Tag:

money

Be the Best Trick-or-Treat House on the Block Without Breaking the Bank

by sshrx_ns3li1 February 21, 2020

written by sshrx_ns3li1

Halloween is the scariest time of the year, but that isn't always due to the ghosts trick-or-treating you, or the creepy clown sightings on the news. The price of Halloween candy, not to mention the cost of costumes and home decorations, can give anyone the heebie-jeebies.According to the National Retail Federation, which surveyed 6,791 consumers from Sept. 6 to 13 about their Halloween shopping plans, the average American will spend $82.93 on Halloween, up from $74.34 last year. All in all, Halloween spending is expected to reach $8.4 billion in 2016.Fortunately, if you are worried about going overboard this year, many decorating experts maintain that it's possible to have the best trick-or-treat house in the neighborhood without breaking the bank. It simply requires a little imagination and preparation on the front end.[See: 9 Scary Things Consumers Do With Their Money.]Candy. We'll start here first, since it's the easiest thing to find cheaply. Buy your candy several days or weeks in advance, so you can be on the lookout for discounts.If you belong to a warehouse club, buying in bulk might save you money. Digital coupon websites like Coupons.com and RetailMeNot.com have coupons for candy and Halloween costumes that you may want to utilize. Just make sure that if you do buy Halloween candy weeks in advance that you hide it, so your family doesn't eat it and gobble all of your savings.Halloween decorations. Check out the dollar stores first. Sure, that may sound obvious, but if you're something of a dollar-store snob, it also may be the last place you would consider."You would be surprised [at] the fantastic finds that can really add value to your Halloween display. There are plastic skulls, dismembered body parts, creepy spiders and so much more," says Felicia Ramos-Peters, who lives in Hurleyville, New York, and is the founder of GetHolidayHappy.com, a website aimed at helping people celebrate holidays with ideas for recipes, decorations and gifts.Jeanine Boiko seconds the dollar store. Boiko is a New York City publicist who also blogs about home decor and owns an Etsy.com shop called Okio B Designs."Stock up on fake skulls, rats and crows, and jars, window decals," she suggests, adding that, "a can of orange or black spray paint can work wonders on sprucing up dollar store finds and creating the 'eek' factor."And if you see nothing you like at the dollar stores, leave. All you have wasted is some time.[See: 10 Oddly Practical Things You Can Rent.]Lights. But one thing to think about while you're at the dollar stores? Lighting."Lighting is everything," says Jamie O'Donnell, an Orlando, Florida resident who has been an event planner for more than 15 years. "Replace the bulbs of your outdoor light with LED lights in orange or purple to cast your house in a spooky glow. It's fairly inexpensive and only takes a few minutes to do but creates a dramatic look."Judging from what you can find online, festive LED lights may run you around $20 to $30 for a string of, say, 40 to 100 lights (which could cost a small fortune if you intend to light up your entire home). The conventional holiday strings of orange or purple lights are generally cheaper, and will likely run you more along the lines of $5 to $15. Of course, you can always buy your lights after the holidays, when they're on sale, to prepare for next Halloween.Sounds and music. Ramos-Peters suggests using sound as part of your Halloween atmospherics."I think music is an underestimated element for outdoor Halloween displays. It is really easy to download or purchase some scary music and sound effects," Ramos-Peters says. "You can turn heads with a display that has some spooky sounds like a chainsaw or evil witch laughing."[See: 11 Ways to Save Time and Money.]Pro Tip: Use What You Have in Your HomePamela Layton McMurtry, an artist and designer in Kaysville, Utah, and author of the e-book "A Harvest and Halloween Handbook," feels it's always effective when homeowners create a spooky scene on their lawn."I love creative, alternative decor for Halloween and go wild for themes taken from literature," she says (think "Alice in Wonderland" and "The Wonderful Wizard of Oz").Now, that might sound like a surefire way to destroy your future retirement funds. You want to entertain your neighbors, not create a multi-million dollar Hollywood movie. But McMurtry says you may be able to find props in your home or at thrift stores. If you really want cheap and effective, McMurtry paints this picture: "Set up a fake campfire with cricket sounds and sad harmonica music. Mound dirt for a grave and put a pair of cowboy boots nearby with a clue about [what happened to] the demised, like a rubber snake."Something else to look for in your basement, attic or thrift store, Boiko suggests, is a long-forgotten Scrabble game."You can use the tiles for easy Halloween decor by spelling out spooky words. I painted the tile holders black and spelled out creepy words on mine," Boiko says.And if you can keep your Halloween costs low, you won't be tempted to spell out Scrabble letters to make phrases like "holiday debt" and "I'm broke." On the other hand, that may be a creative idea. The children on your block may not get creeped out by those words, but you'll send a chill up the spines of their parents..

February 21, 2020 0 comment

Financial Advisors

Understand Your Investing Risk Tolerance

by sshrx_ns3li1 February 21, 2020

written by sshrx_ns3li1

Understanding your true investing risk tolerance goes much further than checking a few boxes on a risk tolerance quiz.Investment risk encompasses several broad concepts, with multiple iterations of each. Longevity risk encapsulates the possibility that you’ll outlive your money. Risk tolerance taps how much of an investment loss you can psychologically withstand. Jason Escamilla, CEO at Impact Labs in San Francisco, describes a two-step plan for tackling client risk: First, protect the client’s wealth and second, ensure they can meet their goals. When approaching risk, Escamilla incorporates both emotion and analytical risk analysis.Here are a few steps for protecting your mental health and financial wealth by understanding your risk tolerance:Define what you consider to be riskier assets.Access your risk tolerance.Categorize your risk level.Manage your risk. Defining RiskWhen discussing risk, it’s common for the investment community to focus on standard deviation or volatility of investment returns. The standard deviation of investment returns measures how far from the average annual investment returns plot on a graph. When applied to annual investment returns, past returns are used to calculate the current standard deviation.A standard deviation close to zero means that the returns are consistent and approximate the average. A certificate of deposit has a standard deviation close to zero. Invest $1,000 in a certificate of deposit, and as long as the investment is owned until maturity, the consumer receives the stated interest rate.For a riskier asset, the 10-year average standard deviation of the SPDR S&P 500 ETF (ticker: SPY) is 12.69. A higher standard deviation means that there’s a likelihood that returns will deviate from the mean, both up and down.Riskier assets, like stocks, have more dispersed returns and typically a higher standard deviation. For example, since 2008, the S&P 500’s greatest loss was in 2008, with a decline of 36.55%. While in 2013, the S&P 500 gained a 10-year record of 32.15%.An investor seeking higher returns must also accept the possibility of greater losses.Longevity risk is akin to risk capacity and relates to the possibility of an investor outliving her wealth. Wealthier individuals have a high-risk capacity or low-longevity risk. Those with more limited means have a greater chance of outliving their assets.A wealthy investor might have a low-longevity risk and still be uncomfortable with investment losses. This investor would be conservative, despite the portfolio’s ability to withstand losses.Assessing Risk“Risk tolerance is a concept that can be difficult to gauge with clients. A client's risk tolerance can change with the direction of the market. When the market is doing well, clients want to be very aggressive and when the market is experiencing some downward volatility, clients can be fearful and want to go to cash,” says Mario Hernandez, a certified financial planner at Gemmer Asset Management in the San Francisco area. Gemmer has a unique strategy to assess client risk. He educates clients with data, describing past stock market declines and then asks them how they'll sleep under those circumstances. That informs the level of risky equities to include within a client portfolio.Brandon Renfro, an assistant professor of finance at East Texas Baptist University, uses a similar approach. For older investors, he asks clients what they did during the onset of the Great Recession and then queries them about how they would react to a future stock market drop.Typical risk tolerance questionnaires ask investors about how they would respond to distinct levels of investment declines. Typical response choices include sell, hold, or buy more of the risky asset after a decline. Investors' responses attempt to describe individuals' risk aversions.But these risk quizzes are historically inaccurate and the more “in vivo” discussions of Renfro and Gemmer are likely to yield more accurate risk-tolerance levels.Categorizing Risk LevelsThe simplest way to categorize risk levels is by time. Short-term investors who will need their funds within one to four years should invest conservatively, with minimal exposure to equities and the greatest allocations to cash and short-term bonds. That’s due to the unpredictability of the stock market in the short term. Investors don’t want the $50,000 downpayment for their new home to be worth $40,000 in two years when they are ready to buy.In contrast, one might assume that long-term investors are aggressive, but that assumption is too simplistic.In the long term, over decades, stock prices trended upwards. But the positive stock market average returns over the long term mask short-term volatility. Realistically, the future is uncertain and there are no guarantees that the upward trend of stock prices will continue. That’s why assessing risk tolerance is tricky.For the mid- to the long-term investor, risk levels will vary from conservative to aggressive. The risk level is represented by the amount of loss an investor is willing to withstand. Even an investor with great wealth may not be willing to tolerate the loss potential of a stock-heavy investment portfolio.A conservative investment portfolio typically holds between 70% and 90% cash and fixed assets, with the remainder in stocks. While an aggressive investment portfolio ranges between 80% and 90% stock investments, with the remainder in bonds.The most common risk tolerance levels vary between conservative and aggressive, with conservative portfolios owning fewer stock assets and more aggressive ones owning greater amounts of riskier holdings.Managing Risk“To manage risk, we believe that it is essential to diversify your assets – whether your risk tolerance is conservative, moderate or aggressive. We recommend reviewing your investment goals, risk tolerance and time horizon with your financial professional on a regular basis to make sure they are aligned with your asset allocation,” says Chris Haverland, an asset allocation strategist at Wells Fargo in Greensboro/Winston-Salem, North Carolina. Diversification reduces portfolio volatility so that if one asset class loses value, others will offset the loss with investment gains. That’s why it’s important to own stocks, bonds and possibly other financial assets like real estate.Some investors prefer to manage risk with a passive portfolio. In this scenario, the investor maintains a constant mix of assets such as 60% stocks and 40% bonds. While others prefer to manage risk actively by adjusting investments according to market and economic conditions.Rick Lear, chief investment officer at Lear Investment Management in Dallas takes an active approach to risk management. Lear conducts in-depth research to determine which asset classes might go up. Then the firm heavily weights the asset classes projected to rise in the future, considering both the research and the economic cycle.Victor Haghani, chief investment officer at Elm Partners in Philadelphia, uses an active value and momentum-based asset allocation strategy. The unique Elm Partners algorithms manage risk by integrating value measures into their asset selection and overlaying those asset class picks with a momentum screen. All clients of Elm’s managed portfolio sign up for an asset allocation that adjusts according to an active assessment of fundamental and momentum factors.Understanding risk tolerance is an active process that incorporates personal, economic and market factors. It’s important to understand one’s time horizon, risk tolerance and risk capacity before constructing an investment portfolio. A comprehensive understanding of investment risk will minimize the likelihood of buying high and selling low.

February 21, 2020 0 comment

Financial Advisors

Can Index Funds Replace an Advisor?

by sshrx_ns3li1 February 21, 2020

written by sshrx_ns3li1

In a few short days – Aug. 30, to be precise – billionaire Warren Buffett will turn 89 years old. Worried investors should note that Charlie Munger, Buffett's sidekick at Berkshire Hathaway (ticker: BRK.A, BRK.B) in Nebraska, is a very sharp 95.If you're wondering at this point what the devil counting birthdays has to do with investing, consider how Buffett wants to provide for Astrid Menks, his wife since 2006. For fund managers, Buffett's 2013 letter to Berkshire Hathaway shareholders might as well serve as a sharp stick in the eye:"One bequest provides that cash will be delivered to a trustee for my wife's benefit," Buffett wrote. "My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund." (He suggested Vanguard, by the way.)The Oracle of Omaha concluded: "I believe the trust's long-term results from this policy will be superior to those attained by most investors – whether pension funds, institutions or individuals – who employ high-fee managers."Or, you could say, Ouch. Buffett insists you don't need a Wall Street type to manage your investments after all. Invest in the index, cut out the middleman and reinvest those saved fees to realize huge rewards over time through the magic of compound interest.The subject of fees and the financial managers who charge them has hardly been a sweep-it-under-the rug affair for investors. The conversation has in fact heated to contentious levels, some of the credit or blame courtesy of the "Freakonomics" public radio show. In case you might've missed it, episode 297, dated March 21, 2018, was titled "The Stupidest Thing You Can Do With Your Money."On it, Stephen J. Dubner reaches a well-reasoned conclusion – backed by financial industry immortals – that the money spent on fees is a waste when compared to the strategy of the passive fund that tracks a market index. He cites a study where only the top 2% to 3% of active fund managers had enough skill to cover their cost. But how far can Buffett's stock market strategy be taken portfolio-wide for the typical investor? After all, 99.99% can't leverage a Buffett-sized fortune and place it in an index fund. Thus many industry experts contend that if you try Buffett's approach as a one size fits all, you might as well climb into a potato sack and call it a three-piece suit."Without an advisor what factors would an investor use to decide which indexes to invest in, at what percentage and how should the investment allocations change over time?" says Ken Stern, senior managing director of Lido Advisors in Los Angeles."I disagree that low-fee index funds are an adequate replacement for an advisor," says John Foxworthy, founder of Foxworthy Wealth Advisors in Fort Wayne, Indiana."These vehicles are changing the concept that an advisor is a 'stock picker,' but there is much more to it than that," Foxworthy says. "The individual exchange traded funds are just ingredients. It takes a good chef to be able to combine those ingredients into a delicious meal.""If the goal is simply to invest money indefinitely then a low-cost index is perfect and a great part of executing a financial plan," says Adriel Tam, CEO and co-founder of Viridian Advisors in Seattle. "However if you have a time horizon like retirement, college planning or a need to use the investments at a later point, then no."Tam's observation raises a salient point: Market index funds and paying an advisor need not represent an all-or-nothing choice."We do not believe the decision to use index funds or to have an advisor are necessarily mutually exclusive," says Geoffrey Sulanke, director of manager research at Davenport & Company in Richmond, Virginia. "Just as you would not try to build a house without a blueprint, you should not approach your finances without making some type of plan before you begin."Ah, ha! No two homes are alike, nor are the resources to build them or the ultimate goals they serve. So getting your financial house in order can be risky business if you spend too much time making sidelong, envious glances at your neighbor's pad.Likewise, no two advisors charge the same amount."There are so many advisors that you can shop around for advisors who charge the least fees," says Mayra Rodriguez Valladares, managing principal at MRV Associates and a bank regulatory and capital markets consultant based in New York. "Always make sure to ask your advisor what he or she invests in to see if they have skin in the game."Investors will benefit from periodically reviewing their assets, how they are allocated and how their efforts to diversify are faring in the stock market.Robert Johnson, a finance professor at Creighton University and longtime follower of Buffett, understands the billionaire's approach in fine detail. Thus he's able to break down The Oracle's proclamation in everyday investing terms.That is: While the numbers say one thing, investors too often do another and it's often frustratingly flawed. So the purpose of a great advisor might be – and often is – to protect people from themselves."The biggest advantage of an advisor is not the financial expertise provided or the investment decisions made," Johnson says. "It's that she will calm you down during times of market turmoil, talking you out of panicking and making sweeping changes to your portfolio."Daniel Kern, chief investment officer at TFC Financial Management in Boston, agrees with this brake on investing emotion."Advisors are a necessary counterweight to many self-destructive behavioral tendencies," Kern says. "It's easy to lose perspective in a soundbite-driven environment that magnifies the natural fight or flight response under stress, which often leads investors to trade too much and to trade at the wrong times."And unfortunately, some investors – even those ensconced in an ETF – feed off manic energy to reckless ends."Anyone can buy an index fund," says Steven Jon Kaplan, CEO at True Contrarian Investments. "A true advisor will keep their clients in alternatives during bear markets even if that means something boring like four-week U.S. Treasurys and/or bank CDs."That said, you could ride out the biggest of bears if you're willing to adopt the supremely patient modus operandi of Buffett. He famously said his favorite holding period for a stock is "forever." And as he closes in on 90, he's as close to that mark as anyone.

February 21, 2020 0 comment

Banking & Credit

3 Strategies to Avoid Soaring ATM Fees

by sshrx_ns3li1 February 21, 2020

written by sshrx_ns3li1

You\r
probably don’t need a survey or statistic to alert you that ATM fees are higher than ever. But in case you do: Earlier this month,\r
Bankrate.com released a survey of 25 banks in large cities, which concluded that the\r
average cost of using an out-of-network ATM is now\r
$4.52, a record.\r
\r
That’s the amount of the national average ATM surcharge ($2.88) plus the average fee to\r
use another bank’s ATM ($1.64), because generally, if you use another\r
bank’s ATM, you’re hit twice. The out-of-network bank will charge you,\r
and your own bank will, too.\r
\r
And,\r
of course, $4.52 is only the national average. If you’re in New York City and\r
get money from an out-of-network ATM, on average, you’ll pay a little\r
over $5, according to Bankrate’s data. And if both banks have\r
above-average surcharges, the price to access your money becomes\r
even more expensive.\r
\r
Of\r
course, talk to bankers, and they’ll tell you there’s a reason for those\r
fees: Banks have to\r
maintain the ATMs.\r
\r
One\r
can argue that the fees are nonetheless too high, but if you’re interested in\r
exactly what goes into the maintenance of an ATM, here’s a quick breakdown from\r
John Oxford, director of corporate communication and external affairs at\r
Renasant Bank, a regional bank headquartered in Tupelo, Mississippi:\r
\r
Government compliance. Many laws dictate how banks must operate. ATMs had to be upgraded\r
in recent years to be compliant with the American with\r
Disabilities Act, Oxford says.\r
\r
Fraud protection. No surprise here, if you consider how frequently identity theft occurs. "ATMs\r
have had to add skimmer detection and other items such as higher-quality\r
cameras and lighting to make sure clients are and feel safe," Oxford\r
says.\r
\r
Maintenance\r
and service. It isn’t just that money needs to be routinely stocked into\r
the ATM, lest money run out. There’s insurance to pay on the ATM, and the bank\r
leases the property where the ATM is located, Oxford says.\r
\r
EMV\r
chip compliance. You’ve heard about how credit cards are being revamped with\r
embedded microchips that will store and better protect cardholder’s\r
information. ATMs need to be ready for that and upgraded, Oxford says.\r
\r
There is another cost as well, which\r
consumers often overlook, says John Pataky, an executive vice president at\r
EverBank, a financial services company that offers online banking: The price tag of the machines themselves. \r
\r
"Some machines are owned by the institution, but many are leased from\r
the major players in the industry, Diebold and NCR," he says.\r
\r
Still,\r
while there may be a reason for higher fees, that doesn’t mean you have to help\r
shoulder those costs. If you are tired of being hosed by ATM fees, try these strategies.\r
\r
Analyze your banking life. If you don’t like paying ATM fees,\r
make sure you use an ATM that belongs to your bank or is within its ATM network. The\r
symbols alerting you to what network you can use should be on the back of\r
your debit card, or you can inquire at your bank.\r
\r
That\r
said, even if you know what you’re doing, sometimes you need cash\r
in a hurry, and even the biggest banks can’t afford to have their ATMs on every\r
street corner. So if you continually find yourself using an out-of-network ATM and being charged a fee, ask yourself: What’s going on? When does this most often occur?\r
\r
If\r
this seems to happen frequently, you’re probably not\r
taking enough money out when you visit your bank’s ATM, and there’s your\r
problem. In other words, there’s probably a simple fix in your\r
routine to keep you from running short on cash. \r
\r
Maybe,\r
for instance, you should download your bank’s or credit union’s mobile app on\r
your phone, or visit its website and look for fee-free ATMs you\r
can use. Maybe it’ll turn out that you frequently use an ATM that’s out of\r
network when two blocks away, there’s one in your bank’s network.\r
\r
Take cash out at the grocery or drugstore. Here’s a simple\r
fix. Many retail establishments, including grocery stores, will let you take out\r
some cash, often up to $50 – and almost\r
always without a fee. Assuming you shop fairly regularly, take out a little extra as needed when you\r
shop, and you could make using the ATM a thing of the\r
past.\r
\r
Get a better bank. Maybe you need to find a financial institution that doesn’t foist a hefty fee every time you use an out-of-network bank, or\r
one that at least has more ATMs in its network. You may want to try an online\r
bank; many reimburse ATM fees, although some of those banks require you to keep\r
a hefty amount of money in your checking account to qualify.\r
\r
You could also consider switching to a\r
credit union. These operate like banks but are nonprofits that serve their\r
members rather than maximizing corporate profits (which isn’t to say that\r
members never complain about them, or that they never have high fees).\r
\r
"Nearly all credit unions\r
participate in a shared ATM network that provides surcharge-free access to\r
their members’ accounts. No single bank can boast as many ATM locations as the\r
CO-OP Network, the largest credit union-owned, surcharge-free ATM network with\r
nearly 30,000 locations nationwide," says Mike Schenk, a vice president of\r
economics and statistics with the Credit Union National Association.\r
\r
Whatever you do, try\r
to avoid paying ATM fees. If you take out $20, for instance, and you’re paying\r
a collective $5 to two different banks, you’ve just lost 25 percent of\r
that cash to two easily avoidable fees. If you aren’t paying attention to\r
your ATM fees, it may seem like only a few dollars here and there, but that’s exactly what banks are\r
banking on..

February 21, 2020 0 comment

Banking & Credit

Don't Fall for These Cyber Scams

by sshrx_ns3li1 February 21, 2020

written by sshrx_ns3li1

Internet scams used to be like the villain in a low-budget children's show. You could spot the bad guy a mile away, and you were probably more amused than afraid. Remember the Nigerian prince who insisted you were due an inheritance, if you'd send in your personal information? Or the email declaring you'd won a giant lottery? All you had to do was send in your bank account numbers, and you'd get your prize.How quaint. Even cute, almost.But today's scammers have grown up and are decidedly scary. Which is why it's smart to stay familiar with the latest and not so greatest in cyber scams. How might you get ripped off in the near future? Lots of ways, if you aren't on guard.[See: 9 Scary Things Consumers Do With Their Money.]Be wary of any financial institution that asks you to take a selfie – with your ID. That's a malware trick that McAfee technicians have discovered in the last few months, according to Gary Davis, chief consumer security evangelist at Intel Security, a Santa Clara, California-based company that makes McAfee computer security software. He says a type of malware (software, used for evil purposes) has surfaced in Hong Kong and Singapore, and attempts to trick computer users into taking a selfie with a personal ID, which obviously would be the worst sort of personal information for a criminal to have."I'm in awe every time I see how creative and clever the bad guys are," Davis says.And, sure, you might think that this sounds on par with the Nigerian prince and lottery scam (Who would fall for this?), but Davis says this malware, once you've managed to download it, will lay dormant and not ask you for financial information until you do some online banking and are probably expecting to be asked some questions. One would like to think that most consumers would stop and reflect –and not pose for a selfie – with their driver's license (even if they do think their bank is asking them to snap the shot), but it's easy to imagine that many consumers would answer the more routine questions, like, "What's your mother's maiden name?"[See: 10 Warning Signs of Identity Theft.]Be skeptical of USB sticks. You can use these data storage devices, also called USB flash drives, to back up information but also to download software, a PowerPoint presentation, a computer game, recipes or almost anything you can imagine. And while most USB sticks or flash drives are perfectly safe to use, Davis says that Intel Security's technicians have been finding ransomware being transmitted through USB sticks.Ransomware is a type of malware that, once it's in your computer, will shut everything down. Suddenly you won't be able to access any of your files until you pay a cash ransom to the hacker who sent you the ransomware. Ransomware is on the rise, industry experts say, affecting not only individuals but school districts, hospitals and businesses. Meanwhile, think about all the times you've stuck a USB stick into your computer. Many people use these frequently without second thought."I can't count the number of conferences I've been to, where they're just handing out USB sticks … If you don't know the history of the USB stick, don't connect it to your drive," Davis advises.[See: 10 Money Leaks to Shut Down Now.]Be aware of Google Voice scams. Jayne Hitchcock – whose pen name is J.A. Hitchcock – had this particular scam attempted on her very recently. Hitchcock, a Maine-based author of the upcoming book, "Cyberbullying & The Wild, Wild Web: What Everyone Needs To Know," put her phone number on a Craigslist ad she posted in hopes of selling a bunch of books she no longer wanted. Not long after the ad went up, she received a text from a phone number she didn't recognize. She Googled the number and found nothing bad, so she replied."Then I got a call from a 202 Washington, D.C., area code that had a prerecorded female voice saying it was Google Voice and to input the two-digit code I received," Hitchcock says. "I then got a text from this person telling me to input '50.'"That made Hitchcock's something's wrong antenna go up, so she wrote back and said to check out her website, netcrimes.net; if he wasn't a scammer, she wrote, she invited him to call her from the local number he was texting from."I never heard from him again," Hitchcock says.So what was the problem? What would have been so bad if Hitchcock had typed in the two-digit code?"What they do is steal your phone number, essentially using it as a forwarding number for them to scam other people," Hitchcock says. It can be such a hassle to get your phone number back that some people don't even bother and instead cancel it, she adds.Steer clear of emails with links to YouTube.com. Nobody needs to be told that YouTube is a massively popular website, and con artists are leveraging its all-ages appeal, according to Rich Drees, a Miami-based entrepreneur who runs a social media marketing company.Drees says crooks will sometimes send consumers emails with a link that leads to a YouTube video. Or, rather, it looks like it's going to lead to a YouTube video."Instead, you're taken to a page that looks exactly like the real thing, but you're asked to sign on, thus enabling the scammer to hijack your account," Drees says.One major hint that you have a problem, Drees says: "Check the address bar carefully when you arrive to ensure that it contains YouTube.com. If it contains another word before that, like Anotherword-YouTube.com, it's not YouTube. "These cyber tactics are only going to get worse, according to Davis."It used to be that proximity mattered," he says. "If you were a thief, you had to go to the bank, and it was high-risk, low reward. But that's why cyber crime is so attractive. It isn't dangerous for the bad guys, and it's difficult for them to be caught, especially if it's somebody who lives in another country. It's a growth market." 10 Ways to Protect Yourself From Online Fraud.

February 21, 2020 0 comment

Banking & Credit

What Millennials Want From a Bank

by sshrx_ns3li1 February 21, 2020

written by sshrx_ns3li1

As the youngest and largest generation, millennials are making their mark on society. From trading taxis for Uber rides to delaying marriage and home ownership, young adults are turning many conventions on their head.Even their banking habits can be unconventional, although industry experts say all generations share certain values when it comes to wanting a financial institution that is stable and secure. "Core expectations are the same, but the way millennials interact with banks is very different," says Matthias Goehler, senior vice president and head of industries at the e-commerce solutions company SAP Hybris.[See: 10 Retirement Planning Moves to Make in Your 20s.]Here's a look at some of what's important to millennials when it comes to banking, and how those things differ from older generations.Technology is a must. As digital natives, millennials are unsurprisingly looking for ways to integrate technology into their banking experience. "Their preferences are very orientated toward quick interactions, either online or on a mobile app," says Lars Holmquist, senior vice president for the Americas at Collinson Group, a global firm that develops loyalty and lifestyle benefits programs. Those interactions could range from checking a balance to making a deposit digitally. "To me, convenience and access are the main drivers," Holmquist says, when explaining millennial interest in mobile banking.Cash is still king. Despite their inclination toward technology, millennials aren't planning to give up their cash anytime soon. Qualtrics, in conjunction with Accel, surveyed 8,000 adults to learn how the different generations approach their money and payment options. "What we found is that 80 percent of millennials say they still use cash, and 64 percent carry cash most of the time," says Mike Maughan, head of global insights at Qualtrics and a millennial himself. Mobile payments not as hot as online payments. Mobile payments may seem like a logical choice for millennials, but they have been slow to catch on. While millennials are 16 times more likely than baby boomers to use Apple Pay or Android Pay, their use still lags far behind that of cash. Millennials are five times more like to use cash than mobile payments, according to the Qualtrics study. "What that's indicating to us is that there's a long ways to go before mobile payments catch up," Maughan says. However, what is hot among millennials is the use of online services such as Venmo and PayPal, which allow users to send payments that bypass the bank completely. Maughan notes 62 percent of millennials use Paypal, and young adults are six times more likely than older generations to use Venmo.[See: 12 Financial Terms Every Retirement Saver Should Know.]Privacy may be exchanged for a personalized experience. When it comes to privacy, Goehler says millennials may be more inclined to share personal information, assuming it benefits them. "In terms of day to day life, millennials are less concerned than older generations," he says. "[They say] I'm OK sharing something if I get something of value in return."That something of value may be a more personalized banking experience. For instance, millennials may be OK with their data being used if it results in offers tailored to their interests or an app that intuitively knows what to display first. "Call it almost the Amazon effect of offer management," Holmquist says. Instead of having to search for relevant information, millennials may gravitate toward systems that use their personal data to display relevant information immediately. Branches are not obsolete. As banking apps become more functional, "One might have anticipated that millennials aren't visiting the bank," Maughan says. However, they are visiting the bank and in roughly equal numbers to baby boomers. The Qualtrics survey found 30 percent of millennials report they visited a bank in the past week. Meanwhile, 33 percent of baby boomers said the same.[Read: The 10 Best Banks of 2016.]Future wants center around quick and easy banking. Goehler anticipates millennials will continue to press for banking changes that will make transactions more flexible and mobile. For instance, he notes some banking activities, such as mortgage applications, may require a personal meeting to verify a person's identity. "Millennials want to do this instantly," he says. "[They're wondering], why can't I do that on a video conference?"Banking laws and regulations will undoubtedly play a role in how much financial institutions can do remotely, but millennials would probably be happy to do as much as possible from their phone. "In the end, it's the ease of doing business [that's important]," Goehler says, summing up just what millennials want from a bank.How to Save for Retirement on Less Than $40,000\r
\r
.

February 21, 2020 0 comment

Financial Advisors

Why It Pays to Know Your Investing Fees

by sshrx_ns3li1 February 21, 2020

written by sshrx_ns3li1

If the tired old cliché applies and the best things in life are free, then surely its opposite does as well and the worst things in life are fee. ATM fees. Concert ticket surcharge fees. Airport tax fees. How shall we count the feeble paths to hair-tearing aggravation?But if you're an investor, perhaps no fee rankles the spirit and wrangles the portfolio quite like the ones investment managers and financial advisors might overcharge.And while it's possible to sweep such charges under the rug as the cost of doing business, investors do so at their portfolio's peril."I see it every week, when I ask investors questions," says Scott Krase, founder and president at CrossPoint Wealth in the Chicago area. "Whether in a meeting, video conference call or on the phone, I ask questions about their current investments. I ask if they know the risk they truly hold and what do these investments cost them. The answer is the same. They don't know."Yes, but they absolutely need to know."Fees take a percentage of a client's return over time," says Ryan Goldenhar, partner advisor at AdvicePeriod and based in San Diego. "The higher the fees, the lower the benefits of compound interest for a client."Albert Einstein supposedly called compound interest the eighth wonder of the world, adding: "He who understands it, earns it; he who doesn't pays it." Safe to say that if he weren't dabbling in the relativity thing, Einstein might well have made a splendid investment guru. For as money accrues in a portfolio, you can easily reinvest it – think of dividends – and create a mountain of money where none once existed.For example, let's take $5,000 with a monthly addition of $10, compounded 10 years over a return rate of 8%. You'll end up with $12,553. Now, let's do it again: You're now up to $28,840. One more time, and in 30 years you've got a whopping $64,000. And all it cost you was 33 cents a day and some patience.If you tried the same thing but did not contribute that $120 – which a financial advisor's commissions and hidden fees could far surpass – here's what happens: You'll have just $50,313 after those same 30 years, or close to $13,700 less. (You can run similar calculations at investor.gov, a website of the U.S. Securities and Exchange Commission.)The trouble is, many people invest greater sums and hence miss out on much more money than that."Fees can be silent killers in a portfolio," says Daniel Kern, chief investment officer at TFC Financial Management in Boston.TFC is independent and "fee only," but don't be confused by the term. It means they fulfill a fiduciary responsibility to always act in their clients' best interest. They do not accept any sales-related fees or compensation, which is where charges really begin to kill an investor."Managing costs and taxes is an important aspect of selecting an advisor or mutual fund," Kern says. "A 1% annual fee on a $500,000 investment at a 6% return over 20 years compounds to more than $180,000.""Over an investors' lifetime, excessive fees can take an astonishingly huge share of the investors nest egg," says Stefan Sharkansky, creator of the Personal Fund analyzer site for advisors and individual investors. "Although some managers do beat the market before fees, it's impossible to know in advance who the lucky managers are going to be."Investors should observe two types of fees, says Carlos Dias Jr., founder of Florida-Based MVP Wealth Management Group and Excel Tax & Wealth Group."With investment advisors, a portfolio manager – the person who's doing the actual investing – might charge 0.5% more or less, while the financial advisor – the person overseeing the account and providing financial advice – might charge 1%," Dias says.When fees pass those amounts, or commissions run high, it's time to take a closer look at your arrangement. Another danger sign: lack of transparency in how an advisor constructs a portfolio, says Mason Williams, chief investment officer at Coral Gables Trust in Florida."Minimal proactive contact from your advisor is a clue," Williams says. "It's important to ask for service expectations up front and what is to be expected as a relationship begins."That's the key word: relationship. Some people need the financial equivalent of a personal trainer to get themselves in ship shape, even if other people can start and follow their own fitness regimen."If advisors are only charging for investment advice, then arguably the fees might not be worth it to an investor," says Matthew Schulte, head of financial planning at eMoney Advisor.Indeed, one way around high fees is to work with a web-based, automated investing platform commonly known as a robo advisor."Depending on an investor's personal financial situation, it might make sense for them to work only with a robo advisor," Schulte says. "If their needs are simple, pursuing a low-cost, low-touch module is certainly one possible way to achieve their financial goals. However, as their needs become more complicated, an investor can greatly benefit from working with a planning-led advisor who can provide recommendations based on their holistic financial picture."And of course not all fees are alike, and an educated investor needs to learn the difference, says Brent Weiss, co-founder of Baltimore-based Facet Wealth."Start by educating yourself on the total fees that you are paying," Weiss says. "Ask your advisor or your service provider for a summary of all fees so you know the true cost."Because in the end, knowing and dealing with the total cost now is far preferable to and cheaper than dealing with it later.

February 21, 2020 0 comment

Banking & Credit

5 Clues That You're Dealing With a Predatory Lender

by sshrx_ns3li1 February 21, 2020

written by sshrx_ns3li1

Consumers are often told to stay away from predatory lenders, but the problem with that advice is a predatory lender doesn't advertise itself as such.Fortunately, if you're on guard, you should be able to spot the signs that will let you know a loan is bad news. If you're afraid you're about to sign your life away on a dotted line, watch for these clues first.You're being offered credit, even though your credit score and history are terrible. This is probably the biggest red flag there is, according to John Breyault, the vice president for public policy, telecommunications and fraud at the National Consumers League, a private nonprofit advocacy group in the District of Columbia."A lender is in business because they think they're going to get paid back," Breyault says. "So if they aren't checking to see if you have the ability to pay them back, by doing a credit check, then they're planning on getting their bank through a different way, like offering a high fee for the loan and setting it up in a way that locks you into a cycle of debt that is very difficult to get out of."[See: 25 Fast Financial Fixes.]But, of course, as big of a clue as this is to stay away, it can be hard to listen to your inner voice of reason. After all, if nowhere else will give you a loan, you may decide to work with the predatory lender anyway. That's why many industry experts feel that even if a bad loan is transparent about how bad it is, it probably shouldn't exist. After all, only consumers who are desperate for cash are likely to take a gamble that they can pay back a loan with 200 percent interest – and get through it unscathed.Your loan has an insanely high interest rate. Most states have usury laws preventing interest rates from going into that 200 APR territory, but the laws are generally weak, industry experts say, and lenders get around them all the time. So you can't assume an interest rate that seems really high is considered normal or even within the parameters of the law. After all, attorney generals successfully sue payday loan services and other lending companies fairly frequently. For instance, in January of this year, it was announced that after the District of Columbia attorney general sued the lending company CashCall, they settled for millions of dollars. According to media reports, CashCall was accused of offering loans with interest rates around 300 percent annually.[See: 11 Money Tips for Women.]The lender is making promises that seem too good to be true. If you're asking questions and getting answers that are making you sigh with relief, that could be a problem.Nobody's suggesting you be a cynic and assume everybody's out to get you, but you should scrutinize your paperwork, says David Reiss, a professor of law at Brooklyn Law School in New York."Often predators will make all sorts of oral promises, but when it comes time to sign on the dotted line, their documents don't match the promises," Reiss says.And if they aren't in sync, assume the documentation is correct. Do not go with what the lender told you."Courts will, in all likelihood, hold you to the promises you made in the signed documents, and your testimony about oral promises probably won't hold that much water," Reiss says. " Read what you are signing and make sure it matches up with your understanding of the transaction."You're dealing with pushy sales people. Maybe you went into an office of your own power and free will but suddenly you're feeling as if you won't be able to leave the premises without taking out a loan?That is a very bad sign. Get out.John Henson, a vice president at LendingTree.com, says one red flag is "overly aggressive sales tactics, including using language which obfuscates the actual terms of the mortgage."He also says you could be in trouble if a lender can't explain some of the vocabulary associated with the loan, especially around fees, or if you're having trouble getting the loan terms from the salesperson right away, such as the interest rate, payment amount or number of payments.[See: 10 Ways to Feel Better About Your Money.]The loan is really easy to get. Borrowing money, especially a lot of it, should be difficult. After all, if you're going to borrow tens or hundreds of thousands of dollars for a car or house, a lender would be crazy to not vet you thoroughly and take a look at your credit score and report and make sure you can pay. Not doing that, of course, is partially how the country got into a recession about 10 years ago. Mortgage companies weren't doing enough to learn if consumers could afford to pay back what they were borrowing.So if you're in the process of getting a loan, especially a big one, and you're thinking, "Wow, this is easy, almost too easy," you're probably right. Breyault says you should be especially wary when you're on a car lot, and you're seeing signs like, "Guaranteed loan," and "No credit needed." Those dealerships are notorious for having predatory lending practices."The point of those car lots is as much to sell you on a high interest loan as it is to sell you a car," Breyault says.And if that's the case, it raises another question: If you're paying a fortune on a loan with crummy terms, how much confidence can you have that the same company is selling you a quality product?Dear Younger Me: 12 Financial Truths We Wish We Knew Earlier.

February 21, 2020 0 comment

Banking & Credit

Why Life Insurance Premiums Are Expected to Decrease

by sshrx_ns3li1 February 21, 2020

written by sshrx_ns3li1

For the past decade, the insurance industry and state regulators have been working on a new system for how life insurance companies determine whether they have enough money in reserve to pay out their claims. Known as principle-based reserving, the framework has been adopted by 46 states and was rolled out across the nation on Jan. 1, 2017. Insurance companies have three years to transition to the new system that uses simulation models to estimate the necessary reserves to cover future claims. Some experts in the industry expect life insurance premiums to drop as companies adjust to the new reserve requirements.[Read: 10 Things You Didn't Know Life Insurance Could Do.]The move to modernize life insurance reserves. The use of principle-based reserves represents a major shift for the industry, and one that reflects the changing face of life insurance policies. "If we go back 50 years, most of the life insurance products were very similar," says Nancy Bennett, senior life fellow with the American Academy of Actuaries. So it wasn't too problematic that state regulators required insurers to use a standard formula to determine how much cash to keep in their reserves for claim payments.However, the market has changed significantly, and companies now offer a variety of term, whole and universal policies. As a result, the old rigid system of calculating reserves no longer worked. In some cases, companies had accumulated large reserves, "far larger than what you would think would be needed," Bennett says.Since the formula didn't allow for variations, companies were unable to adjust the size of their reserves on their own. "We and other companies went to the NAIC [National Association of Insurance Commissioners] and said we want to work with you to right-size the reserves," says Shawn Loftus, senior vice president and chief actuary of USAA Life Insurance Company. The result of that work is the new principle-based reserving model, which offers companies more flexibility when determining how much capital to have on hand. The first wave of regulations affects two types of polices: term life and universal life with secondary guarantee.[Read: Should You Use Life Insurance to Fund Your Retirement?]Some premiums may go down. Bennett says it's hard to tell whether premiums will be affected as a result of the new principle-based reserves, but those in the industry are optimistic consumers will see savings. "The big picture from our end is this rule is going to make life insurance premiums cheaper," says Justin Halverson, founding partner at Great Waters Financial in Minneapolis.Term life insurance, in particular, could benefit from the change. According to a 2012 Impact Study from NAIC, companies are projected to reduce their reserves anywhere from 38 percent to 64 percent as a result of principle-based reserving. Loftus says USAA Life expects to drop premiums by up to 15 percent on some policies, with the average savings being 2.6 percent. Reduced premiums only apply to new policies and will not affect current customers.The situation for universal life with secondary guarantee is a little more complex. Joseph E. Roseman Jr., managing partner for O'Dell, Winkfield, Roseman and Shipp in Charlotte, North Carolina, says the structure of permanent policies shifted from whole life to universal life in the late 1970s and early 1980s. During the next two decades, business for universal life boomed, but reserves didn't always keep up. "They were minimally funding policies," he says.Now, the new regulations may result in some of those universal life policies needing to beef up their reserves. The 2012 Impact Study found some reserves may drop as much as 44 percent while others may need to boost their coffers by up to 63 percent. However, better reserves mean consumers can feel confident their plan will remain solvent. And life expectancy tables have been recalculated so premiums will be spread over a longer period, a change that should keep premium increases to a minimum.Lower your life insurance premiums. Consumers shouldn't expect to see their existing premiums drop as a result of principle-based reserves. The lower prices will only be for new policies, but that should still be welcome news for those living on a tight budget. "About 35 percent of our members are living paycheck to paycheck, so price is a big deal for them," Loftus says. To find out if they can take advantage of lower premiums, the company is recommending all its members conduct an annual insurance review.Part of that review includes getting quotes for a new policy or additional coverage to supplement an existing policy. Halverson cautions anyone getting quotes to be sure the company in question is actually using principle-based reserves. While some firms, such as USAA Life, are implementing the change immediately, insurers have until Dec. 31, 2019 to comply. And a handful of states have not yet adopted the new framework.[Read: 10 Financial Perks of Getting Older.]"[Another] big warning would be to not go dump your current coverage," Halverson says. Getting a quote at a lower cost doesn't mean the company will sell you a policy. The results of a health exam, for example, could result in an application being denied. "Make sure you've had a guaranteed offer," Halverson urges.Principle-based reserving represents a major change for the insurance industry, and it could have benefits for your bottom line as well.10 Tax Breaks for People Over 50.

February 21, 2020 0 comment

Banking & Credit

4 Life Hacks That Cost More Than You Think

by sshrx_ns3li1 February 21, 2020

written by sshrx_ns3li1

"Life hacks" is one of those trendy phrases that describes strategies people use to be more efficient. But you know that.You probably also are well aware that you'll often see online articles with headlines like, "Life Hacks to Save You Money." Many life hack ideas are smart, but often the breezy advice attached to the life hack forgets to mention there may be a hidden cost, too. If you hear any of these life hacks mentioned, don't discount them, but do your homework to make sure they're actually saving you money.Life hack: Use coupons at stores to save money, and you're really missing out if you don't look for coupon codes when you're ordering food online.Why this life hack can cost more than you would think: Couponing only works if you were going to buy the item, anyway. You're probably also better off if you don't let couponing become a way of life."Years ago, I attempted couponing, when it was all the rage," says Kristie Garduno, a business owner in Newport Beach, California. "I took the time to learn all the tricks and lingo and even joined a group, so we could swap coupons. I started spending more and more time trying to save money, even skipping church so I could be first in line to get a good deal on an item – that I probably wouldn't use."[See: 12 Shopping Tricks to Keep You Under Budget.]Garduno says she went way overboard, scouring the internet, looking for deals, sometimes ignoring her business, a retail website called GivingSoaps.com. She even remembers getting in arguments with cashiers over 25-cent coupons."It became almost an addiction, and I'm grateful that I stepped away when I did," Garduno says. "I have no idea how much money I wasted in the name of saving." Life hack: Do a credit card balance transfer to save you money on interest. You apply for a credit card with a low introductory annual percentage rate (APR), preferably zero and one that will remain low for 12 to 18 months.Why this life hack can cost more than you would think: Yes, transferring money from a credit card with a high interest rate to a lower interest rate can be a good idea. But some credit cards have a high annual fee, negating the savings you're going to get. Other cards have a balance transfer fee, and while it may only be 3 percent, that adds up if you're, say, transferring $5,000 from one card to another. In fact, it adds up to $150.And you'll really blow it if you miss a payment, which happened to J.R. Duren, a copywriter in Jacksonville, Florida.In 2009, Duren transferred about $3,300 from one credit card to another. All was well until he was late with a payment and saw his interest rate jump 7 percent. It wasn't a financial disaster since he paid off the card by the end of the year, but he undid some of the work he was trying to do in saving money."I'm guessing the mistake cost me at least $130," Duren says.And keep in mind it's a terrible life hack if you transfer money from the high interest credit card to the lower interest rate one, and then later you end up maxing both of them out and carrying revolving debt.[See: 12 Ways to Be a More Mindful Spender.]Life hack: Buy in bulk. You know how it works. Buy a pack of 16 paper towel rolls at a warehouse discount store, and in the long run, it's cheaper than buying a pack of four paper towel rolls at a supermarket. You spend more upfront, but over time you save money.Why this life hack can cost more than you would think: Buying in bulk can backfire, especially if purchasing perishable items. Tyler Riddell, who works in marketing and lives in Temecula, California, says, "Every time I go to Costco, I think I'm saving tons of money by buying in bulk when in reality, only half of the items I buy get eaten while the rest goes bad and ends up being thrown out."Life hack: If you're looking for a new bank, sign up with one that offers a cash bonus.Why this life hack can cost more than you would think: You really want to be careful when you choose any monthly service, whether it's a bank or a telephone plan, that offers you money to sign up. The deal being offered may be good, but the company is going to get their money back somehow. Tyler McIntyre, a New York City-based business owner in the banking industry, says he once signed up for a bank's checking account offering a $200 sign-up bonus. Before long, however, he realized he was being charged a $12 monthly fee for owning the account. In less than two years, McIntyre's signing bonus would go right back to the bank, and he would still be paying $12 a month.[See: 12 Millennial-Inspired Ways to Spend Less.]That didn't sit well with McIntyre, who knew he could get the same services for free from a community bank."I closed the account, and they took back the $200," McIntyre says.11 Expenses Destroying Your Budget.

February 21, 2020 0 comment

Newer Posts

Older Posts