Current Affairs

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Consistent Saving is a Vital Habit

About 58 percent of Americans have less than $1,000 in personal savings, according to a recent survey by gobankingrates.com. If we think about all the federal employees impacted by the current government shutdown, that means six out of 10 will likely experience financial difficulty due to this interruption in their incomes and lack of savings. A government shutdown is rare. Still, it is a powerful reminder to us all to be prepared for unexpected loss of income or large expenses. Consistent saving is a vital habit.

Having an emergency savings account (for things like a broken water heater, automobile repairs or unplanned medical bills) can save you a lot of anxiety. It can save you hundreds of dollars, as well, since late fees for credit cards, car loans or utility bills often run $30 or so per month. Having an emergency reserve will also help you maintain a good credit score during challenging financial times.

When speaking to young adults, I often recommend they keep $1,000 to $1,500 as a minimum target for a checking account. Adults with children or additional financial responsibilities should set a higher reserve target. The savings not only helps in an emergency, it helps you avoid monthly bank fees that can add up quickly. If you can set aside $20 per week (only about $3 a day), you will have accumulated $1,000 by the end of the year.

Once you have your emergency fund in place, you can focus on your retirement savings. Setting up an automatic deposit from your paycheck into a retirement account is one of the easiest ways to save money. That money never reaches your checking account, so it is less likely to be spent. For 401k contributions, start with 5 percent of your salary or enough to receive any company-matching contributions. After a few months, you will hardly miss the smaller amount going into your checking account.

Consistent saving is a vital habit that lasts a lifetime. Taking that first step is important. According to US Census data, the median household income was $60,336 in 2017. For a typical 40-hour work week at that income, $5 is equivalent to about 10 minutes. Wouldn’t investing just 10 minutes (or $5) a day be a worthwhile investment in yourself?

By |February 4th, 2019|Current Affairs, Financial Planning, Retirement|

3 Cyber Security Tips for Travelers

cyber security tips for travelersHelp keep your personal data safe while you’re on the road with these quick cyber security tips for travelers from Norton.

  1. Lock your devices: Most smart phones, laptops and tablets will allow you to lock the device using a PIN number or fingerprint ID. In the event that any of your devices have been momentarily misplaced or forgotten, this will be the first line of defense against a security breach.
  2. Use caution with public internet: Free Wi-Fi access is appealing when you travel but is also particularly vulnerable to security issues. Avoid unencrypted networks, and ask your hotel about its security protocol before connecting to the Web. If you must use public Wi-Fi, avoid accessing personal accounts or sensitive data while connected to that network.
  3. Disable Bluetooth: Just like your phone’s automatic Wi-Fi connectivity, Bluetooth connectivity can present problems. Bluetooth signals can come from anywhere. If your Bluetooth is left on, nearby assailants can connect to your phone and potentially hack into your device. Keep Bluetooth disabled as much as possible while traveling.

For more tips from Norton, especially for business travel, click here. You can also read more articles on cyber security from the Perspective team by clicking here.

By |January 21st, 2019|Current Affairs|

Bitcoin Products and Pyramid Schemes

Pyramid schemes share one overriding characteristic, according to Debra Valentine, former general counsel of the Federal Trade Commission (FTC): They promise consumers or investors large profits based primarily on recruiting others to join their program, not based on profits from any real investment or real sale of goods to the public. Bitcoin products and pyramid scheme share this description, according to Jonathan Harris. He offers a cautionary view in a recent opinion piece for the CFA Institute.

“Bitcoin is too inefficient to be a currency. Certainly, no government has any plans to use it as one,” he wrote. Harris is a chartered financial analyst and vice president, manager of nonretail credit analytics for TD-Bank. “Thus, the sole way most promoters will realize value from their bitcoin holdings is through new entrants into the market.”

Some proponents of bitcoin equate it to investing in gold. This may be a reasonable analogy. Still, even in the best case scenario, both bitcoin and gold share the characteristics of being volatile investments with poor long-term returns. While gold has other uses (e.g. jewelry or art), Harris points out that bitcoin does not. Furthermore, after the supply of new bitcoin buyers is exhausted, final investors will find themselves with assets that decline in value as early investors sell off.

“If it looks like a pyramid scheme and sounds like a pyramid scheme, we should treat it like a pyramid scheme until proven otherwise,” Harris stresses.

Creating Diversified and Balanced Portfolios

At Perspective, our time-tested investment strategy focuses on building a well-diversified portfolio of stocks and other securities. The Perspective Investment Committee meets quarterly to review and fine-tune the list of funds our advisors utilize to build balanced client portfolios. It is part of the firm’s strategic process. Funds are selected based on several criteria. Considerations include factors such as cost and the fund manager’s tenure. It also includes overall performance and risk vs. return (both of which we compare to peer funds and other benchmarks).

For Harris’ full article on the CFA Institute website, click here.

By |January 7th, 2019|Current Affairs, Investing|

Maintaining Perspective

Patrick Eng addresses maintaining perspective.When the Dow Jones Industrial Average climbed above 22,000 in August 2017 (an all-time high) I wrote an article titled “Managing Expectations.” In early October 2018, the Dow reached a record-breaking 26,800 points. In the four weeks that followed, it dropped by 2,000 points. By mid-November, the it was back near 26,000. As I write today, and the Dow is hovering at roughly 25,000, the new mantra is “maintaining perspective.”

After seeing these numbers, I felt compelled to share once again the points from my summer 2017 article. As we traverse the landscape of volatile financial markets – experiencing both the euphoric highs and the inevitable declines – it’s important to remember the following:

  • Stay diversified; even if it doesn’t feel right, history shows this strategy works.
  • Avoid jumping in and out of the market; it is virtually impossible to time market movement.
  • Invest regularly, in both good times and in bad times; the potential to buy investments at discount prices can only happen if you are involved when things look the bleakest.
  • Market corrections, no matter how painful, are a natural part of the economic cycle.

These long-term fundamental principles of investing will serve you well and set you up for long-term investment success. It also helps to stay in communication with your advisor as changes take place in your life or if you just want to get some perspective on market movement.  An important role we play in our clients’ lives is being an “emotional surge protector” when unavoidable declines take place.

By |November 19th, 2018|Current Affairs, Investing, Uncategorized|