Review: Marcus by Goldman Sachs

As FED (Federal Reserve System) is (was?) raising interest rates we don’t have to suffer from 0.01-0.06% APYs on our savings accounts anymore. Larger retail banks are slower to act here for obvious reasons, but there are first movers worth to take a look. I was considering Marcus by Goldman Sachs, AMEX Personal Savings, HSBC, Barclays, and Allo. There were smaller & less known players offering over 3% but I didn’t feel like adding an extra risk. I decided to do a split between Marcus and AMEX Personal Savings based on APY and online ratings. Comparing these two Marcus is better in both APY and experience.

Marcus by Goldman Sachs Online Savings Account landing page

I never banked with Goldman Sachs and from my previous banking experience (Citi Gold) online is never just online and includes calls and snail mail. With lowered expectations, I opened a new online savings account in June 2018. I was positively surprised, the signup experience was very smooth and everything was actually online. 6+ months in so far and no complains (nor hidden fees).

If you take a look at the finer print (terms and conditions), we get the standard $250K FDIC insurance, the minimum deposit of $500, 6 withdrawals every month, and accounts are now capped at $1M.

The best part of the Marcus is they’re reflecting increasing interest rates. I received three emails regarding the percentage increase. As of January 16, 2019, they’re at 2.25%. You don’t have to wait in the long line for Robinhood’s 3% cash management account, interest in Marcus is Interest is compounded daily and credited to your account on monthly basis.

If you want to start using Marcus just sign up via their homepage.

Review: Drop

This saving tip is also from the category zero-effort low-impact,
similar to Yelp Cash Back.

Drop offers

Download the app, link your credit card(s), select the stores where you usually shop, and you’re all set. Different stores have different points per dollar spent exchange ratios. If you’re like us and regularly shop at Whole Foods (0.8% cashback), Trader Joe’s (1.2%), or Target (0.8%), you might end up getting about $10 every month. No jackpot, but could take care of your Netflix or Dropbox subscription.

Drop Points history and Rewards

If you want to give Drop a try, sign up via their homepage and use code yp7kk
to get automatically 1,000 points (don’t get too excited it’s worth around $1).
Drop links to your cards by securely connecting via the same technology (PLAID), which is used by companies like Mint, Acorns, or Robinhood.

How much should you save?

If you don’t want to be solely dependent on (underfunded) Social Security checks when retired, then you better be putting some money aside.

Many guides shoot for a financial independence, saving at least 25x of your annual expenses based on 4% rule, but for many households, these numbers are unreachable or unsustainable. I put together a simplified guide with a bare minimum you should be saving and a goal of having 10x of your annual expenses saved when hitting the age of 65. Optimal savings to expense ratio should be double or more of what is in the infographic below.

4% rule (4.5% rule)
You might have read about the 4% rule originally published in 1994 (in later stage updated by its author to 4.5%). The 4% rule says that you could withdraw 4% of your savings every year and live on them indefinitely. Basically taking out only the interest without touching the principle. To become financially independent you need at least 25x of your annual expenses.

Example
Annual expenses = $60,000
25 x $60,000 = $1,500,000
4% from $1,500,000 = $60,000

Which means to achieve “financial freedom” you need to set the goal at least 2x more than the minimum savings in the infographic and always be on the lookout for the creeping inflation.

Example (inflation rate = 2.5%)
Annual expenses in 2018 $60,000
Annual expenses in 2028 $76,805
Annual expenses in 2038 $98,317
Annual expenses in 2048 $125,854
Inflation calculator

Sources:

  1. U.S. Bureau of Economic Analysis, Personal Saving Rate, FRED
  2. Bloomberg
  3. FinancialSamurai.com
  4. The New York Times

Review: Google Fi

Update (November 2018): Project Fi is now called Google Fi and supports iPhones (beta). Some additional setup is required, but definitely easier than the hustle described below :)

Project Fi is a virtual mobile network operator by Google. I became their customer in July 2016 (switched over from AT&T). Fi’s superpower is the dynamic switching between different cellular networks (Sprint, T-mobile, and U.S. Cellular) based on the signal strength and a single price tag of $10 per 1 GB for all domestic and international data.

tldr;

(+) Low price if you have WiFi at home & work
(+) Godsend for traveling
(+) Contract free
(–) Requires new(ish) Android device to support all features

Quality of service

Coverage was pretty steady in the city (San Francisco, Seattle) and also the suburbs. I don’t remember any significant signal strength loss, but that might be also to close vicinity to the Google HQ. Anyhow before considering the service check their coverage.

International coverage & data was an amazing experience. Everything worked as advertised, I was really nicely surprised. Turned my phone after landing, waited minute or two and I was up and running with local LTE network. I was using it all over Europe, Dubai, and Bangalore.

Price

If your phone usage looks like mine; music, navigation, emails, and have WiFi at work and at home, it could cut your phone bill in half. I never had to keep checking my usage, in the worst case I will be where I was with AT&T. Pricing is pretty straightforward: unlimited calls & text are $20 month + $10 per GB of data anywhere. In the 23 months of the service, my average price on the bill is $33.90.

There are small taxes & fees at the end of the bill, but nothing unextraordinary. Extraordinary is Google’s transparency here, if you click on the fee sum, it’ll expand and show you all the taxes and fees. Just for your curiosity, I’m adding a screenshot below:

Additional features

  • You can use your phone to create a WiFi hotspot. They’re claiming you can share it with up to 10 other devices at the same time, but I never tried more than my iPad.
  • Text transcribed voicemails are pretty useful, but it is getting standard with other operators as well.
  • Bill for data will never be higher than $60 thanks to their Bill protection.
  • You can add up to 5 additional members for $15/month. The data package is shared.
  • From what I found online (never experienced it) they’ll try to limit your speed somewhere around 15GB monthly.
  • If you’re maxing your mobile data usage, or have kids who do, there are family plans with lower $/line.

Project Fi on iPhone

Project Fi officially does not support iOS, but there are hacks on how to get it to work. I followed the reddit instructions, went to Best Buy, purchased the newest Google Nexus, went home, activated Project Fi SIM, factory reset Nexus and return it back. Project Fi SIM worked after inserted into my iPhone SE. There’s no network switching on iPhones, and you’re always stuck with T-mobile network, which worked fine for me, ideally, check with a friend who has T-mobile how’s her reception in the area.

How to start

I originally started using Project Fi on my iPhone SE. There was a small glitch while transferring my number over from AT&T, but support was very prompt and solved my issue in a couple of minutes. You need a Google/Gmail account to link with your phone number. If you don’t feel like sponsoring Google with more of your personal data, you can always create a blank new account.

You can signup directly via Project Fi homepage, or to start with a $20 free credit use my personal referral link(Disclaimer: I will earn $20 credit as well, which means I will owe you a beer when in the same city).

Review: Yelp Cash Back

One of the older low impact zero effort saving method.

Add your credit card to yelp and every time you pay at a venue that offers Yelp Cash Back you’ll automatically get a cash back, usually, 5–10%,
paid once a month back to your credit card.

Now you can start chasing restaurants (and shops) offering Yelp Cash Back or you can do nothing and just collect occasional cash backs.

The service is pretty straightforward & customers friendly, now let’s hope Yelp engineers will take care of our credit card data responsibly.