A Review of ING Everyday Orange savings account

ING's media department recently asked me if I'd like to post an impartial review of their EverydayOrange Savings account product. I was happy to agree as I already have an ING Online Savings Account which I've used for many years and I'm happy with that account's features and service. ING deposited $600 into the new account so I could trial all the available features -- on the condition that I donate the $600 to a charity of my choice at the end of the trial period.

To kick off the process I opened my new EverydayOrange Savings Account online, using the 'My Applications' link within my ING Online Savings Account in order to save having to re-enter my personal details. I chose not to link my existing ING Online Savings Account to the new ING EverydayOrange Savings Account, as I wanted to keep the ability to have automatic savings into the Online Savings Account deducted from my Credit Union account, rather than having automatic savings debited from the ING EverydayOrange Savings Account. During the online application process I had to enter a security code (sent via SMS) to confirm my identity, and this meant the entire application process was completed in a couple of minutes and my BSB and account number were displayed to me on screen. A welcome pack containing my new Visa Debit card was promised to arrive within 5-10 days, and it arrived less than a week after I applied online. The promised $600 deposit from ING arrived in my account on 22/01.

The welcome pack was easy to understand (a one page welcome letter had the Visa debit card attached) and included some information on the major benefits and ways to actually get paid for using the account:
* earn a $20 bonus for having salary directly deposited into the account - I won't be using this feature just yet.
* have ATM fees reimbursed IF you withdraw $200 or more in one transaction - this is a nice feature as I find ATM fees especially annoying. The only problem will be if I have less than $200 in my orange account and urgently need to get $100 cash... which brings us to the next feature
* if you get cash out via EFTPOS (eg. when paying for groceries at the supermarket) there's no fee. And if you withdraw more $200 or more via EFTPOS you'll even be paid a $0.50 bonus.
* if you set up some direct debits from the Orange Everyday account, you get a $20 bonus when the first direct debit is processed. The welcome pack even included a couple of pre-filled 'change of direct debit' forms to send to existing direct debit creditors, and some postage paid envelopes. Couldn't be simpler!

About a week after my welcome pack and Visa card had arrived in the post, I received an SMS reminder to activate my card. Activation was extremely simple - I just logged into my IngDirect online banking as normal, and clicked on the 'Activate Card' button in the 'My Account Details' section. A confirmation code was sent to my registered mobile phone number via SMS, and I simply entered the code to complete the activation process.

On the 14 Feb I used the Visa card to withdraw $200 from a StGeorge ATM (which advised me that a $2 fee would be incurred). When I checked the transaction listing for my Orange Everyday account online the next day there was a $2 fee rebate showing, as promised. So as long as you remember to withdraw cash from an ATM in $200 chunks rather than a little bit each day, you'll never have to worry about having to pay an ATM fee!

Later that day I paid for my grocery shopping at Woolworths using the Visa debit card to pay from my savings account, and took a $200 cash out at the same time. The next day I checked the online transaction listing and it indeed showed the $0.50 bonus payment generated by that transaction.

The ING Orange account doesn't come with a cheque book, but you can still get a cheque if you need one. The process is relatively simple and free of cost, however it requires you to apply for a bank cheque online and ING will mail you a cheque for the requested amount. I can't imagine this feature will be used very much, although it will be extremely handy for anyone who saves up for a large item (such as a car or home deposit) using their ING Orange account and needs a cheque to make payment.

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Net Worth Update: January 2010

After a good start, market uncertainty regarding the strength of the global economic recovery saw a significant dip in my net worth by the end of January. This month continued improvement in the Sydney property market was more than offset by losses in the stock market which affected both my leveraged stock investments and the value of our SMSF account investments - by 31 January my net worth had fallen back to $843,581 (down $20,497, or -2.37%).

My retirement account (SMSF) value dropped $13,554 (-4.08%) to $318,580, with the losses in the stock market amplified by our modest amount of gearing (8 ASX200 index CFDs, code: IQ). Our employer superannuation contributions for the December quarter employer contributions (SGL and salary sacrifice) didn't appear in our SMSF bank account before the end of the month, so the deposit will probably appear this week (our employer had to make the quarterly contributions by the 31st of January (around $6,000 is due) but their superannuation administrator always takes a few business days to transfer the funds into our SMSF bank account). Since the market has 'corrected' quite a bit in the last couple of weeks, I'll probably move $5,000 from the cash account into our Vanguard High Growth index fund investment as soon as it arrives.

The estimated valuations for my half of our real estate assets (house and investment property) were up again this month, by $12,869 (+1.55%) to $843,152. At the moment Sydney property prices appear to be rising, despite the recent interest rate hikes. Prices may stagnate or weaken during 2010 as further interest rate rises from the RBA impacts affordability, but I expect the rising inflation rate and demand from record-high rates of net immigration to Australia will boost real prices for Sydney real estate in the medium (2-7 year) term.

My stock portfolio lost a whopping $19,754 to be worth $46,386 (net equity) by 31st January (due to the high gearing levels). As the Australian economy is still growing quite nicely at the moment and unemployment is likely to peak much lower than was expected last year, I expect the ASX200 to decouple from falls in Wall Street at some time -- perhaps as soon as current worries about the Chinese economy being slowed by attempts to control inflation recede.

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Net Worth Update: December 2009

December saw another significant increase in my net worth, with a "Santa Claus rally" and end-of-year "window dressing" in the last few business days boosting the stock market valuations. This month the strength in the Sydney property market was again matched by gains in the stock market - by 31 December my net worth had risen to $864,078 (up $33,246, or 4.00%). However my NW is seeing relatively less benefit from the bull market than it had suffered damage from the bear market, mostly due to my having cut back on my margin loan debt last March and not being game to buy back in to the market since then (I'm just holding on to the stock investments I had retained). In addition, most of my hedge fund investments values have stayed at their lowest levels - having either moved entirely into cash or suffering from suspension of trading in the underlying investments. However, in the longer term I should benefit from the capital guarantee conditions applying to my OM-IP funds. Some other investments (such as Timbercorp units) have been liquidated and will therefore never recover.

My retirement account (SMSF) gained $15,299 (+4.83%) to $332,134, with the gains in the stock market amplified by our modest amount of gearing (8 ASX200 index CFDs, code: IQ). No employer superannuation contributions were deposited into our SMSF bank account during December, but I expect all the December quarter employer contributions (SGL and salary sacrifice) will be processed in late January (around $6,000 is due).

The estimated valuations for my half of our real estate assets (house and investment property) were up again this month, by a relatively modest $4,525 (+0.55%) to $830,283. The forecast rate of rent rises during the next few years, coupled with net immigration to Sydney and possibly higher than trend inflation rates, should support (or slightly boost) house prices in the suburbs our properties are in. Affordability issues may cap price rises, although on previous occasions I have been surprised by continued strength in the top end of the housing market at times when the more 'affordable' suburbs have been in a down-turn.

My stock portfolio gained $13,438 to $66,140 net equity during December (due to the high gearing levels). The market (ASX200) break above the 4800 level was on thin trade during the holiday season, and I don't expect it to move much higher until company profits see further benefits from the Australian economic recovery later in 2010.

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Spending the holidays at home

I'm spending the Christmas/New Year holiday break at home this year. My parents are in the last stages of clearing out their Sydney house and moving permanently up to their rural property near Inverell, so we didn't get to take the kids for a farm-stay this year. DS1 will be going up to their farm in the new year to stay with my parents until the 2010 school year commences at the end of January. I have a long list of home improvement projects I'm not getting done. I had planned on first completing my 2008/9 tax return and lodge it using eTax before the end of the year, but the capital gains tax calculations were even more cumbersome than I had expected.

I'd sold off all of my smaller share holdings in March 2009 (as the market dipped below the level where I would start getting margin calls if I didn't raise some cash) and in order to calculate the relevant capital gains figures I had to trawl through 15 years worth of tax pack files to find the relevant dividend reinvestment plan amounts in order to calculate the cost basis for the shares that had been sold. Where the shares had come into my account via a distribution due to a take-over or demerger I also had to work through the paperwork for several different share holdings to calculate the cost base relating to a particular share sale. Some added complications arose where I couldn't find the DRP paperwork in the relevant tax pack file (apparently I had the bright idea of filing the papers that would be needed for future CGT calculations in a different place at some point in time - now I can't find those dividend statements at all!). In those cases I had to look up the dividend payment details online (via computershare), but the online records only went back five years. For my Commonwealth Diversified Share Fund CGT calculation I had even more trouble getting information as the company had delisted when the fund closed down last June, so I couldn't even look up the historical share price information to calculate an approximate cost basis for the DRP shares that had been issued more than five years ago. In the end I had to download the historical price data for XAO (the all ordinaries index) and use a spreadsheet to calculate the approximate ratio of CDF share price to XAO index price, and estimate the CDF share price that would have been used for each DRP allocation. The final cost base amount for my CDF should be a reasonable estimate (within $50 or so), so it won't have a material impact on my CGT calculation. In any case, it looks like I'll have made a small capital loss overall for the 08/09 tax year which will carry forward until I eventually sell some shares for a net profit.

If the ATO ever does a desk audit of this tax return (I haven't been audited yet), it will be interesting to see if they decide to accept my estimation methodology, or want to spend time working out the exact cost base figures. From all the capital gains calculation information I've seen on the ATO website, they tend to prefer the most long-winded methods possible (for example, totalling all the purchase amounts and broker fees separately and then deducting total brokerage cost from total purchase cost, rather than just adding up the net cost amounts. The two methods are mathematically equivalent). At the end of the day, there's a 50:50 chance that I've underestimated the cost base and would be due a refund.

Diversification, dollar cost averaging and use of dividend reinvestment plans seemed like a good idea at the time, but since I stopped recording all my share transaction details in Quicken in 1999 the GCT paperwork has turned into a headache. That's one of the reasons I tend to invest in index funds these days, rather than investing in individual stocks.

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