Military Investment Series Part 3: The S Fund

BLUF: The S Fund is the other 20% of the market that is not the C Fund, you can buy S Fund this at a 1:4 ratio to C Fund (20% S and 80% C) to ensure 99% of the market by capitalization.

We need to talk about market capitalization here to better understand what is the difference between Small Cap and Large Cap companies. Everybody’s favorite stock that everyone already owns, Apple Computer, symbol APPL is a great example of a large cap company. In the entire market, there have been 5.25 billion shares issued of the company each share represents fractional ownership of Apple. Each share is currently trading at a 52 week high of $134.33 per share. Its Market Capitalization is 711.03 billion dollars meaning there is approximately $711,030,000,000.00 worth of Apple stock out there. This is considered a “Large Cap” company which has exceeded greatly the minimum cut off at $5 billion market cap by some definitions.

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Chepo Investing: Schwab Knows Whats Up

Thanks Okinawa Nathan for the good find:

Looks like the name of the game now is low fees with indexing. In response to this demand, Schwab just dropped a bomb on Vanguard’s model. Schwab just announced that starting 01 March 2017 they will only charge 0.03% for SWPPX making it cheaper than Vanguard’s S&P 500 index fund, but not as cheap as C Fund on TSP. Note this difference is just 0.001% or $10 per one million dollars. This is a good alternative for cheap indexing for all those non-military, non-GS workers with no access to TSP, great also if you are looking for a good cheap way to invest!

I am even considering moving over my Vanguard Roth-IRA since I am paying 0.05% for my Vanguard Admiral S&P 500 (VFIAX). This is quite the game changer for us normies, but if you have a workplace investment plan that lets you invest in Vanguard Institutional Index Fund Institutional Plus Shares (VIIIX) that is only 0.02%!

Better yet I could start my own fund, collect the $200,000,000 for the minimum investment for VIIIX and crush it. Who is interested? In the meantime I will stick with my new Schwab account and dump my MR points into my retirement at a cool 0.03% management fee.

Also don’t forget to use the MCCS Library to get free Morningstar reports.

-Derp

Illinois added to USAA Limitless™ Cashback Rewards Visa Signature® Card Pilot!

Thank you Nathan in Okinawa in helping me getting me approved for my new USAA Limitless™ Cashback Rewards Visa Signature®! As you know this new 2.5% cashback card will over take my plated, Spinner Rimmed, Bling Bling, Flossy Gaudy,  24kt gold Barclay Gold Luxury Card which has forsaken us by discontinuation of the the annual $995 annual fee waiver for new members.

I applied while flying transcontinental from SFO to DCA using the United WiFi. Some exciting things happening for those below me in flyover country. For the those that are holding out, it looks like a bunch of states have been added to the list: AL, AZ, CO, GA, HI, ID, IL, IN, KS, LA, MI, NM, NV, NY, PA, RI, SC, TN, TX and WA.

Notice how any of the states that service members gravitate to like DC, MD CA, and FL have been added, good news is that they use your home of record as the resident state.  I have a friend in Japan that has PA as his state that was able to get the card.

You can apply here.

The card’s 2.5% on everything is more than the 2.0% on everything from Barclays Gold. You would still get 6.25% on airline tickets on AmEx Personal Platinum dumping the MR points using the points via Charles Schwab. You still get 6% on the Blue Cash Preferred, and the gas at 4% using the Citi Anywhere from Costco. Next step is the 5% cashback on the Chase Amazon Card.

-Derp

 

Military Investment Series Part 2: The C Fund

Learn how to turn $100 into $1,477 with this one weird trick!

That one weird trick is to not be: a fool with money, a greedy asshole, and a spaz that reacts to every market dip. Lets say you took the $100 you got when you were a kid in 1988 from grandma for your birthday and put it into a nice S&P 500 index fund. Today you would have 14 times as much money if you never touched it in an index fund. That means waiting out a down cycle, and not liquidating even when you have lost over half your portfolio value!

Sadly the truth is you took that money out 5 years later in 1993 to buy an Ace of Base Album, a couple T-shirts and some slap bracelets. You never got to see this return because you wanted stuff that didn’t matter. Or somehow you never got this return because you also fell for investing in a very expensive hot stock or mutual fund which was equivalent of the S&P marketed as “Growth” or “Large Cap”. You were hoping to get even greater return than your peers because you were greedy. Worse yet is during the 2001 and 2008 crisis you panicked and sold everything at the bottom of the market for your end of world prep kit instead of buying up more shares of the index fund.

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The Evasions, Omissions, Fabrications, Frauds, and Outright Falsehoods of Investing

There has to be something wrong with the world when a group of sweet 70 year old ladies from Beardstown, Illinois end up perpetrating one of the largest lies of old lady investment clubs in history. The Beardstown Ladies claimed to be making 23.4% returns annually from 1984 to 1993, nearly double the Dow Jones Industrial Average’s returns during the same period. This of course was because they were charging the ladies in the club membership dues to be part of the inverse funnel scheme that they were cooking up. These dues were counted as part of their “returns” and part of the exceptional 23.4% return. This method was included in the footnotes, and the bold claim is even on the cover! However once Price Waterhouse Cooper (the auditors to the Oscars) came in and looked at their books the game was up! The groups’s returns were actually were quite terrible. These old fraudster’s wise and sage advice on investing resulted in a modest 9% which underperformed the Dow 30! They would have done better in a Dow index fund instead of defrauding and falsely motivating a new generation of dumb money investors. I am sure they made a few bucks on selling 800,000 copies of the book at $20 a pop. You just need that many suckers!

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Treat Your MR Points Like An ATM!

Today is the singularity, the day where I first turned AmEx Membership Reward Points into physical currency! It is the reverse manufactured spending, let’s call it monetized reward churning. It felt like the John Conner Churn, but completely legal.

The Schwab AmEx Platinum card came in 2 business days! Upon activation I applied my SCRA benefits, choose United as my airline and spent the $200 on my registry. I then immediately cashed out the 100,000 MR points from my Platinum Business Card churn for $1,250. Within seconds I had the funds readily accessible to my Charles Schwab ATM card which has yet to arrive. In theory the funds could of been withdrawn from the Schwab the same day into real cash if I had the ATM card.

Keep in mind that the card comes with 40,000 MR points with $3,000 spend. This would be worth $500 in redemption using this method. I earned the points with the Krugerrand Churn which has finally worked out since the spot price has risen to $1234.40 a troy ounce. I just need gold to go up $11.16 to hit $1245.56 an ounce to break even.

Since the transaction to buy the coins was over $5,000 I had earned 1.5 points per dollar making 7,500 MR points or $93.75 per $5k in cash back or 1.875% cash back using the schwab cash out at 1.25 cents per point.

If I had the balls to charge all $15,000 to get 100k MR points that would be $281.25 on top of the $1250 for the bonus for a sweet $1,531.25 by taking on crazy risk to hold on to $15,000 worth of gold coin for a few months. NOT WORTH IT!! but you can’t argue with 10% return in 3 months.

Redemption was easy you just log into the AmEx site and buy the redemption like gift cards. The money just magically shows up in the schwab account in seconds.

I have said for years cash back was for suckers, but I am starting to see the other side of it. It is some time harder to find good redemption and time away from work to travel and redeem these points. I could of course take these points, monetize them and put them into a index fund to have them grow in value for when I will have time to use them. This would be a better value hold than to risk constant devaluation of the value of MR points.

Not sure if a 1099 will be issued on this hippie right here says its a gift so no taxes! I suppose I could contact my tax professional on this one. Now AmEx finally has cash back appeal for all those non travelers out there that have for years snubbed all the MR earning products!

-Derp

Happy Super Bowl Monday Okinawa!

For those brave men and women serving overseas! Cheers! since many have Monday morning off to watch the big game! For those in Okinawa this was a sure thing, and a great opportunity to travel! As you know I’m not a big fan of football or drinking at 10 am Japan time. Instead it would be a good time to go see the Sapporo Snow fest using an experience Japan Fare from ANA . I wrote about this in a previous post here.

The trip was considered a 72 hour liberty travel to mainland from Oki. It did not count towards leave for greenside navy at least. It was a free weekend at $90 a flight segment to travel from the tropics to the Arctic!

You have many years to cheer on your team when the game is at an appropriate time. Meanwhile, take advantage of this free weekend.

-Derp

Trip Redemption Summary Jan 2017

January 2017 turned out to be an amazing time to travel. With the down season, many hotels and flights were at their year low. Redemption was on point too! Lets start with the best trip first:

Hong Kong at the highest hotel in the world (1,588 ft) for Chinese New Year (28 Jan 2017)

Flights were pretty empty and I was able to use 76,986 MR points for a round trip for my mom. This is for flight UA895/896 direct from ORD to HKG taking a whopping 15.5 hours per segment. If I had chosen my personal platinum card I would of gotten 3,849 MR points (5x for flights on personal only) on top of the 38,493 MR 50% refund with Business Platinum. With the 42,342 MR refund on 76,986 we would of only spent 34,644 MR for a $769.86 flight or 2.2 cents per point! However the 2 cents per point that I actually got is still pretty good.

The Ritz Carlton Hong Kong is a Tier 5 hotel costing 70,000 Marriott Points per night. Rooms facing Victoria Harbor go for around $600 a night making redemption at 0.8 cents per point which is just alright. These points came from the 80,000 bonus still going on for the Chase Marriott card for $3,000 spend. This card also includes a free night every anniversary in exchange for the $85 annual fee. I went ahead and used my cert on this trip for the Courtyard Hong Kong Sha Tin up by the river in the New Territories, which included free dim sum for gold members (free with AmEx Platinum via SPG Gold). This room goes for $110 a night which makes up for the $85 annual fee. Next year we will have two nights free at this hotel or any cat 1-4 hotel, and Gold members get a view of the lounge overlooking the Shing Mun river.

Now back to the ritz, the hotel was reported as super fancy by my mom who took advantage of their dinner buffet at Cafe 103 wth friends. The fees are broken down here:

Extravagant Seafood Buffet with Endless Bubbly
Café 103 is pleased to showcase luxurious and extravagant buffet, offering a series of succulent seafood, international delicacies. Our talented chefs have selected premium seasonal ingredients worldwide and present a truly enticing gourmet dinner with free flow of sparkling wine, juices and soft drinks.

Time:    6:30 p.m. – 10:00 p.m.

Price:    HKD 798 per adult         (Sunday to Thursday)

HKD 548 per child         (Sunday to Thursday)

She wanted to share these amazing meals with me:

My brother chipped in by using his Hyatt Card free night at the Hyatt Regency Hong Kong, Tsim Sha Tsui for my mom. This hotel is a Cat 4 and redeemable for the annual free night. The room usually goes for $193 which more than justifies the $75 annual fee.

Round trip flights to and from Hong Kong as well as three nights hotel all on points turned out to be a amazing redemption. You can give a loved one quite an adventure with points alone.

Los Angeles from Beverly Hills Glam to Echo Park Hipster

I was reading Brian’s (The Points Guy) blog on LA and his favorite places to go. It is in a need for a update as some of suggested places to eat have shut down. I tried to hit up the Knuckle & Claw as suggested by TPG, but sadly it closed just a few weeks prior. Flights were super cheap from ORD to SAN and didn’t bother to try to use points. I used $176.20 from my $200 travel bank funded by my American Express Platinum card using the old gift registry trick. Arriving at the San Diego airport I drove up the I-5 and parked at the Cedars-Sinai Medical Center parking for $10 a day and walked to the SLS Beverly hills which was charging $42 a day for valet parking! What was nice with the SLS is the use of the M-Series BMW 740i that would drive you anywhere in a 2 mile radius for free. We would drive out and Uber back.

Hotel was nice, certainly very modern with an appeal to the flashy and flossy crowd. Nice bedding and good customer service. Usually $318 a night, but I used a combination of Marriott points transferred to SPG points at a 3 to 1 ratio for 20,000 SPG points a night (or 60,000 Marriott points) for a redemption of 0.5 cents per Marriott point or 1.5 cents per SPG point. Not the best redemption, but better then actually paying for it. This is all points from stays and some points form the SPG card from AmEx currently offering 25,000 Starpoints after $3,000 in purchases within the first 3 months.

Hotel was nicely located in Beverly Hills, but for contrast we stayed at the Comfort Inn at 2717 West Sunset Blvd on the hipster side of town (Echo Park). Much better street food, and entirely walkable. This hotel was only $143 a night with the AAA discount and with free breakfast. Didn’t even bother to use Choice Reward points for 1,000 AmEx Membership Rewards for 1,000 Choice Privileges points.  The room would of been 20,000 Choice Rewards points at a pitiful 0.715 cents per point. You might as well transfer the 20K via Schwab AmEx for $250 cash at 1.25 cents per point and buy yourself the room and 100 food cart tacos at $1 each.

Overall a fun trip, got to see places from my favorite Sci-Fi film Blade runner like the Ennis House and the Bradbury Building.

Ritz Carlton Atlanta Using Ritz Carlton Chase Card

The heavy weight of my collection is the Ritz Carlton Card which is made of solid brass weighing in at 1 ounce! The $450 annual fee is easily off set by the $300 travel reimbursement as well as the $100 discount on paired round trip flights as well as the 3 club level upgrades. Also with paid stays at the Ritz for 2 nights you get a nice $100 hotel credit. I decided to use up all these benefits in a single trip.

The downside to using the club upgrades is you must pay the full fare for a basic room before upgrading. This price is not published and you must call in to get the price. The Atlanta Ritz usually charges $140 a night for military, but to use the discount I was quoted for $273 for a night, but was able to upgrade to the club level which includes all food and drink.

The going price for the Club Rooms for that night was $500 a night! So we ended up saving $227 a night for two nights which more than makes up for the $450 annual fee. This card is not worth it if you never intend to stay at the Ritz. What does $227 a night buy you? First off we had embroidered pillow covers (for us to take) with our initials on them much like this couple reported here.

Of course cake and balloons to celebrate our upcoming baby! The service was above and beyond even that of the asian Ritz Carltons we have stayed at. The lounge has 5 separate services per day (including hot breakfast) as well as a nice cocktail service from Noon to 10 pm, they can make you any drink you want!

Atlanta is a nice town with many museums such as Coca-Cola and the Margaret Mitchell house with free admission for military.

Plus the subway from the airport to downtown is real easy to use. We also had the $100 credit for the hotel which we used on items at the gift shop.

The best part is the post departure gift that was sent to my house after I checked out! They had given us a digital photo frame of us photoshopped into various Atlanta landmarks for us to remember our trip. The certainly went above and beyond to allow them to “stay with us”!

The flight discount can be summed up in a previous post here. This means we paid $49 per segment to fly from ORD to ATL with the $100 credit provided by the card. This one trip made up for more than the annual fee.

Summary

Don’t let a name like Ritz-Carlton or SLS dissuade you from checking it out. You may not want to pay retail, but there are ways to stay at these places without breaking the bank. For example a combination of 2 nights at military rate along with the $100 credit would make the Ritz Chicago cost less than the Holiday Inn! I think a lot of the time these places are not considered for the sheer fact they seem too over the top. Pair this with a special occasion and two nights becomes cheaper than a pair of tickets for a Hamilton show.

Have fun out there!

-Derp

Went Quadruple Platinum, Temp AmEx Card Issued Instantly!

Looks like AmEx is finally getting their shit together! It was always the gripe of many AmEx Platinum applicants overseas that this card, with all of the best intentions to expedite, would take over a month to get to an APO/FPO address. This is mainly due to a robotic system that sends it via FedEx or UPS  which cannot ship to APO/FPO. Only USPS can send to these remote PSC locations, so the card would get retuned, and for security a new card could not be issued for 2 weeks!

However upon approval today, I got to see the card in all of its virtual glory with text message verification. Not sure if this is for all future applications of all the AmEx cards. You only get 3 minutes on the site to see it before it disappears! This will allow me to make the $3,000 spend for the 40,000 MR points worth $500 (at 1.25 cents per point) even before the card arrives.

The application was really easy, I logged into Schwab and applied for the AmEx Platinum using the internal link under products. The link did not work before on account opening, but once they got their $10,000 the link sent me to AmEx for the standard application.

Now I have the Mercedes-Benz, Personal, Business, and Charles Schwab AmEx Platinum Card, each with $200 airline reimbursement as well as $1,825 in SCRA fee waivers. Is it time for an intervention?

-Derp

New Centurion in Philadelphia and Hong Kong!

I am sad to hear that ORD was not the next Centurionary City after all. Looks like the home of our very own Derp Report webmaster will get a Centurion Lounge of their own! According to user aussiecoffeee on r/churning and this post two weeks ago, the next lounge will be in Philadelphia! Details here:

located directly above the current British Airways lounge located in terminal A-West near gate A14. It will be on the secure side past the TSA security checkpoint so there will be no need to re-screen at the checkpoint before catching your flight.

Even more reason to get in on the AmEx Personal Platinum (again, again, and again). How many versions of this card could there possibly be? Who cares when they are paying you $700 a pop and waiving the fee per SCRA.

UPDATE!!

Looks like the real news in the 8,000 square foot Centurion lounge in Hong Kong that will open this year! Thanks CDR for the tip!

-Derp