Like the market in general, there are many different opinions, but this group tends to back up their positions with a variety of financial ratios and statistics that help you understand the basis for their recommendations. These message boards deliver strong value to compliment the basic service offerings.
For those who do not choose to invest money in a subscription, the Motley Fool still offers value to the public. They have public podcasts (I listen regularly to Motley Fool Answers and Motley Fool Money) and publish many articles on their home page and through other websites (Yahoo Finance, etc.). The Motley Fool is a valuable resource for anyone interested in finance.
In addition to the Motley Fool, I also regularly use Yahoo Finance, Google Finance, and the Bloomberg App for the iPhone. Do I need a quick stock price quote? Google Finance (basically just search for a stock symbol on their home page) and Bloomberg’s App (iPhone) provide very quick ways to check on stock prices and for any recent news related to specific companies. Do I want to dig in deep to a company’s performance? Then I fire up Yahoo finance on my PC. Yahoo Finance provides more in-depth information and charts than Google or Bloomberg about company finances, industry competitors, etc. For browsing for new stocks, Yahoo also has very robust stock screeners and bond screeners. The only bad thing about their screeners is that they are too accurate. I often wind up staring at a list of hundreds of companies that I have never heard of and become overwhelmed…
The last two free resources are a website called the Dogs of the Dow and Company-specific websites.
The Dogs of the Dow website has not changed much since it was started in 1996, but it continues to provide rock solid advice based upon a simple principle. Why not get the highest possible return on the largest, most stable stocks around? This site is also effectively a screener on a screener. The Dow Jones screens for 30 top American companies and the Dogs of the Dow selects the top 10 dividend performers from that list. If you want a stable, predictable return, this is a good place to start looking.
As for company-specific sites, I like to look at the federal financial filings for various companies if I am getting serious about investing in them. Yahoo Finance provides a quick, high-level look at the basic financial picture, but nothing beats the 10K (annual financial report) and 10Q (quarterly financial report) filings for a full picture (at least as far as public resources go…). In a future blog, I’ll go into more detail about what to look for in these numbers, but for now, just know that most public companies have websites with a section for Investors. Under this Investors section will be links to their annual report and financial statements and you can really dig deep into a company using this information.
I hope people find this information useful if they want to get started investing. However, like investing, you must select services that fit your needs. There are a lot of services out there and you need examine their details to see how they fit your situation. Still, you can use my recommendations to benchmark what you find and compare options. Have fun and be profitable!