Chris's blog

How to Protect Yourself Against Identity Theft

A data breach at a major company can put millions of people in danger of identity theft. Unfortunately, this seems to happen nearly every other day, with new company names splashed across the headlines each week. As security technology gets stronger, hackers and malicious actors meet the challenge of finding new ways to break it. It is important to understand what kinds of activities put your information in danger and what you can do to protect yourself from identity theft.

Secure Your Personal Information

It is possible to leave your personal information lying around, both in the physical world or online. Leaving a public computer without logging out and clearing passwords can be as damaging as losing a credit card on the bus. If you must use a public or shared computer, clear passwords. No matter what, it is a good idea to change passwords often and to avoid ones that are simple or easy-to-guess.

Shred Sensitive Papers

Bank statements, credit card offers, even utility bills can be used by thieves as part of the process of identity theft. Keeping your personal information secure means destroying papers with personal information instead of disposing of it while it can still be read. A shredder makes it easy to accomplish this task.

Phishing

Phishing is a common scam you need to be aware of it you want to protect yourself against identity theft. That is where a scam website tries to imitate a real website and convince you to enter your login credentials. For example, a scam might try to steal traffic away from Bank of America’s website with a dummy site that looks similar. If a person attempted to log into their Bank of America account, they would provide the scammers with their login credentials. Watch out for websites that do not look normal or seem off in some way.

Anti-Virus Software

There are many ways for thieves to try to access your personal information and steal your identity. One simple way to block their path is to keep your antivirus software up to date on every device you use to connect to the internet. Protection against viruses and security threats will watch for threats that you would not normally be aware of otherwise.

Knowledge + Vigilance

The only way to act against identity theft is to first know that someone has committed the crime against you. We live in a world today where there is simply no other option: individuals need to keep an eye on their accounts and credit report on a regular basis.

Everyone is entitled to a free copy of their credit report every year through each of the three major credit bureaus. Credit report monitoring is also included with an increasing number of financial products, such as credit card accounts. 

Credit Card Protections

It is more common to see credit card companies offering enhanced security features and measures designed to protect against identity theft. These features are less common on debit cards and you should be careful using them for online purchases.  When you make a purchase online, use the safest payment method available to you. You should know what protection is included on the card before using it.

Outside Investment Protection

As security breaches and identity theft becomes more common, there are an increasing number of services on the market today to help you guard your credit and identity. For example, an identity guard service might monitor your credit report for new accounts and notify you when something new is opened. If you did not authorize the account, you would be empowered to immediately act. 

Identity theft is alarming, but online shopping and banking are here to stay. We must adapt, and that means taking vigilant steps to monitor your financial identity and protect sensitive information.

Shred Sensitive Papers
Bank statements, credit card offers, even utility bills can be used by thieves as part of the process of identity theft. Keeping your personal information secure means destroying papers with personal information instead of disposing of it while it can still be read. A shredder makes it easy to accomplish this task.
Phishing
Phishing is a common scam you need to be aware of it you want to protect yourself against identity theft. That is where a scam website tries to imitate a real website and convince you to enter your login credentials. For example, a scam might try to steal traffic away from Bank of America’s website with a dummy site that looks similar. If a person attempted to log into their Bank of America account, they would provide the scammers with their login credentials. Watch out for websites that do not look normal or seem off in some way.
Anti-Virus Software
There are many ways for thieves to try to access your personal information and steal your identity. One simple way to block their path is to keep your antivirus software up to date on every device you use to connect to the internet. Protection against viruses and security threats will watch for threats that you would not normally be aware of otherwise.
 Knowledge + Vigilance
The only way to act against identity theft is to first know that someone has committed the crime against you. We live in a world today where there is simply no other option: individuals need to keep an eye on their accounts and credit report on a regular basis.
 
Everyone is entitled to a free copy of their credit report every year through each of the three major credit bureaus. Credit report monitoring is also included with an increasing number of financial products, such as credit card accounts.
 
Credit Card Protections
It is more common to see credit card companies offering enhanced security features and measures designed to protect against identity theft. These features are less common on debit cards and you should be careful using them for online purchases.  When you make a purchase online, use the safest payment method available to you. You should know what protection is included on the card before using it.
 Outside Investment Protection
As security breaches and identity theft becomes more common, there are an increasing number of services on the market today to help you guard your credit and identity. For example, an identity guard service might monitor your credit report for new accounts and notify you when something new is opened. If you did not authorize the account, you would be empowered to immediately act.
 
Identity theft is alarming, but online shopping and banking are here to stay. We must adapt, and that means taking vigilant steps to monitor your financial identity and protect sensitive informat

Fixed Payment Annuities- An Income you Cannot Outlive

There is no such thing as a “safe” investment. There are always risk, market volatility and inflation, no matter how you invest, but if you want a guaranteed stream of income while forgoing market risks, perhaps a fixed payment annuity is for you. 

A fixed payment annuity is essentially a contract with an insurance company guaranteeing a stream of payments (annuities) over a specified period. The contract first requires that you pay an upfront premium (lump-sum).  There may also be a number of payout options that are available to you.  There are commissions and fees associated with the purchase. You should make sure that you fully understand all of the options costs and fees associated with an annuity contract.

A fixed payment annuity will provide you with an income for a specified time period at a contracted interest rate.  A fixed payment annuity is considered a long-term investment and is not for short-term gains. Fixed payment annuities are predictable as you will receive a contracted (known) payment every month, and it is because of this that many will use fixed payment annuities to supplement their retirement income. However, though fixed payment annuities forgo market volatility and are essentially risk-less, there are risks associated with them.

An insurance company sponsors fixed annuity investments. Therefore, your investment and cash flow are dependent on the financial health of the insurance company. You should check the insurance company’s rating before signing the contract.

There is currently nothing guaranteeing the payment of your principal lump sum if the insurance company defaults. However, annuities can differ from state to state so be sure to check with your state insurance commissioner. Another risk to consider are the various payout options. If the annuity holder passes away, there is no guarantee that you will get the initial lump sum payment returned to you.  In this case, there is no guarantee to get the initial lump sum payment back. 

Something else to consider is if you change your mind after signing a contract there may be ¨surrender charges¨ incurred to get your money back, depending on when you change your mind.  On top of this, fixed annuities do not factor in inflation. Because of this, your annuities could be less valuable over time. A fixed income annuity is not for everyone. Make sure you get a suitability analysis done to see if this type of investment is right for your financial goals and future income needs. Contacting your state insurance department can help you navigate the facts and figures you need to know before making this investment. 

There are different types of annuities and doing your research upfront can help you decide which annuity and insurance company is best for you. While you are deciding on a fixed payment annuity or you have already chosen to invest, be sure to become acquainted with your contract as it will control your interest rates, costs, fees, annuity payment, and payment schedule.

 A fixed payment annuity is an investment that offers a steady flow of income over your desired time period. With this type of investment, you know how much you are investing and you know how much you will be receiving in return. It is due to these unique characteristics that many will choose to invest in a fixed payment annuity. The words ´investment´ and ´guaranteed income stream´ do not fall in the same sentence often, if ever. However, if you are looking for an income you can not outlive, a fixed payment annuity may be for you.

Understanding your Liabilities - Liabilities Drive Investment Decisions

Who knew that keeping track of our bills could help guide our investment decisions?

Each month, we keep track of our bills: rent, mortgage, water, electricity, internet, and other expenses. We do it mostly so we can avoid late payments and the penalties that come with them. However, there is another reason why we should keep track of these payments, and it will help drive our investment decisions.

When starting to formulate investment decisions, it can sometimes feel a little overwhelming. Short-term securities, long-term securities, stocks, annuities, insurance, and mutual funds, where do we start? There are many places to invest money. When faced with this long-list of investment choices, it is easy to forget the reason why we sat down to invest in the first place, but if we know what our liabilities are, now and in the future, we will be able to create a framework and strategy for our investments. However, what exactly are liabilities?

Specifically, liabilities are what we are legally responsible for paying, now or in the future. They can consist of loans, accounts payable (like bills), mortgages, deferred revenues, and accrued expenses. Knowing our liabilities can help drive our investment decisions because when we see what we need to pay and when we need to pay it, we have a greater understanding of when we need our investments to be more liquid (cash) or less liquid (real estate). For example, when we know we have a recurring payment of $500 in May, we can plan to have at least that much in cash at that time. At that time, holding all of our assets as 30-year bonds does not make sense for our lifestyle and liabilities. This example clarifies why it is essential to understand our liabilities. Knowing them can help drive our investment strategy and set us up for the future. Here are some specific examples of personal liabilities and some things to know about each one (The list does not include every liability):

Expenses

Expenses include bills and other payments. Typical expenses include rent, water and electricity bills. We can predict the recurrence of these payments as they are generally contracted to occur on a specific date in a certain amount.

What to know: Keep a list of your monthly expenses so you can plan your investing schedule around them. By understanding monthly payments, it can be easier to implement not only investing strategies but also saving strategies.

Mortgages

Fixed-Rate mortgages are mortgages where you pay the same principal payment and interest amount every month.

Adjustable Rate Mortgage is a mortgage where the interest rate you pay varies with the market. When market rates are low, your mortgage may look more affordable. As the market changes, the change in interest rates may make your monthly payments less accessible.

What to know: Do not forget to factor in interest, and its volatility. The changing interest rates can affect monthly payments, for better or for worse.

Loans

A loan is a lump sum amount loaned by a bank (or person) that you can pay back in installments.

What to know: Understand the number of installments, the period, and the interest rate of the loan to be paid back. These details will help drive your investing strategy.

Credit Card Payments

If you do not pay your credit card bills in full each month, you will generally have to pay back the amount with a significant interest rate, meaning the value you initially spent will exponentially multiply as time passes.

What to know: Be aware of banks´ interest rates as they all will vary.

Once we understand our liabilities, we can then start to build the framework of our investing strategy. Though there are other things to acknowledge when investing, knowing our liabilities is an essential first step. So, once we know our liabilities, we can start to identify the amounts of money we can use to invest and where we can invest them. 

We need to determine what the time frame is for our investments. How long do we have until retirement?  Can we utilize long-term investments?  Is our time frame shorter and the assets will need to be in a more liquid investment?

This shows how we now understand what our asset allocations should be, because we first took the time to understand the time frame of our liabilities. 

Understanding our liabilities is a pertinent step in creating an investment strategy that fits our lives. We each have different liabilities and commitments. Being fully aware of each one will help create a framework for your personal investing.

Who knew that keeping track of our bills could help guide our investment decisions?

Each month, we keep track of our bills: rent, mortgage, water, electricity, internet, and other expenses. We do it mostly so we can avoid late payments and the penalties that come with them. However, there is another reason why we should keep track of these payments, and it will help drive our investment decisions.
When starting to formulate investment decisions, it can sometimes feel a little overwhelming. Short-term securities, long-term securities, stocks, annuities, insurance, and mutual funds, where do we start? There are many places to invest money. When faced with this long-list of investment choices, it is easy to forget the reason why we sat down to invest in the first place, but if we know what our liabilities are, now and in the future, we will be able to create a framework and strategy for our investments. However, what exactly are liabilities?
Specifically, liabilities are what we are legally responsible for paying, now or in the future. They can consist of loans, accounts payable (like bills), mortgages, deferred revenues, and accrued expenses. Knowing our liabilities can help drive our investment decisions because when we see what we need to pay and when we need to pay it, we have a greater understanding of when we need our investments to be more liquid (cash) or less liquid (real estate). For example, when we know we have a recurring payment of $500 in May, we can plan to have at least that much in cash at that time. At that time, holding all of our assets as 30-year bonds does not make sense for our lifestyle and liabilities. This example clarifies why it is essential to understand our liabilities. Knowing them can help drive our investment strategy and set us up for the future. Here are some specific examples of personal liabilities and some things to know about each one (The list does not include every liability):
Expenses
Expenses include bills and other payments. Typical expenses include rent, water and electricity bills. We can predict the recurrence of these payments as they are generally contracted to occur on a specific date in a certain amount.
What to know: Keep a list of your monthly expenses so you can plan your investing schedule around them. By understanding monthly payments, it can be easier to implement not only investing strategies but also saving strategies.
 
Mortgages
Fixed-Rate mortgages are mortgages where you pay the same principal payment and interest amount every month.
Adjustable Rate Mortgage is a mortgage where the interest rate you pay varies with the market. When market rates are low, your mortgage may look more affordable. As the market changes, the change in interest rates may make your monthly payments less accessible.
What to know: Do not forget to factor in interest, and its volatility. The changing interest rates can affect monthly payments, for better or for worse.
Loans
A loan is a lump sum amount loaned by a bank (or person) that you can pay back in installments.
What to know: Understand the number of installments, the period, and the interest rate of the loan to be paid back. These details will help drive your investing strategy.
 
Credit Card Payments
If you do not pay your credit card bills in full each month, you will generally have to pay back the amount with a significant interest rate, meaning the value you initially spent will exponentially multiply as time passes.
What to know: Be aware of banks´ interest rates as they all will vary.
Once we understand our liabilities, we can then start to build the framework of our investing strategy. Though there are other things to acknowledge when investing, knowing our liabilities is an essential first step. So, once we know our liabilities, we can start to identify the amounts of money we can use to invest and where we can invest them. 
We need to determine what the time frame is for our investments. How long do we have until retirement?  Can we utilize long-term investments?  Is our time frame shorter and the assets will need to be in a more liquid investment?
This shows how we now understand what our asset allocations should be, because we first took the time to understand the time frame of our liabilities. 
Understanding our liabilities is a pertinent step in creating an investment strategy that fits our lives. We each have different liabilities and commitments. Being fully aware of each one will help create a framework for your personal invest

Conservative Assets: Navigating Market Volatility

The uncertainty of the stock market has people looking for a conservative way to invest and still yield returns. When talking about investing, it is hard to find a guaranteed, “conservative” investment. Conservative assets exist and we will discuss each one: cash, certificates of deposit, treasury bills, and money market funds.

A conservative asset is an asset in which the risk of loss is low.  Meaning, like cash, we have a relative certainty of the asset´s value. With the stock market´s daily troughs and peaks, conservative assets can make our portfolios feel more secure. Some of the most common conservative assets include:

Cash

Money is unarguably a conservative asset, in the short-term. I say short-term because due to inflation cash may lose its value in the long-term. Another rare moment when money may have  risk would if you ended up holding counterfeit currency. Though less common in the US, counterfeit riddles countries in central and South America. So, in general, holding our investments in cash, in the short term, is conservative.

Certificates of Deposit

A certificate of deposit (CD) is a savings certificate with a fixed maturity date, specified fixed interest rate and can be issued in any denomination depending on the minimum investment requirements. A CD may restrict access to the funds until the maturity date of the investment. CDs are generally issued by commercial banks and are insured by the FDIC up to $250,000 per account registration. 

Money Market Funds

A money market fund is an investment whose objective is to earn interest for shareholders while maintaining a Net Asset Value (NAV) of $1 per share. A money market fund portfolio is comprised of short-term, less than one year, securities representing high-quality, liquid debt and monetary instruments. There is no guarantee that the NAV will stay at $1 per share.

Treasury Bills

Treasury bills are another type of conservative investment. They are considered lower risk because they are backed by the U.S. Government. We can look at these as conservative assets because the likelihood of them defaulting is very low. If we hold a treasury bill to its maturity, we will receive the face value of the treasury bill. If we sell it early, the value may be more or less than we originally paid for it.  If interest rates go up, the value of the Treasury bill will go down.

So, in short, if we invest $100 in a treasury bill, upon maturity we will get $100 back (not factoring in time value of money). Treasury bills usually have maturity dates of up to one year.

……….

Conservative assets can make our portfolios feel low risk and guarded against the unknown, the low risk nature of conservative assets also means a smaller return compared to higher risk investments. Generally, the higher the risks, the higher the potential returns.

So, is there another approach to protecting our portfolios and increasing our returns?

Yes, and the answer is to diversify.

Rather than buying a group of conservative assets and watching their yield increase at the rate at which molasses drips from our spoons,  we can to some extent protect our portfolios by diversifying. 

Diversification means buying a diverse array of assets—both conservative and higher risk. By doing this, we can enjoy the potential higher yields of risky assets while also hedging the unavoidable market cycles with our more conservative assets.

Conservative assets are essentially lower-risk investments. To see higher returns, diversifying our portfolios to include both conservative assets and risky assets could prove to be more beneficial for our portfolios long term, than holding conservative assets alone.

The uncertainty of the stock market has people looking for a conservative way to invest and still yield returns. When talking about investing, it is hard to find a guaranteed, “conservative” investment. Conservative assets exist and we will discuss each one: cash, certificates of deposit, treasury bills, and money market funds.

A conservative asset is an asset in which the risk of loss is low.  Meaning, like cash, we have a relative certainty of the asset´s value. With the stock market´s daily troughs and peaks, conservative assets can make our portfolios feel more secure. Some of the most common conservative assets include:
Cash
Money is unarguably a conservative asset, in the short-term. I say short-term because due to inflation cash may lose its value in the long-term. Another rare moment when money may have  risk would if you ended up holding counterfeit currency. Though less common in the US, counterfeit riddles countries in central and South America. So, in general, holding our investments in cash, in the short term, is conservative.
Certificates of Deposit
A certificate of deposit (CD) is a savings certificate with a fixed maturity date, specified fixed interest rate and can be issued in any denomination depending on the minimum investment requirements. A CD may restrict access to the funds until the maturity date of the investment. CDs are generally issued by commercial banks and are insured by the FDIC up to $250,000 per account registration. 
Money Market Funds
A money market fund is an investment whose objective is to earn interest for shareholders while maintaining a Net Asset Value (NAV) of $1 per share. A money market fund portfolio is comprised of short-term, less than one year, securities representing high-quality, liquid debt and monetary instruments. There is no guarantee that the NAV will stay at $1 per share.
Treasury Bills
Treasury bills are another type of conservative investment. They are considered lower risk because they are backed by the U.S. Government. We can look at these as conservative assets because the likelihood of them defaulting is very low. If we hold a treasury bill to its maturity, we will receive the face value of the treasury bill. If we sell it early, the value may be more or less than we originally paid for it.  If interest rates go up, the value of the Treasury bill will go down.
So, in short, if we invest $100 in a treasury bill, upon maturity we will y get $100 back (not factoring in time value of money). Treasury bills usually have maturity dates of up to one year.
……….
Conservative assets can make our portfolios feel low risk and guarded against the unknown, the low risk nature of conservative assets also means a smaller return compared to higher risk investments. Generally, the higher the risks, the higher the potential returns.
 
So, is there another approach to protecting our portfolios and increasing our returns?
Yes, and the answer is to diversify.
 
Rather than buying a group of conservative assets and watching their yield increase at the rate at which molasses drips from our spoons,  we can to some extent protect our portfolios by diversifying. 
Diversification means buying a diverse array of assets—both conservative and higher risk. By doing this, we can enjoy the potential higher yields of risky assets while also hedging the unavoidable market cycles with our more conservative assets.
 
Conservative assets are essentially lower-risk investments. To see higher returns, diversifying our portfolios to include both conservative assets and risky assets could prove to be more beneficial for our portfolios long term, than holding conservative assets alone

Stay the Course on a Carefully Prepared Investment Strategy

There is always going to be a financial guru trying to sell you the hottest “proven” investment strategy. The truth is that there are many different investment strategies to choose from and there is no single perfect answer for every investor. 

That is not to say that all investment strategies are created equally, but what is right for you may not be right for someone else. Determining your specific goals and risk tolerance is the first step. Disciplined investing is key, and that means following through on your investment strategy before you judge its effectiveness.

The Process of Deciding Your Investment Strategy

The first step to becoming a disciplined investor is to decide on an investment strategy. The main points you will need to think about are uncertainty, asset allocation, your goals, objectives risk tolerance and diversification.

Planning an investment strategy starts with understanding your relationship with uncertainty. A defining characteristic of your investment style will be how much risk you are willing to take on. Aggressive investments may have a higher potential return, but a larger uncertainty of losing value at any given time. These assets tend to be volatile. Other investments may have a relatively stable price without much real uncertainty of losing significant value. Once you are able to define how much risk you are willing to expose yourself to, you can begin to determine which types of investments are best suited to meet your specific goals and objectives. This is where asset allocation and diversification come into play.                                                                                    

The goal is to design a portfolio that limit the risk that you may lose more money than your are comfortable with. The other goal is to earn a return on your investment. But markets move up and down, and new investors are often nervous when they see their investment begin to underperform. This is a common reflex for investors to change their mind about their strategy and sell the asset. 

Give Your Strategy Time to Mature

Fearing that you may have employed a losing strategy is a difficult emotion to overcome. It is one thing to talk about uncertainty in the abstract, but it is another to see the loss in your portfolio. But you should not allow emotion to be the ruler of your investment strategy. You must take the time to choose a strategy you can believe in, because if you sell your asset too early, you might miss out on a potential gain when the market corrects itself.

What happens is that if an asset begins to perform poorly some  investors are likely to sell the stock. Some investors stick to very small margins, others may panic at the dip in value, or any other number of factors could cause this to happen. The volatility of the market will may draw the value of the asset back up after a period of time, which can result in a gain for an investor who held onto it. However, there are events that may occur when it would be in your best interest to sell the position. This is why some people work with an advisor to help them make difficult decisions.

Investing Requires Discipline

Any time you make an investment, it is important to perform the due diligence required to feel comfortable in your purchase. This may include prospectus, research reports, earnings reports, news items or offering memorandums.  If your investment declines in value a short time after you buy it, and you did your research on the company you may feel more secure about holding onto the stock through volatile markets. This is the discipline that any investment strategy needs to be successful.