Guide for Seniors: Protect Yourself Against Investment Fraud (SEC)

 Senior citizens are the number one target of investment con artists. The files of state securities agencies are filled with tragic examples of senior citizens who have been cheated out of life savings, windfall insurance payments, and even the equity in their own homes.

Illegal telemarketing is a crime, and fraudulent telemarketers are criminals. There are an estimated 14,000 illegal telemarketing operations bilking thousands of victims every day. This fraud adds up to at least $40 billion annually, according to Congressional surveys. Additionally, surveys by the American Association of Retired Persons indicate that over one-half of those victims are age 50 or older.
Allan Wilson, South Carolina Attorney General

But there are ways senior citizens can protect themselves. Several government offices have published guidelines to help seniors protect themselves (and it’s not bad advice for those of any age). Reprinted below is the content from a booklet offered free of charge by the SEC and can be seen here. Other places to look are:

How To Avoid Fraud

Seniors are often the target of fraud. However, with some basic understanding of how scam artists work, you can avoid fraud and protect your hard-earned money. Learning how to invest safely can mean a huge difference in your retirement years.

Seniors are particularly vulnerable to tactics of scam artists who are “nice” or attempt to develop a false bond of friendship. Scam artists prey on seniors who are polite to others and have difficulty saying “no” or feel indebted to someone who has provided unsolicited investment advice.

WHAT CAN I DO TO AVOID BEING SCAMMED?

Ask questions and check out the answers.
Fraudsters rely on the fact that many people simply don’t bother to investigate before they invest. It’s not enough to ask a promoter for more information or for references—fraudsters have no incentive to set you straight. Savvy investors take the time to do their own independent research and talk to friends and family first before investing. Make sure you understand the investment, the risk attached, and the company’s history. And remember, if the product sounds too good to be true, it is!

Continue reading

Thoughts on 403(b) Plans

Helpful Information For Our Teacher Members:

Investment Options and Important Advice About 403(b) Plans From the Securities and Exchange Commission.

As an employee of a public school, you likely have access to both a pension and a retirement savings plan called a “403(b)” plan.  Let’s examine what a 403(b) plan is, and then go through the choices you’ll likely need to make if you decide to invest in a 403(b) plan.

What Is a 403(b) Plan?

A 403(b) plan is a type of tax-deferred retirement savings program that is available to employees of public schools, employees of certain non-profit entities, and some members of the clergy.  Because you do not have to pay taxes on the amount you contribute to a 403(b) plan for the year in which you contributed to the plan, investing in a 403(b) plan can lower your overall tax burden — at least in the present.  You can defer the income tax on your contributions until you begin making withdrawals from your account — typically after you retire.  The earnings on your account also grow tax-free until withdrawal.

Investment Options

If you are eligible to participate in a 403(b) plan, you may have to choose among different types of investments, depending on how your employer structures the plan. It will be up to you to choose investments that will best meet your financial objectives. 403(b) plans typically offer fixed annuities, variable annuities, and mutual funds. Here is a brief description of each:

Continue for information on investment options, key questions to ask, and where to go for additional information:  Continue reading

MyRA: Is It for You?

In his State of the Union address, President Obama announced plans to create a new ‘MyRA’ retirement account aimed at helping millions of Americans to start building a retirement nest egg.

The next day he signed a presidential memo directing the Department of Treasury to create the government-backed retirement accounts.

Apple will forego the snide comments about how to pronounce “MyRA” that some “bloggers” have made,  and instead layout the proposal, as the White House has described it.

But first let’s make one point very clear, MyRA is not intended as replacement, or improvement, in the plans available today, namely 401(k), 403(b), traditional IRA and Roth IRA. Instead the MyRA proposal is aimed at the millions of low- and middle-income Americans who don’t have access to employer-sponsored retirement plans. That includes roughly half of all workers and 75% of part-time workers.

Plan Outline:

  • The accounts will launch in a pilot program later this year and will eventually be available to any worker who gets paid through direct deposit.
  • All workers may invest in the accounts, including those who would like to supplement an existing 401(k) plan, as long as their household income falls below $191,000 a year.
  • The account will function as a Roth IRA, which allows savers to invest after-tax dollars and withdraw the money in retirement tax-free.
  • But unlike traditional Roth IRAs, the accounts will solely invest in government savings bonds. They will also be backed by the U.S. government, meaning that savers can never lose their principal investment.
  • Workers will be able to keep the accounts when they switch jobs or contribute to the same account from multiple part-time jobs. They will also be able to withdraw their contributions at any time without penalty.
  •  Initial investments can be as low as $25 and workers can contribute as little as $5 at a time through automatic payroll deductions. Like a traditional Roth account, savers will be allowed to contribute up to $5,500 a year under current limits.
  • Once a participant’s account balance hits $15,000, or the account has been open for 30 years, they will have to roll it over to a private sector Roth IRA, where the money can continue to grow tax-free. Workers will have the option to switch to a Roth IRA at any time.
  • The White House said the accounts will earn the same rate as the Thrift Savings Plan’s Government Securities Investment Fund that it offers to federal workers. That fund earned around 1.5 % in 2012. Continue reading

Saving & Investing Tip #4: A No-brainer!

This post is the forth in a series of 9 posts under the category of “Save” and this one is really a “No-brainer”!

Well, maybe a “no-brainer” but good advice and worth repeating here. It’s simply, “Pay Off High Interest Debt First”. Yep, it’s that simple.

This series of posts is essentially be reprints of 9 articles from Investor.gov, a Securities and Exchange Commission  web site. The 9 articles present a roadmap to sound saving and investing. You are invited to visit Investor.gov to view the original articles.

The 9 steps to the Savings and Investing Roadmap are:

Define Your goals (previous post)
Figure Out Your Finances (previous post)
Small Savings Add Up to Big Money (previous post)
Pay Off Credit Cards or Other High Interest Debt (this post)
Save for a Rainy Day
Understand What It Means to Invest
Diversify Your Investments
Gauge Your Risk Tolerance
Learn About Investment Options

Here’s the advice with a few good rules for controlling high interest debt from investor.gov.

“Pay Off Credit Cards or Other High Interest Debt

No investment strategy pays off as well as, or with less risk than, eliminating high interest debt. Most credit cards charge high interest rates — as much as 18% or more – if you don’t pay off your balance in full each month. If you owe money on your credit cards, the wisest thing you can do is pay off the balance in full as quickly as possible. Virtually no investment will give you returns to match an 18% interest rate on your credit card. That’s why you’re better off eliminating all credit card debt before investing. Once you’ve paid off your credit cards, you can budget your money and begin to save and invest.

Here are some tips for avoiding credit card debt:

Put Away the Plastic

  • Don’t use a credit card unless you know you’ll have the money to pay the bill when it arrives.

Know What You Owe

  • It’s easy to forget how much you’ve charged on your credit card. Every time you use a credit card, track how much you have spent and figure out how much you’ll have to pay that month. If you know you won’t be able to pay your balance in full, try to figure out how much you can pay each month and how long it’ll take to pay the balance in full. (see the editor’s note below)

Pay Off the Card with the Highest Rate

  • If you’ve got unpaid balances on several credit cards, you should first pay down the card that charges the highest rate. Pay as much as you can toward that debt each month until your balance is once again zero, while still paying the minimum on your other cards. The same advice goes for any other high-interest debt (about 8% or above), which does not offer any tax advantages

(editor’s note: If you are looking for a good tool to consolidate credit card balances and other debt, consider MoneyDesktop, a personal financial management tool offered by Tri-Town Teachers Credit Union free to members.)

Was this post helpful? Please let us know. We really want to hear from you. Just make a comment. We will respond.

Small Savings Add Up to Big Money

How much does a daily candy bar cost? Would you believe $465.84? Or more?

If that number, $465.84, seems a bit high, then read on!

This post is the third in a series of 9 posts under the category of “Save”. The posts will essentially be reprints of 9 articles from Investor.gov, a Securities and Exchange Commission  web site. The 9 articles present a roadmap to sound saving and investing. You are invited to visit Investor.gov to view the original articles.

The 9 steps to the Savings and Investing Roadmap are:

Define Your goals (previous post)
Figure Out Your Finances (previous post)
Small Savings Add Up to Big Money (this post)
Pay Off Credit Cards or Other High Interest Debt
Save for a Rainy Day
Understand What It Means to Invest
Diversify Your Investments
Gauge Your Risk Tolerance
Learn About Investment Options

OK, let’s see about this $465 candy bar.

“If you buy a candy bar every day for $1, it adds up to $365 a year. If you saved that $365 and put it into an investment that earns 5% a year, it would grow to $465.84 by the end of five years, and by the end of 30 years, to $1,577.50. That’s the power of “compounding.”

With compound interest, you earn interest on the money you save and on the interest that money earns. Over time, even a small amount saved can add up to big money.

If you buy on impulse, make a rule that you’ll always wait 24 hours before buying anything. You may lose your desire to buy it after a day. Also, try emptying your pockets at the end of each day and putting spare change aside. You’ll be surprised how quickly those nickels and dimes add up.”

Sounds simple doesn’t it? Like most of the main points of this roadmap, it is an idea we’ve heard before, probably many times. Yet, many of us look at a small expenditure like a candy bar and say, “It’s only $1, that can’t affect my financial plan, and besides, I want it!”

There is a difference between knowing what is best course of action, and doing it. Hopefully simple reminders, like this one, will help you make better decisions more often  and take a courses of action that help your financial future.

Was this post helpful? Let us know. We really want to hear from you. Just make a comment. We’ll see it and respond. You can BANK on it!

Saving: Figure Out Your Finances

This post is the second in a series of 9 posts under the category of “Save”. The posts will essentially be reprints of 9 articles from Investor.gov, a Securities and Exchange Commission  web site. The 9 articles present a roadmap to sound saving and investing. You are invited to visit Investor.gov to view the original articles.

The 9 steps to the Savings and Investing Roadmap are:

Define Your goals (previous post)
Figure Out Your Finances (this post)
Small Savings Add Up to Big Money
Pay Off Credit Cards or Other High Interest Debt
Save for a Rainy Day
Understand What It Means to Invest
Diversify Your Investments
Gauge Your Risk Tolerance
Learn About Investment Options

“Figure Out Your Finances

Take an honest look at your entire financial situation — what you own and what you owe. This is a “net worth statement. ” On one side, list what you own. These are your “assets. ” On the other side, list what you owe. These are your “liabilities” or debts. Click here for a printable Net Worth Worksheet. Subtract your liabilities from your assets. If your assets are larger than your liabilities, you have a “positive” net worth. If your liabilities are larger than your assets, you have a “negative” net worth.

You’ll want to update your “net worth statement” every year to keep track of how you are doing. Don’t be discouraged if you have a negative net worth — following a financial plan will help you turn it into positive net worth.

The next step is to keep track of your income and expenses. Click here for a printable Monthly Income and Expenses Worksheet. Write down what you and others in your family earn and spend each month, and include a category for savings and investing. If you are spending all your income, and never have money to save or invest, start by cutting back on expenses. When you watch where you spend your money, you will be surprised how small everyday expenses can add up. Many people get into the habit of saving and investing by paying themselves first. An easy way to do this is to have your bank automatically deposit money from your paycheck into a savings or investment account.”

The Trick Is Taking Action and Following Through

Many of us look at advice like this and say something like, “Everybody knows that”. And that’s more or less true. We hope by repeating this sage advice our members and other visitors will get the following message:

“Knowing the way to financial security and taking the steps to achieve it are very different.”

(editor’s note) Tri-Town Teachers Credit Union offers the use of MoneyDesktop, online software that assists with the organization, tracking, and presentation of financial information critical to the successful implementation of a strategy such as depicted here. There is no charge for this service to members of the Credit Union. Visit our web site or call the office, 203.227.8511.

Let Us Know

Let us know if this kind of information is useful. Leave a comment, we’d love to hear from you.

Saving: Define Your Goals

With this post Tri-Town Apple is initiating a series of 9 posts under the category of “Save”. The posts will essentially be reprints of 9 articles from Investor.gov, a Securities and Exchange Commission  web site. The 9 articles present a roadmap to sound saving and investing. You are invited to visit Investor.gov to view the original articles.

The 9 steps to the Savings and Investing Roadmap are:

Define Your goals (this post)
Figure Out Your Finances
Small Savings Add Up to Big Money
Pay Off Credit Cards or Other High Interest Debt
Save for a Rainy Day
Understand What It Means to Invest
Diversify Your Investments
Gauge Your Risk Tolerance
Learn About Investment Options

“Roadmap to Saving and Investing

Define Your Goals

Knowing how to secure your financial well-being is one of the most important things you can do for yourself. You don’t have to be a genius to do it. You just just need to know a few basics, form a plan, and be ready to stick to it.

To end up where you want to be, you need a financial plan. Ask yourself what you want. List your most important goals first. Decide how many years you have to meet each specific goal, because when you save or invest, you’ll need to find an option that fits your time frame. Here are some tools to help you decide how much you’ll need to save for various needs.

  • The Ballpark Estimate, created by the American Savings Education Council, can help you calculate what you’ll need to save each year for retirement.
  • The Financial Industry Regulatory Authority (FINRA) has a college savings calculator.”

The Trick Is Taking Action and Following Through

Many of us look at advice like this and say something like, “Everybody knows that”. And that’s more or less true. We hope by repeating this sage advice our members and other visitors will get the following message:

“Knowing the way to financial security and taking the steps to achieve it are very different.”

(editor’s note) Tri-Town Teachers Credit Union offers the use of MoneyDesktop, online software that assists with the organization, tracking, and presentation of financial information critical to the successful implementation of a strategy such as depicted here. There is no charge for this service to members of the Credit Union. Visit our web site or call the office, 203.227.8511.

Let Us Know

Let us know if this kind of information is useful. Leave a comment, we’d love to hear from you.