Where To Park Your Cash

A friend of mine called me up today. He asked me about where he could find a better interest rate on money in a bank account. As I work in the financial field, it also reminded me how many of our clients have similar questions, and how many people leave money on the table when it comes to the money in their banks.

A little primer on inflation: Some people actually still hide money "under the mattress" in a place where it accumulates no interest. They are losing money every single day, in a very real way. Due to inflation, the money you have today will be worth slightly less tomorrow. In the US, annual inflation averages around the 3-4% range. So if it is 4% this year, that means that $1,000 today will be effectively worth $961 next year if it just sits under your mattress. It will still be $1,000 if you count it, but will only buy $961 of today's goods. Thus, in order to keep your money's value stable, you need to earn 4% on that money in the next year. Anything less and you'll be losing money, and anything more and you'll be gaining money.

Some countries have terrible inflation problems due to bad policy (usually from dictators or highly corrupt governments). Take a look at this heat map around the world, and you will see what I'm talking about. The worst inflation by far is in Zimbabwe, and it just reached 2.2 million % per year! In other words, if it costs you $1 to buy a loaf of bread today, it will cost you $2.2 million to buy that same loaf of bread next year. And we panic when we get close to 5%... This horrible inflation is a direct result of the country's president, Robert Mugabe, and his corruption and nationalization campaigns for the last 20 years. What was once one of the richest of African nations is now in financial ruins.

Ok, so you need to keep up with inflation as best as you can. But if inflation is at 4%, and your bank's checking account only pays less than 1%, you're losing at least 3% of your money in the bank each year. How do you stop the bleeding?

One option that I like is the direct online savings accounts. Big real banks start online-only branches that give you very little service and have everything done electronically. Thus they avoid buildings, employees, and most all other costs. Then they give you a higher rate on your savings account than in their regular "bricks and mortar" banks. Right now you can get rates between 3% and 3.5% at some of these online savings accounts. They have links to your regular bank account and you transfer money back and forth as you wish. They typically have no fees, no minimums, and no restrictions.

If you want to look at a few for reference, try www.ingdirect.com, www.emigrantdirect.com, and www.hsbcdirect.com. And if you want to keep at least $1,000 in as a minimum, you can get a little higher rate at www.dollarsavingsdirect.com, which is also owned by Emigrant Bank. Make sure that where ever you put your money it is FDIC insured in case a bank implodes, and always read all the fine print when it comes to putting your money anywhere.

Rankings Or Popularity Contest?

Anyone who knows me could tell you that I am a competitive person by nature. I also enjoy watching others compete. And one thing I love to watch is college football! Unfortunately, every year there are big disagreements between many people about the rankings of those teams, and which teams should be ranked higher than others. No real good answers have been put into effect, as the ongoing (and often heated) argument proves. Currently, college football teams are ranked weekly by 2 major polls, one voted in by members of the associated press, the other by college football coaches. But this presents problems.

Ranking polls and thus all the systems that rely on them (the BCS rankings in part) are inherently flawed due to human nature, greed, a team's viewability, a team's history, and more. Coaches have absolutely no incentive to cast votes in the most accurate and uniform manner, and neither does the press for that matter.

A possible solution to rankings of teams uses one of these very weaknesses in the current system (greed) as the method of really deciding how well a team played each week. And thus, collectively, how it has performed throughout the season. How? Use people with "skin in the game" so to speak: bookmakers. Every week, bookmakers around the world put odds on NCAA football games. All the best odds makers in the world typically zero in on a certain spread, over/under, etc. If they're right, they make money, if they're wrong by much (cumulatively) they'll lose their shirt. So they have a vested interest in getting the spreads as close as possible to the correct result.

So how do we use this? No pre-season polls, first of all. All teams start equally ranked. Before each game, its official spread is locked in. If a team beats its spread (win or lose), it gets bonus ranking points. If it doesn't equal its spread, it loses bonus ranking points. The more it beats the spread by, the more bonus points it gets, and vice-versa. Rankings are then decided simply by team record, with the tiebreaker being how many bonus ranking points each team has. Thus, after week 1, roughly half the teams will be 1-0, and the other half will be 0-1. No 0-1 team will rank higher than any 1-0 team, and the top ranked team will be the 1-0 team with the largest number of bonus ranking points (ie the team that beat its spread last week by the most points). This will incentivize both teams to play hard for the entire 60 minutes of the game.

Of course, you may say, "Wait, would this kind of system entice strong teams to schedule a bunch of pansies, and also penalize teams in supposedly "strong" conferences?" A valid concern indeed. And one that can easily be addressed with one additional numerical modifier. It could be called a "strength of schedule" modifier, much like the one which has been used in the BCS system. For example, the combined winning percentage of all your opponents could constitute the modifier. We just need to get people to sit down and work out the math, and try to take into account all variables.

Sure it has its potential problems, but it is a start. And breaking the status quo is the only way that many great teams and players out there will ever be able to compete (in the rankings) on a level playing field.

Emergency Essential: The Rechargeable Lantern

Last year we had a power outage of several hours, due to a fire on a nearby mountain. I decided to drive to a store that still had power and look for a lantern. Lo and behold, what I found turned out to be one of the best emergency preparedness items we now have in our inventory: A great emergency lantern! OK, maybe that doesn't sound too exciting, but stick with me here.

This lantern has multiple ways to be powered: You can plug it into a regular outlet, plug it into your car, you can put in 3 AAA batteries, or you can charge the internal battery with the hand crank.

What do you get out of it? You can get a nice amount of light off the 20 LEDs, and that light is somewhat adjustable with a dimmer built into the switch. It can also flash a red light to signal for help. It has a built-in AM/FM radio and antenna, and even allows you to use the internal battery (and the crank) to power or charge devices like your cell phone or other small DC devices. All you have to do is buy an inexpensive set of DC conversion jacks somewhere like Radio Shack, and then make sure you have whatever your device requires for charging, and you're set. It has a nice handle, with a hook to easily get it up high where it can brighten a large area.

For less than $40 to get a new one, it is a great item for your emergency kit, or even for camping. It is the Garrity 20 LED Rechargeable Crank Lantern, but there are several companies that make similar ones. I'd give it an 8 on a 1-to-10 scale (which is really high for me) and would highly recommend it to anyone.

A Bright Future For Solar

Much hype has surrounded renewable energy solutions, especially in recent years. But still, the problems with these renewable sources center on expense. They produce power in a way that is just not cost-competitive with fossil fuels.

However, that may be about to change. A California company, Nanosolar, says it has found a way to produce solar cells so cheaply that they can compete with coal. Their technology uses thin-film solar technology, which does away with expensive and bulky silicon, and centers around being able to print these cells (made of a concoction of metals and nano-particles on a foil backing) much like a printing press prints newspapers. They have already sold out all their manufacturing capacity for the next year, and in doing so will become the biggest solar manufacturer in the US.

Some of the richest people on the planet have invested in the firm. And if the technology turns out to be even half as good as they say it is, those people will become much, much wealthier. But it is exciting for all of us peons as well. Soon this technology will be available to anyone, to use on their home. Or even as part of the building materials themselves, such as roofing or siding for homes. Such a huge leap forward could do much to move us towards energy independence and cleaner air in our cities. I, for one, hope Nanosolar is a wild success, and that we can all soon enjoy the benefits of cheap renewable energy.

Cars that drive themselves?

Have we finally reached the point where cars might actually be able to drive themselves, with little or no input from their passengers? It has long been the stuff of science fiction and movies (as in the Tom Cruise film The Minority Report), and has been whispered about in recent years by many scientists and engineers. But now General Motors has come right out and said that they want to make this happen in a decade.

Now, I don't know about you, but most of the time, I am in a car because I want to get to somewhere else, not because I want to be in my car. And if I have to spend my time in the car, I would sure love to be able to take a nap, or read a book, or work on a laptop. But of course, that's not possible for drivers today, and most of us can't afford to hire a driver to shuttle us around. So the idea has a good deal of appeal to me.

There are of course many hurdles, not the least of which are technical in nature. Driving a vehicle really is a very complicated task. A person needs to continuously calculate their speed relative to a myriad of objects around them. They have to respond quickly to unexpected situations in which there are many variables to consider. So getting a computer to see and do all this is no small task. Then there are the legal questions of what happens if a car gets into a wreck when it is driving, etc.

But I for one am excited for the day I can spend my driving time doing something more important or enjoyable. I think the first systems will take care of the driving only on the freeways. But hey, for me that's a great start. When a 1-hour freeway drive can become a 1 hour nap, I'll be a happy camper.


Click here for the story.

Wolf In Sheep's Clothing

It is very trendy in today's day and age to publicly announce how green you or your company are. But we must also remember that just because some people claim they are green, doesn't necessarily make it so.

Case in point, a CNN article about using ice cooling in large buildings in New York. They claim that by freezing water into ice at night, and then blowing air over it during the day to cool the air, they are saving money and helping the environment. Well, they most certainly ARE saving money. And they most definitely are lowering their PEAK-TIME energy usage. But are they actually helping the environment overall?

Everyone knows that it takes energy to make ice. And it takes energy to keep it as ice until you need it. It takes more energy to make ice, than to cool the air at the time you need it. Simply because of inefficiencies in materials, etc. All these companies are doing, is shifting their power usage from a peak time in the afternoon to an off-peak time in the middle of the night. And overall they are actually increasing their energy usage. It just costs less at night, saving them money. But they want to make this big hoopla over it. And yes, I'm sure that they are saving some little bit of pollution since off-peak power generation is more efficient and environmentally-friendly. But what about the added power being used to cool all that ice? And what about the environmental cost of building all that machinery?

Wouldn't it simply be better to find TRULY innovative ways to save money and the environment? Look at IBM, they have a bunch of telecommuting employees, and they save big $$ doing it. Most of these companies could have at least some of their employees work part-time or full-time from their homes. That way they don't even have to come into the city, or use up office space that needs to be heated and cooled. The real key is eliminating excess, not just adding more of it and calling it environmentally-sound excess.

Read Story Here

Brain-Controlled Toys

Using your brain alone to control objects and games will be the big interface trend of the near-future. I think that within 10 years, there will be consumer devices available for people to buy that will use brain scanning. One obvious implementation could be in video game systems. Another would be in a computer interface to replace keyboard and mouse. By the time my child is a teenager, I think it will be entirely possible that she will be playing the video games of the day simply by thought.

Click To Read

The Postal Joke

Who likes the USPS and thinks they do a great job? Raise your hands now. Did anybody hear the question? Why didn't anybody raise their hands?

One of my favorite economist writers makes the case of why most of us don't care for the USPS, and why it really should change. Read up on it here:

Privatize the Postal Service (for Starters)

Supreme Meddling

What DOESN'T the US Supreme Court (and many other courts, for that matter) get its hands into anymore? What was once devised as one of the 3 checks and balances, has become all 3 pieces. There is nothing the court won't touch, if it wants to. It is simply a partisan display of politics and government intervention most of the time. Here is yet another example:

Story

The AP Bans Paris Hilton

It appears that the AP decided to run a 1-week ban on Paris Hilton stories, just to see what would happen. That fact alone is enough to make me sing their praises (where I am usually just deriding them). Turns out that nobody actually called up and asked for a Paris Hilton story, during the whole blackout. Hmmm.... sounds like all these celebs are actually not as newsworthy to people as the media make them out to be. See my recent blog about this media-fed craze. Maybe if enough of us would tell our news outlets and the AP that we don't care about every detail in the life of Paris Hilton, Brittney Spears, or Anna Nicole Smith, they would finally get the hint, and quit pushing these useless celebs' lives upon us.

Read the AP article.