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April 2020 Posts


Supporting Girl Scouts During Social Distancing

Supporting Girl Scouts During Social Distancing

 

By Kylee Hale

Thursday, April 2, 2020

You may be aware of the Secretary of State’s financial literacy program, Indiana MoneyWise. Our program partners with the Girl Scouts of Central Indiana on many programs throughout the year such as Circle the City, Girl Scout Day at the Statehouse and multiple badge earning programs. With the coronavirus pandemic making it impossible for troops to get together and earn badges with in-person activities, we’re excited to offer online learning and activities to keep girls earning those badges.

Brownie Celebrating Community Badge

This eLearning module is full of exciting fun about why communities are special and how celebrations are a big part of showing love for ones community. 

Time to complete: 20 minutes

Supplies needed: paper, markers or crayons, and your imagination! 

 

 

 

 

Brownie Money Manager Badge

This eLearning module is about wants and needs. After earning this badge girls will be savvy at managing all their cookie money income. 

Time to complete: 20 minutes

Supplies needed: paper, a pen or pencil and a calculator

For more badges and Girl Scout Resources visit girlscoutsIndiana.org

March 2020 Posts


Con Artists in the Age of COVID-19

Con Artists in the Age of COVID-19

 

By Kelly Griese

Wednesday, March 25, 2020

The coronavirus, or COVID-19, is all anyone can talk about. Terms like social distancing, pandemic, and hand sanitizer have been added to our daily vocabulary. We’re discussing toilet paper and hand washing more than ever before. And many of us are finally getting caught-up on binge-worthy series we’ve been meaning to watch for ages. It’s weird. It’s stressful. I understand. But while our guard is up regarding germs, we’re probably a little less guarded when it comes to scams. 

Emergency situations often cause us to react without much thought. Our brains don’t always work the way we want them to when we’re scared, and con artists know it. They exploit our fear for their gain. Sometimes they build scams around natural disasters, such as hurricanes, tornadoes, and even volcanoes. Sometimes the scams are tied to health emergencies, such as COVID-19, Ebola, and swine flu. Whatever the source of our fear, con artists are exceptionally good at creating a scam to go with it. 

Right now, many of us are split between worrying about our health and worrying about our finances. I’m going to focus on scams related to our finances. 


Investment Fraud 

With the current volatility in the market (Kylee wrote about it last week), I want to urge you to be especially cautious when contacted by anyone regarding your investments. If you are contacted, do not give out personal information. Instead, call your investment professional on a number you know to be trustworthy and ask if the contact is legitimate. Some calls could be real, but others could be from people trying to take advantage of this economic turmoil. If you believe you’ve been contacted by someone engaging in investment fraud or fraudulent activities, you can report it to the Indiana Securities Division


Checks from the Government 

By now, you’ve probably heard that the federal government is working on an economic stimulus package that would provide many Americans with money. We don’t yet know how much money or how it will be distributed. But what we do know is that scammers will no doubt try to take advantage of the situation. The Federal Trade Commission shares these tips for protecting yourself: 

  • The government will not ask you to pay anything up front to get this money. No fees. No charges. 
  • The government will not call you to ask for your bank account, credit card, or Social Security numbers. Anyone who does this is a scammer.
  • These reports of checks are not yet a reality. Anyone who tells you they can get you the money now is a scammer. 

Just remember, no matter what this payment winds up being, only scammers will ask you to pay to get it. If you spot one of these scams, report it to the Federal Trade Commission. It’s also a great idea to sign up for the FTC’s consumer alerts


Charity Scams 

In times of crisis, some of us become more charitable. We see others suffering, and we want to help. It’s a wonderful instinct to have, but you need to take caution. Scammers are eager to exploit your generosity. They will use names that sound a lot like the names of real charities and create convincing websites to lure you in. Money lost to bogus charities means less money for those who need it most, so it’s important that you do your research before donating. Here are some tips from the Federal Trade Commission: 

  • When you consider giving to a specific charity, search its name plus “complaint,” “review,” “rating,” or “scam.”
  • Use these organizations to help you research charities. 
  • If someone wants donations in cash, by gift card, or by wiring money, DON’T DO IT! That’s how scammers ask you to pay. 
  • Keep a record of your donations and review your financial statements carefully to make sure you’re only charged for the amount you agreed to donate – and that you’re not signed up to make a recurring donation if that was not your intent. 

In Indiana, charity scams should be reported to the Indiana Attorney General. If you need to make a report in another state, the National Association of State Charity Officials has a great list of all the state charity regulators. 


How Scammers Think

One of the best ways to protect yourself against scammers is to learn how they think. There are far too many scams out there for me to discuss them all, but once you learn the basics, you’ll be able to spot new scams. So here are some things to keep in mind: 

  • Scammers are in a hurry. Time is money, and in order to maximize their returns, scammers need to communicate with as many people as possible as quickly as possible. They will try to rush you into giving them money and/or personal information. Not only does this keep you from taking the time to discover they’re lying, but it helps them move on to their next victim. 
  • Your caller ID could be lying to you. Scammers utilize something called “spoofing” to make it appear as if you’re receiving a call from your normal area code (like 317, 812, and 765). Or they may even put names on the caller ID (like Social Security and IRS). There’s really no way of knowing where the call originates, so never do business over the phone if you can’t verify the caller’s identity. 
  • Scams are often lacking important details. The scammers may make vague, sentimental, or sensational claims but give no specifics. Crucial paperwork is typically missing. 
  • They make unrealistic promises. If anything sounds too good to be true, it is. With investing in particular, beware of anyone who offers guaranteed returns or claims to know about a no-risk investment. Remember that risk and reward go up and down together. There’s no such thing as a high return/low risk investment. 
  • Beware of gifts and incentives. Scammers could say you’re going to win a lot of money or some big prize, such as a vacation or a car. Or they might simply offer some swag or a free trial to open the doors to communication. Legitimate businesses and organizations use these tactics too, so it can be challenging to figure out who to trust. 
  • Scammers make threats. This goes back to using fear as a manipulation tactic. Scammers may talk about arresting you or mention a warrant. They could claim someone you care about is in danger or in need. 

If you notice any of these red flags, contact the proper authorities immediately. If you’re not sure who that is, contact me at kgriese@sos.in.gov. I’ll connect you with the correct agency. 

What is Market Correction?

What is Market Correction?

 

By Kylee Hale

Wednesday, March 18, 2020

Market Correction1

With investments, it can be said that a stock index enters “correction” territory when it falls by more than ten percent, and this alarming drop can put many investors on edge. A lot has happened recently in large part due to coronavirus concerns resulting in canceled meetings and reservations, supply chain disruption, an oil price war and on top of that we’re in a presidential election year. As an investor or onlooker, you may be wondering what this really means and what to expect next. So let’s look at some of the common questions. 

Is it the beginning of a bear market? 

Let’s go back and define market correction, there is no universal definition but most consider a correction has occurred when a major index such as the S&P 500 index or Dow Jones Industrial Average, declines from its most recent peak by 10% but still less than 20%. Historically the drop returns or “corrects” prices to their longer-term trend as this is referred to as the “correction”. It’s not really possible to predict whether a correction will reverse or turn into a bear market, meaning that the market falls by 20% or more. As of last week Dow Jones, the S&P 500 and the Nasdaq all entered a bear market. Since November 1974 there have been twenty-two market corrections, four (five if you include the current) of which became bear markets. 

What if this is the start of a declining market?

It’s easy to forget that the market cannot and should not go up indefinitely. After a long run of a bull market, shares of stock are selling at a premium, a correction would be better seen not as a sign of doom but yet as a sign of opportunity. While bear markets can be scary, they are part of long term investing and they don’t last forever. The average bear market has lasted 17 months which is far shorter than the average bull market and they can end as abruptly as they begin. 

How to survive the market dip? 

We don’t know how the coronavirus will play out – nor does anyone, really. While we navigate our way to progress the markets will remain bumpy. This uncertainty is uncomfortable and driving volatility in the markets. We are experiencing an economic slowdown as we’re all affected by the social distancing. What we don’t know is how long it’s going to last, but we can be almost certain to expect growth to rebound, even if it doesn’t happen this year. 

In China, where the outbreak originated, a decline in new cases of the coronavirus is already happening, showing that travel bans and canceling public gatherings is working to stop the spread. Economically, as a country we are in better shape than the 2008 bear market, because our large banks aren’t as highly leveraged, meaning they’re better equipped to handle this now than they were back then. Worrying about the spread of the virus and the bear market is counterproductive, but being prepared is a good approach. 

Is there anything I can do?

Have a plan. A written financial plan can help you weather the storm and calm your nerves. Think of your short and long term goals and stay the course as the market gets bumpy. Consider your risk, it’s easier to take risks when the market is rising, however, market downturns can provide a time to consider adjusting your asset allocation. Remember you can’t lose any more than the money you put into your investments and regular rebalancing will help keep your portfolio on target. If you are tempted to sell and buy again later, CNBC has demonstrated if you had invested in the market from 1999 to 2018 and not touched it, your money would have doubled. But if you had jumped in and jumped out of the market and perhaps missed out on the ten best performing days in the timeframe, your returns would be cut in half. Lastly, it is important to consider your life stage or age. As young investors have time to recover, those nearing retirement would favor diversification and a more conservative approach. It might be a good idea to avoid selling assets and postpone planned withdrawals for large expenses. It's important to remember that a loss is not official until funds are withdrawn and it's recorded on paper.

Social Security Impostor Scams

Social Security Impostor Scams

 

By Kelly Griese

Wednesday, March 11, 2020

I had planned to write about something else this week. Then I received SIX calls in one day, from six different phone numbers, and they all left the exact same voicemail. I knew I had to share this information with all of you. Here’s the transcription of the voicemail.  

We are trying to reach you to let you know that your Social Security number is been used for some kind of fraudulent activities in the south border of Texas. So please in order go ahead get more information. To speak with officer, press one. I repeat, press one. Thank you and have a great day.

The voice was computerized. The message was vague. The purpose was clear. This is an impostor scam designed to scare people into providing personally identifiable information to fraudsters. Ironically, I received these SIX voicemails just three days before a massive public awareness campaign launched by the REAL Social Security Administration called “Slam the Scam Day.” 

The Federal Trade Commission says Americans reported losing nearly $153 million to government impostor schemes in 2019. Of that, more than $37 million was lost to Social Security scams. It’s no wonder the Social Security Administration (SSA) is working hard to educate Americans about this scam. The agency regularly posts about it on Facebook, Twitter, Instagram, and LinkedIn. They have created public service announcement videos for YouTube. They write about the scam in the Social Security Matters blog. And they’ve even asked our office to help get the word out. They’d love for all of you to help spread the news as well. I’m hoping this blog post will provide you with the key points you need to know. I’m also hoping you’ll share the information with your friends, family, and coworkers. 

SSA may call you in some situations, but stress that they will NEVER:

  • Threaten you
  • Suspend your Social Security number
  • Demand an immediate payment from you
  • Require payment by cash, gift card, pre-paid debit card, or wire transfer
  • Ask for gift card numbers over the phone or to wire or mail cash

SSA advises that if you receive a suspicious call, HANG UP! Do not give the caller money or personal information. Finally, report the scam to the Office of the Inspector General. You can do so via their website or by calling their hotline: 1-800-269-0271. 

Here are some red flags that you’re talking with a scammer: 

  • The caller says there’s a problem with your Social Security number or account. (That’s what the robocaller claimed in the voicemail I received). 
  • Any call asking you to pay a fine or debt with retail gift cards, wire transfers, pre-paid debit cards, internet currency, or by mailing cash. 
  • Scammers pretend they are from Social Security or another government agency. Caller ID or documents sent by email may look official, but they are not. (Learn more about caller ID “spoofing” by checking out the Federal Communications Commission’s webpage on the subject.) 
  • Callers threaten you with arrest or other legal action. 

Again, the Social Security Administration wants to spread the word. Tell the people in your life about this scam. Share this blog post. Share links to SSA’s content on the subject. And get used to listening to and DELETING a lot of annoying voicemails. 
 

Compound Interest Benefits the Lender, Not the Spender.

Compound Interest Benefits the Lender, Not the Spender.

 

By Kylee Hale

Wednesday, March 4, 2020

In my last post, I explained how remarkable compound interest is and how its positive effects can really boost your savings. However, compound interest also applies to most of your debt like student loans, mortgages and unpaid credit card balances. For those who pay compound interest on loans, it can dig a deep hole that may be difficult to escape. Here's a few examples of how compound interest can dig financial holes:

Compound Interest on School Loan

Brandon took out student loans to fund his education, finishing school with $50,000 in student loans at a 7% annual interest rate. Brandon was not able to find a job in his field with a competitive salary, so he entered an income-based repayment program to make ends meet, paying $200 per month. While the repayment program freed up money to help him pay his monthly bills, the payments were not enough to cover the interest on his student loans, much less the principal. After ten years, Brandon’s loan balance grew from $50,000 to $65,866, despite making payments every month. Time and compound interest caused his loan balance to grow. To the right is an example of Brandon’s $50,000 loan with compounding interest creating more debt just over one year.

Brandon’s sister Amanda wanted to go on vacation, but had not saved enough money. Instead of scaling back her plans, she booked a trip to Tahiti on her credit card. Unfortunately, Amanda was unable to pay off her credit card balance, and the interest charges began to compound. Amanda went from owing $10,000 to owing more than $10,786 one year later, even though she paid $150 per month. The credit card’s high 25% interest rate meant that Amanda’s $150 payments didn’t even cover the interest on her debt each month.  

 

What can I do to avoid the pitfalls of compound interest?

  1. Be discerning about debt. Don’t take on unnecessary debt like Amanda did. Make sure you only take on debt that you can afford to pay back, at an interest rate that won’t hinder your ability to save for your future.  
  2. Pay down high-interest debts. If you already have high-interest debt, refinancing to a lower rate could be a solution for you, but might not make sense for everyone. Do your best to pay off high-interest debts before the compound interest takes its toll on your finances.

Compound interest should be used to your advantage, and to invest for your future.  Be cautious in taking on debt and understand how compound interest can derail your finances.

February 2020 Posts


The Devil You Know

The Devil You Know

 

By Kelly Griese

Wednesday, February 26, 2020

Affinity Fraud

You know the phrase, “better the devil you know than the devil you don’t,” but it isn’t true when talking about investment fraud. Specifically, I’m talking about affinity fraud. It’s a financial scheme that involves a scammer who appears to be part of a community or interest group. The scammer builds trust within the group and exploits that trust to push fraudulent, non-existent, and too-good-to-be-true investments on other members of the group. 

Simply put, affinity fraud is the wolf in sheep’s clothing. 

Affinity fraud is most likely to occur in groups or communities of like-minded people. You’ll find it almost anywhere that people gather around a shared belief, interest, or goal. Examples include:

  • Places of worship
  • Tight-knit ethnic or immigrant communities
  • Country clubs
  • Professional organizations
  • Places of business
  • Online forums

Why It Works

Affinity fraud is successful for a few reasons. For starters, it’s human nature to trust people who are similar to us. I played a game once with some fourth graders who were visiting the Indiana Statehouse for Statehood Day. In the game, I played the role of an affinity fraudster, and a coworker played the role of a victim. The common interest that my character exploited was a love of the Colts. I started by hyping up the team and sharing stories about watching football. Once it seemed clear the victim saw me as someone trustworthy because of our shared interest, I mentioned a “great investment opportunity.” The victim was excited to hear more. That’s when she turned to the kids, asking if they thought she should invest. They quickly informed her that I could not be trusted, and my greatest joy was having one of those children call me - the fraudster in the skit - a “dirty liar.” 

Another reason why affinity fraud works is that victims are often reluctant to report someone who they feel is part of their group. The victim could be afraid that they won’t be believed or that other members of the group will be angry with them. The fear of reporting allows the fraudster to remain within the group, conning more and more members. 

Here’s an example of affinity fraud shared by the North American Securities Administrators Association (NASAA): 

Desiree has been attending the same church for many years. One day, the pastor introduces a new member of the congregation, Jim. Jim spends the next several months getting to know parishioners, and even reads scriptures and gives sermons for the pastor on occasion. Everyone loves Jim!

Jim gathers a group of parishioners one Sunday after service, including Desiree, and tells them about an exclusive investment opportunity that he has just for them. Jim’s investment pays more than their savings accounts and has zero risk, but he needs a check or cash before he leaves church that day. Desiree knows Jim and trusts him, so she gives him a check for $2,000. Like clockwork, the interest checks come in and the statements Jim gives her show huge gains in her account!

Desiree is so impressed that she gives Jim the rest of her savings and tells her sister Nicole, who also invests with Jim.

Two months later, Desiree stops getting the promised returns. Jim assures Desiree that everything is okay, it’s just an issue with a supplier of the company that is funding the returns. Desiree believes him and agrees to wait it out. Jim stops coming to church, and stops responding to Desiree, Nicole, and the rest of the church members that invested with him. When they report the matter to their local securities regulator, they find out that Jim and the product were unregistered, and that their savings are likely gone forever.


Protect Yourself

So how can you protect yourself? First, know that affinity fraud is common. It happens every day all over the U.S. You should be cautious if you’re ever approached about an investment opportunity at church or in a community group. 

  • Don’t act on personal feelings. People who commit affinity fraud are usually very likable and seem trustworthy. Investors should never let their comfort with a person’s character and status in the community replace adequate due diligence. Ask questions.
  • Don’t act too quickly. If someone offers you a can’t miss investment opportunity and puts you on the spot, don’t be afraid to walk away. Never make an investment decision without understanding where your money is going, how it will be used, and how you can get it back.
  • Everything has risk. There is no such thing as a risk-free investment, and anyone who promises otherwise is lying. Investors should always ask about the risks of the investment, and understand issues such as liquidity, investment time frame, rate of return, risk of loss, and how the proceeds of the investor’s investment will be used to turn the promised profits.
  • Trust but verify. Affinity fraud frequently involves someone that the victim has known for many years. The simple fact that you’ve known a person for 20 years does not replace the need to ask questions about any investment opportunity, and to take pause if you don’t understand it.
  • Always ask if the person and the security are registered. Contact the Indiana Securities Division or search FINRA’s BrokerCheck database to confirm if the salesperson is registered. Regardless of how long you have known a person or been conducting business with an individual, it’s worthwhile to do a quick search in the database to confirm up-to-date licensing and compliance. If the person isn’t registered, ask why, and carefully consider if the investment is worth the risk.

If you think you are a victim of affinity fraud, contact the Indiana Securities Division
 

Why Compound Interest Matters

Why Compound Interest Matters

 

By Kylee Hale

Wednesday, February 19, 2020

Compound interest has been called the 8th Wonder of the World. It can be a double-edged sword, benefiting those who use it to build wealth, and burdening those who accrue interest on loans and dig themselves into deep financial holes. Let’s discuss the basics of compound interest and the effect it has on your financial future.

What is compound interest and how does it work?
Compound interest is interest calculated on an amount of principal (e.g., a deposit or loan) including all accumulated interest from prior compounding periods. Put more simply, it is interest on top of the interest previously added to the principal. Compound interest causes principal to grow exponentially over time. In the case of invested assets, it is a powerful tool to build wealth.

Examples of how compound interest can help build wealth:

Compound Interest

 

Warren recognized early in life that if he routinely saved and invested, he could accumulate wealth and live a better life. He started investing at 22, adding $500 per month to an account which held an index fund tied to the stock market. The index fund returned 7% per year for the next 40 years, when Warren retired at the age of 62. The initial $500, and the monthly contributions thereafter, grew to almost $1.2 million thanks to time, compound interest, and Warren’s investing strategy.   

Compound Interest

 

 

 

Warren’s friend Charlie wasn’t able to put away as much as Warren during his career, but he invested a $10,000 inheritance at 22 in the same index fund. Charlie’s investment, despite him not adding any more money to it, was worth almost $150,000 when he turned 62.  How? Time and compound investment returns caused Charlie’s inheritance to grow without him adding a penny.

 

 

From these examples, you can see how remarkable compound interest is and why you would want to take advantage of it whenever possible. However, compound interest also applies to most of your debt like student loans, mortgages and unpaid credit card balances. In my next post I will explain how compound interest can have a negative effect and how you can best avoid it. Here are a few tips on how to get the most out of your money with compound interest.

Don’t just save — invest! To take advantage of compound interest, your savings must be in an account that pays some kind of return on investment. That rate will depend upon the amount of risk taken. Higher rates of return are associated with higher risk of loss, and lower rates of return are associated with lower risk of loss.   

Start as early as possible: Time is one of the most important elements of compound interest. The longer your money is invested, the more opportunities it will have to grow. A 25-year-old who puts away $500 a month until age 65 with a 7% rate of return would have nearly $1.2 million, while a 35-year-old doing the same thing would have only $567,000 at age 65.  The earliest years of investing are the most important when it comes to compounding.

Be consistent and patient: Consistent contributions to an investment account over time gives compounding more principal to compound on and can enhance returns. As Warren and Charlie discovered, even modest contributions, paired with investment returns over long periods of time, can help you reach your financial goals.

 Check it out for yourself: The U.S. Securities and Exchange Commission has a compound interest calculator available on their website. Look at what your savings could look like based on different timeframes and rates of return.

Love Hurts: How to Spot a Romance Scam

Love Hurts: How to Spot a Romance Scam

 

By Kelly Griese

Wednesday, February 12, 2020

Love Hurts

A quick Google search of the words “Love Hurts song” yields numerous results. The Everly Brothers, Patrick Swayze, Roy Orbison, Rod Stewart, Heart, Joan Jett, and more. They all sang about heartache. It’s relatable. Most of you reading this blog have experienced such emotions and can think of someone in your life who “gave love a bad name.” But the pain of a broken heart can be even greater when THE ONE doesn’t even exist. It can also be costly.

Online dating and social media have made it easier than ever to meet new people. You chat with a lot of them, meet a few for dates in the real world, and hopefully find someone special worthy of additional dates. Or maybe not. One of those online profiles seems too good to be true. The perfect catch! And while they have a lot of reasons why they can't meet in person yet, they want to know everything about you. 

In December 2019, the internet couldn’t get enough of one guy’s online romance. Twitter user @nickturani had met THE ONE! He tweeted, “Ladies take notes! Met this girl online YESTERDAY, and she’s already trying to learn more about me, not just hook up. It’s called conversation. Learn it.” Then he proceeded to share a screen grab of all the things his new girlfriend wanted to know about him. 

  • The name of his first pet
  • His mother’s maiden name
  • The name of the town where he was born

No doubt she would also be interested to learn his Social Security number… you know, typical first date information. 

Obviously, Nick was being “catfished.” If that term is new to you, let me explain. Merriam-Webster defines this type of catfish as "a person who sets up a false personal profile on a social networking site for fradulent or deceptive purposes." Catfishing is sometimes done as a cruel joke, possibly by a person who knows you in real life, but it’s also quite popular as a means of stealing information and money. In the example above, it seems that Nick is aware his new “girlfriend” isn’t real, and he’s making a joke about the blatant attempt to gather answers to password recovery/reset questions. Not only is Nick’s girlfriend not actually interested in him, she’s probably not a person at all. In all likelihood, she’s a bot, which is the common name for autonomous computer programs that can interact with real people online.  

Dating websites and apps are filled with bot accounts, so you need to be careful. Some are obvious, like Nick’s girlfriend, but others are more advanced. And, yes, sometimes a real person is on the other end of the conversation. If you’re dealing with a con artist, brace yourself. They can create compelling backstories with full-fledged identities. They might also use attractive photos of models to lure you in. That’s what happened in a romance scam reported by Bob Segall with WTHR. He talked with a 70-year-old widow who spent two months talking with a con artist named “Richard.” The scammer was after cash, as many of them are. 

According to the Federal Trade Commission, Americans reported losing $143 million to romance scams in 2018. The median reported loss was $2,600, and for people over 70, it was $10,000. Online dating isn’t just for young people. More and more seniors are looking for love via dating websites and apps, creating an even bigger pool of potential victims. 


Spotting Scams

So how can you spot a scam? Here are some great tips provided by the Better Business Bureau

  • Too hot to be true. Scammers offer up good-looking photos and tales of financial success. Be honest with yourself about who would be genuinely interested. If they seem “too perfect,” your alarm bells should ring.
  • In a hurry to get off the site. Catfishers will try very quickly to get you to move to communicating through email, messenger, or phone.
  • Moving fast. A catfisher will begin speaking of a future together and tell you they love you quickly. They often say they’ve never felt this way before.
  • Talk about trust. Catfishers will start manipulating you with talk about trust and how important it is. This will often be a first step to asking you for money.
  • Don’t want to meet. Be wary of someone who always has an excuse to postpone meeting because they say they are traveling or live overseas or are in the military.
  • Suspect language. If the person you are communicating with claims to be from your home town but has poor spelling or grammar, uses overly flowery language, or uses phrases that don’t make sense, that’s a red flag. 
  • Hard luck stories. Before moving on to asking you for money, the scammer may hint at financial troubles like heat being cut off or a stolen car or a sick relative, or they may share a sad story from their past (death of parents or spouse, etc.).

Many of these examples are included in a video created by the Federal Trade Commission.

The Federal Trade Commission provides some additional information about the types of requests that romance scammers often make

  • Pay for a plane ticket or other travel expenses
  • Pay for surgery or other medical expenses
  • Pay customs fees to retrieve something
  • Pay off gambling debts
  • Pay for a visa or other official travel documents

The scammers often ask you to wire the money or purchase prepaid cards from MoneyPak, Amazon, Google Play, iTunes, or Steam. 


Protect Yourself

There are ways to protect yourself from romance scams. The Better Business Bureau provides more tips: 

  • Never send money or personal information that can be used for identity theft to someone you’ve never met in person. Never give someone your credit card information to book a ticket to visit you. Cut off contact if someone starts asking you for information like credit card, bank, or government ID numbers.
  • Ask specific questions about details provided in a profile. A scammer may stumble over remembering details or making a story fit. 
  • Do your research. Many scammers steal photos from the web to use in their profiles. You can do a reverse image lookup using a website like tineye.com or images.google.com to see if the photos on the profile are stolen from somewhere else. You can also search online for a profile name, email, or phone number to see what add up and what doesn’t. 

So, yeah, “Love Hurts,” and scammers certainly “give love a bad name.” I’d use more lyrics and song titles as puns, but I think you get the idea. Stay safe in this season of love and romance. Protect your heart. Protect your identity. Protect your bank account. 
 

5 Reasons to Shift Investments

5 Reasons to Shift Investments

 

By Kylee Hale

Wednesday, February 5, 2020

We must start off saying, it's best not to stir up your investments. When you choose to invest, it’s advised to relax and ride out the roller coaster twists of the market. Trying to beat the market is not a good strategy and often doesn’t work. Stick to the motto of investing steadily, diversely and for the long term. This will provide the most foolproof route to success.Set it and forget it

 

However, there are times when Showtime’s rotisserie chicken oven infomercial tagline “Set it and Forget it” just isn’t meeting your needs. Here are 5 relevant situations where you might be better off moving your funds around.

 

  1. New job, new retirement account  

If your employer provides the option to invest in a 401(k), 403(b) or similar retirement saving vehicle your contribution to this investment typically cuts off when you terminate employment with that employer. It’s often a good idea to consider rolling the funds over to your new retirement saving investment vehicle whether that’s a new employer-sponsored plan or a different account of your choosing. It is possible to leave the account as it stands but this could become a loose end. If you choose to roll it over, you’ll want to follow the protocol from the IRS to avoid a tax penalty and opt for a direct rollover to reduce tax filing complications.

Side note: In a previous post, I analyzed the state employee’s paycheck. The state-sponsored 457 plan is yours to keep after you leave state employment, and you can roll it. There is no age penalty but you are responsible for paying income tax on the funds.

 

  1. You're over the fees

There will always be fees, every cent you pay in fees is a cent not in your account, not earning returns. If you’re using a digital adviser, you can expect to be charged about 0.25% - 0.30% of your assets per year. If you’re shelling out for fees themselves, or if moving your investment could lower your fees, it’s probably a good idea to make the move. You may also consider moving your investments if the options you’re looking for aren’t available for you. If impact investing or investments made to generate positive, measurable social and environmental impact alongside a financial return, is your desire, you may have to shift your investments to meet this ambition.

 

Memory Overload

  1. Requires excess memory 

An overall financial picture can be difficult to maintain if you have multiple accounts. Consolidating your investments can ease your stress and create a simpler way to follow your investment goals. Another benefit of having your investments all under one scope is the ability to work with a single person or company. Developing a relationship with one person that you can speed dial with all your investment questions is a relief when it comes to money. Multiple accounts also means multiple logins, statements, and tedious account updates when your address or beneficiaries change.

 

  1. Need some risk or stability

Managing your investments all in one spot can avoid overlapping investments, but it’s still important for your portfolio to stretch across multiple asset classes. Maintaining balance within your portfolio might urge you to shift your asset allocations. Maybe you bought a stock a while ago and then inherited a similar or were gifted an investment. Rebalancing your portfolio helps preserve your desired amount of risk and continue progress towards your goals.

 

  1. Retirement is on your horizon

When you’re getting close to the golden years you may want to reevaluate your assets. You can’t keep money in tax-advantaged retirement accounts forever. There are age restrictions on certain accounts and you are required to begin withdrawing at least the minimum distributions. If you don’t, you will lose that hard-earned and saved money to penalties. It’s easy to forget about an old 401k, from a previous job, if you have not consolidated in a while.​​​​​​

 

As you may have noticed none of the examples above include moving investments due to market dip. It’s important to remember when investing if you experience a market plummet or prolonged downtown, the loss is not locked in until you sell. History shows the market always returns and often surpasses the previous high. If the conditions above apply to you and you decide the time is right to shift your investment, be sure to ask about a direct rollover or in-kind transfer to ease the process. Investments and taxes can be complicated, if you have any questions, be sure to seek out a licensed professional. To confirm a professional licensure, you can search the database on the Securities Portal. 

January 2020 Posts


Much Ado About Resolutions

Much Ado About Resolutions

 

By Kelly Griese

Wednesday, January 29, 2020

Did you make a new year’s resolution? University of Scranton psychology professor John C. Norcorss tells CNN that about 40% of Americans set new year’s resolutions, and about 40-44% of those people actually succeed. So what does it take to turn a resolution into a realized goal? CNN provides some good advice in the link above, and I wrote about S.M.A.R.T. goal setting a couple weeks ago in this blog. 

When we set resolutions, we do so for a reason. We want to succeed. But are you putting the correct pieces in place to ensure you reach the finish line before the next ball drop? Try switching out the word resolution and replace it with the word goal. Make that goal specific (that’s the S in S.M.A.R.T.). Make the goal something that’s actually possible to achieve (that’s the A in S.M.A.R.T.). Know that failure is also possible, but that it doesn’t have to mark the end of you trying to reach your goal. Try again and be kind to yourself in the face of failure. 

Change is hard, especially when you consider that the most popular 2020 new year’s resolutions are exercising more and saving money… two things a lot of people struggle to do! According to survey results shared by YouGov, 50% of Americans making resolutions say exercise is their top priority, while 49% are focused on saving money. We can help you with both of those resolutions. The fitness edition of our Indiana MoneyWise e-magazine includes information on yoga for every budget, meal planning, and more. And the Indiana MoneyWise website as a whole is filled with information to help you get on a better financial path. 

Speaking of finances, not all resolutions are equal when it comes to the cost of success. Let’s use the “exercising more” resolution as an example. There are a lot of different ways to exercise, but new gym memberships peak this time of year. So how much will a membership cost you? According to The Motley Fool, the average cost of gym membership is $58.00 per month, or $696 per year. But the monthly fee isn’t your only area of consideration. Many gyms charge an initial fee just for joining, and there may be other hidden costs. Keep in mind that there is a LOT of room for negotiation when joining a gym, and you should check to see if you qualify for any discounts based on your age, your employer, or even your health insurance provider. There are also numerous specials this time of year, so be sure to check online before walking into a high pressured sales pitch at the gym itself. And before joining, make sure you read the contract’s fine print… especially when it comes to the gym’s cancelation policy. 

There’s one more thing we need to talk about when it comes to resolutions, and that’s when to cut ties with anything that’s draining your budget in order to help you achieve them. Don’t hold on to subscriptions and memberships out of guilt or a belief that if you keep paying for these services, you will magically resuscitate your new year’s resolution. If it’s dead, it’s dead. Bury it in a shallow grave rather than digging a deeper debt hole. Cancel the subscriptions and memberships. If you still want to work toward food choice and exercise resolutions, do so in ways that don’t stretch your budget. There’s a wealth of free information online. You can exercise in your living room or local park without expensive equipment. You can shop for your own groceries and cook your own meals without consulting pricy apps first. And if you need accountability to keep you motivated, ask a trusted friend for such help.

What Exactly is a Real Estate Investment Trust?

What Exactly is a Real Estate Investment Trust?

 

By Kylee Hale

Wednesday, January 22, 2020

In past years, stocks would have been considered the best long term investment, but as of last year, real estate has made its way to the top. According to this Bankrate survey that asked Americans “What is best way to invest money that you wouldn’t need for more than 10 years?” approximately 30% of all generations are in favor of real estate as a long term investment. Real estate can be a very lucrative investment at any age, however it usually requires a lot of money, or very good credit, to get started and is known to be a big time commitment. For busy individuals who might not have the extra cash for a huge down payment, a real estate investment trust (REIT) might be a less demanding way to get started.

Market Exposure - REITs allow investors to pool money together to invest in large-scale, income-producing commercial real estate. These may include office buildings, shopping malls, apartments, hotels, resorts, self-storage facilities, warehouses, and mortgages or loans. This collaboration provides people who may not have the funds to buy commercial real estate on their own with the opportunities to invest but without the time commitment and cost of buying and managing a property. 

Diversity - By being in a different asset class than stocks or bonds, REITs, provide the opportunity to diversify a portfolio. REITs can be found in public and private markets, although publicly-traded REITs are the most liquid. Before investing in a REIT, you should understand whether or not it is publicly traded, and how this could affect the benefits and risks to you. For more, check out FINRA’s Investor Alert on reviewing non-traded REITs.

Appreciation - REITs are generally passive investments as opposed to active…meaning that they are generally suited best for long term investors rather than short term. Unlike other real estate companies, a REIT does not develop real estate properties to resell them. Instead, a REIT buys and develops properties primarily to operate them as part of its investment portfolio. A benefit to investing in REITs is the potential for long-term appreciation, if the real estate market you're invested in gains value, your shares may too.

Fees - Publicly traded REITs can be purchased through a broker. Generally, you can purchase the common stock, preferred stock, or debt security of a publicly-traded REIT. Brokerage fees will apply. Non-traded REITs are typically sold by a broker or financial adviser. Non-traded REITs generally have high up-front fees. Sales commissions and upfront offering fees usually total approximately 9 to 10 percent of the investment. These costs lower the value of the investment by a significant amount. 

Taxes - When the REIT collects rental income from its properties, at least 90% of those earnings are returned to the investors as dividends. The shareholders of a REIT are responsible for paying taxes on the dividends and any capital gains they receive in connection with their investment in the REIT. Dividends paid by REITs generally are treated as ordinary income and are not entitled to the reduced tax rates on other types of corporate dividends.

REITs provide the option to add real estate to an investment portfolio when it otherwise might not be feasible. Some REITs yield higher profit dividends than other investments, but with reward comes risk. Be extra cautious of non-exchange traded REITs and fraudulent salesmen. You can verify the registration of both publicly traded and non-traded REITs through the Securities and Exchange Commission’s EDGAR system. You can also use EDGAR to review a REIT’s annual and quarterly reports as well as any offering prospectus. Lastly, you should also check out the broker or investment adviser who recommends purchasing a REIT. To learn how to do so, visit the SEC’s Investor.gov page: Working with Brokers and Investment Advisers.

Financial Relationship Status: It's Complicated

Financial Relationship Status: It's Complicated

 

By Kelly Griese

Wednesday, January 15, 2020

Let’s face it, we are emotional spenders. Few of us are able to make purely logical financial decisions. Instead, we spend based on how we feel, and our feelings are impacted by a lot of internal and external forces. If our relationship with money was a Facebook status, it would be listed as “it’s complicated.” And to make matters more complicated, our financial behavior is set at an earlier age than most of us realize. 

According to a study from Cambridge University, not only are kids able to grasp basic money concepts as early as age 3, but money habits are set as young as age 7. By the time we reach the age of making major financial decisions, we’re already firmly set in our ways. And that’s why it’s okay if you’re struggling to change. Improving our financial behavior is hard, and it takes much more than some facts and figures on a spreadsheet to make changes. 


Pay Yourself First

So how do we begin? Well, I like to start with some of the best financial advice I’ve ever heard: PAY YOURSELF FIRST! When faced with a financial decision, repeat those three words in your head. Each time you buy something new and exciting, you are paying someone else. You are giving them money in exchange for the latest gadget you crave. 

Paying YOURSELF means setting aside money for YOUR future. This requires discipline. It also requires you to think beyond your need for immediate gratification. If you find yourself frequently tempted into making impulse buys, look for ways to remind yourself of the things you want months or even years from now. Do you want a new car? What about an awesome vacation? Retirement? 

Spending that money now can make us feel good in the short term (remember, we spend with our feelings), but in a few years, when we really want/need something big, the money won’t be there. If you’re still working when you’re in your 80s, you may regret not paying yourself first.


Values

Now let’s talk about some of those intangible things that influence our emotional spending. Things like values. Values are qualities or standards people consider to be worthwhile or desirable. These are the basic and fundamental beliefs that guide or motivate our attitudes and actions. Examples include: accomplishment, community, entertainment, generosity, and so on. You may possess some of these values or different ones. Take a moment to think about what you truly value and write it down. Better yet, prioritize your values. When I give financial fitness presentations, I provide folks with a worksheet, so feel free to print a copy for yourself


Goals

Now let’s talk about goals. Goals are the specific plans or purposes we have in life. Short-term goals can be accomplished in a few weeks, months, or even a year.  Examples include setting up a savings account and using it, building an emergency fund, or saving for a family vacation.  Long-term goals require more planning and saving, and they are often not realized for many years.  Popular long-term goals include homeownership, a college education, or a comfortable retirement.  

Unfortunately, goals are somewhat meaningless without a plan to achieve them. That’s why I encourage you to create SMART goals. SMART is an acronym. 

  • Specific – state exactly what you want to buy or accomplish with the money you save
  • Measurable – indicate the exact dollar amount you need in order to reach the goal
  • Attainable/Achievable – identify the necessary steps to achieve this goal
  • Relevant – the goal needs to be meaningful or you may lose motivation
  • Time-Bound – the goal should have a deadline for achievement 

Let’s transform a regular goal, such as “I want to buy a car” into a SMART goal. “I plan to save for a down payment on a new car. I need to save $5,000 for the down payment. I will reach my goal of saving $5,000 by setting aside $200 from my paycheck each month. I need a new car because my current car is getting old and repairs will become costly. By saving $200 a month, I will save $5,000 in 25 months (or two years and one month).”

Now that’s a SMART goal! To help you create your own SMART goals, print the worksheet I created.


Wants vs Needs

Now that we’ve established our values and goals, it’s time to buy stuff, right? Not yet. We need to talk about wants versus needs. 

As children, we are taught that needs are the stuff that’s necessary for survival: food, water, shelter. Wants are all the stuff we can live without but would enjoy having. Using these simple definitions, we can put things like rent, groceries, and transportation into the needs category, and most of our entertainment options are considered wants. But this whole post is about our complicated relationship with money, and wants and needs are not quite so simple. 

A few years ago, I was helping some local Girl Scouts earn their Junior level Savvy Shopper badge. We made collage posters with magazine clippings, with wants on the right side of the poster and needs on the left side. One girl brought up an interesting question: where does deodorant go? It sparked an insightful conversation that helped me realize our wants and needs are more complicated and simply deciding what’s necessary for survival. The girls and I talked about how it might be hard to make friends or get a job if we smell bad. We Googled the history of deodorant (great article can be found here).  We even discussed cultural differences related to hygiene. In the end, we decided that wants and needs are complicated. They are also unique and personal. Everyone has different priorities, and so everyone has different wants and needs. Identify your own wants and needs, just as you did with your values and goals. Your spending and saving decisions should be reflective of these choices. To help you determine your own wants and needs, we have another worksheet you can complete. It’s a great activity to do with other members of your family. 


So how will all of this critical thinking improve your financial situation? Wants, needs, values, and goals are important parts of every budget. After you have identified the emotional drivers behind your spending and saving decisions, start a spending log. I recommend using it for at least a week, but a month is preferred. Keep track of every last cent! In addition to writing down the date, purchase, and cost of all your expenses, also write whether they satisfy wants or needs. You can use this spending log to help you make adjustments to your budget. Spending logs are great at revealing problematic spending. We have a spending log worksheet as well as a budget worksheet that you can print. 
 

New Year, New You, Anatomy of Your Paycheck Part 2

New Year, New You, Anatomy of Your Paycheck Part 2

 

By Kylee Hale

Wednesday, January 8, 2020

On average, an employee’s salary makes up seventy percent of their total compensation, while the remaining thirty percent is compiled of fringe benefits. These “extras” often include; insurance, tuition reimbursement, childcare, retirement plan contributions, and discounts. In my first post about understanding your paycheck, I discussed the common terms on most pay stubs such as Gross Income and Net Pay. In this post, I’m going to dive deeper into the deductions listed on most pay stubs to explain where every penny goes to determine your take-home check. 

Before we talk benefits, I want to point out, about thirty percent of your Gross Income is reduced by taxes. Tax withholdings are dependent upon your W-4 form filling, the example pay stub (right) for John Smith is claiming one exemption. Multiple income tax withholdings are calculated according to a person’s claimed exemptions.

Federal Income Tax: Federal tax is calculated by tax brackets determined by taxable income and your tax filing status: single, married filing jointly, married filing separately, etc. There are Paycheckseven tax brackets, the progressive tax system allows your taxable income to be taxed in chunks according to the portion of income that falls in each tax rate category. John Smith is a single filer with $32,692.30 in annual taxable income. That puts him in the 12% tax bracket in 2019, but he only pays 10% on the first $9,700 of income, then he pays 12% on the rest up to $39,475 of taxable income, because the next bracket of 22% begins with $39,476 taxable income.

FICA/Medicare: Federal Insurance Contribution Act (FICA) tax is a payroll tax that funds Social Security benefits and Medicare health insurance. This tax is split between employers and employees who both pay 7.65% (6.2% for Social Security, 1.45% for Medicare). You can calculate these individually but for many employers, these are lumped together. John Smith is paying $95.38 for FICA and $22.30 for Medicare each pay period, equaling $117.68 together.

State Income Tax: Some states do not collect income tax, some collect a flat rate and some impose a progressive tax meaning people with higher levels of income pay higher taxes. The state of Indiana has a flat tax rate of 3.23%. John Smith will pay $49.69 per pay period or $1,242.25 a year in state income tax.

Local Tax: This is also known as county tax, in Indiana, this is based on your County of residence as of January 1 per tax year. For John Smith's pay stub, he is a Marion county resident with a tax rate of 0.0202%. 

Insurance Premiums: Most pay stubs itemize the insurance premiums for the services you selected. For health, dental, vision, life and disability, your employer likely requires you to pay a portion of the premium. These costs are deducted from your gross pay. If your employer offers TaxSaver benefits, this prevents you from paying tax on the premiums. John Smith has medical, dental, vision and life insurance on a single plan, rather than a family plan. If applicable, this section of your pay stub is also where you will find disability insurance. For state of Indiana employees, I have found that the employee portion of the premium for disability insurance is about 0.0025% per paycheck. 

Other deductions: Depending on your employer, there may be additional deductions. For example, if you choose to donate part of your paycheck to a charity that partners with your employer — like the State Employees' Community Campaign (SECC), this should appear on your pay stub.

Deferred Compensation: These funds are also known as your retirement money. The tax is deferred on this income until payout which is likely in your retirement years. The strategy with this is that you benefit from a lesser tax burden at the pay out because you expect to be in a lower tax bracket after retiring, than when you initially earned the income.

The Direct Deposit amount is your take-home pay, also known as net pay. Most pay stubs include how much you've received year to date (YTD).

The last section of the state employee paycheck, Employer Provided Benefits, is my favorite. Most employers who offer benefits are required to pay a portion of the premiums for the employee’s coverage. For example, while John Smith pays $1.22 per pay period towards his premium for dental insurance, his employer pays $10.38 per pay period towards the premium. This is the same for medical, vision, life and disability insurance premiums. 

Let’s talk about retirement accounts, this will be different for non-state employees, but I hope this information will provide some insight and spur you to find out more about how your employer retirement accounts are structured. 

On John Smith’s pay stub, we see the deductions titled:

Def Comp.: This refers to a Target Retirement Fund account offered by Hoosier S.T.A.R.T., sometimes also referred to as a 457 plan, only for state and local government employees and some non-profits. This is similar to a 401(k) plan that might be offered by a private employer.

PERF St and PERF Spe: This could be referred to as your state employee pension and the state pays 100% of the cost. While employed, the state will continue to put money into these accounts, this is provided by INPRS. This appears as two separate contributions on the pay stub because a portion is invested via an annuity and the other via Target Date Funds

Def Comp St Pd: This is another Hoosier S.T.A.R.T. sponsored retirement plan, sometimes referred to as a 401(a) plan. The unique feature of this plan is, state employees receive a $15-per-paycheck matching contribution which equates to $30/month or $390/year of “free money”. Another way of thinking is to view the state’s match as BOGO, you put in $15 a payday and the state will match that giving you $15 in your account each payday. It’s wise to contribute at least up to the match so you’re getting the benefit of all the money your employer is offering and padding your retirement savings.

HSA Employer: The last thing to mention is a Health Savings Account (HSA). If enrolled in a High Deductible Health insurance Plan (HDHP), you qualify for an HSA, an account allowing you to save specifically for medical costs. As an employer, the state of Indiana contributes thirty-nine percent of your annual deductible into your HSA. Your contributions to an HSA are pre-tax or tax-deductible and you don’t pay tax on the account’s growth nor the withdrawals if used for eligible expenses. An HSA is similar to a Flexible Spending Account (FSA), although an FSA does not allow for the leftover funds to roll over to the next year, and an FSA is often better paired with a lower deductible health insurance plan.

It’s important to stay on top of tracking your deductions and contributions. Any errors are your responsibility to find and report, the last thing you want is for an error to be repeated through several pay periods.

I can write from experience, my first year as a state of Indiana employee, somewhere a mistake was made by HR. The information on my W-4 was incorrectly filed in the system. For about seven months my taxes were withheld in “married” filing status, although I would be filing as “single”. I noticed this on my paystub a little too late in the year, and when tax filing time came around, I owed more than I was excited to pay.

If you have questions about any of the information listed on your pay stub, be sure to contact your human resources representative.        

December 2019 Posts


The Anatomy of Your Paycheck

The Anatomy of Your Paycheck

 

By Kylee Hale

Wednesday, December 18, 2019

Most people don’t get a pay stub delivered to them along with the paycheck anymore, because most employers issue a direct deposit check and theState Employee Paycheck funds just appear in your bank account. This doesn’t mean that pay stubs no longer exist, or that pay stubs are no longer important. Reviewing your pay stub can help you spot errors and be aware of where the money that isn’t deposited into your account is going. There is good information about your finances located on this slip, knowing about your withholdings, taxes, benefits and retirement contributions can help you be better off financially. In this post, I’ll show you how to locate your pay stub (for state of Indiana employees), and define some of the information you see on your pay stub. If you are not a state of Indiana employee, check with your Human Resources Department.

For state of Indiana employees, your pay stub can be found in PeopleSoft. The same place you go to submit your time, except instead of selecting "Time Reporting", you'll go to "Payroll and Compensation". From there, you click on "Pay Inquiry" and this will open a new window with your pay stub. 

Now that you've found your pay stub, again, if you are not a state of Indiana employee, be sure to ask your HR department, let's look at the earnings and taxes. Below is an example of a pay stub for John Smith, making a $40,000 salary. 

Pay stub example

For state of Indiana employees, we have information about our employment anniversary (Bonus Date) at the top of our paychecks, this refers to when you will be awarded paid time off. You can find more about this in the State of Indiana Employee Handbook, or your agency's employee handbook. Just below that, is your Tax Filing Status, this correlates to the W-4 tax form that you completed with your HR representative. You can change your exemptions at any time, this will impact your take home pay amount. If you opt for less money withheld for federal taxes, you need to plan ahead for tax filing season, as you might owe money instead of getting a tax return. The IRS has an IRS Withholding Calculator that can help you estimate what you should claim on your W-4.

The majority of your paystub describes income earnings, tax withholdings, retirement contributions and medical premiums. Let's review some common terms. 

Pay Period: The dates on your pay stub will inform you of your pay schedule, whether it's weekly, bi-weekly, or monthly. If you're paid weekly you would multiply the pay by 52 to calculate the annual salary. If paid bi-weekly multiply by 26, and if paid monthly, multiply by 12. State of Indiana employees are paid bi-weekly or 26 times a year. 

Gross Earnings: This is the total amount earned for the pay period, including wages/salary, plus bonuses and tips if applicable. For this example, the pay stub shows how much John Smith has earned year to date (YTD), after 25 out of 26 pay periods. 

Non Taxable Earnings: The IRS definition of a non-taxable wage is fairly narrow, but an example of such is disability wages and worker's compensation. 

Deferred Compensation: This part of your income is set aside to be paid to you at a later time, also known as invested retirement funds. You don't pay taxes on this portion of income until the money is paid out.

TaxSaver Benefits (Cafeteria 125 Plan): This is an employee benefit offered by section 125 of the Internal Revenue Code, allowing for your premiums to be deducted before taxes are applied to your income. This allows for your take home pay to be a little bit bigger. 

Taxable Earnings: This portion of your income, is used to figure the taxes you'll pay to Federal, State and Local entities as well as your premium for Medicare/FICA. You can learn more about tax and premium calculations in the next post, The Anatomy of Your Paycheck Part Two, where I break down the other half of your paycheck.

Some pay stubs summarize your paid time off. Like you can see on John Smith's pay stub, state of Indiana employee pay stubs reflect overall taxes, deductions and take-home income for the pay period and YTD. 

Net Pay: This is your take-home pay. Calculated after all taxes, insurance premiums, deferred compensation/retirement contributions and deductions have been subtracted out, this is the remainder of your income. 

If you're like most people, the number on your pay stub that really matters is the cash dollar amount on your paycheck. We are all excited to get paid and have money deposited into our accounts. Although, it is important to review your pay stub, being tuned into where every dollar goes will help you take full advantage of your employee benefits. If there is a mistake in your pay or an opportunity to better your retirement or take-home pay, this is where you'll likely notice it. In our next post, we will analyze another part of your pay stub: insurance premiums and retirement accounts. Be sure to check out the Anatomy of Your Paycheck Part Two on January 8, 2020. This will be our first post of the New Year. 

Save Energy, Save Money

Save Energy, Save Money

 

By Kelly Griese

Wednesday, December 11, 2019

Save Energy, Save Money

We already know you love saving money, because you’re reading the MoneyWise Matters blog (and are hopefully a subscriber)! That’s why we’re confident you’ll love this post, because it’s all about saving money… and energy. How great is that? You can help the planet and your budget at the same time. 

In order to help you improve your home’s energy efficiency, we teamed up with Indianapolis Power & Light Company. They taught us that small changes can have a big impact on energy bills. But if you’re not an IPL customer, don’t worry, we have links to energy providers in your community at the end of this article.

Here are five easy things you can do this weekend to improve your energy efficiency:

  1. Replace the air filter in your furnace every 6 months. A clogged filter is problematic for several reasons. When it comes to energy efficiency, a clogged filter requires your furnace to work harder. Replacing the filter will not only improve the air quality of your home, but it will allow that air to flow through the filter with greater ease. (Side note… you should also consider cleaning the air vents and hoses that connect to your clothing dryer. Dryers also have to work harder when the vents and hoses are clogged with dust, plus, all that debris is a fire hazard.) 
  2. Replace the incandescent light bulbs in your home with LED bulbs. Incandescent bulbs may cost a little less in the store (as little as 70 cents per bulb), but they don’t last nearly as long (about 1,000 hours), and 90% of the energy is wasted in heat, while only 10% goes toward producing light. Meanwhile, standard LED bulbs run anywhere from $1-$3, but they are much more efficient and will last a lot longer (about 25,000 hours). According to Energy.gov, your lighting energy costs can be cut 50%-80% by switching out your incandescent light bulbs to LEDs.
  3. Using setbacks on your thermostat is another great way to get significant savings. In the winter, 68 degrees is the recommended temperature when you are home and awake, and 63 degrees is recommended when you are away at work or on vacation. In the summer, it is best to set your thermostat to 78 degrees when you are home and 83 degrees when you are away.
  4. Seal air leaks and cover drafty windows. Replacing windows can be expensive and time consuming, but there are plastic kits you can buy in most home-improvement stores to help you insulate the windows you have in the meantime. Install new caulking and weather-stripping to help seal air leaks around doors because they can wear out over time or may have never been installed when your home was built.
  5. Unplug electronics and appliances that are not being used. If you have a guest room, that is a great place to start. Nearly everything that plugs into the wall outlet will draw small amounts of power even when turned off. You can save energy by unplugging anything you do not regularly use. You may also want to consider an energy efficient power strip for your entertainment system. It will cut power to devices that are not in use, but still provide power to things like your internet modem and DVR when you are away from home.

To tackle some of these projects and identify other energy bandits in our homes, one of our Indianapolis-based staff members scheduled a FREE energy assessment with IPL. Watch as Brandon Kline, our Elections Outreach Coordinator, tours his home with Casey Roehm from CLEAResult®, who manages IPL’s residential and commercial energy efficiency programs. 

IPL’s eScore™ Home Energy Assessment is free to IPL customers. An energy advisor will come to your home, conduct a walk-through assessment, and install energy-efficient products to help you start saving immediately. Your home will be given an eScore of 1-10, and the energy advisor will provide you with recommendations to improve that score. All of the recommendations will appear in your eScore dashboard, which you can view online when you log into your IPL account.  One of the “coolest” parts about the eScore program is that the advisor can install a FREE smart thermostat by Nest. To qualify, customers must enroll in IPL’s CoolCents® program, and they must have electric heat or central cooling, a compatible HVAC system and working Wi-Fi. You can learn more about the CoolCents® program by clicking here


So what if you’re not an IPL customer? Energy providers throughout Indiana offer similar ways to save. We compiled a list of the energy efficient programs in other parts of the state.

Rein in Holiday Spending

Rein in Holiday Spending

 

By Kylee Hale

Wednesday, December 4, 2019

For some, overspending and under preparing is as habitual as the holiday season itself. An albatross of debt on your shoulders is no way to start the New Year. Financial prosperity requires financial planning. To ensure your holidays are merry this year, check out these approaches to stretch your funds without being a Scrooge. 

A Plan for Affordability:

Make a list and check it twice. Establishing a gifting budget is the best way to keep yourself from overspending. Jot down an outline of who you are buying for and how much can be allotted to each. Look for things you canSant's List trim, try to avoid gag gifts that may go unused or discarded soon after unwrapped. Most importantly, use self-control and stick to your budget. 

Retail SaleAvoid impulse shopping. Retail stores strategically place items conveniently at the checkout and on aisle end caps. It can be hard to resist grabbing additional items, but too many stocking stuffers can add up to a large total of spending. Don’t succumb to the temptation and remember that if you didn’t intend to buy it, then you probably don’t need it. 

Price check online before you buy. If you see something in a store that looks like a good deal, use your smartphone to check prices at other retailers before making your purchase. Some apps, like Amazon, even have barcode scanner to make the price check process easier and you can read the reviews as well. Also, check for price adjustments, many merchants price adjust for up to two weeks, just keep the receipt and an eye on your product’s price. 

gift exchangeDo not buy for everyone and their brother. Do you have a seemingly endless number of family members? Are you compelled to buy for every co-worker? Try alternative ideas, like sharing a meal together as a group or a weekend trip. I’ve heard of relatives agreeing to only buy for the children, that is, if there are less kids than adults in the group. Cut down on the extent of gift giving by trying a White Elephant gift exchange

Use plastic to your advantage. Credit cards can be unnerving, especially during the holiday season when overspending can send you down the rabbit hole of debt. However, if you’re responsible with your spending, why not get cash back for the money you’re spending. Use your credit card to earn rewards by always paying your balance in full. You can receive gift cards or travel miles as rewards, which are often worth more than cash back.

If you’ve stressed about holiday spending before and how to afford all the festivities, these tips will help you enjoy the hustle and bustle a lot more. Time spent with family and friends is more enjoyable when you’re not worrying about your finances. Just remember, the holiday season doesn’t require spending every last dime you have. Being able to afford your holiday spending in cash may be the best gift of all.

November 2019 Posts


Shop Smart, Shop Safe

Shop Smart, Shop Safe

 

By Kelly Griese

Wednesday, November 27, 2019

Before your Thanksgiving feast even has a chance to fully digest, many of you will start shopping. And while plenty of folks choose to burn a few calories by bargain shopping at traditional brick and mortar stores, others prefer to lean back in the La-Z-Boy to shop online while watching football. No matter your style, these tips will lead to a safer, smarter shopping experience.  


Security
When shopping online, make sure the site is secure before sharing your personal information. Look for a tiny padlock icon, which you can usually find near the browser’s URL bar. Also check the website’s address. Non-secure sites and pages begin with http://. Secure sites and pages begin with https://. You’ll also want to research the online retailer to make sure they’re legit. Creating a website is easy, so you’ll want to verify the online seller’s physical address and phone number. 


Hidden Costs and Fees
Check the total price of an item before purchasing. Look for shipping and handling costs, then compare that price to what you would pay if you visited the store in person. You should also beware of restocking fees. If you return an item you bought online, you may have to pay for that item to be repackaged and replaced. Some retailers charge 25% or more, so it’s important to check the retailer’s return policy before making an online purchase. CBS News recently published its list of the best and worst return policies. If you’re someone who suffers from chronic buyer’s remorse, you may want to read the article before making your next purchase.  


Shipping
Save on shipping. Ship packages directly to the recipients rather than spending the extra money to ship to yourself first. Slower shipping methods are always cheaper, so don’t wait until the last minute to make online purchases. While an increasing number of online retailers offer free shipping (check The Penny Hoarder’s list of 35 stores that offer free shipping), others throw in the free shipping based on how much you purchase. In those cases, it’s best to order from as few stores as possible. One more tip: some of the most popular retailers, including Walmart, now offer free in-store pick-up for your online purchases. 


Credit vs Debit
When shopping online, credit cards are safer than debit cards. Credit cards come with more protections against identity theft and fraud. It’s also helpful if you only use one credit card for all your online shopping. If a thief does access your information, only one card is compromised, making it easier for you to put a stop to the theft. Prepaid cards are growing in popularity for online purchases. Before picking a prepaid card, check out this editorial article from CreditCards.com about some of the pros and cons of these cards. It includes tips for selecting the right card for your needs. 


Layaway
Layaway is back in a big way! Unlike a credit card, which bills you after you have your purchase in hand, layaway allows you to make payments in advance. You won’t receive your purchase until after you have fully paid for it. It’s a helpful tool for staying out of debt around the holidays. To use layaway properly, follow these tips: 

  • Determine what the layaway policies and fees are prior to using it. Ask about the payment period, when payments are due, and what happens if you miss a payment or the item goes on sale while still on layaway. 
  • Make all scheduled payments. Policies vary by store. In some cases, the item could be pulled from layaway and you could be asked to pay a fine if you miss a payment.
  • Get everything in writing. When you put something on layaway, you are entering into a contract with the store and agreeing to pay for the item they’re holding for you. Make sure your responsibilities as well as the store’s responsibilities are clearly outlined and don’t lose your copy! 
  • Know who is in charge of the layaway program. Some retailers use third-party vendors for their online layaway services. Also, you should know whether your merchandise might be held off-site.
  • Understand the store’s refund policy. Some stores may include a cancellation fee if you try to cancel the purchase. Stores may also refund all, little, or none of the money you have paid for the purchase, or they may give you in-store credit. 

For more online shopping tips, check the Federal Trade Commission’s blog. They recently published a great article on the topic, and it includes information about how to report online shopping fraud. 
 

Let's Talk Money

Let's Talk Money

 

By Kelly Griese

Wednesday, November 20, 2019

Having “The Talk”
If you’re a parent, seeing the words “the talk” in quotation marks may make you nervous. You probably assume it pertains to a discussion of the birds and the bees. But in this case, “the talk” pertains to an even more taboo topic: money. A quick Google search reveals article after article on how we would rather have an awkward conversation about sex, politics, or religion than delve into the ultra-uncomfortable subject of money. Gary Dayton, a licensed psychologist and head of Peak Psychology in Glastonbury, Connecticut, was quoted in a recent US News report. “To many, money symbolizes comfort and living with ease, but it can also bring up scary issues of dependence, insecurity and even survival,” Dayton said. When you put it that way, it’s no wonder we’re all so afraid to discuss our finances! Money means a lot to us. It can represent status, power, security, stress, weakness, mistakes and more. We judge ourselves and others based on how much money (and debt) everyone has. Right or wrong, it’s common. So how do we broach such a difficult conversation with our loved ones, and why should we? 

Why You Should Talk about Money
Let’s start with the why. Keeping our finances a secret allows for a lot of problems to fester. Think of the room in your house where guests aren’t allowed. It’s where you hide all the junk you don’t want them to see. The rest of the house may look picture perfect for a party, but that’s because you stashed all the clutter in that one room that’s off-limits. You might impress everyone for the time being, but what happens if someone stumbles into the messy room? Rather than hiding your secrets, wouldn’t it be better to fix the problems you’ve shoved out of sight? Purge the room of all that stuff you no longer need or want and give it a good scrubbing. Most importantly, don’t refill the room once you’ve cleaned it! By opening up our whole home for exploration and presenting an honest version of ourselves to the world, we’re motivated to tackle problem areas and maintain them moving forward. Think of your finances in the same way. Hiding money problems from your spouse, children, and parents won’t make those problems go away. They’ll grow to the point of crisis. So make a plan to discuss what’s wrong and work together to improve your financial lives. 

When You Should Talk about Money
The holidays can actually be a great time to discuss finances. On Thanksgiving, it’s common for multiple generations of a family to gather together to celebrate. It’s a time to reflect on all the good things in your life for which you are thankful. And this date sadly can precede a time of excess spending in preparation for Christmas. So before rushing out to shop on Black Friday, take some time to discuss what you can truly afford to spend. Or, perhaps decide as a family to change up the way you have traditionally celebrated Christmas. You could forgo presents all together, arrange a Secret Santa system, or even decide to pool all your money together for a shared adventure that will create wonderful memories. 

How to Start a Conversation about Money
Starting a conversation about money is easier than you think. You don’t have to air all your dirty laundry right away. It’s fine to ease into these talks and gradually discuss more and more difficult things. Here are some conversation starters from the North American Securities Administrators Association (NASAA) that you can use to begin the process. 


Conversations for Couples - Communication is an essential part of a healthy relationship. Your money talk should be an open and honest dialogue with your spouse or significant other about your current financial situation and goals. 

Budgeting 

  • How much of our income should go toward fixed expenses (i.e. rent, insurance) versus flexible expenses (i.e. entertainment, savings, investments)?
  • Have we determined our priorities for flexible income and expenses?
  • Do we have similar habits or views on how to manage money?

Saving

  • What are our short and long term financial goals?
  • Are we prepared for unexpected financial hardships?
  • Are there ways we could spend less and save more?

Investing

  • How much risk are we willing to take with our money?
  • What investments are appropriate at this time in our life?
  • Where can we get help with our financial/investment decisions?
  • How can we select a financial professional (i.e. broker, investment advisor, financial planner) that’s right for us?

For more help discussing financial matters with your significant other, we encourage you to check out our Money Skills for Newlyweds guide


Conversations for Parents and Kids - Help your children build good money habits by talking with them early and often about finances and by setting a good financial example. Educational games and resources for youth can help get your children thinking and talking about personal finance. Use the questions below to jump start a conversation with your child about responsible money management. 

Budgeting

  • What is the difference between a need and a want? Which is more important?
  • How does our family make decisions about spending and saving?
  • Why is it important to balance income (money coming in) with expenses (money going out)?
  • What are ways to earn more money (i.e. babysitting, lawn mowing)?

Saving

  • What are some ways to save money?
  • How can interest help make your savings grow?
  • Is there something special you want to save for?
  • What are some ways to save for a long-term goal like buying a car or going to college?

Investing

  • What is an investment and how does it work?
  • How can investing make your money grow?
  • What are some of the risks of investing?
  • What are some ways to make investing less risky?
  • Where can you get advice and information about investing?

There’s an argument to be made for parents telling children how much money they make. The New York Times reported on one man’s hands-on budgeting lesson. He withdrew his entire month’s salary in $1 bills, dumped the cash on a table in front of his children, and spent the next few hours explaining where all of that money goes. 


Conversations for Retirees and Senior Citizens - Once you leave the workforce, it’s important to talk with your loved ones about how to ensure that you retain your financial security and independence throughout your retirement. Ask yourself, your partner or your adult children these questions to help you re-evaluate your financial plan in retirement.

Budgeting

  • Are projections for our retirement needs accurate?
  • Will we be able to enjoy the lifestyle we want (i.e. travel or recreational activities)?
  • Have we planned for unforeseen expenses due to inflation and medical expenses?
  • Could we downsize to reduce living expenses?
  • Have we made arrangements for someone to manage our finances if our health should decline?

Saving

  • Have we planned for rising health care costs?
  • Does someone we trust have copies of our estate planning documents and accounts information?
  • Do we have an emergency fund for unexpected financial hardships?
  • Who can we seek advice from to leave an inheritance?
  • Do we know all commissions, penalties, taxes and fees for withdrawing or rolling over retirement funds?

Investing

  • Who manages our investments and gives us investment advice?
  • Does our mix of investments match the level of risk we want at this stage of life?
  • Do we understand the risk and benefits of financial products promoted to senior investors, such as reverse mortgages, variable annuities or life settlements?
  • Do we know all commissions, penalties, taxes and fees for withdrawing or rolling over our retirement funds?
  • Who will handle our investments if our health starts to decline?

There’s another important conversation to have with aging loved ones. It’s crucial that you discuss fraud. It’s everywhere, and senior citizens are a favorite target. Many people fear this topic, because they think it will upset the seniors in their life. To ease your mind, here are some conversational queues flowing right along with “can you pass the turkey,” to ease into talking about protecting their pockets.

  • Now Versus Then - “Back in my day” and “when I was your age” are two common sayings spoken by aging generations. Most parents and grandparents love to tell stories about how they had to “walk 20 miles, uphill, both ways, in the snow.”  Use this to your advantage. Ask them why and how they interpret things have changed. This is a great way to lead into discussing technology and the evolution of scams.
  • Vet yourself - Remember the first time you typed your own name into Google? You were probably amazed at the amount of information returned through your search.  Be sure to ask your loved ones if they have tried this.  If not, grab a device and do this together. This will help them observe “straight from the horse’s mouth” how much personal information is online and available at one click. Feel free to throw in a “wow, look how easy it is for fraudsters to access this information” or similar comment.
  • Add Credibility - By visiting valid alert websites with your aging loved ones, such as Federal Trade Commission and the IRS, you are able to share valuable information with your loved one without seeming pushy or overly dramatic. These sources also have Facebook and Twitter accounts for followers to receive fraud alerts automatically. Additionally, it can help to watch the news together when reports about fraud are discussed.  Our Indiana MoneyWise website also provides ways to spot fraud and avoid becoming a victim.
  • Talk with them, not at them - Most of us pride ourselves on our independence. Engaging in conversation and open discussion rather than telling your loved ones what to do, goes along way.  Remember your parents and grandparents probably have a contrasting viewpoint on scams and fraud.  Back in the day, they didn’t have to lock their doors, and a handshake sealed the deal.  Although times have changed, the mindset still exists. Their trusting nature, accessibility, and polite manners make them tempting targets for con artists. When talking with them, encourage an attitude of empowerment. Discuss ways they can protect themselves.  By arming them with information, you’ll help your aging loved ones avoid fraud and establish yourself as someone they can come to when problems arise. For more information about aging family members and caregiving visit AgingCare.com.
     

Holiday Scams to Avoid

Holiday Scams to Avoid

 

By Kylee Hale

Wednesday, November 13, 2019

We are only 41 days away from Christmas. Some of us have started our shopping and others will procrastinate until the eve before. No matter how you do your gift giving, you might be surprised to learn that older peoplMillennials fraud holidaye are not the most susceptible to falling for scams. While elders tend to lose more money, younger people are more frequently victims. 

In a recent Consumer Protection Data Spotlight by the Federal Trade Commission (FTC), research shows that 20 and 30 year olds (aka millennials), are 25% more likely to report a loss of money via fraud than people in their 40s and older. The #1 type of fraud loss reported by millennials is online shopping, followed by fraud of business imposters, government imposters, fake check scams and romance scams. 

Scammers prey on consumers’ emotions and desires. They will take advantage of any opportunity, especially the season of giving. The holidays are a prime time for con artists to try to get ahold of your personal information and rob you of your holiday spirit. Don’t let a scammer steal your jingle, be on the lookout for these popular scams. 


Imitation sites – The amount of retailer marketing emails we receive during the holiday season seems to be triple compared to the rest of the year. Scammers are responsible for some of our inbox overload as they send out illegitimate emails made to look like the real ones that retailers produce. These replicated emails could contain malicious links built by scammers to gather your credit card information or ruin your machine by installing a virus. For example, consumers visiting wa1mart.com may mistakenly think that they're on the real Walmart website. In reality, the L in the URL was replaced by the number one -- and the site is fraudulent.

Similar to emails, fraudsters also target the younger generations through social media ads. Be cautious of social media promotions, if a deal sounds too good to be true, it probably is. Many of the shopping-related fraud experiences reported to the FTC were about items that were never delivered or weren’t as advertised.

To check links for legitimacy, hover over the link in an email or on social media to see where the link directs you. Check that the URL includes https: identifying that it is a secure page and be sure to avoid purchasing items on a site you have never heard of. Review emails and ads for typos and other mistakes that could indicate it’s inauthentic. When in doubt, your safest route is to directly search a website by typing in the web address yourself via a new browser window. 


Phony attempted delivery notifications – After you place an online order, your eager recipient excitement sets in, and con artists know this too. Similar to the imitation marketing emails and social media posts, scammers also send fake shipping notifications to try to get you to click their copycat links. The email might say your shipment is on the way but you need to update your delivery preferences. By following the link you risk downloading a keystroke virus that could track your keypad activity and compromise your credit card and personal information.  

Would you believe there is a low-tech version of this scam? Scammers try to pull a fast one by putting a note on your door or mailbox similar to the redelivery notifications that come from UPS and Fedex. However, the phone number provided goes to a fraudster who will try to get your bank account information. 

This seems like a fitting time to also mention keeping your packages out of the hands of “porch pirates”. Your online orders are just as susceptible to standard theft. Nearly 26 million Americans reported their holiday packages stolen last year, including this guy in the USA Today article, whose package contents were removed from the box within 5 minutes of Amazon’s delivery. 


Fake Charities - Holiday time is a common time of year for people to feel generous and to give to charities. If you donate you are likely aware of the tax benefits which may be your motive. Charities know this and typically reach out during this time, but so do scammers. 

With the increased request for donations, be sure to double check the authenticity of the charity. The Better Business Bureau’s Wise Giving Alliance (Give.org) is a great resource offering reports and ratings on how organizations spend donations and conduct business, you don’t want to give to a fake cause or end up funding someone’s personal gain. 


Virtual Gift Exchange – A scam that is recycled year after year, but continues to get new victims. Watch out for this seasonal pyramid scheme on Facebook, Instagram and Twitter. The scam begins when a friend posts about inviting you to a gift exchange, often it’s titled Secret Sister Gift Exchange. It’s advertised that if you buy a gift valued at $10 and send it to one person, you will in return receive 36 gifts in the mail. Not only does this seem too good to be true, it’s actually illegal. According to the Better Business Bureau, any chain letter of this kind is considered illegal gambling by the United States Postal Service, and that includes postal mail, email and social media. 

 

The holiday season brings out a lot of cheer and goodwill, but it’s also a time when scammers see more opportunity to prowl for easy victims. Stay alert and don’t risk being separated from your hard earned money. Recognizing when deals are unrealistic and paying close attention to links and phony websites will help protect you.  

5 Tips for Celebrating Veterans Day

5 Tips for Celebrating Veterans Day

 

By Kylee Hale

Wednesday, November 6, 2019

If you’re like me, you recognize Veterans Day as a holiday in November, which means you don’t have to come to work. This is a great benefit even to those of us who are not veterans. While we are enjoying time away from our cubicles, here are a few tips to make sure you truly know what this day is all about.

#1 Veterans Day and Memorial Day are not the same.

I will admit, I did not know the difference, except that one is in May and one in November. But, I know I am not alone due to the number of articles written to explain the differences between these two holidays. According to Military.com, Memorial Day is for reflecting, remembering and honoring. In other words, Memorial Day is a way of appreciating those who gave their lives for our country, while Veterans Day honors all who have served – dead or alive – yet it seems to mostly be intended to thank living veterans for their service.

#2 “The end of all wars”

Veterans Days was originally Armistice Day, named for the end of the fighting of World War I. On the eleventh hour, of the eleventh day of the eleventh month of 1919, the Allies and Germany put into effect an armistice or a truce. Congress did not establish this day as a holiday until 1938, and then World War II happened and the Korean War. In 1954, congress changed the holiday to “veterans” day to honor all American war vets.

#3 Veterans Day, not Veteran’s Day.

Just like Daylight Saving Time is commonly misspelled with an added “s” to be Daylight Savings Time, Veterans Day often gets an apostrophe added which does not belong. There is no possession of Veterans Day, just plural, as is celebrating all veterans as a group.

#4 Always on November 11th

From 1971 to 1977, Veterans Day was observed on the fourth Monday in October. This was part of the Uniform Holiday Bill, which pinned down a few federal holidays to be celebrated on a Monday. Officials hoped this would stimulate the economy with travel and family activities over the long weekends. Americans did not like Veterans Day being celebrated this way. In 1978, President Ford signed a bill that return Veterans Day to November 11th. Ever since, we have always observed this holiday on November 11th and sometimes we get lucky enough that it falls on a day next to the weekend. 

#5 Celebrate HomecomingMilitary Homecoming

Civilian life can be very different than time spent while on active duty. For those transitioning their way into life at home with family and friends, there are many resources to help. Some challenges include obtaining a job, repaying debt, going back to school and preparing for financial emergencies. The links to several assistance resources are listed below:

Veteran Jobs: Military.com, USAJobs
Continued Education: GI Bill 
Hardship Support: USA Cares, The American Legion, Operation First Response, Coalition to Salute America’s Heroes and Disable American Veterans

October 2019 Posts


Bitcoin and Beyond: What Do You Know About Crypto?

Bitcoin and Beyond: What Do You Know About Crypto?

 

By Kelly Griese

Wednesday, October 30, 2019

Bitcoin This week marks the 11th anniversary of Bitcoin. It’s one of the most talked about brand names in the fintech world, and for many people, it’s as synonymous with cryptocurrency. Think using Coke in place of soda, Kleenex in place of facial tissue, Chapstick in place of lip balm. There are even terms to define this phenomenon: genericized trademark or proprietary eponym. Essentially, the brand name becomes the common name we use to describe all similar products. In the case of Bitcoin, we often use it in place cryptocurrency, even though there are more than 2,900 different cryptocurrencies in existence. 

 

So what is cryptocurrency anBitcoind how does it apply to investing? 

First, let’s define cryptocurrencies with some help from the North American Securities Administrators Association, or NASAA

“Cryptocurrencies are digital assets created by companies or individuals that take the form of a virtual coin or token. Anyone can create a cryptocurrency. Cryptocurrencies are intangible and exist only on the internet. Central banks and other governmental authorities do not insure or control cryptocurrencies. You cannot always exchange them for other fiat currencies (i.e., currencies declared “legal tender” by governments), such as the U.S. or Canadian dollar or Mexican peso. Cryptocurrencies trade on unregulated, opaque exchanges on which there may be little or no opportunity to independently verify their true market value. And given the newness and uniqueness of cryptocurrencies and related instruments, they do not yet have a clear place in the existing framework of financial regulation.”

BitcoinFor some investors, the decentralized, unregulated nature of cryptocurrencies makes them MORE appealing, and fraudsters agree.

Fraudsters all too eager to exploit investors’ interest in the crypto craze. Here are some common schemes associated with cryptocurrencies: 

Fake digital wallets – A digital wallet is used to store, send, and receive cryptocurrencies. Scammers design a fake digital wallet to lure users into providing their private key or code that enables the wallet to open. Once a scammer receives the private key, he or she can steal all the cryptocurrency from the owner’s digital wallet.

Pump-and-dumps – Groups of individuals coordinate to buy a thinly-traded cryptocurrency, promote the cryptocurrency on social media to push up demand and price, and then sell it in a coordinated sale. The price plummets and those unaware of the scheme are left with the devalued cryptocurrency. 

Multi-level marketing platforms – Companies lure investors through the promise of high interest with low risk. These investors are then incentivized to recruit more members. 

In an effort to combat cryptocurrency scams, the Indiana Securities Division joined forces with NASAA to investigate Initial Coin Offerings (ICOs) and cryptocurrency-related investment products. “Operation Cryptosweep” involves more than 40 NASAA members, including the Indiana Securities Division.  To date, the operation has resulted in more than 330 inquiries and investigations and at least 85 enforcement actions. As part of the the sweep, the Indiana Securities Division filed a cease and desist order against Bionic for registration violations.

Bitcoin

Before investing in crypto-related products, here are some common concerns you should consider: 

Volatility - Cryptocurrency markets are highly volatile, making them unsuitable for most investors looking to meet long-term savings or retirement goals. To understand this volatility, just look to the Bitcoin crash of 2018. It was valued at $6,447 on October 31, 2017 before spiking to an all-time high of $19,068 on December 17, 2017 and returning to $6,283 as of October 30, 2018. Other cryptocurrencies experienced similar volatility.

No recourse - Cryptocurrency and many crypto-related investments are subject to minimal regulatory oversight, and there may be no recourse should the cryptocurrency disappear due to a cybersecurity breach or hack.

Untraceable - Cryptocurrency or crypto-related investments only exist on the internet. Issuers can be located anywhere in the world, so it may be impossible to trace and recover lost funds through the courts.

Uninsured - Cryptocurrency accounts are not insured by the Federal Deposit Insurance Corporation, or FDIC. 

Unregulated - Cryptocurrency investors rely upon unregulated exchanges that may lack appropriate internal controls, making them susceptible to fraud, theft and hacking.

Hackable - Creating a digital wallet to store cryptocurrency involves installing software on an investor’s computer. As with any software download, hackers may include malicious code.

Vulnerable - Purchasers of cryptocurrencies rely on the strength of their own computer systems as well as systems provided by third parties to protect purchased cryptocurrencies from theft.

Last year, ahead of the 10th anniversary of Bitcoin, the Securities Division of the Indiana Secretary of State’s office released an investor advisory on the subject of cryptocurrencies. You can read it here.  Additionally, NASAA created a short, animated video to help investors better understand cryptocurrency-related investing and the risks involved. You can view the video here
 

How to Start Investing

How to Start Investing

 

By Kylee Hale

Wednesday, October 23, 2019

Young adults today face one of the most uncertain economic futures of any generation since the Great Depression. Specifically for us Millennials, born in the 80’s and early 90’s, most of us came of age and entered the workforce during the Great Recession. As a result some of us started careers with lower salaries than desired or not in our preferred field of work. Fuse this with the amount of debt we carry in the form of school loans, and it’s easy to see why some (not all) of us might be nervous about putting our hard earned money into an investment option that carries any degree of risk. Aside from questioning how to begin investing, you may be wondering when to begin. Let's address that first.
 

If you remember any of the following, you need to be investing for your future:

Oregon Trail when Facebook required a college email address.N*Sync & Limp Bizkit.Total Request LiveBeanie BabiesBlockbuster VideoAIM AOL instant messengerMixed CDsFloppy DisksNETFLIX DVDs VIA MAILDial-up InternetTwilight

Hopefully, you have deduced that you should start investing today. Not investing while time is on your side could make for a difficult road to retirement. But many times, we run away from things that seem challenging or when we don't know where the starting line is. Investing can seem overwhelming and full of uncertain outcomes, yet most of these emotions are built up by myths or fictional roadblocks. Here are the top three myths you need to stop believing about investing and the encouragement you need to get going. 

3 Investing myths you should ignore

Myth 1: I don’t have enough money to start investing.
“The journey of a thousand miles begins with a single step.” - Lao Tsu, Chinese Philosopher

Can you put aside $5 a week? $10 a week? Then congratulations! You have enough money to start investing for your future goals, whether that includes a home, wedding, or more flexible lifestyle. You might be able to find even more to invest by taking a look at your budget. (Don’t have a budget? Check out our free budgeting worksheet and instruction guide here.) You can make this choice effortless with automatic deductions. If you’re paid bi-weekly and have $20 taken out from your paycheck before it hits your bank account, you’ll have over $500 to invest over the course of the year, and you won’t miss it because you won’t see it.

Many brokerage firms and trading platforms offer no minimum deposit required investment options, just be sure to check the commissions or management fees. Many young adults are curious about investing apps, you can check out some guidelines for using smart phone investing apps here. Remember, before placing your money with any broker-dealer, to make sure they are registered by checking the Indiana Securities Portal.

Myth 2: I don’t know enough about investing – I have no idea which stock to pick.
“You don’t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ.” - Warren Buffett

You don’t have to pick stocks if you don’t feel comfortable researching the financial health and history of individual companies. There are many investment products that enable you to invest in broad sectors of the market for not much cost at all. These products allow you to diversify and spread your risk out over several different companies and economic sectors, rather than putting all your money in one company’s stock. If you need help building a portfolio, you can also enlist the assistance of a robo-adviser or consult a registered financial professional. Many financial planners, investment advisers, and brokers are willing to work with clients who are just starting out on their investing journey and may not have accumulated many investable assets yet. In a way, time is on the financial professional’s side by working with younger clients whose investments will enjoy the benefit of compounding value over time.

Start educating yourself by using Google or check out our Investing 101 page for educational materials on investing. You may also start by researching lower cost financial professionals in your area or who are willing to work with you remotely on your investment goals. For more information, see this overview of the different types of financial professionals.

Myth 3: I’m afraid of losing all my money.
“When you invest, you are buying a day that you don’t have to work.” - Aya Laraya

It's undeniable how scary it was when the US stock market lost half of its value in 2008. However, that’s not the end of the story – by 2012, the market was back on track and trending upward. How many millionaires can you name that became wealthy by investing in savings accounts? The answer to that question is likely, none. While there is always a risk of losing money when investing, leaving your money in a savings account is almost a guarantee that you will lose some of the value of your money to inflation.

Take a look at the data on market performance over the long term (10, 20, and 30 years), while there are fluctuations, in general, the market has trended up over the long term. Don’t get hung up on social media trends or 24-hour news shows. It’s important not to make your investment decisions based on sources that offer dramatized information on the latest market dip or the hottest new IPO. 

I can't say it enough, right now time is on your side, but with each day that passes, it’s a little less on your side.


Through my membership with the North American Securities Administration Association (NASAA), Alerts and Advisories project group, we created NASAA's Millennial Money Mission. For more investor insights and advisories visit NASAA.org

Scary Spending: Halloween by the Numbers

Scary Spending: Halloween by the Numbers

 

By Kelly Griese

Wednesday, October 16, 2019

We spend a scary amount of money on Halloween. Americans in particular love the holiday and can’t seem to get enough of the candy, decorations, and costumes that have come to define October 31st (and the month or so before it). The National Retail Federation, or NRF, has been conducting a survey of Halloween since 2003 to see how Americans celebrate this spooky holiday. This year, shoppers say they will spend an average of $86.27 per household. That means Halloween spending in 2019 is expected to reach $8.8 billion (that’s down from 2018’s projected spending of $9 billion).  

So where’s the money go? The bulk of the money, $3.2 billion, is expected to be spent on costumes. 47% of consumers say they plan to dress in costumes – and 17%, or 29 million people, say they will buy costumes for their pets as well. It seems social media, Instagram in particular, could be driving the pet costume trend. According to the NRF, the most popular pet costumes include pumpkins, hot dogs, superheroes, bumblebees, devils, and sharks. 

Decorations are the second biggest spending category, with consumers expected to spend $2.7 billion making their homes look seasonally spooky. 49% of folks say they plan to decorate their homes for the Halloween holiday. Then there’s the candy. Consumers are expected to spend $2.6 billion on sweets for themselves and trick-or-treaters. 69% of shoppers say they will hand out candy this year. 

Despite our love of Halloween spending, we still can’t say no to a good deal. Most Halloween shoppers (47 percent) get their goodies at discount stores. 38 percent visit specialty Halloween stores, and 25 percent shop at grocery stores. 
     
To learn more about Halloween spending, check out the NRF’s report. And if you're trying to get control over your spending, consider creating a budget. We can help you. Check out the Basics of Budgeting page of the Indiana MoneyWise website. You'll find it under Personal Finance 101
 

Investing via Smartphone Apps

Investing via Smartphone Apps

 

By Kylee Hale

Wednesday, October 9, 2019

Smartphones offer easy and instant access to apps that can help you navigate the complex world of investing. However, the variety of financial apps offered to investors can be daunting, especially if you are new to investing. This information will help you understand some options when investing via smartphone apps and highlight things to consider before committing to app-based investing.

investing app

 

Thinking of using a smartphone app for investing?

You may already use smartphone apps to do your banking, make purchases, transfer money to your friends, or find deals on products and services. With so much of your financial life tied to your phone, it makes sense that you might also consider an app (or two) to help you invest. Since investing can help you reach short- and long-term financial goals, there are many things to consider when choosing an investment-focused app.

 


What kinds of apps are available?

Financial services companies that offer smartphone apps take various approaches to help people invest their money and monitor their portfolios. These apps range in focus and cost. Here are some examples: 
 
  • Buying and selling investments: Trade stocks, bonds, and other investment products.
 
  • Turning daily spending into investing: “Round-up” your daily purchases and take the “spare change” to automatically buy investments for a predetermined portfolio.
 
  • Investing through automatic allocation: Direct a certain percentage of your income to an investment or retirement account.
 
  • Assigning a portion of spending to invest: Monitor your spending and saving habits and assign a percentage of your overall spending to an investment account.
 

How can using investing apps be helpful?

Investing is a life-long pursuit that can help you meet your financial goals. If you’re just getting started, an app may help you take more control of your finances or better understand the investing world. For example, if you have trouble making yourself save money to invest, you may favor an app that does it for you. However, once you build a small investment portfolio, you should reevaluate if you still need the app and if there are better options for you. This should become a habit as your needs and expectations change.

How can investing apps be problematic?

Smartphone apps give instant access to trading and portfolio management services, with market access at your fingertips. If you are fairly new to investing, jumping right into trading stocks, bonds, and other complex financial products may not be in your best interest. For example, if you are an emotional person who is swayed by market gyrations, you may end up buying investments at high prices and selling at low prices. Even if you are paying low, or no, trading fees, frequent buying and selling can cost you in the long run. You may also end up with a portfolio that isn’t balanced or diversified. 

Things to think about when using investing apps:

  • Investing on autopilot: Putting an investment portfolio on cruise control may be attractive to people who think investing is difficult and complex. However, if you don’t pay attention to your investments or the services you are using, you may not be happy in the long run. Also, if you use several different apps, you risk over-complicating your finances. 

 

  • Cyber and data security: Read the terms of service and understand how the company will protect your financial data. With any online application, there’s a risk of being hacked. Check consumer reviews and internet searches for information about any data breach the app may have experienced.  

 

  • Customer service and access: If you have an issue with your account or the app, you’ll want to be sure that you have access to someone (a live human!) who can help you fix the problem. Be sure you are comfortable with the level of service the app provides, and read customer reviews. 

 

  • Fees: People are attracted to these types of services because they offer low-fee alternatives to traditional financial service firms. Being fee conscious is good, but a lower fee structure could mean less service and information. Read the fine print to determine what the total fees are for an account. Over time, these add up and impact your overall returns. 

 

  • Investment offerings: If the app is allocating money to investments for you, understand the investment products and track record of the investment management firm overseeing the products. You want to be comfortable with the types of investments an app is putting you into, the risk you are taking, and the fees being charged. 

 


What can I do to avoid possible pitfalls of using financial services apps?

Be cautious, do your research and stay engaged.

Don’t use a smartphone app just because a friend suggests it to you. If you are new to investing, you may find yourself using an app that isn’t suitable for your needs or is fraudulent. Technology can make your investing life easier, but you should monitor and check in on your portfolio regularly. Being an informed investor will help you build the skills and knowledge you need to meet your long-term financial goals.


Your takeaway

Technology is rapidly changing the way we invest and manage our finances. When using online services or apps, be sure to use smartphone apps that you understand and fit your financial needs. 

Through my membership with the North American Securities Administration Association (NASAA), Alerts and Advisories project group, we created NASAA's Millennial Money Mission. For more investor insights and advisories visit NASAA.org

Free Classroom Programming

Free Classroom Programming

 

By Kelly Griese

Wednesday, October 2, 2019

School is back in session, and the holidays aren’t far away. It’s safe to say teachers are BUSY! And so are our Indiana MoneyWise education coordinators. This time of year, we receive dozens of invitations from Indiana teachers interested in inviting us to their classrooms to speak to students about personal finance and fraud prevention. So in celebration of World Teachers' Day on October 5, we offer you an overview of some of the FREE programming options available to all Indiana teachers. 

Pet $ense Magical Creatures – This is a game that teaches children some of the basics of budgeting using magical creatures from the world of Harry Potter. Children adopt imaginary pets and use an assigned allowance to make purchasing decisions for pet supplies. We throw in an emergency expense, and children will be face with the dilemma of whether they have enough money remaining to afford a class trip to Hogsmeade. 

  • Suggested Time: 15-45 minutes (depending on group size, math skills, and the amount of discussion that takes place)
  • Content: budgeting, credit, debt, emergency expenses
  • Recommended Ages: grade school
  • Ideal Audience Size: any size

Avengers Saving the Day – Connecting with kids using comic books! We use a special edition “Avengers” comic book, created by Marvel Comics in partnership with Visa’s Practical Money Skills to teach children basic financial concepts. Children receive a free piggy bank and comic book (while supplies last). 

  • Suggested Time: 45-60 minutes (more time is needed for larger groups)
  • Content: currency, budgeting, saving, banking, and more!
  • Recommend Ages: grades 2-7
  • Ideal Audience Size: any size

Fraud Fighting Force – Children love escape rooms, and we have created a simulation that uses many of the best parts, such as locks and secret codes. Children are told they have a chance to join a superhero team known as the Fraud Fighting Force, but they must first prove their worth by passing a series of tests. In the process of playing, children learn how to spot the red flags of fraud so they can avoid becoming victims of a financial scam. 

  • Suggested Time: 15-30 minutes (depending on ages and group size)
  • Content: financial fraud prevention
  • Recommended Ages: 5th grade and older
  • Ideal Audience Size: participants should be divided into teams if there is a large audience (4-5 per team)

Financial Football – This is a game that’s available online, but can be fun to play in teams. The fast-paced, interactive game is competitive and helps students learn money management skills. Teams compete to answer finance questions to gain yardage and score touchdowns. 

  • Suggested Time: 45 minutes
  • Content: general financial fitness
  • Recommended Ages: there are three versions, 11-14, 14-18, 18+
  • Ideal Audience Size: 20 or fewer (teams are recommended)

How to Avoid Getting $CAMMED – This $CAMMED presentation is our most popular program. It provides students with the perfect introduction to various types of financial fraud and exploitation. Teens learn about the IRS scam, the grandparent scam, the tech support scam, Ponzi schemes, and identity theft. The presentation includes videos featuring interviews with real criminals and victims. Teenagers learn about methods of persuasion used by fraudsters and are taught how to protect themselves. 

  • Suggested Time: 45-60 minutes (60 is ideal to allow for more questions)
  • Content: fraud and scams
  • Recommended Ages: high school
  • Ideal Audience Size: any size

Adulting 101 – Reality bites! In this presentation, we examine typical “adulting” activities such as budgeting, paying off debt, investing, improving your credit, buying a car, and paying for school. This is a more intensive workshop that is best presented over a course of multiple sessions, or you can pick a few topics for us to cover with your students. 

  • Suggested Time: 3-4 hours total (can be spread over the course of several days)
  • Content: values, goals, budgeting, saving money, investing, credit reports, credit scores, buying a car, paying for school
  • Recommended Ages: high school students (juniors and seniors especially) 
  • Ideal Audience Size: 20-40 students

If you’d like to invite one of our education coordinators to visit your school, please send an email with the following information:

  • Teacher name, email address, and phone number
  • School name and address
  • Proposed dates and times 
  • Student grade level
  • Topics you’d like us to cover
  • Number of class periods you’d like to join

You can email me, Kelly Griese, at kgriese@sos.in.gov. Or you can email my coworker, Kylee Hale, at kyhale@sos.in.gov. All of our programs are customizable to fit your needs, and we are able to bring our own presenting equipment if necessary. And, yes, we really do travel the ENTIRE state of Indiana. All of our programming is available for free for use in classrooms and out-of-school programs. 
 

September 2019 Posts


The Truth About October Investing

The Truth About October Investing

 

By Kylee Hale

Wednesday, September 25, 2019

Is October the month of market crashes? AccoStocks Crash October Effectrding to lnvestopedia.com, the October effect is the theory that stocks tend to decline specifically during this month. This theory is supported by multiple historic market crashes. For example: on October 19, 1987, the Dow fell 22.6%, one of the largest single-day drops in market history. This day has been coined as Black Monday. Other examples include: Thursday, October 24, 1929 (Black Thursday) when the Dow dropped 11% and Tuesday, October 29 (Black Tuesday), which marked the beginning of the Great Depression.  Are these historic crashes anything more than coincidence? What should you look for in October?

-  There’s no evidence that the previous major market crashes were connected. The statistics show more historical down markets have occurred in September than October

-  Previous market slides in the years 1987, 1990, 2001, and 2002 turned around before October was over. 

-  Despite the 1987 plummet, Black Monday has been one of the best buying opportunities of the last 50 years. 

-  The psychological expectation of the October effect combined with skittish investors is a recipe for a self-fulfilling prophecy. Evidence suggests than more often than not, you’ll make money in October. 

-  October may get a bad rap for the significant historic drops, but it’s important to remember that market downfalls don't cluster. As convenient as it would be for all financial collapses to occur in just one month, October is no more susceptible to downfalls than the other 11 months.

-  If October isn’t the worst month, which is? September has more historical down markets and was the instigator for the crash in 1929. 

The stock market is not easy to predict. But one thing you can rely on is that after every crash, the market will eventually go back up. Here are some parting words regarding the October Effect. 

  • Don’t get caught up in worrying over one month, think long term. If you’re investing in the short term, be conservative, lighter on stock investments and only invest what you are willing to lose.
  • If you sell in October, you could be missing out on big gains. December is typically a good month for the market. 
  • Be sure to diversify as past performance doesn’t always indicate future returns.
  • Spread your money around and combine investments in multiple sectors to alleviate risk. 
  • Exploit the fear, if other investors are selling off during October, be sure to look for deals. 

As with all investments, careful vetting and due diligence is a must. Call our office at 1-800-223-8791 or search the Securities Portal to check if both the professional and securities products being offered are registered.

5 Reasons Why Your Budget Isn't Working

5 Reasons Why Your Budget Isn't Working

 

By Kelly Griese

Wednesday, September 18, 2019

First things first… why do we budget? For many people, budgeting is a scary word. For some of those people, the idea of doing math is the scariest part. But budgeting is less about math and more about record keeping and self-control. The basics of budgeting are easy. 

Simply put, a budget is a plan for your money. It’s a document of money coming in and money going out. Keeping track of your money’s movement can help you avoid spending more than you earn. It can also help you plan for long- and short-term goals. Sometimes it can be hard to plan ahead, but doing so now can help you avoid the horrible feeling of NOT being able to make ends meet. 

If you have never budgeted before, a good way to start the process is by printing our free budgeting worksheet and instruction guide. You can find the PDF here

If you’re struggling with budgeting, take a look at some of the common problems below. 

 

1) You left zero room for error. 

A lack of flexibility in your budget, especially when you first begin, is sure to lead to problems. Those problems can include emergencies. If your budget doesn’t include contributions to an emergency fund, make that change immediately! Once you solve that problem, add a little wiggle room to some other categories of your budget. Expenses tend to rise and fall, and your budget needs to be able to roll with the punches. IF you spend less than normal one month, put the surplus into savings. It will come in handy the next time you go a little over budget.

2) You haven’t clearly defined your goals.

Without goals, how can you possibly hope to prioritize your spending? Most budgets require some degree of sacrifice. Figure out what it is you want to accomplish with your money and work toward those goals. The rest of your expenses will likely need some trimming. If saving for higher education is a must, how much do you really need to spend on entertainment? If your career aspirations require you to be up-to-speed on current events, maybe you do need cable, internet, and a daily newspaper, but do you also need to dine out for lunch every day of the week? Probably not.

3) You forgot you have a personality. 

Are you a saver? Are you a spender? Your budget is unique. That’s why you can’t simply copy someone else’s. It should match your personality and lifestyle, as well as your goals. If you are the sort of person who enjoys shopping and has a casual attitude about money, then be sure to build a cushion into your discretionary spending category. If your budget includes other people, such as a spouse and children, you’ll need to take into account all of their personalities as well.

4) You aren’t being honest with yourself.

Once you commit to budgeting, you absolutely must keep track of every cent you spend… especially in the beginning. Until you have a realistic picture of your spending habits, you won’t know how much of your income should be devoted to each budget category. The place where most people slip up is with their “discretionary” spending. You probably have your rent or mortgage payment memorized down to the last penny. It’s likely our biggest bill each month, and paying it is required. But what about all those little purchases you make each day? A morning coffee, an afternoon snack, a trip to the movies with friends, or an impulse purchase on Amazon. Discretionary spending accounts for all the stuff you don’t need. It also accounts for all the stuff you are LIKELY to buy.  Be honest with yourself. Keep good records of your spending the first few months you budget. It will help you identify problem areas and work to correct them. You can print a copy of our spending log to begin the process. The spending log can be found here

5) You didn’t pay yourself first.

Saving for the future is an essential part of every budget. This can be hard when you’re barely making ends meet. It requires discipline. It also requires you to think beyond your need for immediate gratification. We crave the “high of the buy.” Spending money now can make us feel good in the short term, but in a few years, when we really want something big, the money won’t be there. If you’re still working when you’re in your 80s, you’ll regret not paying yourself first. Set aside room in your budget for saving and investing, no matter how small, and work on growing that category over time. 

Be sure to check out the Personal Finance 101 section of the Indiana MoneyWise website to learn more about budgeting. There you will also find information about credit cards, debt management, retirement planning, investing, and more. 

The Best Way to Save for Higher Education

The Best Way to Save for Higher Education

 

By Kylee Hale

Wednesday, September 11, 2019

The Best Way to Save for Higher Education 9.11.19 postWhether you’re a parent or you yourself are looking to obtain a degree it's easy to get sticker shock from reviewing education costs. With a price tag that's constantly rising, it may seem impossible to pay upfront or even someday pay off financial aid loans. Future students should apply for scholarships, grants and even consider schools with lower tuition fees. But two things ring true in nearly every situation - it's never too early or too late to start, and a dollar saved now is better than one borrowed later. With this, I want to bring light to the beauty of Indiana’s 529 Plans, which might just be your best friend in paying for higher education.  

Named for Section 529 of the federal tax code, 529 Plans are to post-high school education as 401(k)s and similar options are to retirement. 

Earnings on 529 investments are tax-deferred, and become tax-free when used to pay for qualified higher education expenses.

Indiana offers one of the most generous up-front tax incentives for 529 contributors, Hoosiers can get a 20% credit worth up to $1,000. This credit is available to each taxpayer that contributes, even better, the credit is available to account owners and third­party gift contributors, meaning parents, grandparents and others can all pitch in and reap some of the benefits.

529s are also incredibly flexible. Qualified expenses include tuition, room and board, books, fees or computers at any school that's eligible to receive federal financial aid. Whether your child wants to become a doctor or a skilled tradesperson, 529 savings can be used to help them pursue their goals. But one thing to note, is that 529 savings cannot be used to pay off student loans, so it’s better to save up before and take advantage of the tax benefits. 

Perhaps most importantly, 529 Plans are affordable and easy to use, with a variety of investment options and strategies to meet savers' needs.

Here in Indiana, the CollegeChoice 529 program consists of three different Plans:

CollegeChoice Direct CollegeChoice Advisor CollegeChoice CD
The Direct Plan features quick online account setup and a low minimum contribution of $10. The Year of Enrollment portfolios are set to automatically grow more conservative as a beneficiary gets older. The Advisor Plan offers access to a wider variety of investment options. As with any financial service involving professional assistance, the Advisor Plan comes with slightly higher fees. The CD Plan resembles a traditional bank product in that it offers principal protection. Its streamlined lineup of FDIC-insured options includes one-, two­and three-year fixed rate certificates of deposit (CDs) and a savings account.

All three of these 529 Plans share the same core benefits mentioned above - and all three represent a meaningful investment in a child's future. 

The cost of higher education isn't going to suddenly plummet overnight, but when used properly, 529 Plans can help parents and all students prepare for the significant challenge of financing it.

For more information about the CollegeChoice 529 Direct Savings Plan, call 1.866.485.9415 or visit www.collegechoicedirect.com to obtain a Disclosure Booklet, which includes investment objectives, risks, charges, expenses, and other important information; read and consider it carefully before investing. 

For more information about the CollegeChoice Advisor 529 Savings Plan, contact your financial advisor, call 1.866.485.9413 or visit www.collegechoiceadvisor529.com to obtain a Disclosure Statement, which includes investment objectives, risks, charges, expenses, and other important information; read and consider it carefully before investing. 

For more information about the CollegeChoice CD 529 Savings Plan, call 1.888.913.2885 or visit www.collegechoicecd.com to obtain a Disclosure Statement. The Federal Deposit Insurance Corporation (FDIC) generally insures, with respect to each FDIC-insured institution, deposit accounts that are held in the same right and capacity up to the maximum amount set by federal law, currently $250,000. 

 

Please Note: before you invest, consider whether your or the beneficiary's home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in that state's qualified tuition program. You should also consult your financial, tax, or other advisor to learn more about how state-based benefits (or any limitations) would apply to your specific circumstances. You may also wish to contact directly your home state's 529 college savings plan(s), or any other 529 plan, to learn more about those plans' features, benefits, and limitations. Keep in mind that state-based benefits should be one of many appropriately weighted factors to be considered when making an investment decision.

The above is adapted from the Indiana MoneyWise e-magazine March 2018 as written by guest author Troy Montigney. Click here to download a PDF version of the full e-magazine.

How to Spot a Con Artist

How to Spot a Con Artist

 

By Kelly Griese

Wednesday, September 4, 2019

Con artists are pretty clever. They prey upon our emotions, hopes, dreams and fears. It is important to understand that they are very good at what they do. Duping people is what they do for a living. Here are some red flags that can help you spot a con artist and avoid falling victim.

  • The seller is not licensed or registered. You can easily check with the Office of the Indiana Secretary of State through our searchable databases on the Indiana Securities Division's website. Individuals and firms in the financial services industry must meet certain requirements. Taking time to research a seller and their investment offer could save you in the long run.
  • No written information is provided. Ask for a prospectus. It is a legal document that provides details about an investment offering. The prospectus or "offer document" will contain the facts you need to make an informed investment decision.
  • The seller refuses to take no for an answer. You should be suspicious of any seller who pressures you to "act now" or says this is a "limited time offer." If they’re pushing you to make a decision immediately, it is probably because they don’t want you to find out they are selling a scam.
  • The seller is hesitant to answer your questions. Con artists seem to have an answer for everything, but if your questions make them uncomfortable, it is best to walk away. Ponzi schemer Bernie Madoff once said he only turned people away when they asked too many questions. 
  • They promise high returns with low risk. Returns and risks go up and down together. There is no such thing as a "no risk" investment. All investing comes with some risk attached. 
  • You are asked to keep this "exclusive" offer a secret. Con artists do not want to be caught. Therefore, they pick their victims carefully. They do not want you telling someone who might uncover the scam.

Finally, trust your gut. Many victims report feeling uneasy about the decisions they were making. Just know that if an offer sounds too good to be true, it is!

August 2019 Posts


Interesting Facts I Bet You Never Knew About Millennial Investors

Interesting Facts I Bet You Never Knew About Millennial Investors

 

By Kylee Hale

Wednesday, August 28, 2019

The millennial generation has been plagued with the blame of killing almost everything. From napkins and cable TV to the real estate industry. Even though, millennials aren't buying starter homes as soon as they leave the nest these young adults stand out in their saving and investing manners.

DIY Generation

From building a bookshelf to starting a business, millennials are do-it-yourselfers. These adults know that more than likely they will be responsible for saving for their own retirement. More than half, feel that their main source of income during retirement will be from a 401k, IRA or similar savings account, the pension is dead.

Money isn't a Sensitive Subject

Because millennials feel more responsible for their retirement success they are openly discussing money plans with family and friends, well more openly than past generations. According to CNBC, 75% of millennial couples talk about money at least once a week, that's 9% more than Gen X couples and 31% more than baby boomer couples.

Millennials are on F.I.R.E.

F.I.R.E. stands for Financial Independence Retire Early, this is a financial movement defined by frugality, extreme saving and investing. Not all Millennials are living by the guidelines of this focus, however, Transamerica Retirement Survey shows that 58% of Millennials plan to be retired by age 65 or sooner, and while 69% of baby boomers say they expect to work past that age. Not only do millennials expect to retire earlier, but they also expect to live longer, making them the first generation to spend more time in retirement than time spent on the job.

Simplicity is Golden

Some millennials are investing, and they are selecting investments that are easier to understand. Some of the most popular investment vehicles for millennials include index mutual funds, exchange-traded funds and employer 401(k) target-date funds. Millennial investors are more interested in sustainable investing, investing in companies or funds that take into account social and environmental impact. According to Morgan Stanley, millennials are twice as likely, compared to the overall investor population, to invest in companies targeting social and environmental goals, and 90% of millennials say they want sustainable investing as an option in their 401(k) plans.

What's the Verdict?

The millennial generation is coming up short compared to other generations in accumulated emergency funds, participation in employer retirement plans, and they seem to be a bit skittish when urged to invest. But that's not to say they are doomed. Millennials are saving at an earlier age than Gen Xers and baby boomers did and many of the challenges like student loan debt and high housing costs aren't their fault. However, saving more, maxing out the employer's 401(k) match (if available), and dipping their toes in the water of other investments would hedge the millennial's outlook to greater retirement success.

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