Cryptocurrency Hacks

A man and a woman using laptop computers at a kitchen tableCryptocurrency is all the rage. Money you can’t see? Online accounts that aren’t regulated by big banks or even the feds? It has a futuristic feel, and anyone and everyone seems to be buying into the trend.

Lots of those folks who are buying up bitcoins by the hundreds claim cryptocurrency investment is the ticket to a richer tomorrow. But security experts think otherwise. They’ve repeatedly warned that all cryptocurrency is extremely vulnerable and at risk of being hacked – and that includes yours.

Is cryptocurrency the wave of the financial future, or is it really as risky as experts would have you think?

Before making your decision, read on to arm yourself with all the information you’ll need about cryptocurrency hacks.

How it works
Cryptocurrencies are decentralized and unregulated. That means there is no single country or institution controlling bitcoin, Ethereum or Litecoin. These currencies are, consequently, extremely volatile and vulnerable to risk. Since all cryptocurrency transactions are processed online, a hacker can simply break into crypto exchanges, drain people’s wallets and disappear without a trace.

As you may expect, hackers have been following the meteoric rise of cryptocurrency and are eager to cash in on the prize. They’ve been systematically frauding the system for years, and have only gotten bolder over time. In the most recent major heist, hackers made off with an incredible $530 million in cryptocurrency from Coincheck, the leading Asian bitcoin exchange, this past January.

And experts predict that it will get worse.
An Ernst & Young report studied 372 preliminary coin offerings between 2015 and 2017 and found that more than 10% of the funds were stolen, amounting to as much as $1.5 million a month.

It’s not only individuals who’ve been defrauded; the report shares that huge companies have lost several million dollars on hacked cryptocurrency.

According to Chainalysis, a risk management software company for virtual currencies, more than 50% of these hacks occurred through phishing.

In other instances, hackers have modified malware to redirect bitcoins to their own wallets during a trade or purchase. This scam is particularly nefarious because the hackers snag the victim’s exchange credentials and login information so they can gain complete control of the mark’s bitcoin wallets.

By extension, this means the hackers have also accessed the victim’s credit card information and can do untold damage to their credit score while racking up huge bills in the victim’s name.

Any way you slice it, cryptocurrency hacks pose a major risk to all investors and users.

Who’s paying?
Nearly 20% of bitcoin investors purchase their cryptocurrency using a credit card – and almost 25% of them cannot pay off their credit card balance after making this purchase.

Some credit card companies are ready to throw in the towel on cryptocurrency. They’ve had their fair share of headaches caused by cryptocurrency hacks aimed at their cardholders, including disputed charges, fraudulent transactions and the inability to pay for large purchases.

Earlier this year, many major credit card companies, including Discover and Capital One, announced they will no longer allow cardholders to purchase cryptocurrencies using their credit cards due to the high level of risk and potential fraud associated with such transactions.

Lots of financial institutions have followed suit with similar announcements, claiming the increased volatility poses a loss to the institution, which may be forced to pick up the pieces for their member if a cryptocurrency investment or purchase is hacked.

Are cryptocurrency exchanges government-regulated?
The short answer is no. The very attraction of bitcoins and Ethereum is that they are decentralized, answering to no institution or government.

A little digging reveals that some foreign countries, like China, are actually taking stronger approaches toward protecting their citizens from cryptocurrency fraud and are coming down hard on all scammers and hackers.

For the average U.S. citizen, though, when it comes to cryptocurrency, you’re on your own.

Protecting yourself
Cryptocurrency transactions pose an extra risk by being absolutely final. There’s no way to cancel a cryptocurrency payment, back out on a purchase or secure an anti-fraud guarantee from a reputable financial institution. In case of fraud, you may be able to trace the computer that was used for robbing you, but it’s nearly impossible to identify the scammers that took off with your money.

In other words, by using cryptocurrency, you’re putting yourself at significant risk. There’s no one protecting you and no way to undo the damage once you’ve made a payment that’s been hacked.

The only thing you can do is take proactive steps to be as careful as possible when engaging in crypto-payments:

1.) Stick to established, recognized exchanges, like Coinbase.

Only use exchanges you’ve heard of, and only those that utilize two-factor authentication.

2.) Don’t store too much digital currency online.

It’s best to store your money as actual greenbacks in a brick-and-mortar financial institution. You can keep some cash in your wallet or even hoard it in a home safe, but be careful not to put too much in an online digital exchange.

3.) Keep your OS and security software up-to-date.

Always accept and install the most recent patches and updates when they become available. To ensure your system doesn’t fall behind, elect to have it update automatically.

4.) Be wary of suspicious emails and links.

Never share sensitive information over the internet, no matter how sincere or urgent an email or link may appear to be. Don’t download anything from an unverifiable source, and keep your spam settings working at their strongest capacity.

Cryptocurrency may be the dollar bill of the future, but don’t fall prey to the many criminals who are counting on consumer naivety to make a quick buck. Use caution and be on guard to keep your money safe!

Your Turn:
Do you use or invest in cryptocurrencies? What precautions do you take against hacks? Share your own tips with us in the comments!


Guide to Investing in Your 20s

Laying the groundwork for a lifelong investment strategy

Young man in front of a blackboard with financial notes on itYou have finally graduated college and, after finally finding a full-time job, can start paying back those student loans. Retirement seems like it is in the distant future and you are more concerned with living paycheck to paycheck. But it is never too early to start preparing for your future by establishing sound financial footing and taking early investment steps.

Save money
The first step to investing is to align your spending habits with your investment plans by carving out a chunk of every paycheck for savings. While you might not feel that you have the current flexibility to put away any money, the earlier you make saving an uncompromisable habit, the easier it will be to increase your investments long-term.

According to Charles Schwab Foundation president Carrie Schwab-Pomerantz in an interview with Forbes, people in their 20s should be budgeting for and saving at least 10 percent of their annual income. While this may seem excessive, the more you have saved early on, the more it will compound over the next 50 years. Not to mention, it is a solid step to increasing your savings rate to 20 percent in your 30s.

Pay off your debts
Get out from underneath the oppressive thumb of student loan and credit card debt as quickly as possible by establishing an aggressive debt repayment plan. According to Stacy Rapacon of Kiplinger, the longer you let debt linger, the further it will set your finances back in the form of greater interest payments and lower credit scores. The sooner you repay your debts and free yourself from crippling interest payments, the more money you’ll have to invest in your future.

Fund your retirement
It is never too early to start setting aside money in your retirement fund, especially since the years will only compound how much you will have in your account by the time you retire. Rapacon of Kiplinger calculates that if you invest $100 a month as a 25-year-old, assuming an 8 percent return and quarterly compounding, you’ll have around $346,000 by the time you turn 65.

Investing money in a retirement fund now is even more essential because of your employer’s matching program. Arielle O’Shea of NerdWallet highly suggests taking advantage of your employer’s generosity by contributing to any available retirement plan, such as a 401k, especially if your employer offers a matching percentage.

If you don’t have access to a company-based 401k, Forbes’ Samantha Sharf recommends investigating the option of starting a Roth IRA or Roth 401k that taxes your contributions now but lets those contributions grow tax-free for the rest of your lifetime.

Take risks
Those who do invest in their 20s often do so conservatively because they don’t want to see any of their hard-earned money lost, but that also limits the potential for their investments to grow. According to O’Shea, “Many millennial investors make the mistake of avoiding risk even though it helps them over a long timeframe.” Thus, to reach your target retirement financial goals, it is important to allocate much of your portfolio to stocks over bonds. While there may be more short-term drops, Vanguard analyses show that it is the way to get a better lifelong annual return.

Get advice
If you are not sure what the best investment options are for you, or would like additional clarification on what investing involves, it never hurts to ask for advice from an advisor who can help you map out a financial plan that spans. O’Shea of Nerdwallet recommends even opening an account with a robo-advisor that will give you basic insights into your current plan and offer advice on the next steps.

Your gut feeling may be to wait to invest and spend your money elsewhere while you are young, but the more aggressively you save and invest your income now, the better prepared you will be for retirement.

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Investing vs. Paying Off Debt

Deciding factors include your financial resources and goals

Some people willinvestvsdebt_featured decide to pay off all their debts before ever investing money, while others will say it’s better to carry livable debt and be able to grow your savings over time. There are pros and cons to either option, depending on your financial situation.

What to consider first
According to an October 2014 article in U.S. News Money by contributor Joanne Cleaver, paying off debt first means losing potential compound interest earned on any investments you would have made during that time. On the other hand, investing first means having to manage your debt and pay more in interest over time. And if you’ve invested your money, you likely have fewer funds to make payments toward your debt.

Cleaver says that understanding your financial situation and what you can handle is the largest determinant. She suggests you find your tipping point for affordability by looking at the interest rates of your loans and calculating how much it will cost you on a monthly basis to maintain the debt. If the number doesn’t fall within your affordability parameters, consider paying off the debt before doing any investing.

To do this, Paul Heising, a financial adviser with California-based investment firm Smarter Decisions, recommends “[organizing] consumer debt accounts according to their interest rates so you can see which are costing you the most,” and to “pay back loans with the higher interest rates first, especially if those rates are over 10 percent annually.”

Advantages of doing both
Other experts recommend striking a balance of paying off your debt and investing, but only with certain, less-risky investments at first. Joshua Kennon, author of Investing for Beginners, suggested such a balance in a January 2016 article on the financial resource website

According to Kennon, you should fund any workplace retirement accounts, like a 401(k), and start an emergency fund using an FDIC-insured institution while paying down any high-interest rate loans, like student loans and credit cards. Then, he advises to circle back to investing more money into such savings vehicles as an IRA or Roth IRA, and begin building assets in mutual fund and brokerage accounts.

He listed three main points in his reasoning:

  1. “You minimize your tax bill, both from earned income and on investment income, which means more money in your own pocket.”
  2. “You create significant bankruptcy protection for your retirement assets. Your employer-sponsored retirement plan, such as 401(k), has unlimited bankruptcy protection under the current rules, while your Roth IRA has $1,245,475 in bankruptcy protection as of 2015.”
  3. Reducing debt over time allows you to build up while you pay down, so that when you are debt-free you suddenly have a major stream of cash to do with what you want.

An article by CFP Nick Holeman for investment management firm Betterment suggested a similar plan to pay off debt while investing in certain funds.

Holeman advised making at least the minimum payment on your bills, on time, while taking advantage of any employer retirement savings as you pay off major debt. Then you can build your emergency fund and finally invest further for retirement and savings.

Contributing to your company 401(k), even with debt, is important, said Holeman. Especially if your employer has a match contribution, making your contribution maximum to earn the match can yield a higher return on your investment than can many other investment alternatives.

“If you have debt that’s costing you over five percent in fees, pay it off as fast as you can. Start with the highest-interest debt first,” Holeman suggested.

In the end, the decision between off all your debts first, investing all your money first or balancing a plan of both depends on your financial risk-taking and resources.

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How to Start Investing With Limited Funds

You don’t need a lot to get started investing

It may seem intuitiveStartInvesting_Featured that investing gives you the best benefit if you start early, but many people put off the task if they feel they don’t have enough information or money to start off the “right way.”

The good news is that you don’t need a lot to start investing, and there are many simple ways to begin. So, take the adage “There’s no time like the present” to heart, and follow these tips for making your first forays into the exciting world of investing.

Even if you only have a few hundred to a thousand dollars to invest, you should start now. Investments that are generally considered the safest, like bonds, are slow-growing and take time to make a big impact on your bank account.

Riskier investments, on the other hand, can experience big ups and downs while still maintaining an overall upward trend over the span of many years, so people holding these investments can earn big bucks if they have the time to stick with them over the long haul. The farther away you are from retirement age, the more you can afford to take big investment risks hoping for big rewards to match, because you have time to recuperate your funds if an investment goes south.

“The key, really, is simply to open an investing or retirement account and regularly transfer money into it, preferably automatically from your paycheck so you don’t forget or get side-tracked,” stated Kimberly Palmer, author of “Generation Earn” and blogger for U.S. News & World Report.

Now that you are inspired to start investing right away, you have to plan your strategy. Careful consideration at the start can help you avoid the potential disappointment and headaches that come when minimum deposit restrictions, fees and other costs catch you off-guard. Starting safe with investments in a 401(k) is a great way to begin. This lets you avoid the time commitment required to learn about the stock market, and it can give you the confidence you need to go forward to riskier investments in the future.

“Assuming you have a 401(k), save time and put your money into an index fund that mirrors the stock market (like an S&P 500 index fund),” states Personal Finance Expert M.P. Dunleavey for “Or if index funds aren’t available in your 401(k), use a low-cost target date fund (keep the expense ratio at 0.5 percent or lower).”

Index funds are an especially good choice for people investing only a few hundred dollars, because many — particularly individual retirement accounts — have initial investment minimums as low as $250.

“After your initial investment, you can add as much money as you like, as frequently as you like, with no additional costs or commissions,” according to a December 2015 article by The Motley Fool. “You can purchase index funds directly from mutual fund companies, so there are no commissions to pay to a middleman.”

If you want to dive right into the stock market, you have to strategize to find the right way to invest your small sum because many brokers deal only with large accounts. The first thing to learn is the difference between the types of stockbrokers.

“Stockbrokers come in two flavors: full-service and discount,” according to Writer and Co-founder of Second Summit Ventures Chad Langager. “As the name implies, a full-service broker provides much more in the way of service, but it only deals with higher-net-worth clients.”

With many discount brokers, you can open an account with a minimum of $1,000, but you should understand that you will receive fewer services than someone working with a full-service stockbroker would. Another option is to forgo a broker and tackle the market yourself.

“You also could purchase shares directly from a company through direct stock purchase plans,” says Langager. “Some of these plans have a minimum investment amount restriction, which ranges between $100 and $500.”

Now that you know the basics of investing with a small sum of money, cash in on your momentum and get started investing right away. And remember, if you need any advice about your particular financial situation, your local financial institution is your best resource.

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Saving Versus Investing Over Time

Does one take precedence over the other?

It’s the age-old questionSaveVsInvest_Featured to which everyone wants an answer: Is saving over time or investing your money more likely to make you the big bucks?

While both strategically saving and investing will make you money, investing is more likely to up your financial game over the long term, and is best for helping you reach those faraway goals, such as saving for a wedding or a child’s college education. Savings accounts work better for goals in the near future, such as going on vacation or making a large purchase.

While investing over the long term certainly has its advantages, it can pose many more risks than saving accounts do. With funds ensured by the federal government, money up to $250,000 would be restored if anything happened to your financial institution with a savings account. In addition, savings are ready at hand in the event you need money quickly — a possibility investing doesn’t always provide.

Investing, however, offers the potential for major profit and a higher return than a regular savings account. Over time, your investment may appreciate, which will increase your net worth. So if you sell what you invested in for a higher price, you make a profit. With a savings account, you can earn interest, but that’s generally much less than an investment profit.

Of course, when you invest money, you risk losing some or all of it. The key with investing is focusing on the things in your control.

“The only thing that you can control is the amount of capital you invest. Even during periods of low market returns, the frequent addition of investment capital can have a lasting effect,” says Director of Investor Education Bob Stammers of the CFA Institute. “Consistently adding capital to your portfolio, [when combined with] the long-term returns earned on that capital, is an excellent way to steadily move toward your overall financial goals.”

Even if you’re investing your money, it’s still important to be good at saving as well.

“An average saver will do better than a great investor who doesn’t save,” says CFP Professional and Principal David A. Schneider at Schneider Wealth Strategies in New York City.

In addition, whether you save or invest, it’s best to start sooner rather than later.

“The sooner you start saving and investing, the easier it is on your budget,” says President Carrie Schwab-Pomerantz of the Charles Schwab Foundation. “The sooner you start, the less you have to save because you have time on your side.”

“Every $1,000 saved in your mid-20s grows to over $10,000 at retirement, assuming 6 percent growth every year. But waiting until your mid-30s means that same $1,000 will only grow to $6,000,” explains Chartered Financial Analyst and CEO Shane Leonard of Stockflare. Think of it this way: Investing a mere dollar at age 25 could be more than five times as valuable as doing so at age 45.

Stop by to see what kind of investment and saving options we have for you today.

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Guide to Investing in Your 20s

The ages between 20 and 29 are the best time to begin investing your money

It’s true that millennialsInvest_Featured have a tendency to want to put their money toward anything instead of socking it away — from clothing to concerts to a night out. In fact, only 28 percent of millennials believe that long-term investing is an important path to success, compared to 52 percent of non-millennials, according to a UBS report. But the truth is, your 20s might be the best time to begin investing money.

“The sooner you start saving and investing, the easier it is on your budget,” says Carrie Schwab-Pomerantz, president of the Charles Schwab Foundation. “The sooner you start, the less you have to save because you have time on your side.” That’s because money invested throughout your 20s will continue to gain interest. Think of it this way: Investing a mere dollar at age 25 could be more than five times as valuable as doing so at age 45.

So how can you start investing? It might be easier than you think. Take these first steps and you’ll be on your way to meet your retirement goals:

Evaluate your current financial situation. It’s important to not jump right into investing if you can’t afford to do so — that won’t help anybody.

“If you don’t have at least three to six months’ [income] in a cash reserve account, I don’t think you should start investing,” says Dominique Broadway, a financial planner, personal finance coach and founder of Finances De×mys×ti×fied and the Social Money Tour. “You don’t want to lose your cash cushion or emergency fund.” So if that’s the case, save up a reserve and then take on investing.

Put away 10 percent of each paycheck. Or as much as you can. The key here isn’t so much about what amount to put away but rather understanding to do it now, because time is on your side. Even if you’re just setting aside 5 percent of each paycheck, the amount, over time, will blossom into a good-sized amount in retirement.

“Building habits, especially in your 20s, is so important for long-term success,” says John Deyeso, a certified financial planner.

Start a 401(k) or IRA. Many jobs offer a 401(k), and if yours does, you’ll definitely want to take advantage. A 401(k) allows employees to contribute a percentage of their paychecks tax free. Try to invest as much as you can into a 401(k), and take advantage of whatever your company will match. If you don’t have access to a 401(k), you can open an IRA. It’s important to open one of these accounts in your 20s. In your 30s, you can contribute twice as much and still not have as much as if you’d started in your 20s.

“Every $1,000 saved in your mid-20s grows to over $10,000 at retirement, assuming 6 percent growth every year. But waiting until your mid-30s means that same $1,000 will only grow to $6,000,” explains Shane Leonard, a chartered financial analyst and the CEO at Stockflare.

Don’t be afraid of risks. When you’re young, you can risk jumping at every opportunity and not having them work out, because it gives you more leeway for a reward later in life.

“You may need to take risks when you’re younger,” says Erin Baehr, author of “Growing Up and Saving Up.” “You may take one job over another and find it doesn’t work out. But when you’re younger, you have the ability to do that. And then that can parlay into a bigger return down the road.”

Investing early should pay major dividends in the future. Stop by today and speak with one of our representatives to see your options.

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Best Apps for Investing

For pros or beginners, the best ways to manage investing on the go

Thinking about becomingInvApps_featured an investor, or want to make investing easier? There’s an app for that. There’s several, actually, and if used wisely, they can help anyone from big brokerages to small start-ups find success in their investing endeavors.

The following apps are available for Apple and Android devices (or both) and best of all, it won’t cost you a thing! Check out these five best apps for investors:

Investors can link their credit and debit cards, so that whenever they make a purchase, the app rounds up the change and invests the difference into a diversified portfolio of index funds. The best part about Acorns is that no matter how much money you have, you can still make small-dollar investments in a fast, stress-free way.

“Acorns is designed for new and experienced investors who want a quick, easy, and automatic way to invest their money,” said Jeff Cruttenden, co-founder and COO of Acorns. “People can get started in seconds; then set it and forget it.”

Note: While the app itself is free, Acorns charges $1 a month for accounts under $5,000 and 0.25 percent of your annual assets for accounts over $5,000.

Don’t you wish you can buy and sell stocks for free? Now you can. As one of the easiest ways to invest in stocks, Robinhood allows users to view real-time market data and quotes, create their own personalized watch list and perform trades, all with just a click of your fingers. It’s also very secure, requiring users to create a Touch ID or custom PIN code for their account.

Share your portfolios’ holdings with your followers, which can be anyone from your friends to colleagues and financial professionals. The holdings are given in a percentage instead of a dollar amount, so no one knows your actual worth. Sharing holding information can help you take note from other investors’ portfolios, especially the people you admire and trust (not to compare and judge each other!).

“If surrounding yourself with a network of smart investors makes you a more confident investor, maybe that’s a good thing,” says Grant Easterbrook, a former financial analyst at Corporate Insight. “But you probably shouldn’t be trying to copy hedge fund strategies.”

SigFig Investing
Wondering where you stand in the grand scheme of things? One of the best ways to manage your brokerage accounts, the SigFig Investing app links all of your existing investing accounts and tells you where you are in terms of breaking industry news. View your stocks’ performance, allocation, risk and more with a simple tap of a button.

This is a great app to keep you updated on the latest financial news, as well as real-time stock tickers for major and minor stock exchanges. You can even get personalized news on the companies that you’re watching to help you make smart financial decisions. In addition, Bloomberg allows you to customize your own stocks and see where you stand in the market.

Check out these, and tons of other awesome apps, and be on your way to better investing. After all, isn’t getting you to invest more what’s important?

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Paying Down Debt vs. Investing vs. Saving

Best tactics to improve your bottom line

Paying down debtCut Card is a tricky process. Not only is it hard finding the money to do so, and it takes a while, but there are different strategies to employ based on your goals. Some people may contemplate saving throughout the year to get a solid nest egg before starting to pay down on that debt. Others opt to invest in hopes to make more money back in order to pay money off more quickly later. There are many considerations when it comes to deciding what to do with your money. Here are just a few of them.

Paying down debt
It’s never a bad idea to work on improving your credit score by paying down debt. Furthermore, there’s no right or wrong way to do so. There are multiple schools of thought regarding how to go about the process:

  • Pay down the loan with the highest interest rate first. Debt with high interest costs you more money over time, so you may want to take care of them primarily.
  • Pay down the loan with the smallest balance first. Clear up many smaller loans more quickly, giving you more money to apply to big loans later.
  • Combine the two approaches. “Average” the methods in a way where you use both approaches at different points in the year. For example, knock out a few of your small loans in a few months and then work on larger interest debt before going back to paying on small loans again.

Regardless of the plan you choose, just make sure to stick with it. However, it is okay to change your approach if your financial circumstances change. Also, don’t use any money saved on frivolous items; keep it in the budget for loan payments only or for the next two options.

Now, should you pay off those bills using one of the above methods, or should you use your finances instead to invest? This head-to-head debate is not cut and dry. There are many questions to ask regarding the amount of your debt, its interest rate, the possible return on investment and the legitimate likelihood of that return. Neal Frankle, a financial expert writing for Forbes, said that aside from the factual considerations, there are also the emotional aspects at play, such as how you’d feel if you paid off the debt, if you opted not to invest, or if you did and it didn’t work out?

“I have found that these emotional questions are just as important as the financial questions. What good is it to make an otherwise smart financial decision if at the end of the day you are left feeling miserable?” Frankle asked.

There are four inquiries Frankle conjured up to address both the financial and emotional issues:

  • What happens if you decide to pay off the debt and the other investment does well? The answer will likely depend on each unique situation. Would you be giving up the chance of a lifetime to pay down your debt, or are the upsides of the investment actually very limited?
  • What happens if you pay off the debt and the other investment does poorly? Good for you! Do a little dance because you made an amazing choice.
  • What happens if you don’t pay off the debt, make the investment and it turns out well? Be honest—what reasonable outcome can you expect? Will it be enough to cover the interest rate that you are paying on your debt? Will your money double? Be practical in your expectations.
  • What happens if you hold the debt, make the investment and it turns out badly?

What is the risk involved? Can you afford to lose the money at stake and still be stuck with the debt?

By taking a look at how you would feel and how your life would be impacted from two competing alternatives, you can likely make a better decision for your specific situation.

If investing isn’t for you, maybe you would rather save up some money in a rainy day fund. Actually, some personal finance experts say building a safety net of cash should come before any other money move, according to Casey Bond in U.S. News and World Report.

“The idea is you need to be prepared for financial emergencies — car repair, job loss, etc. — so that you don’t load up on more debt should an unexpected bill arise. Not to mention, it’s psychologically satisfying to see a positive savings account balance,” Bond said.

However, Bond added that feeling good just doesn’t pay the bills. Statistically, you are losing money by saving, as interest rates against debt are much higher than the interest you would be earning in a savings account. The solution, again, is to average the points of view. Strike a balance between saving and paying on debt that is feasible for you and your family.

Regardless of what you choose to do with your money, carefully considering all factors at play in the situation should always be the first step. Hasty decisions regarding your finances are never beneficial.

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Investing for Students

Students can invest to grow their funds while still in school

Finances can bebankingon_e_a002960754 frustrating for college and graduate students in many ways. It can be discouraging for students to watch their debt increase each semester while feeling like they can’t earn money when in school full time. Fortunately, even though full-time students can’t typically work enough hours to earn meaningful money, investing is another way that they can help their bank account balances move in the right direction.

Finding the best loans is only one part of the financial equations for proactive students who wish to put themselves in the best financial situation as soon as possible. Although your schedule may not leave you enough hours to hold down a steady job, the random hours you have speckled between classes is perfect for managing a beginner investment portfolio.

“The biggest resource and advantage college students have is time,” states investment executive Paul Feldman for USA Today College. “It’s important to take the maximum advantage of how much time you have — that’s one of the main things that’s going to drive success.” Feldman recommends that students start investing right away by making contributions to a Roth IRA.

An IRA, Roth IRA or 401(k) are great options for students who have a little extra cash that they would like to invest. They are perfect for young investors because compounding returns make it drastically easier to save for retirement if you start early.

“The compounding of the investment returns is huge when you’re looking at decades rather than months or years,” states Eric Tyson, author of Investing for Dummies. “Young people [might] only need to save six to eight percent of their annual income each year [as opposed to 10-12 percent] to be able to accomplish a given retirement goal. I wouldn’t go overboard with it, but it certainly is a reasonable thing to begin to think about.”

Before throwing all your spending money into the stock market, it’s important to learn how the market works and begin the process slowly. According to USA Today Collegiate Correspondent Jennifer Kline, students looking to learn how to invest should make sure to spend time brushing up on the current events in the finance world each day. Creating or joining an investment group at school is another way that students just dipping their toes into the stock market can find support and advice.

Kline also notes that taking a business class can go a long way toward preparing students for financial success. “Understanding the fundamentals of running a business is invaluable when you’re navigating and analyzing the stock market,” states Kline. “After all, the purpose is to invest in strong companies, and finance classes can help you determine a winner from a dud.”

So, once you’ve taken a few business classes and gotten into a habit of reading the finance news each day, you can begin tightening your budget so that you can put aside money to invest. Be sure that you’re not investing money that you need readily available, however.

“Before jumping into an investment, the experts agree that young adults should have adequate savings to cover an emergency or unexpected expense,” cautions Fox News Business.

One benefit of being a young investor is that you have more time to allow market processes to work in your favor. Even investments that have a strong upward trend will experience dips and increases, sometimes dramatically. Fortunately, students, compared to people on the verge of retirement, have the time needed to weather any temporary dips in order to cash in on the long-term upward trend.

Used with Permission. Published by IMN Bank Adviser
Includes copyrighted material of IMakeNews, Inc. and its suppliers.

What is an Investment Strategy?

How to understand and evaluate investment strategies
Investing is similar to cooking,investment no two people go about it in exactly the same way, and great results can be had from very different techniques. The following information about investment strategies can be useful whether you’re interested in learning how to develop your own strategy or if you want to be able to communicate with your financial adviser more effectively.

Each investor spends a significant amount of research and time considering a client’s future capital needs, comfort with risk and individual goals in order to form a plan of attack that guides investment choices. This is known as an investment strategy. An investment strategy typically includes guidelines for asset allocation, assessing risk and determining when to buy and sell.

“Investment strategies can differ greatly from a rapid growth strategy where an investor focuses on capital appreciation to a safety strategy where the focus is on wealth protection,” according to Investopedia. “The most important part of an investment strategy is that it aligns with the individual’s goals and is closely followed by the investor.”

If you’re looking to form an investment strategy for making your own investments, Investopedia has put together the following four questions that you should answer:

Can you write down your strategy?
Writing down your strategy ensures that it is complete and that you fully understand what your goals are and the framework that you will follow to achieve them.

“Writing down your strategy gives you something to revert back to in times of chaos, which will help you avoid making emotional investment decisions,” according to David Allison from Investopedia. “It also gives you something to review and change if you notice flaws, or your investment objectives change.”

Does your strategy include a way to determine if an investment is over or undervalued by other investors?

Examine ways that you can determine if an investment seems to be over or undervalued by other investors. This may be special industry knowledge, or any other competitive advantage that sets you apart as an investor. Once you figure out your advantages, use them to choose investments that others may miss.

How will your strategy perform as the market changes, and when will it do poorly?

Looking ahead to determine when you think your investment strategy will do poorly can help you form action plans for those times. It can also prevent you from acting rashly and making bad decisions.

“As market trends and economic themes change, many great investment strategies will have periods of great performance followed by periods of lagging performance,” states David Allison. “Having a good understanding of your strategy’s weaknesses is crucial to maintaining your confidence and investing with conviction, even if your strategy is temporarily out of vogue.”

How will you measure the effectiveness of your strategy?
If you don’t have parameters in place for measuring the success of your strategy, you won’t be able to figure out when to make changes or determine what those changes should be.

Even if you aren’t forming your own strategy, it’s important to understand the strategy a fund manager uses. This will help you choose the best fund manager to meet your personal goals.

“The criteria that mutual fund managers use to select their assets vary widely according to the individual manager,” states Dan Weil from Bankrate. “So when choosing a fund, you should look closely at the manager’s investment style to make sure it fits your risk-reward profile.”

Top-down and bottom-up investing strategies are two of the most popular. Top-down involves picking assets that fit into an overarching theme of the market. An example would be buying stocks across the board based on the hypothesis that the market will improve greatly in the near future.

This strategy has the benefit of providing a big payout when the overall theme is correct because all investments were chosen to match that theme. On the other hand, there is no guarantee that the investor was right about the theme, and even if the theme was correct, the investor might have chosen the wrong investments to support it.

Instead of looking at the overall market and fitting investments into the general picture, bottom-up investors choose investments based on their individual performances and strengths. These investments are considered good or bad, regardless of the overall market.

“A bottom-up manager benefits from thorough research on an individual company, but a market plunge often pulls even the strongest investments down,” states Weil.

There are countless investment strategies, so be sure to talk to your financial institution about any questions you have. It’s the best resource for finding your perfect investment strategy. Please don’t hesitate to give us a call with any questions.

Used with Permission. Published by IMN Bank Adviser
Includes copyrighted material of IMakeNews, Inc. and its suppliers.