Tuesday, September 29, 2015

High Yield Investment Fraud


Whenever the stock market takes a hit, unscrupulous individuals will try to find a way to use the misfortune of worried investors to make a quick profit.  In light of this year's problems on Wall Street, it's no surprise that old scams are coming back, and like all of the classic scams, this one is based on the oldest premise there is:  make a lot of money, really fast, with no work.

High yield investment fraud is most commonly found on the Internet, where it's much easier to put together a website that appears trustworthy and professional than it is to create the same appearance in person.  Such sites claim to provide amazing returns, sometimes as much as 40 or 50% per month, and are supported by dubious charts and testimonials from people who may not actually exist. Between a quality website, impressive charts, and some meaningless investment buzzwords describing a "magic pill" of an investing philosophy, unwary consumers can be easily fooled into forking over a chunk of their savings to an investment broker who is not licensed by the SEC and makes claims the SEC would call illegal.

The clearest warning signs of these scams are easy to remember, just like avoiding them should be simple to do: don't trust anyone who offers to-good-to-be-true returns, dismiss cutting-edge investment opportunities if they come from anyone but an investment professional with whom you've worked before, and ignore any evidence of success that can't be verified by an outside party.

Big returns are appealing.  You want to retire someday, send your kids to college, or start a business to get away from the morning commute, and the more money your investments make, the quicker you can do so.  But it's important to trust the process.  Return on investment is tied to the risk involved in spending money on that investment.  The stock market offers better returns than treasury notes because it's far riskier to bet on United Airlines than on the United States.  High-yield investment scams are successful because we want to believe that someone can beat the market so well and that we can have returns that are better than the stock market with risks that are lower than treasury bonds.  It just doesn't happen that way.

At Destinations Credit Union, we believe we've created a nice sweet spot with our savings products. No matter what your preferences are, we can fit into your investment portfolio. In times that the market does well, the money you have with us will keep you moving towards retirement, but when the market slows down, you don't have to worry about losing your financial security because the money your entrust us with is safe.

To put it another way, the U.S. economy has traditionally done three things very well:  lower prices, create jobs, and price risk.  The last recession was caused by doing a poor job of pricing risk, and that hurt our ability to do the other two.  But that's exactly the point.  As an economy, we are so good at pricing risk that when we screw it up, it's an enormous, world-altering event.  If you find someone who can price risk so much differently than every other investment professional in the world, you need to also be ready to bet that the economy is going to take a radical shift in an entirely new direction, because that's what happens when we do a bad job pricing risk.

Finally, if you want to avoid all kinds of investment scams - and the SEC, FTC, and USA.gov all have many pages listing the variety and creativity of these scams - the best thing to do is remember why you bank with us.  We're part of your community, not a giant multinational corporation.  We share our revenue with our members, not shareholders who may not even be connected to our local community. Our kids go to school with your kids and you can always come in to talk to us for helpful advice. 

Sources: 
http://investor.gov/investing-basics/avoiding-fraud/types-fraud/high-yield-investment-programs
http://www.investopedia.com/terms/h/high-yield-investment-program.asp\\
http://www.ncpw.gov/blog/dont-get-scammed-investment-fraud-internet

http://www.dfr.vermont.gov/securities/top-ten-investor-scams

Friday, September 25, 2015

Rethinking Your Money With Apple Math



When it comes to your finances, it can seem like all the advice you get is deadly boring, unbearably abstract or both.  For example, when it comes to paying off debts, how can you be expected to make a dent without first having a spreadsheet that compares all your credit cards and loans with columns for principal, interest rate, fees and maybe even frequent flyer miles?  It's intense. At the same time, when it comes to spending, you're no better off. How do you compare the value of a fancy dinner to buying a new outfit for the kids?

In 1986, The Economist created "The Big Mac Index" as a way to compare currency values across eras and national borders.  The index shows how many hours of labor it takes to earn the cost of a Big Mac. So, if it took you 10 minutes to earn the cost of a Big Mac last year and it takes you nine minutes today, you are - in theory - better off than you were before. That's true whether those gains come from getting a raise, moving to a town with a lower cost of living or improvements in McDonald's supply chain to save consumers money. While the value of a dollar changes over time, the value of a Big Mac to a hungry customer remains constant.

We're going to use the same Big Mac concept here, but we'll use it to explain personal finance. If you're a fan of Apple products, fabulous. If not, feel free to substitute other luxury goods of your choosing.  As an added benefit, if you're looking to talk about money with a young person, you may find the Apple index to be a helpful tool for starting a conversation.  After all, that young person is probably staring at their phone, tablet or laptop right now. 

The price of luxury 

If you're carrying an iPhone, it's probably the most expensive thing you carry every day.  You might not think so, because you might be used to those two-year contracts that artificially decrease the price of a phone by several hundred dollars.  In reality, though, a lot of companies, from your service provider to the handset manufacturer, stand to make money by concealing the price from consumers.

Even then, you could be skeptical.  "After all," you might say, "I'm currently wearing a very expensive watch.  This Omega Speedmaster Moonwatch is the same model as the one that's been on the moon." Or maybe you're glancing at your Herm├Ęs Clemence Birkin purse, believing no phone could cost as much as a bag for which a noble alligator gave its life.

Actually, it does.  You see, when a person buys a luxury watch, he or she usually expects to hand it down to their son, daughter or whomever so they may stay in a family for generations.  The same is true for Hermes bags, particularly because they have to last long enough to get back to the top of the waiting list.  A Hermes reservation can last a family for generations, too.  A $10,000 watch or bag that lasts 100 years actually costs $100 per year.  Similarly, a basic two-year phone contract typically came with a $200 credit toward a phone purchase, so even a free phone on that plan costs $100 per year, the same as an Omega watch or Hermes bag.  A $649 iPhone 6s costs more than three times that much. 

The price of five bucks 

Most phones sold this year don't have 2-year plans.  Instead, AT&T, Verizon and many of their competitors offer plans that can be canceled at any time, with the cost of the phone spread over two years or more, disguising the total price of the product.  After all, the difference between spending $25 per month and $30 per month seems negligible. If you're already writing a check to your service provider for $200 worth of data, talk, taxes and fees every month, what's another five bucks, right? Of course, that difference over two years comes out to $120.  If you have three lines on your account, the bill comes to $360.

When are you planning on paying off that smartphone?  When do you expect to not have to pay another phone bill?  The smartphone manufacturers assume a two-year lifecycle, and intentionally do not design their phones to last forever. Five years ago, one of the best selling phones was the original Motorola Droid. Go back another year, and it's Nokia at the very top of the sales charts, capping over a decade of the company's dominance.  It's hard to remember that environment, but it included 3G networks and sliding keyboards.

Phones have short shelf-lives, so you can probably expect to make payments on a phone for most of the rest of your life.  If you made that $5 payment into your savings account instead, that would be around $16,000 in time for your retirement.  That's an expensive five bucks.

It's not a Big Mac, but hopefully the iPhone works just as well to explain the value of money when it's difficult to understand.  Buying a product that lasts a lifetime can actually be quite affordable in the long run.  On the other hand, a mindlessly squandered five dollars can be quite expensive.  We've got a lot more lessons from the Apple index coming up, so stay tuned! 

Sources: 



Tuesday, September 22, 2015

College Credit: It's On The Syllabus


No matter what you ask your professor over the course of the semester, the most likely response you'll get is something like "It's on the syllabus." Yes, professors love to write up big documents governing every aspect of behavior in their class. In some instances, it might seem like the iTunes terms and conditions are easier to get through than that 30-page syllabus. Even worse are the instructors who offer a half-page of instructions while expecting you to interpret in a manner similar to applying the Ten Commandments to a dispute in your fantasy football league.

As exasperating as those syllabi might be, there's something to be learned from them.  When you have a document that outlines your principles, it helps clarify confusing situations.  Do you have a syllabus in your life?  What is your policy for missing class?  What guidelines do you have for civil behavior?  How do you know if you're living up to your principles if you've never sat down and tried to figure out what your principles actually are?  Without a syllabus, you're just left to figure out every confusing situation as it comes along.

Your financial life needs a syllabus, too.  What's your policy on work hours?  Will you pick up a shift during finals week?  Are you willing to quit your job if it interferes with school?  A budget can be your syllabus for spending to answer many of those questions.  For instance, if you know ahead of time that you can spend $20 per month on video games, then you know buying that video game you want this month means that you can't buy another until the end of the year. It also means that, if you haven't bought a new video game all summer, you don't have to feel guilty about buying one now.  

This weekend, put together your syllabus.  Use one your professors have provided as your example ... and fill in all the sections.  Start with who you are, what your expected outcomes for the semester are, and determine your tentative schedule.  Don't worry about some of the odd sections until the end. You can probably find a way to incorporate them - for example, sexual harassment policies might become "dating principles" - but that's something you can handle later.  For now, try to get down the most important principles to guide your path ahead.

Finally, after you know what you value, put together a budget.  Do you value time with your friends?  Then put more money aside to cover spending leisure time together.  Or maybe you value that time with your friends, but don't value going out to eat or dancing on Saturday nights.  Maybe your budget should reflect that, so maybe consider putting money aside to host a dinner party or watch football.

Whatever plan you come up with, try not to deviate from it too much once you have it established.  That way, when a strange situation comes up in a few months, you've got a list of principles to help your decision process.  Tell yourself, "It's on the syllabus" and use that to help guide you.  Creating a budget, scheduling your time, and formalizing your principles can be difficult, so drop us a line if you'd like some help.  You can find us here.

Friday, September 18, 2015

Straight Outta Excuses: The Financial Lessons Of Dr. Dre


With "Straight Outta Compton" being the box office surprise of the summer and a new studio album filling America's iPhones for the first time since before iPods were invented, Dr. Dre is experiencing a late-career renaissance. While rappers' careers are notoriously shorter than almost any other group of musicians, Dr. Dre is relevant for the fourth consecutive decade.  Perhaps even more surprising than his prolonged musical success is his financial success. With the 2014 sale of his iconic Beats headphone company for $3.2 billion, his share of the company vaulted him into uncharted territory: He claims to be rap music's first billionaire.

Let's take time to examine Dr. Dre's personal narrative and see what lessons we might glean, because no matter who you are while you're reading this, you almost certainly started with more than he did and currently have less. We could all use a prescription from this doctor.

Pursue your goals with drive and clarity.  One of the themes of Dr. Dre's life is that he has followed his own vision, no matter what other people are doing. The biggest rap acts when Dr. Dre started were flashy pop-infused showmen like MC Hammer and Vanilla Ice, but he wanted to make serious music about the world he experienced. When he backed Eminem in the late 1990s, the idea of a white rapper was seen as a novelty, but Dr. Dre ignored appearances in favor of his faith in his ability to identify talent.  In each case, Dr. Dre believed in himself, understood what his goals were, and did what needed to be done.  

What are your goals?  Do you want to retire to the beach?  Do you want to ditch the rat race?  When you pass that billboard with the giant Powerball payout, where does your mind wander?  Let us know. We have ways to help get you there.  We may have expert advice because we've been there before.  Don't be embarrassed if you think it's crazy: It was crazy for Dr. Dre to get a local criminal, Eazy-E, to bankroll his band, but it was still the right move.  Let Destinations Credit Union be your Eazy-E (without the criminal background, of course).  Step one to your goals is call or e-mail us.

Be careful who you trust with your money.  One person who never comes out looking well in the Dr. Dre story, whether in Straight Outta Compton, Behind the Music, or even the US legal system, is Suge Knight.  The erstwhile villain of the film's second act, Knight's character uses violence and intimidation to force Dr. Dre to move on from his record deal with almost nothing.  Less violent is the film's depiction of Jerry Heller, but the fictional version of N.W.A.'s manager is portrayed as similarly unscrupulous.  Everyone seems ready to steal Dr. Dre's money.

Even among friends, money can make enemies.  The infamous early-1990s feud between Eazy-E and Dr. Dre had deep roots in questions of trust and money that poisoned the shared bond between N.W.A.'s most famous members.   

Who do you really trust with your money?  We all have people close to us to whom we might "lend" money without ever expecting it back, but how many people would you trust to hold your next mortgage payment for a few weeks? Bonds of friendship and family often fall apart when it comes to money.   As your credit union, we know you've put your faith in us to take care of your money.  You already know we exist by the members and for the members rather than a board of executives or stockholders, but it's worth the reminder that our model was built to make sure you have someone you can trust.  We promise to live up to that trust every day.  

Own something that matters to you.  Dr. Dre didn't get rich working for someone else.  Dr. Dre got rich making his own label, signing his own acts, then doing it all again.  Without releasing an album between 1999 and 2015, he still made a fortune by owning the label that released albums by Eminem, among others.  He didn't earn his mega-wealth endorsing Beats headphones; he owned a large chunk of the company.  

What do you own?  Do you own your home?  Do you own a business? Do you own a share in your success?  Risk can be scary, and hanging out a shingle can be risky. But in exchange for risk, you are entitled to the fruits of your labor, and those can be fantastic.

If you want to own something that matters and set goals based around your family, you can offer them a home that is safe, comfortable and inviting.  You could take steps to improve the curb appeal of your house, to make your home easier to sell if you pass, add a movie room to transform those Saturday night Netflix sessions into unforgettable family experiences, or even buy a pair of Jet Skis to entice the grandkids.  You can check out our fantastic home equity rates.

Dr. Dre has been part of our lives for so long that we don't really think about him much.  In a lot of ways, we forgot about Dre.  But his story is really extraordinary, and if we take a few minutes, we can probably learn some lessons from him for our personal financial health.

Sources:
http://www.dailymail.co.uk/news/article-3209565/Straight-Outta-Compton-wrong-says-man-created-NWA-band-s-manager-says-film-s-hero-Dr-Dre-broke-black-Beatles-Ice-Cube-joined-Suge-Knight-used-death-threats-help.html

Tuesday, September 15, 2015

Securing Your Phone


If you spent time on Twitter, CNN, or just about any other corner of the Internet, you might believe that they only thing that happened anywhere in the universe last week was Apple's product announcement on Wednesday. Joined by developers from Adobe and Microsoft, the company showed off a new iPad, new iPhone, and a pencil. That's right, a pencil.

In all the excitement of a new $70 pencil, it was easy to miss Apple's discussion of iOS 9, which is to be released September 16. For some, however, that date was surprising, because their phones had been asking them to upgrade to iOS 9 for days. Unfortunately, that update was not from Apple. It was from scammers, hoping to gain access to people's mobile phones, where we keep all of our secrets. The effects of the attempted scam appear to be minimal so far, but it's a great reminder to brush up on our mobile security. Here are some quick steps you can take to protect yourself on your phone:
 
1). Always update your software. It can be annoying to find a time to plug in your phone when you're on Wi-Fi, and sometimes you don't want to put your phone down for an hour or more while it downloads the most recent operating system. For smaller apps, it can feel like you're dealing with a new update every other week. What's the deal? Those apps never seem to add anything useful. 

The reason you get so many little updates is that the apps from major developers are constantly getting security updates. Google and Microsoft update every two weeks, usually with minor bug fixes and security updates, but they'll update more frequently if security risks dictate it.  It might be annoying sometimes, but the frequency of those updates is the best security you have for the software you use on your phone everyday. 

The biggest security issues are covered by operating system updates. Apple is notoriously slow on OS updates, just like they are with many of their apps, which only serves to make their updates even more important.  When iOS 9 comes out on the 16th, it will be their third major update of the year, which is far more frequent than usual.  If you're currently running anything before iOS 8.4.1, your security is out of date, and only going to be more antiquated next week.  Take the time to update--it's worth it. 

2). Think about the Wi-Fi you connect to.  If you're still on a restrictive data plan - and with the price of mobile data being what it is, no one would blame you - you understand the relief that finding the open Wi-Fi connection of a fast-food restaurant or coffee shop can provide.  But that relief might be misguided.  After all, that barista - the one with the tattoos, piercings, and boho sense of cool - isn't an IT specialist.  It's unlikely they get paid much more than minimum wage plus tips, and that kind of salary doesn't attract tech-savvy security experts.  When was the last time the router was replaced? When did they last update the firmware or check the network for viruses?  You're about to connect your phone, which may be the most expensive object on your person, the object you use the most often, and the most irreplaceable tether to your family and friends to a network whose security is at best questionable and at worst far from safe. If all you were planning to do was check social media or the box score of last night's game, you might want to just stay on your LTE or 4G network.  If you were going to do anything more private, whether it's email, banking, or shopping, you definitely want to consider whether that coffee shop wi-fi is a good idea. 

3).  Reconsider what you do on your phone.  If you had a time machine and could show your smart phone to a younger you from the 1990s, the younger you would be stunned.  If you were into grunge music, you might use Spotify or Apple Music to explain that you now carry every song ever recorded in your pocket at all times.  If you spent the 1990s rollerblading, you might pull up MyFitnessPal or Nike+ to show how you can track your heart rate, calories burned, and steps taken every day.  If you spent the 1990s in an office, you might pull out Excel or PowerPoint to explain that, well, basically it's the same thing, but on a smaller screen.  The next thing that would happen, though, is that they younger you would ask what else you use it for everyday.  You'd explain messaging and email, but when you explained mobile banking how would you react? 

If you told your younger self that you had a personal computer in your pocket at all times, and that you put your most private secrets in it - from medical information to intimate conversations with your romantic partner to your financial data - which you then sent out into the world through an invisible network (which you don't understand), which then ran your secrets through servers (in a location that you don't know), before traveling through another hard-wired network (that you can't explain) to your financial institution or investment firm, where the information immediately reversed course and came back to you over the same mysterious connections...If you told that to your younger self would they be impressed?  Or would they smash the phone on the ground and slap you in the face for your stupidity?  How can you trust your secrets that way?  Why are you putting all of that information in one place? 

If you want to protect your information online, you need to use the kinds of software that are built with security protocols and frequent updates.  With Destinations Credit Union Mobile Banking, we have found the best software security providers in the business and built layer after layer to protect your information.  We're not interested in disappointing the 90's version of you, who still believes that there's a difference between public life and private life.  We want your information safe and secure. 

Our app also lets you deposit checks with your camera, make transfers, track your spending, report fraudulent activity, or do virtually anything else you could do in our brick and mortar locations.  Most importantly, it's still us on the other end - a neighborhood credit union that puts service for members ahead of profits, so you know we're not going to cut corners on security.

Destinations Credit Union is also in the process of a major upgrade to our mobile app which will include many more features, including bill payment

Sources: