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"LUMP SUM" PENSION SETTLEMENTS MUNI BONDS: RISKS AND REWARDS CRUNCHING YOUR NET WORTH NUMBERS FACTS ON FEES AND 401(K)s BEHIND THE BITCOINS BOOM HOW MUCH SHOULD YOU SAVE? SOCIAL MEDIA AND INVESTING STAY IN CONTROL, AVOID INVESMENT MISTAKES BE AN INFORMED INVESTOR SCAM ALERT: POACHING VETERANS' PENSIONS FINANCIAL PLANNING FOR CAREGIVERS PREVENTING FINANCIAL ABUSE OF SENIORS INVESTOR ALERT: INTEREST RATES AND YOUR BOND PORTFOLIO DISCIPLINE REQUIRED IN INVESTING FOR RETIREMENT GETTING RETIREMENT SAVINGS BACK ON TRACK FUTURES DUE DILIGENCE YOUR CONFIRMATION STATEMENT AVOIDING A PERSONAL FISCAL CLIFF TARGET-DATE FUNDS CROWDFUNDING: WATCH OUT FOR INTERNET FRAUD MUNICIPAL BONDS: UNDERSTANDING CREDIT RISKS ROLLOVERS AND IRAS STOCK SCREENS TIPS FOR ESTATE PLANNING FUTURES DUE DILIGENCE HURRICANE SANDY AND INVESTMENT SCAMS INVESTOR EDUCATION AT WORK WHEN TRADING STOPS ESTATE PLANNING WEEK REBALANCING YOUR PORTFOLIO HEDGE FUNDS: WHAT YOU NEED TO KNOW
Like mutual funds, hedge funds pool investors' money and invest the money in an effort to make a positive return. Hedge funds typically have more flexible investment strategies than mutual funds. Many hedge funds seek to profit in all kinds of markets by using leverage (in other words, borrowing to increase investment exposure as well as risk), short-selling and other speculative investment practices that are not often used by mutual funds. Unlike mutual funds, hedge funds are not subject to some of the regulations that are designed to protect investors. Depending on the amount of assets in the hedge funds advised by a manager, some hedge fund managers may not be required to register or to file public reports with the SEC. To learn more, check out the new Investor Bulletin from the U.S. Securities and Exchange Commission ...
YOUR INVESTMENT PERFORMANCE RETIREMENT SAVINGS AND TAX BENEFITS
Individuals' ages are typically more important than their marginal tax rates in determining how much they benefit from deferred taxation of compensation contributed to employer-provided retirement plans, according to a study released today by the Investment Company Institute (ICI). The ICI study, The Tax Benefits and Revenue Costs of Tax Deferral, shows, for example, that in realistic simulations for a variety of investments, the tax benefits from a one-time $1 contribution to a retirement account are greater for a 45-year-old with a 15 percent marginal tax rate than for a 60-year-old in the 35 percent tax bracket. Sixty-nine percent of U.S. households report that they have employer-sponsored retirement plans (which include defined benefit and defined contribution plans) and/or individual retirement accounts (IRAs). This study explains the tax benefits that these households receive from setting aside a portion of their compensation for retirement ...
FINDING "POCKETS" FOR YOUR ASSETS
One big advantage of a 401(k) plan is that it is tax-advantaged—it helps minimize the amount of money Uncle Sam can grab from your pockets in the form of taxes. But the best way to limit Uncle Sam's reach is to make sure you are putting the right assets in the right pocket. In this instance, the pockets are either taxable savings accounts or tax-deferred 401(k) accounts. The decision as to which account will hold your stock assets and which will hold your fixed-income assets while attaining your desired asset allocation is often referred to as the "asset location" decision. Sooner or later you will be saving in both taxable and tax-deferred accounts. A recent article from the American Association of Individual Investors can help you figure out how to pick the right tax pocket for your assets ...
MARKET METRICS: THE "GOLDEN CROSS" ... AND MORE
There are no infallible guides to stock market movements. However, that doesn't stop investors from using various measurements to try to divine the current and future direction of a stock's price or the equity markets as a whole. There are some common methods (or metrics) for gauging the stock market, including gauging volatility, moving averages, the "golden cross/death cross," and using fundamental data. The CBOE Volatility Index measures real-time changes in the prices of a group of S&P 500 30-day options. A moving average reflects a stock's average price or an index's value over a specified period of time. When the short-term moving average of a stock or index rises above a longer-term average, the situation is referred to as a "golden cross." To learn more, check out the American Institute of Certified Public Accountants article on stock market metrics ...
401(k) KEY FOR GEN X
Eligibility for participation in a workplace 401(k) savings plan is one of the single-most important factors in closing the retirement savings gap for Generation X, according to a report by the nonpartisan Employee Benefit Research Institute (EBRI). But for Gen Xers trying to calculate how much they will need in retirement, EBRI also finds that taking potential nursing home and home health care expenses into account is crucial to a realistic estimate of retirement savings needs. Earlier EBRI research has found that, overall, about 44 percent of both Baby Boomer and Gen Xer households are likely to be at risk of running short of funds during retirement, assuming they retired at age 65 and retained any net housing equity in retirement until other financial resources were depleted ...
INVESTMENT FRAUD AND OLDER AMERICANS
Investment fraud and financial exploitation targeting older Americans is a major problem today and most seniors do not have the information they need to pick a financial advisor to help them protect their savings, according to a major new survey of 756 experts conducted by the Investor Protection Trust (IPT) and Investor Protection Institute (IPI) in response to questions posed by the Consumer Financial Protection Bureau (CFPB). What are the best ways to reach older Americans and their loved ones to educate them about how to protect themselves? The survey found that "programs delivered by local professionals, such as caregivers, adult protective services workers, law enforcement agencies, and health care professionals" worked best followed by "programs delivered through senior centers and other facilities catering to older Americans" ...
INVESTING & FINANCE TEACHING TOOLS ARE YOU A "SAVINGS CONSUMER"?
Like all investors, individuals who are living off of their retirement savings need a blueprint to construct a successful portfolio. But the blueprint that works for the typical investor who is saving for retirement won't work for those who are living off of their retirement savings. That's because the goals of these two types of investors are not quite the same. All investors want maximum returns on their savings. But those living off of their retirement savings are also "savings consumers" who use their savings to support themselves. These investors typically have two goals: savings that last and savings that provide large annual paychecks. To figure out how to balance those goals, check out a recent article from the American Association of Individual Investors ...
INVESTOR ALERT: EXCHANGE-TRADED NOTES
The Financial Industry Regulatory Authority (FINRA) issued a new Investor Alert called Exchange-Traded Notes—Avoid Unpleasant Surprises to inform investors of the features and risks of exchange-traded notes (ETNs). ETNs are a type of debt security that trade on exchanges and promise a return linked to a market index or other benchmark. However, unlike ETFs, ETNs do not buy or hold assets to replicate or approximate the performance of the underlying index. An ETN's closing indicative value is computed by the issuer and is distinct from an ETN's market price. Investors should understand that an ETN's market price can deviate, sometimes significantly, from its indicative value. If the ETN is trading at a significant premium to its closing or intraday indicative value, investors might want to consider similar products that are not trading at a premium ...
SELF-DIRECTED IRAs
The Retirement Industry Trust Association (RITA) and the North American Securities Administrators Association (NASAA) will conduct a free webinar to help raise public awareness of how to avoid fraud when considering investing in self-directed Individual Retirement Accounts. A self-directed IRA is an IRA held by a trustee or custodian that allows investments in a broader set of assets than is permitted by most IRA custodians, such as real estate, promissory notes and private placement securities. Because they include alternative assets, the risk and rewards of self-directed IRAs may be greater than those of traditional IRAs. The webinar is open to the public, is scheduled for July 18 at 2 p.m. EDT and registration is required. Topics to be discussed include: what self-directed IRAs are and why they are useful, warning signs of investment fraud in self-directed IRAs, and more ...
TEXAS' "DIY" INVESTOR EDUCATION
What is the value of investing? The Texas State Securities Board, a member of the North American Securities Administrators Association (NASAA), has developed a "Do It Yourself" (DIY) online primer on the basics of investing, "Value of Investing." Although written specifically for Texas school district employees, the primer applies to everyone. Among the key topics covered: how to invest; the core principles that should underlie investment decisions; investing for retirement; and, avoiding scams. One reason for the development of the program is the State Securities Board's enforcement actions against promoters of fraudulent investments that were pitched to teachers ...
PROXY VOTING: WHY IT IS IMPORTANT
As a shareholder, you are part owner of a company and that company's management has a responsibility to be accountable to you. You have an important voice in influencing policies that impact shareholder value, the culture of the company and the effect the company has on the world around it. On behalf of the financial services industry, the underwriters for public companies in the financial markets, SIFMA is now offering a comprehensive guide - the Proxy Resource Center - to the proxy election process on the importance of the individual investors' participation. Proxy voting is the primary means of ensuring corporations are accountable to their shareholders – whether they are individual or large institutional investors. In addition, the proxy voting process facilitates shareholder knowledge of and participation in key governance issues faced by the companies in which they have invested ...
ELDERLY FINANCIAL SWINDLES ON THE RISE
Just ahead of World Elder Abuse Awareness Day, a new survey of over 7600 experts who deal with investment fraud/financial exploitation of American senior citizens shows that 84 percent agree that the problem of elderly financial abuse is getting worse. Nearly all of the respondents (99 percent) say that older Americans are "very vulnerable." How can this problem be combated? The Investor Protection Trust started the Elder Investment Fraud and Financial Exploitation (EIFFE) Prevention Program and has been working to train medical professionals who work with the elderly about how to spot older Americans who may be particularly vulnerable to investment fraud abuse and then to refer these at-risk patients to state securities regulators and Adult Protective Services (APS) professionals ...
GOOD PEOPLE, DISHONEST FINANCIAL ADVICE: STANDING TALL ON THE TILTED TURF
In the June 2012 Issue of the AAII Journal, AAII vice president Charles Rotblut and Duke University psychology and behavioral economics professor Dan Ariely discuss the interplay between psychology, dishonesty and investing. The discussion, based off Ariely's new book, "The (Honest) Truth About Dishonesty," examines how a bad incentive structure in the financial services sector can cause some people to embrace immoral work practices. Those who read the article will gain savvy and practical takeaways that will help them identify conflicts of interest when investing ...
TEACHING EMPLOYEES TO SAVE AND INVEST IN WORKPLACE PROGRAMS!
How do you encourage employees to participate more fully in workplace saving and investing programs? The Investor Protection Trust (IPT) has joined with the Investor Protection Institute (IPI) to create a groundbreaking training program that addresses this question. Titled "Investor Education in Your Workplace," IPT and IPI are now running 10-week online training programs aimed at helping employees realize the benefits of savings programs within their workplaces. Tangible results have already been achieved within several pioneering states. Today, state securities agencies are being encouraged to register to participate in the Fall 2012 program series. More details can be found here ...
FRONTIER MARKETS: WHAT INVESTORS SHOULD KNOW
Investors often tremble when considering "frontier markets"—a term coined in 1992 to describe a subset of small and illiquid emerging stock markets. Yet as CFA's David Larrabee spotlights, some of the most attractive opportunities for investors today can exist in frontier markets like Romania and sub-Saharan Africa. For investors looking for growth, frontier markets can deliver. They offer attractive risk-adjusted returns with low correlation to developed markets. As Larrabee argues, the notion that frontier markets are inhospitable investing outposts where corruption abounds is incomplete ...
INVESTING IN A LOW-INTEREST ENVIRONMENT
In a low interest rate environment, investors face a dilemma: do they accept a low investment return in order to protect their principal? Or do they take on greater investment risk and aim for a higher rate of return? The American Institute of Certified Public Accountants brainstormed this dilemma along with the other challenges investors face in today's low interest rate environment. Those efforts were ultimately converted into this list - a collection of practical suggestions and tips that investors can implement as they navigate through today's challenging low interest rate environment ...
INVESTOR EDUCATION – THE CHICAGO WAY
On Wednesday, April 25, NFA will join other regulatory and enforcement agencies at a Financial Regulators Fair at the State of Illinois Building, Thompson Center in coordination with Money Smart Week. Representatives from twelve agencies, including the Commodity Futures Trading Commission (CFTC), Financial Industry Regulatory Authority (FINRA), the Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation (FDIC) will distribute information on financial protection, banking, credit and investing. The event will run from 10:00 a.m. to 2:00 p.m. CDT. For more information about Money Smart Week visit: http://www.moneysmartweek.org/Chicago ...
GENDER GAP ON FINANCIAL LITERACY?
Women consistently score lower than men on measures of financial literacy, a new study from the FINRA foundation found. According to the new research, women were five percentage points more likely to carry a balance, four points more likely to pay the minimum payment on their cards and six points more likely to be charged late fees. These findings suggest that increasing financial literacy among women and men may be a fruitful means of improving credit card behavior and reducing or eliminating gender-based differences in credit card behavior ...
PROTECTING FINANCIAL CONSUMERS
The Federal Trade Commission and more than 30 other federal agencies, consumer groups and national advocacy organizations, in conjunction with state, county, and local government agencies, are participating in National Consumer Protection Week, March 4-10, 2012. National Consumer Protection Week is a coordinated campaign to focus attention on the importance of consumer information and provide people with free resources explaining their rights in the marketplace. David Vladeck, Director of the FTC's Bureau of Consumer Protection, noted the campaign's website, NCPW.gov, available in English and Spanish, hosts a variety of resources on topics that matter to the nation's consumers. Finance and investing resources include protecting yourself and your finances from online predators, checking out your broker and financial advisor, avoiding investment fraud, financial planning and saving for retirement ...
PERSONAL FINANCE: A MILITARY FAMILY "FIELD MANUAL"
More than 800,000 copies of the second edition of the "Financial Field Manual: The Personal Finance Guide for Military Families" have been distributed on military bases around the world and directly by state securities agencies, under a partnership of the Investor Protection Trust (IPT), the Investor Protection Institute (IPI), the Council of Better Business Bureaus (CBBB) and Kiplinger's Personal Finance Magazine. The guide focuses on the key issues that can help military families make informed investing decisions, protect their money and their families, and take charge of their financial lives. The first round of print copies has been distributed directly to military bases in the U.S. and around the world and 29 states and the District of Columbia are also using copies as part of education programs with service members and their families in their states ...
YOUR FINANCIAL SECURITY: SAVING AND INVESING
It's America Saves Week so there is no better time to educate yourself about saving and investing. Knowing how to secure your financial well-being is one of the most important things you'll ever need in life. You just need to know a few basics, form a plan, and be ready to stick to it. No matter how much or little money you have, the important thing is to educate yourself about your opportunities. If you get the facts about saving and investing and follow through with an intelligent plan, you should be able to gain financial security over the years and enjoy the benefits of managing your money. The Securities and Exchange Commission's "Saving and Investing - A Roadmap To Your Financial Security Through Saving and Investing" is a great place to get started ...
TAXES AND YOUR RETIREMENT
As U.S. policymakers consider tax policy and how to resolve federal budget deficits, more than eight in 10 U.S. households believe the current tax incentives to encourage retirement saving should be preserved, according to new research released by the Investment Company Institute (ICI). The research is based on data collected in a survey of 3,000 U.S. households in November and December 2011. The ICI study-America's Commitment to Retirement Security: Investor Attitudes and Actions-found that such agreement was consistently high across various demographic and financial characteristics. Households were asked their views on changing the tax incentives for retirement plans and whether saving incentives for retirement should be a national priority. Respondents were also asked about their views on retirement plan saving and their confidence in 401(k) and other DC plan accounts
ETFs AND MUTUAL FUNDS: WHAT'S THE DIFFERENCE?
Exchange-traded funds (ETFs) are America's "financial idol" at the moment, getting more financial press than just about any other financial product. Even Vanguard, the bastion of the mutual fund, is rolling out ETFs. No wonder individual investors have their interest piqued. So what do ETFs have that mutual funds don't and vice versa? The American Association of Individual Investors outlines the differences between ETFs and mutual funds but also says, at the end for the day, they are interchangeable. Investors should concentrate on creating a diversified portfolio and applying appropriate portfolio weightings for the individual's time horizon, risk tolerance and portfolio goals. And then turn to either mutual funds, ETFs, or a combination of the two ...
HACKING YOUR INVESTMENTS
Anyone who has experienced an email account intrusion or "hacking" knows how frustrating it can be to deal with the aftermath. In the most serious cases, a compromised email account can lead not only to identity theft, but also to theft of your money. That's why one of the most important first steps you should take if your email account has been hacked is to notify your brokerage firm and other financial institutions. FINRA has received an increasing number of reports involving investor funds being stolen by fraudsters who first gain access to the investor's email account and then email instructions to the firm to transfer money out of the brokerage account. FINRA has issued an Investor Alert to warn investors about the potential financial consequences of a compromised email account and to provide tips for safeguarding your assets ...
INVESTING AND YOUR TAXES
As the W-2s and various tax documents start rolling in ahead of the April filing deadline, how much do you know about the U.S. federal income tax rules that affect your investments in various financial instruments, including stocks, bonds, options and futures contracts? The Options Industry Council has updated their booklet, "Taxes and Investing: A Guide for the Individual Investor" just in time for the 2012 tax season. The summary provided is for general information purposes only and is not intended to address any individual investment or tax situation so you should still consult a professional for more information ...
LEARNING WHEN TO SELL
As usual, no one "rang the bell" when the 2002–2007 bull market topped out in October/November a year back. Thus, from where we stand now, it would seem somewhat lame to say 'these are the reasons you should have lightened up long before the recent meltdown.' So what should you do in and after a severe bear market if you are investing your own portfolio of individual stocks? The American Association of Individual Investors offers guidelines on when to sell. First and foremost, you should keep in mind a few selling guidelines that should be used in normal times. If you have built your individual stock portfolio in a disciplined manner, and you have made sales in a disciplined manner, you should have a relatively solid core portfolio of high-quality issues that have continued to perform fundamentally ...
FINDING A "FINANCIAL BUDDY"
New Year's resolutions are notoriously tough to keep, especially when they relate to your finances. But recruiting a "financial buddy" who will provide you support and keep you accountable can help you accomplish your goals this year. A financial buddy can be anyone—a parent, a spouse, a friend, a co-worker. Whomever you consider, make sure that person has certain qualities. It should be someone you trust, who will set a good example and who will keep you honest. Once you have selected your buddy, work together to create long-term plans for both of you. The plans should have specific and measurable goals that are realistic. Once you have created a plan, keep tabs on each other. NEFE's SmartAboutMoney provides more insight into how a buddy can help ...
401(k) INVESTING: STOCKS STILL HOT
After a decade marked by two severe bear markets, 401(k) plan participants have adopted a more balanced approach to their portfolios, according to a report released today by the Investment Company Institute (ICI) and the Employee Benefit Research Institute (EBRI). Fears that younger participants in 401(k) plans would abandon stock investing are not borne out by the data, which suggest that greater use of target date funds is helping workers keep their investing on track. The shares of 401(k) participants who had either no equities at all or high concentrations of equities were lower in 2010 than in 2000 for almost every age group, according to the EBRI/ICI report, 401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2010 ...
GROWING GROUP: "NEVER RETIREES"
Not only are older American workers (age 50 and over) expecting to work longer, but many now say they expect to never retire, according to the nonpartisan Employee Benefit Research Institute (EBRI). Data suggest the trend may be tied to the recent economic recession. In 2006 (just before the recent recession), 11.2 percent of workers age 50 or over expected to retire at age 70, but by 2010 (after it had officially ended) that had increased to 14.8 percent. The EBRI report notes that while the rising age of expected retirement may reflect a growing awareness of economic and fiscal reality among Americans workers (especially at a time of rising longevity), other research by EBRI indicates many of them will be unable to actually work longer ...
SOCIAL NETWORKING AND INVESTMENT FRAUD
Social networking in the Internet age allows people to connect to one anothermore quickly and easily than ever before. Investment promoters increasingly are logging on to find investors … and their money. While social networking helps connect people with others who share similar interests or views, con artists infiltrate these social networks looking for victims. By joining and actively participating in a social network or community, the con artist builds credibility and gains the trust of other members of the group. In online social networks, a con artist can establish this trust and credibility more quickly than in traditional social networks. Online investment fraud has many of the same characteristics as offline investment fraud. To protect yourself from fraud in social networking, check out this primer from the North American Securities Administrators Association (NASAA) ...
INVESTING 101: GETTING STARTED
Are you a recent college graduate looking to start an investment portfolio and want to learn more but don't know where to start? Have you been saving for a few years and built up a good cushion and now want to start investing? Are you nearing retirement age and want to make sure you have everything in place for your golden years? The nonprofit, 21-member Alliance for Investor Education (AIE) is making available a major new resource today which highlights 10 of the best Web-based resources for consumers looking to "step up their game" when it comes to investing. The Alliance's new "Investing 101: Getting Started" is available now ...
MAKING THE MOST OF YOUR PORTFOLIO
Modern portfolio
theory (MPT) introduced the concept of portfolio efficiency, which focuses on
the portfolio as a whole and how the individual holdings interrelate. Through
proper diversification, risky assets can be combined in a portfolio to achieve
higher returns without taking on additional risk, or to reduce risk in a
portfolio without reducing return. The key is selecting portfolio components
that work together in combination to achieve this. Portfolio optimizers help in
this analysis. They are basically asset allocation models that help you select
the right combination of investment vehicles that will maximize your return
while minimizing your risk. Where on the Web can you go to find these tools?
The American Association of Individual Investors (AAII) created a list with
several current sources for asset allocation advice found on the Web ...
5/15/2013
Do you receive a monthly pension from a former employer? Are you getting regular distributions from a settlement following a personal injury lawsuit? If so, you may be targeted by salespeople offering you a lump sum today to buy the rights to some or all of the payments you would otherwise receive in the future. Typically the lump sum offered will be less than the total of the periodic payments you would otherwise receive. After acquiring the rights to a future income stream, these companies may turn around and sell these income streams to retail investors. FINRA and the SEC's Office of Investor Education and Advocacy issued an Investor Alert to inform anyone considering selling their rights to an income stream—or investing in someone else's income stream—of the risks involved and to urge investors to proceed with caution ...
5/8/2013
Why invest in the $3.7 trillion municipal bond market? Tax exemption, low default risk, and an investment that lends money to state and local governments to build roads, schools, and hospitals, among other essential needs, are among some of the compelling reasons. And the returns: the average weekly value of the Bond Buyer 20-bond GO Index over the last 20 years (1993-2012) is 5.0%. As with any investment, however, investors need to weigh the risks against the returns and determine if a particular investment meets their specific needs. To be sure, one of the primary concerns of investors in any "fixed-income" instruments like municipal bonds is the effect of rising interest rates on a bond's market value. Check out the new SIFMA blog post about municipal bonds for more information ...
5/1/2013
One of the best ways to assess where you stand financially is to calculate your net worth. When you add up all of your assets and subtract your debts at least once a year, you can clearly see if you're progressing towards your goals or moving backwards. You may be investing more money in your retirement accounts each year, for example, but your net worth may actually be shrinking if you're also taking on more debt. Breaking down your assets and your liabilities into categories also makes it easier to see where you can beef up your savings, and which liabilities are holding you back. To calculate your net worth, you (and your spouse) will need to dig up your recent financial statements and do a little research. The FINRA Investor Education Foundation's SaveandInvest.org lays out an action plan for calculating your net worth ...
4/24/2013
Consistently falling prices in a marketplace are usually a sign of competition and innovation. Think about technology products, for example-the computer you can buy today almost certainly costs less and does more than the computer you could have bought a year ago, while the one you will be able to buy a year now from will be better and cheaper still. Thanks to innovation, increasing transparency, and the dynamics of a highly competitive market, 401(k) mutual fund fees also have been falling-even as plans offer more and better services to participants. Let's take a closer look. In any discussion of fees, it's important to start with a key notion: all forms of savings and investment come with costs. Investors incur these costs through fees, spreads, or reduced returns. Check out ICI's post about the facts on fees and 401(k)s for more details ...
4/18/2013
A craze is sweeping the nation. Indeed, it is sweeping the world. That craze is Bitcoins, the decentralized, encrypted digital currency, introduced in 2009. Bitcoins, which have a permanently fixed supply, are turning out to be a pretty big deal because of the stark contrast with our present (fiat) currency system — which thanks to central banker largesse is yielding a growing and seemingly endless supply of money (latest entrant to the game: Japan). Eventually, this rampant money printing risks triggering inflation, which destroys currency values. So, to understand the recent Bitcoin binge, you need to understand inflation. Let's consider what might happen if inflation applied to other facets of life ... like sports. Check out the CFA Institute Enterprising Investor blog for a primer on Bitcoins …
4/10/2013
Some people are natural "planners"-others, not so much. But as baseball great Yogi Berra once
commented, "If you don't know where you're going, you might end up someplace else." Effective savings strategies start with a goal, something to aim for. Some goals are easier to identify than others, of course. It's easy enough to figure out a price range for something like a television, a car, or even a house—once you've figured out things like how big a screen you want, what make/model you prefer, and where you want to live. In fact, some of those goals are set by the cost of those choices. For many, retirement savings goals seem impossible to set. There are, however, tools that can help you set a reasonable target. Check out more details from the American Savings Education Council …
4/3/2013
Do you use Facebook, Twitter and other social media websites as an investing tool? The SEC's Office of Investor Education and Advocacy recently issued an Investor Bulletin to provide investors with tips they should consider when establishing an account on a social media website. Investors' use of Facebook, Twitter and other social media websites as an investing tool has increased substantially in recent years. Investors who use social media websites for investing should be mindful of the various features on these websites in order to protect their privacy and help avoid fraud. For example, investors should be mindful of the default privacy settings when establishing an account on a social media website as it could permit sharing of information to a vast online community. Additionally, investors should be extra careful before clicking on links sent to you or posted …
3/27/2013
We just don't know what will happen next. It's a reality that can be hard to handle as an investor. From fiscal cliffs and debt ceilings to unemployment rates and quarterly earnings, it can feel like we're just along for the ride. And this feeling that we lack control, combined with uncertainty about the future, can make it very difficult to behave when it comes to investing. An investor's goal for 2013 needn't be finding the "best" investment or even the next Apple Inc. Instead, an investor (and their portfolio) should be better off if focusing on the things under their control and implementing strategies to help avoid classic investing mistakes. A new article from the American Association of Individual Investors (AAII) offers five steps for gaining control of your investments and avoiding costly mistakes …
3/20/2013
Do you know how to research a stock, bond, mutual fund, or investment professional to see if they are a good fit for you? If you need help figuring out how to do the homework known as "due diligence," there's a new place to turn for help. Before investing in a stock, bond, mutual fund or hiring an investment professional, investors should review the AIE's new "Due Diligence: How to Make Sure You Are an Informed Investor" available now at http://www.investoreducation.org/duediligence.
3/13/2013
Veterans and their families are a target for some dishonest advisers who are claiming to offer free help with paperwork for pension claims. The scheme involves attorneys, financial planners, and insurance agents trying to persuade veterans over 65 to make decisions about their pensions without giving them the whole truth about the long-term consequences. Specifically, these unscrupulous brokers try to convince veterans to transfer their assets to a trust ¬or to invest in insurance products - so they can qualify for Aid and Attendance benefits. What they don't reveal is that these transactions could mean that the veteran loses eligibility for Medicaid services or loses the use of their money for a long time. Adding insult to injury, the advisers are charging fees that range from hundreds to thousands of dollars for their services. The FTC offers tips on how vets can stay safe …
3/6/2013
Being a caregiver to an aging or ill parent either physically, financially, or both, is a compassionate choice that involves immediate and long-term financial planning. It is important to understand all the expenses involved and what you can afford. Follow these tips to help trim expenses and keep your income while helping your parents at the same time. The National Endowment for Financial Education's SmartAboutMoney website provides six tips for managing your expenses while helping your parents. They include details related to making a budget, cutting costs, planning for long-term expenses, keeping your income, considering hiring help and lowering your tax bill …
2/27/2013
You may think you know your elderly relative very well. But do you really? Too often, money is the one subject we are reluctant to talk about with our parents or relatives, because we worry that we'll be seen as looking for a handout or overly eager for an eventual inheritance. Your financial abuse protection plan for older relatives begins with conversation. Start where CFP® professionals always begin when they do financial planning: with goals and hopes for the future. From there, perhaps in a subsequent conversation, you can broach the subject of the financial resources available to support the goals of your parent, grandparent, aunt or uncle. For more details on creating a plan to shield your older relative from financial abuse, check out the CFP Board's February newsletter ...
2/20/2013
If you own bonds or have money in a bond fund, there is a number you should know. It is called duration. Duration signals how much the price of your bond investment is likely to fluctuate when there is an up or down movement in interest rates. The higher the duration number, the more sensitive your bond investment will be to changes in interest rates. Currently, interest rates are hovering near historic lows. Many economists believe that interest rates are not likely to get much lower and will eventually rise. If that is true, then outstanding bonds, particularly those with a low interest rate and high duration may experience significant price drops as interest rates rise. A new FINRA Investor Alert warns that if you have money in a bond fund that holds primarily long-term bonds, expect the value of that fund to decline when interest rates rise ...
2/14/2013
Over the past decade, equity investors have been blindsided by two severe bear markets, a global financial crisis, and the worst recession since the 1930s. As a result, they have seen generally meager investment returns. So it is not surprising that many had been fleeing stocks and equity mutual funds. Since the stock market peaked in October 2007, industry-wide net outflows from equity mutual funds totaled several hundred billion dollars through 2010. Historically, investors often have abandoned the stock market during steep downturns, missing out on subsequent recoveries. Those saving for long-term goals such as retirement, however, should consider the implications of reacting to recent events by reducing their equity allocations-and therefore reducing the growth potential of their portfolios. For more on the disciplined approach required to invest for retirement, check out the new AAII article ...
2/7/2013
Tough times call for tough choices. If you've stopped making retirement contributions to make ends meet, you're not alone. But as soon as your financial situation allows, it's important to get your retirement savings back on track. You don't have to implement all of these steps, but prioritizing your efforts will maximize the results. If you borrowed from an IRA, return all money to a new rollover IRA account within 60 days. After that, the money you borrowed cannot be returned and likely will be considered taxable income and may be penalized. Begin making contributions through your employer's retirement plan, such as a 401(k) or 403(b) plan. Try to commit to saving enough that you get the full amount of any matching contributions offered by your employer. Check out all the steps to get your retirement plan back on track at NEFE's SmartAboutMoney.org website ...
1/31/2013
As more individual investors consider adding futures and off-exchange foreign currency (forex) trading to their investment portfolios, it's essential that they find out as much as they can about a firm before opening a trading account. National Futures Association (NFA) has been working diligently during the past year to upgrade their investor research capabilities in an effort to provide greater transparency for futures investors and assist them in conducting due diligence. As part of these efforts, in November, they improved the Background Affiliation Status Information Center (BASIC) so that it now includes more-detailed financial information about Futures Commission Merchants (FCM). BASIC is a free service investors can use to research the registration and disciplinary backgrounds of current and former Commodity Futures Trading Commission (CFTC) registrants. The service provides registration histories and information concerning disciplinary actions taken by NFA, the CFTC and all U.S. futures exchanges ...
1/24/2013
Under SEC rules, whenever you purchase or sell a security, the broker-dealer through whom you bought or sold the security is generally required to give or send you a written notification – or confirmation – with information about the transaction. The confirmation statement contains basic information about the transaction, such as the identity of the security, the amount of securities you purchased or sold, and the price that you paid or received. The confirmation statement serves a basic investor protection function in several ways. It contains information that allows you to verify the terms of your transactions, alerts you to potential conflicts of interest with your broker-dealer, acts as a safeguard against fraud by informing you of the activities in your account, and provides you a means by which to evaluate the costs of your transaction and the quality of your broker-dealer's execution ...
1/16/2013
The FINRA Investor Education Foundation has released Five Tips to Keep Your Finances From Going Off a Cliff. While the new year is beginning with improving economic conditions, the financial situation of many Americans remains fragile. The FINRA Foundation's five tips can help consumers and investors keep their finances on solid ground. "With changing tax rates, and a still recovering housing market, many Americans face an uncertain and precarious situation. You cannot control your tax rate or the value of your home, but there are practical steps you can take to achieve greater financial security even in the face financial shocks," said FINRA Foundation President Gerri Walsh. The FINRA Foundation's five tips can help Americans successfully navigate today's changing conditions ...
1/9/2013
Most experts will tell you that the most important decision in retirement saving is deciding how much to save, not how those savings will be invested?and yet, for years, much of the education and discussion about retirement saving has been focused on investing. Enter the target-date fund (TDF), a type of investment fund apportioned according to what investment professionals deem to be an appropriate age-based blend of stocks, bonds, and other asset classes for an individual within a particular target-date of his or her retirement. Perhaps more importantly, that apportioning is automatically rebalanced over time, as the target date approaches, becoming less focused on growth and more focused on income over time. It's an approach to which individuals and plan sponsors alike have come to embrace. For more on EDFs, check out the recent Employee Benefit Research Institute article ...
1/2/2013
Crowdfunding's presence on the Internet has risen sharply in recent months in anticipation of rules to allow small businesses and entrepreneurs to raise investments online, a task force of state and provincial securities regulators said recently. Crowdfunding is an online money-raising strategy that began as a way for the public to donate small amounts of money to help finance projects or causes. Through the Jumpstart Our Business Startups (JOBS) Act, small businesses and entrepreneurs will be able to tap into the "crowd" in search of investments to finance their business ventures once the SEC adopts rules to do so, which are expected in 2013. Anticipating an increase in online fraud stemming in part from passage of the JOBS Act, NASAA created a task force on Internet fraud investigations shortly after the enactment of the JOBS Act to monitor crowdfunding and other Internet offerings ...
12/27/2012
The Securities and Exchange Commission recently issued an Investor Bulletin to help purchasers of municipal bonds better assess the bonds' credit risks. The bulletin provides several factors for investors to consider including the type of the bond, the purpose and nature of the financing, the overall financial condition of the issuer, and the sources of funds to pay both principal and interest. The bulletin also urges investors to undertake their own independent review of municipal bonds' credit risk and not rely solely on a credit rating or a short-hand label such as "general obligation" or "revenue" bond when deciding whether to purchase a municipal bond. The bulletin also provides a list of additional resources where investors can find more information on municipal bonds ...
12/18/2012
Rollovers into traditional individual retirement accounts (IRAs) are playing an important role as households consolidate retirement assets, according to new data in the Investment Company Institute's annual survey of households owning IRAs. Specifically, in May 2012, 45 percent of traditional IRA-owning households with rollovers in their traditional IRAs reported that consolidating assets was among the reasons for their rollovers, and 19 percent said it was the primary reason. The paper, The Role of IRAs in U.S. Households' Saving for Retirement, 2012, also found that taxes were forefront in savers' calculations with 67 percent of traditional IRA-owning households with rollovers indicating that preserving the tax treatment of their accounts was a factor in their decision to make a rollover. Overall, 51 percent of traditional IRA-owning households reported that their traditional IRAs contained rollovers from employer-sponsored retirement plans ...
12/5/2012
Over the years, the American Association of Individual Investors has studied the works of many famous and successful investors. AAII's goal has been to learn from the winning strategies and techniques of investment professionals with a proven record of long-term success. AAII found that it is easy to come up with a list of meaningful screening criteria, but building and applying a cohesive set of criteria can be challenging. Screening is the application of quantitative criteria to a broad universe of stocks in order to narrow the list down to a few companies. It allows investors to focus attention on a smaller but more promising group of stocks. It also forces investors to use a consistent framework to decide which stocks to include in their portfolio. The December AAII Journal offers more details on how to pick an approach that is right for you ...
11/21/2012
As Americans gather for the Thanksgiving holiday, many thoughts will turn to loved ones both past and present. According to Certified Financial Planner Board of Standards, Inc. ("CFP Board") Consumer Advocate, Eleanor Blayney, CFP®, Thanksgiving's focus on those we care about creates the ideal setting to reflect on the legacy we will leave to our family and friends. To ensure those reflections turn into reality, Blayney suggests all Americans take time this month to create their own estate plan. Estate planning is one of 12 steps in CFP Board's year-long "12 for '12 Approach to Financial Confidence. Blayney suggests that consumers consider a few tips when creating their estate plans including: taking an inventory, considering to whom you'd like your assets to go or not go, and using life insurance to create an estate if you have dependents but nothing to behest ...
11/14/2012
To increase the amount of information available to futures customers, the National Futures Association (NFA) is launching a new service to assist them in their due diligence review of Futures Commission Merchants (FCM). Individuals can now view certain financial information of any FCM via an easy-to-read display that appears on each FCM's Background Affiliation Status Information Center (BASIC) system page on NFA's website. From a FCM's BASIC page, the public will now be able to access general information about an FCM, as well as publicly available disciplinary information and financial information for an FCM. Information on how to access these financial reports is available on the new FCM Financial Information page in the Investor Information section of NFA's website. NFA's Special Committee on the Protection of Customer Segregated Funds recommended that FCM financial information be made publicly available ...
11/7/2012
Hurricanes, floods, oil spills, and other disasters often give rise to investment scams. The Securities and Exchange Commission (SEC) is warning individuals, including those receiving lump sum insurance payouts, to be extremely wary of potential investment scams related to Hurricane Sandy. These scams can take many forms, including promoters touting companies purportedly involved in cleanup efforts, trading programs that falsely guarantee high returns, and classic Ponzi schemes where new investors' money is used to pay money promised to earlier investors. Some scams are circulated through spam email, promising high returns for small, thinly-traded companies that supposedly will reap huge profits from recovery and cleanup efforts. For example, the SEC brought a number of enforcement actions against individuals and companies who made false and misleading statements about alleged business opportunities in light of the damage caused by Hurricane Katrina ...
11/1/2012
More than 12,000 employees at nearly 300 companies in 12 states took part in over 120,000 hours of unbiased personal finance and investing education during the first three years of the "Investor Education in Your Workplace" program, according to an Investor Protection Trust (IPT) and Investor Protection Institute (IPI) report to the President's Advisory Council on Financial Capability. By the end of this fall, the number of people who have benefitted from Investor Education in Your Workplace will have jumped to about 20,000. The latest round of Investor Education in Your Workplace training launched on Monday (October 22nd) with more than 100 companies and over 8,000 individuals registered to participate. After starting out with the involvement of state securities regulators in Wisconsin, North Carolina and Pennsylvania, the national program has since spread to nine
other states ...
10/24/2012
Thousands of stocks are quoted and traded every day in U.S. securities markets. Trading in most stocks takes place without interruption throughout the trading day-but some stocks are subject to short-term trading halts and longer-term trading suspensions. In rare instances when the market experiences a very steep decline, trading across the entire market can be stopped. This alert explains how, when and why interruptions in trading occur-and what investors can do in some of these situations. When a company is listed on a U.S. stock exchange, it agrees to notify the listing exchange about any corporate developments that could affect trading activity in its stock-before announcing them to the public. For more on what you need to know about halts, suspensions and other interruptions, check out this recent Investor Alert from FINRA ...
10/17/2012
This week - October 15-21, 2012 - is National Estate Planning Awareness Week. By definition, estate planning is a process designed to help you manage and preserve your assets while you are alive, and to conserve and control their distribution after your death according to your goals and objectives. Estate planning is an important part of every financial plan, no matter the size of the estate. It's also an area that is often overlooked. With the right planning, you can save yourself, and your loved ones, money and emotional hardship. A few things to consider in your estate planning include: an advisor, a will, power of attorney, and advanced medical directive. For more details, check out the American Institute of Certified Public Accountant's (AICPA) FeedthePig.org site ...
10/12/2012
The first three quarters of 2012 have been marked by handsome increases in stock prices, modest rises in bond and commodity prices, and generally declining stock market volatility. While these are welcome developments, investors should not get complacent going into the fourth quarter - nor be tempted to let their equity allocations run up as their market value increases rather than paring the allocations back as part of a disciplined rebalancing practice. You can look at rebalancing as a form of portfolio risk management. If you allow allocations to drift as asset prices fluctuate over time, the more volatile asset classes will tend to take over and increase portfolio risk - hence, the need for periodic rebalancing. Check out the CFA Institute's recent Inside Investing piece for more on rebalancing ...
10/4/2012
9/27/2012
If you have already implemented a financial plan that includes investing and saving, you are heading in the right direction for a secure financial future. But once you have started investing, what are the next steps to make sure your money grows? The nonprofit, 22-member Alliance for Investor Education (AIE), a consortium of America's top regulatory, nonprofit and industry organizations focused on investor education, is making available in one place the best online resources monitoring and evaluating investment performance. The AIE's new "Monitoring and Evaluating the Performance of Your Investments" is available now …
9/14/2012
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7/31/2012
Are you a teacher looking for free, quality resources to help instruct students on managing their personal finances? The nonprofit, 22-member Alliance for Investor Education (AIE), a consortium of America's top regulatory, self-regulatory and industry organizations focused on investor education, is making available a major, new resource today outlining 10 of the best Web-based resources for teachers looking to give their students a strong base of knowledge in investing and personal finance so they will know how to properly manage their finances as they grow into adulthood. The Alliance's new "Investing & Finance for Kids" is available now …
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