arbitrage on?

I received a solicitation letter from First National Bank Omaha today. The offer was 1.99% APR on balance transfers in the first three billing cycles, for life.

Almost immediately, I thought about doing some more arbitrage. Meaning, I envisioned getting a high credit limit on this card, getting that amount transferred to another card, withdrawing the credit balance, and then investing that money in my HSBC online savings account.

The spread would be *roughly* 3% (because HSBC's APY is 5.05%, and I'm too lazy and stupid to figure out what the APR is). Assuming I get a $30k credit limit and, for calculation's sake, transfer/withdraw all of that, I'd get:

$30,000 x .0505 = $1,515 in interest income for the year

However, with that $30k in the negative books, so to speak, I'd owe:

$30,000 x .0199 = $597 in interest expense

Of course, since I'd be making minimum payments to the credit card monthly, the total interest expense for a year would probably be less. Let's say it'd be about $550 (I may be way off).

That'd leave me with $1,015. Yet, that is before we factor in taxes. Let's use the 28% bracket and calculate from there:

$1,515 * .28 = ~$424

That means after deducting for interest and taxes, I'd have:

$1,515 - $550 - $424 = $541

Personally, that's not much of a return, and certainly not worth weakening my already weakened (from past arbitrage efforts) credit score. Long story short -- nice idea, but just not worth it. Now, if the credit limit was $100k, that'd be a different story. ;)

when to buy

Very interesting article on the best days to make certain purchases. Honestly, I'm not sure how accurate this, given that the suggestion is to buy clothes on Thursdays, before retailers stock their shelves for the weekend. Last I heard from my friends in the fashion and retail businesses, seasonal collections stay out for more than a week, so shopping every Thursday seems unnecessary.

steady she goes

When I first started reading about personal finance as a young pup (aka fresh out of college), one of the things that seemed to echo throughout was the importance of saving. Sure, investment gains are great, but a big key to growing wealth was to save.

Circumstances (low income, student loans, bad spending habits) prevented me from saving much in the first half of my post-college life, but since (ironically) I've moved back in with the parents, my net worth has skyrocketed. A lot of it has to do with gains in investments made possible with savings, but primarily, I attribute the rise to socking more money away.

So here's a quick update (from approx. the beginning of the year through June), again, because I'm in such a good mood due to the market.

• My net worth has risen about 87%.
• My brokerage account has jumped 131%, mostly due to my participation in my company's ESPP program.
• My 401(k) has gone up over 90%, thanks to my contributing 15% of my salary and my company's match.
• My Roth IRA went up 24% (it'd be almost 40% if you factor in July's goings-on).

Though the month is only halfway over, my net worth has already grown 8.6% since the end of June. Usually, the growth is due to savings but this month has been special. This month, the growth's been mainly due to Baidu.

Let's hope earnings are good come July 25. ;)

back (kinda)

It's been a long hiatus, with some soul-searching in between, but for now, I'm back. Here's an update (primarily because I'm feeling so good about how things have been turning out):

Not counting my mutual fund holdings, which totals a number of contributions since the start of the year, below is a table that shows my stocks and ETFs, with performance from when I purchased them this year.

Holding	Buy Price	Current Price	% Gain/Loss
YHOO	$ 28.02	$ 26.58	-5.14%
HOT	$ 72.00	$ 75.09	4.29%
EPP	$ 123.59	$ 154.38	24.91%
ADRA	$ 31.76	$ 36.42	14.67%
BIDU	$ 120.50	$ 212.84	76.63%

I'm really happy about the above, of course (especially Baidu's run-up). However, I'm happier about the fact that I've outperformed the major indices (for now):

Average Portfolio % Gain	23.07%
DJ Index	11.59%
S&P 500 Index	9.46%
NASDAQ	12.08%

I'll be taking subscriptions to my investment newsletters now. ;)