Whose Ally Are You?

After spending the better part of the past three days trying to help a friend of mine decide whether to lease or purchase a new car, it was welcomed relief when another friend calls me up to suggest that I write a blog about the reemergence of boutique banks, notably Ally.

He mentioned seeing an ad for Ally Bank which is offering some very attractive cd and savings rates. It instantly dawned on me that I had seen the funniest commercial this morning of some guy in a suit taking away a toy truck from a kid, and replacing it with a cardboard cut-out of a truck after a few seconds of play.

LOOK AT THE KID'S FACE........

The tagline of the Ally bank revolves around 'nothing being buried in the fine print and honesty.' However, what both ads fail to indicate is that Ally Bank is nothing more than a renamed GMAC Bank. GMAC Bank was formally the financing unit of General Motors, which has received more than $12Billion from the U.S. government. From what I gather, Ally Bank is the rebranding attempt of General Motors, to distance itself from dismal auto sales and poor lending practices in its overall financial services unit. That seems like a pig in lipstick to me. Perhaps a pony might paint a better picture.

I am not a banking expert, but it is troubling to know that a failing bank, can rename itself, with the governments permission and our money, then advertise itself as a boutique bank, without mentioning their affiliations. Maybe we're using the boutique bank moniker too freely here, because boutique banks generally service a certain market, group, or industry. However the term boutique was mentioned by my friend, but built upon by myself to indicate how Ally Bank, was created for the distinct purpose of masking the failures of GMAC.

It is no different from when Valujet, remember them?, renamed themselves as AirTran Airways, not long after flight 592 crashed in the Florida everglades killing 105 passengers along with the crew. I fly AirTran regularly and airline accidents are far and in-between, but slapping a new face on someone who is ugly inside insults my intelligence and doesn't do anything to solve the underlying problems.

However, 2.25%APY on an online savings account is pretty attractive. That 2.80%APY on a 1-Year cd is not a bad looker either.

In all fairness, Ally mentions GMAC twice on it's website: www.ally.com, once under, "the ally story" and once under the FAQs.

So the question remains, whose ally are you Ally Bank?

For more information on GMAC's rebranding as Ally Bank, check out:

Thanks A.C.

-whatdabusinessis.com

Passive Interest or Aggressive R.O.I.?

So the other day I get an email from E*Trade bank announcing the reduced rate of interest my money (and yours, if you have an account with them) will be earning if I continue to let it sit in their coffers.

According to the email, my money will now earn .95%APY. When I first joined E*Trade the rate was about 4.5%. Well before this recession and prior to the collapse of the housing market E*Trade offered as much as 5.05%APY.


Now mind you, any money that is earned for doing zero work is good money, so I'm not complaining. However as a business owner, I make much with the return on investing in my company than putting it in the hands of others. Problem is, I have to do all the work.

The question is whether to continue getting a sucker rate with E*Trade and earn the passive interest or to go hard with my business to make the aggressive R.O.I.?

On the one hand, E*Trade says their rate is 5 times (5x) the national average, but there's a big difference between .95%APY and 5.05%APY. My account with ING Direct, still earns 1.5%APY, but that too is down from the original 3.5%APY I started with. To make things worst, my credit union only offers .25%APY on savings accounts and 1%APY on money market accounts. On the other hand, my business has a quarterly return of roughly 30%. But, I gotta constantly reinvest and do the work.

Never mind the fact that I'm not working with a lot of money, it's the principal of the matter. Should I just be content to earn a little while they use my money to make a lot or should I use my money to invest in me with the potential to earn more? How are you investing, passively or aggressively?

Is it better to earn passive interest or seek aggressive returns on investments? How does one differentiate earnings on saving from interest earned from investing? Could someone please help me figure this out?

In the meantime, I'm gonna continue to do both. I'm gonna put aside some in the "max-rate" (HA) savings accounts at E&Trade and ING, but invest more time and money in my ventures to truly maximize my returns.

I would suggest you do the same.

Here's a video that helps put this into perspective.

-whatdabusinessis.com

Self Made.....The Most Rewarding Success

When 2Pac rapped, "I'm a self-made millionaire" on 1996's Hit'em Up, he said it with a certain conviction, so it is no surprise that all of the African American's on Forbes' inaugural list of "The Wealthiest Black Americans" are self made millionaires, except for one, Oprah Winfrey, a self made billionaire.

Never mind the controversy surrounding 2Pac's lyrics, the fact is that his story and many of those on this list is that of African Americans who took their God-given talents and parlayed them into stratospheric success. So pardon him and them, for speaking with certainty.

The list, compiled by the people over at Forbes, highlights the names of the normal crop of African Americans that come to mind when we speak of wealth, Oprah, Tiger, Cosby, Magic, Jordan, Bob Johnson, and Jay-Z but also includes a number of lesser known names, including Don Peebles, Ulysses Bridgeman, Jr., and Quintin Primo III.

However, what they all have in common is that entrepreneurial spirit and internal drive that allowed them to be self-made.

It's is one thing to be a Hilton, a Morgan, a Carnegie, a Walton, an Astor, or a Ford, where you are essentially born into wealth, but it is a completely different ballgame when you come from the bottom, like Madam C.J. Walker, A.G. Gaston, or John H. Johnson. Your only armament is that of skill and persistence.

Almost every culture and rung of the socioeconomic scale respects the hustler. We are drawn to those who chart their own course, make their own rules, and attain success, within and outside the boundaries of the law. Be them the mobsters who built Las Vegas or the hustlers who lit up Harlem.

Aside from paying homage to those that came before you and those that helped open doors for you, being self made is what the American dream is all about. It is the redefinition of rugged individualism. That belief not only in self, but in the ability of the self to achieve on behalf of a group. What many people fail to remember is that as one person becomes a millionaire, he/she enables many others to earn alongside them.

Wealth is not created in a vacuum! It creates wealth and encourages success around it.

Just think of all the people they employ directly or indirectly through their companies. Warren Buffet has been minting millionaires since before many of us were born, like wise for Bill Gates, and many others. In theory, it is: I succeed, so we succeed.

So as you go about your daily grind, trying to figure out how to create your own
stratospheric wealth, strive to be self made. Strive to stand on your own two. Strive to make those around you wealthy in the process. Strive to create generational wealth, so that your children's children will come out the gate ahead of the pack.

You too could have "money like Cosby," if you strive to be self made.

-whatdabusinessis.com