Costco Connection - November 2006

inside costco

Stocks the easy way

$320,730

FOR PEOPLE BUILDING a nest egg, the stock market poses a challenge. On one hand, stocks can offer enticing yields. On the other hand, they are risky investments, and buying them has traditionally meant going through a broker, paying high commissions and making investments in large lump sums. Costco can’t answer the question of whether you should invest in stocks. But Costco can make it easy and affordable for you to invest in stocks if you choose to do so. Here’s a look. Through ShareBuilder Online Investing, Costco members can establish dollar-based investing plans—that is, you can invest any dollar amount in the stocks you want from ShareBuilder’s pool of 6,000 stocks. There are no account minimums to get started and no inactivity fees. You do all transactions online, and you can set up a weekly or

monthly automatic investment plan to build your shares over time.

“It’s a hassle-free way of building your stock portfolio,” says John Gleason, Costco member services manager. “Once your plan is set up, everything happens automatically. You can start or stop your plan, or make investment changes, anytime you want.”

Starting a ShareBuilder plan involves three easy steps: Select your favorite stocks and the amount you want to invest, decide how often you want to invest and provide a funding source. Most people fund an account directly from a checking or savings account.

An option worth considering this time of year is establishing a custodial account for a child as a holiday gift. They’re easy to set up and a great way to start a college savings plan.

Whether it’s a custodial, joint or individual investment account, Costco members reap special benefits for opening a new account: All members receive a $55 bonus for each new funded account. Also, Executive Members receive a 25 percent rebate per quarter on automatic investment fees ( 10 percent for Business and Gold Star members).—Tim Talevich

How $100 today and $50 per month could work for you

College

Home

$38,641

Retirement

$114,769

$10,502

10

20 30

YEARS

40

Here is a look at what $100 today and $50 a month in a stock market account could be worth. This is a hypothetical presentation based on a fixed 10 percent rate of return and is not a guarantee of future performance. Actual investment returns will vary with stock selection and changing market conditions. Calculations do not include tax or inflation considerations. ShareBuilder is a registered broker-dealer and member NASD/SIPC and is not affiliated with Costco.

Myths, truths of savings

SURPRISINGLY, THE STANDARD savings account remains one of the most popular places for Americans to stash their money. It’s not clear why, but it may be a result of myths about better savings options, such as money market accounts. Let’s bust a few of them.

Myth 1: It’s better to have a savings account than a money market account because you have access to your money whenever you need it.

In reality, you can tap into money market accounts in a variety of ways, including checks, ATMs and online transfers. It’s true that federal regulations restrict the number of times you ⁶^.00%can withdraw from a money market account. But unless you’re tapping your account very ⁵^.00%

frequently, this shouldn’t be an inconvenience.

Myth 2: Savings accounts earn about as much in interest as money market accounts.

In reality, money market accounts have outpaced traditional savings accounts in interest earnings, especially during the past few years.

Myth 3: Savings accounts are safe, but money market deposit accounts aren’t.

In reality, both types of accounts are FDIC-insured up to $100,000 per depositor.

Myth 4: You must have deep pockets—

Connecting
For more information on these investment
options, and to open an account:
ShareBuilder: Go to costco.com and
select “Services,” “Financial” and
“ShareBuilder Online Investing.”
Money market accounts: Call toll-free
1-866-630-7953. For more details, go to
costco.com and select “Services,”
“Financial” and “Money Market Accounts.”

Compare rates for yourself

STOCKBYTE

4.00% 3.00%

2.00%

1.00%

Capital One Money Market 5.14%* Annual Percentage Yield (AP Y)

National Money Market Average 1.55%**

(APY)

2004 2005 2006

*As of September 25, 2006, if the daily balance of this money market account was $100 or more, the APY was 5.14%; if not, the APY was 0.00%. Minimum deposit amount is $5,000. Terms and conditions of this offer are subject to change without notice. Rates are variable and are subject to change. This product is offered by Capital One, F. S.B and Capital One Bank, members FDIC. **National average of APYs for money market accounts as published by BanxQuote.com as of September 25, 2006.

$10,000 or more—to start a money market account, and you must be willing to put that money away for a long time.

In reality, you can open money market accounts for much less than that. The longer you leave the money in the account, the more you make.

Costco and Capital One have teamed up to offer a money market account program through Capital One. The minimum deposit is $5,000. A new feature of the program is online transactions, which make it easier than ever to transfer money to or take money from an account. (Withdrawal limits apply.)

Money market accounts have been especially attractive during the past several years because of rising interest rates. And Capital One’s money market rates have been better than the national average for money market accounts, as the accompanying chart shows.