posted on November 5, 2000 03:12:15 PM
I just notiiced today that paypal is offering you a rate of return on your paypal balance. They want your social security number though to be able to do this. I am a little hesitant to let them have it just for 5% interest. Just wondering what others here think.
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posted on November 5, 2000 03:19:53 PM
By federal regulation, in order to pay you interest they have to have your tax ID number and report the income to the IRS. It just depends on what kind of a balance you are going to carry on Paypal as to whether it is worth it to you to earn the interest. Pesonaly I think it is great to earn that good of a return on some money. It's a lot higher than a bank savings account.
posted on November 5, 2000 03:20:20 PM
I first noticed the feature last week when I was taking care of some business. At this time I am not interested in signing up. I am verified, the bank has my ssn and I don't think that they need my ssn at this time.
I don't keep $ at pp for very long. I manually transfer $ into my bank.
EBay has my ssn as well as other entities such as my insurances and so on, so I am not all that protective of my ssn. Even though I do have grave concerns about all of our ssns floating around in society and the internet.
posted on November 5, 2000 03:23:12 PM
One more thing.....I have the opinion that it is a gimick to encourage one to keep money with them so they can make $.
Also right now it is 5%, what about in a month? Is there any guarantee it will remain at 5%?
posted on November 5, 2000 03:28:36 PM
You both show good reasons to do it or not to. I have to say, that like you bobby, I don't leave money in there for that long either. I just transfer it directly to my bank account.
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posted on November 5, 2000 03:29:38 PM
If you read the prospectus carefully these are non-guaranteed securities.
If you sign up you buy these securities in $1.00 increments as money is added to your account and sell them when mony is taken out.
If there is a huge market turndown you could lose a big chunk of your account when you choose to liquidate. If PP would go belly up I do not see any guarantee that you would ever get anything.
Why take this amount of risk with a company like PP that has demonstrated a lack of stability and foresight when you can get a comprable return elsewhere FDIC insured?
They would have to offer me 20% to get me to leave a chunk in for awhile instead of transfering it out frequently. That would
reflect the risk level.
posted on November 5, 2000 04:53:07 PM
Last spring or so right, the site was not excessible for about three days. Fortunately for me I had no money in there and learned a valuable lesson. Therefore I don't keep money with pp and any incentive to do so in my opinion will never get me to keep money in there.
That's why I don't understand why a person would, other than if they buy as well which I don't. Well, I suppose, some people may not have bank accounts so pp might be the only place to keep their money.
posted on November 5, 2000 04:58:12 PM
The 5%+ figure that Paypal quotes is very misleading. First, it's based on a 7-day average return. More importantly, the figure quoted is for the fund that the Paypal account is based on, but there is an additional fee, and, as far as I can tell, nowhere does Paypal disclose the amount of this fee.
The point is that the effective rate will likely be signigicantly less than the rates quoted.
posted on November 5, 2000 05:19:10 PM
It has been a couple of days since I read it but the impression that I got was that the fees are charged to the fund that your money is in but you personally don't pay it. Other than lower interest rates.
posted on November 5, 2000 07:48:12 PM
I would be very careful about investing any money in this money market fund, especially if you're not going to leave it there for at least a year. I am enclosing a URL to the X.com Funds prospectus that I found on the finance.x.com site which includes the details of their Money Market Fund run by the Barclays Global Fund advisors. Paypal is using their Money Market Reserve Fund. Please note that they have instituted a quarterly fee of $2.00 per account and they are going to be charging an annual fee to the shareholders of 1.50%. You may also want to look at the REDEMPTION FEE clause. This fund is highly susceptible to interest rate fluctuations and you could possibly LOSE some money.
https://secure.finance.x.com/info_prospectus.asp BTW, this URL isn't always stable and I have noticed periodic connection problems.
_____________________________________________
QUOTE
"X.com U.S.A. Money Market Fund
The X.com Funds propose to offer to shareholders of the X.com U.S.A. Money Market Fund a broad array of financial services, including debit cards, checkwriting privileges and electronic transfers. In order to offer these services without any per-transaction charges, we propose to increase the fees payable by shareholders of the Fund to an annual net amount, after fee waivers, of 1.50%. We also propose to change the name of the fund to the "X.com Money Market Reserve Fund"'
END QUOTE
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QUOTE
"REDEMPTION FEE. The Funds do not impose a redemption fee. The Index Funds experience substantial price fluctuations and are intended for long-term investors. Short-term market timers" who engage in frequent purchases and redemptions can disrupt a Fund's investment program and create additional transaction costs that are borne by all shareholders. For these reasons, in the future the Index Funds may assess a 2.0% fee on redemptions of shares held for less than 90 days."
END QUOTE
_____________________________________________
Blanche
[ edited by bhearsch on Nov 5, 2000 07:51 PM ]
posted on November 5, 2000 08:58:45 PM
I Jumped at the chance to earn a very competative rate on money that had been just sitting there earning nothing before. This is no different then any Money Market Account that most of us already have. This is a very conservative investment and one that every professional financal planner would recommend we keep a portion of our porfolio in. Many people keep there emergency funds in a money market fund.
Even when you are sweeping money out of PayPal there will always be some sort of balance in there. I thought that users would appreciate earning some interest on that money. I think it's interesting that in this extremely high risk world of making a living by finding items and auctioning them online that so many would be adverse to an investment with a 99.99% success history and where your money is still sitting right where it has been all along. Or is it because we are all a little wary of anything new that comes on the internet? And rightly so. What about the very first people that signed up for PayPal. They were boldly going where no man or woman had gone before, and look at us now, 4,000,000 strong and growing by 10,000 to 15,000 thousand a week. Someday it will be 100,000,000. The Internet is the future where most people will work,play,shop,bank and communicate. Some of us are already living on here 10 hours a day. Go for it.
posted on November 5, 2000 09:13:40 PMelvis, I'm all in favor of Money Market Funds that are offered by entities that have a long, proven track record. However, I'm not sure that's the case with PayPal and I don't think everyone understands how PayPal's fund works since they aren't known for their clear and concise explanations. Also, their past behavior suggests that the fees and prospectus MAY change at a whim and if you need your emergency funds any sooner than 90 days, you're SOL.
Caution is a good reaction.
Blanche
[ edited by bhearsch on Nov 5, 2000 09:15 PM ]
posted on November 5, 2000 09:48:33 PM
PayPal just made your funds more secure by offering this fund. You will be able to access your money just like you always did and now you will know where your money is and what is being done with it. It will be invested in a conservative Money market Fund that you own, Not PayPal, that will invest in high grade securities, U.S. T-Bills, Bank Bonds, etc. and will be managed by Barclays Global Investors, one of the world's leading institutional money managers. With more than $700 billion in assets under management, BGI manages the Master Portfolio in which our Fund invests as well as the money for 1 in 4 Fortune 500 Corporate list companies and 100 of the largest pension funds in the world. <br>No fund like this defaulted in the last 20 years, the few that did were made good by the Investment Companies that ran them. I feel that my money is safe now, I don't know about yours that is still being controlled by PayPal.
posted on November 5, 2000 10:03:12 PMelvis, PayPal has NEVER had any control over my money because I've never signed up with them. Personally, I don't feel comfortable with any investment program that is connected in any way to PayPal. But, I'm sure you've done your research and feel that your funds are safe and you're certainly entitled to make your own decision in that matter. However, like I said earlier, I'm a very cautious person and I've made the decision to RUN as fast as I can away from PayPal.
I think I'll just keep my emergency money in my sock!!
Paypal is not a bank. They are not regulated. They can pretty much do as they darn well please with your money (they have to a bunch of folks.) If you plan on leaving money sitting in your PP "account" (which doesnt really exist) be prepared to kiss it goodbye.
PP keeps bragging about 10,000 people a week joining the service. I am still waiting for them to admit that a significant number have left. How many thousands of auctions already say "no paypal"? It seems we only hear half the story.
posted on November 6, 2000 08:41:07 AM
I place just as much trust in any company that deals with PayPal as I do in PayPal itself. Therefore I respectfully decline their noble offer.
posted on November 6, 2000 10:15:30 AM
I just don't like the idea of anyone except banks getting my social security number.
<P>
As for the idea that you'll lose money -- chances are almost nil that you will because they invest in rock-solid stuff like U.S. Treasury bills. You may not earn a lot of interest, but its a pretty long shot for you to lose money.
and be happy.