Shop around for the best bank for you
All banks are not alike. You may have chosen yours for a good reason, but here are some other considerations. They may save you some money.
• If you chose a bank due to its location, know that these days, with newfangled inventions like the telephone, direct deposit, the U.S. mail system and the Internet, you don’t need to be particularly close to a bricks-and-mortar branch of any bank.
• A good way to figure out exactly which of a bank’s services you most need to pay attention to is to make a list. Jot down the following items on a sheet of lined paper and make three columns, where you enter how much you spent for each category in each of the past three months: ATM surcharges, “foreign” ATM fees, other ATM fees, overdrafts, monthly maintenance fees, check printing, deposit/other slips, call center charges, debit card fees, low-balance penalty, per-check charges, return check/NSF fees, money order fees, traveler’s checks and other bank fees. This will help you quickly see where your money is going and what features you should examine when evaluating a bank.
• If you’re parking any money in CDs, shop for the best rates. Check sites such as www.bankrate.com. You might earn 1 percent or 2 percent more at a small bank a few states away.
• You can often get a higher interest rate on your checking account at a small regional bank than at a big national one. Better still, some brokerages are now offering banking services such as check writing. Learn more about brokerages and how to pick a good one at www.broker.fool.com.
• Use direct deposit. It saves time, and some banks will give you free checking if you use it.
• Don’t order checks from your bank, which might charge as much as $25 for 200 checks. You can get the same thing for a fraction of the price through services such as www.checksinthemail.com and checkreorderexpress.com.
For more information and tips, pop over to www.fdic.gov/bank/individual/ online/safe.html and www.aba.com/Consumer+ Connection.
Ask the Fool
Q: Should I invest in stocks or savings bonds for my kids? — W.M., Baton Rouge, La.
A: It depends on your plans, because the stock market is best for long-term investments. If the money will be spent on college, then determine how many years you have until they’re 18. If it’s for their future use as adults, it might grow for a few decades.
Putting the money in “safer,” less volatile investments such as savings bonds or CDs will give you a modest return and minimize losses. But over most long periods of time, stocks will outperform bonds and CDs. If you can leave the money to grow for five, or better still, 10 or more years, stocks are more compelling.
An index fund is a great way to start with stocks. You might also invest at least a little money in the stock of a few companies that your children know, such as PepsiCo or Microsoft. Then you can follow the fortunes of the companies and your investments together as they learn about the stock market.
Learn more about savings bonds at www.savingsbonds.com and other bonds at www.bondsonline.com. Learn about index funds at www.indexfunds.com and at www.fool.com/funds. At www.fool.com/shop/newsletters we offer newsletters to help you find superior investments – try them for free.
Q: What does it mean when I see that “Today’s Volume” for a stock is 11,300,000? — K.B., San Antonio
A: Imagine Chihuahua Channelers (ticker: YIPYIP), which helps people communicate with long-lost pets. If its current volume is 11,300,000, that just means that so far today, 11.3 million shares of the stock have changed hands. Volume can vary widely — Microsoft averages nearly 70 million shares per day, vs. 3 million for 3M.
My dumbest investment
Back in 2004, after hearing Loudeye CEO Mike Brochu speak with such positiveness and common sense about the future of digital communication on a talk show, I jumped on the bandwagon. I was feeling cocky and considered it total speculation, so I invested just $1,500, less than 1 percent of my portfolio. Over the next year, it fell some 40 percent. It’ll be interesting in the coming years to learn if it truly was a dumb move, or if I stumbled on the next Microsoft (ha ha). — K.G.K., Seattle
The Fool Responds: Yikes. That’s a lot of money to speculate with. The digital media distribution and promotion specialist may end up faring well in the long run, but it’s not a slam-dunk now, with net losses instead of gains and a CFO/COO who departed after just eight months. With its stock trading for less than $1 per share, this is a “penny stock” firm that merits close inspection before any investment. Better still, wait for it to turn profitable.