Author Archives: Kai

About Kai

I teach graduate and undergraduate finance at the University of California Santa Cruz. My courses included financial institutions and markets, investments, corporate finance, and financial engineering. I hold a Ph.D. in economics, a CEMS Masters in Management, and a CFA charter. In my previous career as a management consultant with Booz & Co., I worked on many projects for banks, insurance companies and other financial service providers.

PenFed lost $2,300 of my money

In an earlier post, I recommended the PenFed cash-back credit card for people who spend a lot on gas. Well, PenFed just lost $2,300 of my money. Shortly after receiving an email saying that my credit card statement was ready, … Continue reading

Posted in Credit cards | Leave a comment

Make $1,000 a year with just two cash-back credit cards

Our family of four makes nearly all our purchases with credit cards, spending about $4,000 a month (but we pay them off every month). Getting an average of 2% in cash back lets us save $1,000 a year, and thus … Continue reading

Posted in Credit cards | Tagged , | 2 Comments

The best credit card

In a different post, I argued that it’s a good idea not to carry balances on credit cards, and to get cash back rewards instead. But which card is the best? Online services such as CreditCards.com, Mint.com and BillShrink claim … Continue reading

Posted in Credit cards, Dirty little secret | Tagged | 1 Comment

Credit cards are good and bad

You can use credit cards in one of two ways: using the credit facility to borrow money and carry a balance from month to month, or using them like debit cards and paying off your balance every month. Dirty little … Continue reading

Posted in Credit cards, Dirty little secret | 1 Comment

Avoid the credit card tax

Merchants who accept credit cards typically have to pay between 2 and 5% of the value of each transaction in fees to Visa, MasterCard and the banks involved, adding up to $600 per household per year. To cover their costs, … Continue reading

Posted in Credit cards, Dirty little secret | Tagged , | 1 Comment

Use dollar cost averaging

Dollar cost averaging means regularly putting a fixed amount of money into an investment, e.g., investing $100 into a mutual fund every month. The beauty of this strategy is that you will automatically buy more shares when they are cheap … Continue reading

Posted in Investing | Tagged , | Leave a comment

Save early and steadily

Compound interest rocks! The graph shows that an investment of $1,000 will grow to nearly $11,500 after 50 years, given an annual return of 5%. Surprisingly, compound interest (interest on interest) accounts for 76% of the growth in value ($7,967 … Continue reading

Posted in Lessons from personal finance | Tagged | Leave a comment

Finance and evolution

Evolution has equipped us with many useful tools: we can immediately judge if some someone is a threat, a desirable mate or just a nuisance. However, evolution has not equipped us to make sound financial decisions. Deciding what type of … Continue reading

Posted in Lessons from personal finance | Tagged , | Leave a comment

Caveat emptor (buyer beware)

Don’t believe everything other people tell you, especially about money. Conflicts of interest are common: Stock brokers and commission-based financial advisers get a commission every time you trade based on their advice, leading to unnecessary turnover and high expenses in … Continue reading

Posted in Lessons from personal finance | Tagged , , , , | Leave a comment