Five Ways to Encourage Good Saving and Spending Habits in Your Children

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How often do you discuss money with your children? If your answer is “not often,” you’re not alone.

There is an opportunity to help your children form strong spending and saving habits at an early age, and doing so can have a concrete impact on their futures. For example, recent research suggests that children with savings – even as little as $1 to $499 – are four times more likely to go to college than children with no savings at all. There are many reasons why it’s beneficial for children to learn how to manage money from a young age, and getting started sooner rather than later can drastically shape your children’s financial futures for the better.

Here are five ways you can encourage your children to develop good saving and spending habits.

Find a balanced allowance. One reliable rule of thumb for weekly allowance is to give your children $1 for each year of their age. For example, if your child is eight years old, you would give her or him an allowance of $8 a week. Of course, one size does not fit all, and you can adjust this allowance to fit your family rules and values.

Reward them for saving. Back-to-school shopping presents a great opportunity to teach your children how to differentiate wants from needs. Set a firm school shopping budget, and make a list with your children of what they need for school. Go over their list to see which items are really necessary versus which items are wants. Once you’ve determined what they need, help them calculate how much is left in the budget to spend on wants. Consider rewarding your children by giving them the surplus money to spend as they choose – but only if they’ve covered all of their necessary supplies first. If you have a teenager who’s hoping to drive a new car soon, consider matching his or her savings.

Take them to the bank. Middle school is a good time to replace that savings jar with a savings account, and if your children have been saving cash for years, it can be very rewarding to take that money to the bank or credit union and open their first account with it. This is a great way to introduce them to the concept of interest, and how savings accumulate over time when left unspent. Visit the Consumer Financial Protection Bureau’s website for more information on savings accounts for children.

Talk to your children about essential expenses. As your children enter high school, you may want to consider delving into more complex financial concepts with them. If your teen has a paid job, review their paycheck with them and explain where the money goes and why – for example, if money is withheld for tax purposes. Or talk to them about the larger expenses on the horizon, whether it’s a car or college tuition, and discuss all the financial pros and cons of these investments.

Help them earn their own money. Earning income through hard work is one of the best ways to learn the true value of money. Encourage your children to earn money, whether it’s through setting up their own lemonade stand, doing chores around the house or neighborhood, or, if they’re teens, getting a part-time or summer job. This helps your children supplement their allowance and teaches them the real-life value of working.

Bottom line: Learning how to save and spend wisely is crucial to good money management, and teaches other important values. The best way to help your children build solid financial skills is through practical, age-appropriate lessons, which are relevant as they grow into young adults.

By Nathaniel Sillin

Hummer Malware Makes Cybercriminal Rich by Infecting 1.4 Million Devices a Day

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For those who are on the fence about how lucrative cybercrime can be, Cheetah Mobile Security Research Lab has some information that should push you over to one side of said fence. In a new report, the security firm found that the developer of the Hummer malware family of apps made over $500,000 per day at the peak of the malware’s activity.

Hummer infects Android devices by masquerading as mobile apps such as WhatsApp, Facebook, and Uber and the number of infections is on the rise. In the first half of the year, this Trojan infected around 1.4 million devices each day, making it the #1 mobile trojan in the world while netting the developer $.50 per infection. It obtains administrator privileges and subsequently displays those dreaded popup ads. But it gets its big money by installing online banking malware and then draining the account right into their pockets.

As always, it’s advised to only download and install apps from your device’s official App stores. In the case of Android, this is the Google Play Store.  But don’t think that Androids are the only mobile devices at risk. While this particular one infects those, there are plenty of others that target iOS devices. Two that made Nokia’s top 20 list of mobile malware were XcodeGhost (a malicious version of an app development tool) and FlexiSpy (an app that allows recording of activity on a device).

Anti-malware is not just for PCs anymore. Make sure you have downloaded an anti-malware app from a reputable source and keep it updated on your mobile devices too. The same goes the notification that one is available. Don’t forget about your internet-connected devices at home like smart TVs, your climate control, and music system, to name a few. Anything that exploits a vulnerability on any of these devices can roam your home network and infect others and potentially do a lot of damage.

This malware and others don’t just try to steal information such as banking credentials. They also consume a lot of data. This can cost you money in data overage fees. One Cheetah test found that Hummer accessed the network 10,000 times and ultimately consumed over 2GB of network traffic. It also uses up your battery life in the process.

This malware cannot be removed by performing a factory reset on the device. In addition, not all anti-virus tools will get rid of it. However, there are some that will. If you suspect it’s on your device, do some thorough research to find out which ones do and get one of them. Make sure it’s from a reputable developer and read the reviews. If it’s no good or harms your device in any way, it should be noted in the reviews. Don’t be afraid to pay for a good one. If that does not work or you are not comfortable doing this, take your device to an authorized technical support provider for help.

The majority of infections noted in this report were not within the United States, but that does not mean it was not found in the U.S. It may be an indicator that training, awareness, and information sharing helps users avoid infections. The command and control center for Hummer was traced back to a Chinese email address.

© Copyright 2016 Stickley on Security

Netflix Summer Scam Asks for Your Personal Data and Remote Access to Your Computer

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There is yet another scam going around this summer, but it really has nothing to do with the season. The Better Business Bureau is warning about one involving Netflix. Some users have received a notice stating there is an issue with their payment card and to visit a link to resolve it. When the link is clicked, it appears to be an actual Netflix login page. However, it is a fake site.

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The link looks like it goes to a page on the company’s site, but the page it really goes to request account information and other personal details. Then a dialogue states the account has been suspended. Of course the users panic and call the “customer service” number on the page, which actually goes to fake representatives.

But wait! There’s more! The agent, just being helpful, encourages the user to download “Netflix support software,” which is actually remote login software that allows the so-called rep to get into the user’s computer. That is not cool.

Watch out for indicators of scams like this. Whenever calling customer service, it’s always best to go to the website directly and get the contact details. In other words, don’t use the information provided on a page that you got to by clicking a link. Don’t use the info in the email message either.

And while we’re talking about links, avoid clicking those in the first place when they arrive in email messages. So often, they are phishing and the outcome is not going to be in your favor. If you have a Netflix account, or any other account, use a previously bookmarked link to get there. You can also manually type the URL into the address bar and get there. Just be careful not to type and get caught out by typo squatters.

You should never allow someone you don’t know to log into your computer remotely. In fact, unless you are getting support from an internal IT support person that you know and trust, you should not give anyone remote access to your computer. That just gives them access to do all kinds of nefarious things.

If you get an email with a link or attachment that is unexpected, view it with much skepticism and if you are not 100% certain it’s safe, just don’t click it at all. If you really want to know if it’s legitimate, contact the sender by a known phone number or by starting a completely new email message and asking.

Netflix says that they will not ask to log in remotely to anyone’s computer so if they do ask, you already know it’s a scam. Also, a Netflix page should not act as a popup. It is reported that this page does, so that is another dead giveaway that it’s phony.

One example of the notification had British spellings of words and an international phone number listed. These little details are important when identifying scams, so don’t panic and take some time to notice what is actually written. If there are typos, it sends you to a number in another country (most U.S. customer service numbers will be U. S. numbers or toll-free numbers), or doesn’t make sense, it’s likely phishing and you should just send it to the trash and go outside and enjoy the summer.

© Copyright 2016 Stickley on Security

3 Ways to Help Save Money on Your Kids’ Sports

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Participating in local sports is one of the most important and influential times in a child’s life both in terms of personal and social development. Often for the first time, your son or daughter will be forced to not only get along with peers who are outside their normal comfort zone, but also to work together with them towards a common goal through hard work. It’s also a time, however, that parents tend to go a bit overboard with treating the situation like their kid as about to try out for the New York Yankees or New England Patriots.

Raising kids is hard enough on your bank account, so when they start experimenting with sports and other social clubs, it’s really important to invest your family’s finances on not only the right things, but also at the right pace. Here are three helpful hints that will assist you in giving your children the support and tools they need to succeed (and more importantly have fun) in their athletic endeavors, while keeping the family’s nest egg intact.

  1. Volunteer Your Time– One of the greatest joys a parent-child relationship can experience is that of a coach and athlete while growing up through your town’s youth sports leagues; and not only does it create lasting priceless memories for everyone involved, volunteering your time to the team has numerous practical benefits too. First and foremost, it will be easy to gauge your child’s passion for the sport; so if he or she isn’t into it, you can move along to the next one without investing too much time, energy, and money. Additionally, most leagues exclude the signup fees for the families of their coaches, which is a nice bonus for the effort you’ll put into the role.
  1. Be Smart with the “Needed” Accessories– We know you think your kid is going to be the next Derek Jeter (we thought ours were going to be too), but there’s no need to go buy everything in Modell’s right now just because your son or daughter want to play on their friend’s team. Start out by seeing what the league is going to provide, i.e helmets, balls, and bats. From there, look into cheaper means of acquiring what’s left to purchase- try garage sales, second hand shops, stores like Play it Again, and even look into family hand me downs. The quality of the items are normally more than appropriate because children grow out of things so quickly; there’s simply not enough usage to really develop wear and tear in some instances so don’t be afraid to give it a shot. More and more teams are also holding their own gear swaps too, which can be the perfect opportunity for cheap equipment.
  1. Make Friends with Other Parents– This one should be a no brainer because there are just so many responsibilities with having a son or daughter fully entrenched in sports, you’re going to need back up. Not to mention, developing friendships with the parents of your kid’s teammates will open up a whole world of money saving options. Carpooling alone will save you tons on gas and the health of your vehicle, while you can also take advantage of certain deals for equipment, clothes, and leagues by doing everything together. If your children wind up playing on travelling teams, you can even save by sharing hotel rooms and doing group meals instead of eating out every night. Additionally, let’s not forget the huge benefit of not having to run out on work or call a sitter every time something unexpected comes up with the team like makeup games or changing practice times. You’ll have a network of friends that can help in these situations, saving you plenty of cash along the way.

 

Investment Alternatives for Retirement Income

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INTRODUCTION

As retirement approaches, you might begin wondering whether the “golden nest egg” you’ve accumulated is enough to provide the retirement lifestyle you envision. To answer that question, you must determine how much annual income you’ll need in retirement.

After you’ve made that calculation, the next step is to develop a plan to turn your nest egg into an income stream that will be sufficient to meet your retirement needs and goals. Retirement income planning is a very individual matter, and no single strategy or investment is right for everyone. The strategies and investments you choose should be based, at least in part, on your desired lifestyle, risk tolerance, life expectancy, potential return on your investments and their degree of volatility, as well as other available sources of fixed income such as Social Security and pensions.

There are many different types of investments available. Understanding how they work individually and in combination with other choices can help you decide which investment options will work for you.

Caution: All investing involves risk, including the possible loss of principal.

ANNUITIES

Annuities are a common investment for retirement income planning primarily because they provide the opportunity to receive a stream of income for the rest of your life. Most annuities offer you the option to take regular or intermittent withdrawals as well. These types of annuities are called “deferred annuities.” Deferred annuities allow your contributions to grow during a period called the “accumulation phase.” During the accumulation phase, earnings accrue tax deferred (i.e., earnings are not subject to income taxes until they are withdrawn). Most deferred annuities allow you to periodically withdraw some of the earnings (or some of the earnings and principal) from the annuity, or you can withdraw all of the earnings and principal from the annuity (this is referred to as full surrender). Another withdrawal option found in most deferred annuities is called “annuitization.”

With annuitization, you receive an income stream from the annuity. The annuity issuer pays you an amount of money on a periodic basis (monthly, quarterly, yearly, etc.). You can elect to receive either a fixed amount for each payment period (called a “fixed annuity payout”) or a variable amount for each period called a “variable annuity payout”). You can receive the income stream for your entire lifetime (no matter how long you live), or you can receive the income stream for a specific time period (10 years, for example). You can also elect to receive the annuity payments over your lifetime and the lifetime of another person (called a “joint and survivor annuity”).

Immediate annuities offer the same payment options as an annuitized deferred annuity. However, immediate annuities differ from deferred annuities in a few ways. While you can make a single payment or many separate payments for most deferred annuities, immediate annuities are usually funded with a single, lump-sum payment. Immediate annuities do not have an accumulation phase; rather, payments begin within one year from your investment in the annuity. And, unlike deferred annuities, most immediate annuities do not allow for partial withdrawals, although there are some exceptions.

Immediate annuities pay a steady income for a fixed period of time, or for the rest of your life, or for the joint lives of you and  another. Often, if you have an immediate need for income, you may be able to buy an immediate annuity.

Caution: Annuity guarantees are subject to the financial strength and claims-paying ability of the annuity issuer. Also, withdrawals  made prior to age 59½ may be subject to a 10 percent federal income tax penalty.

Fixed Versus Variable Deferred Annuities

There are two basic types of deferred annuities: fixed and variable. The issuer (an insurance company) of a fixed annuity  promises that a minimum rate of interest will be paid on the annuity, but the actual rate of interest credited to the annuity may be higher than the minimum rate. Fixed annuities may provide a source of income by allowing you to withdraw interest earnings, often as frequently as monthly, and the annuity contract may also let you withdraw a stated percentage of the annuity’s account value, usually 10 percent each year, without incurring surrender or withdrawal charges. But, if you withdraw your money early from an annuity, you may pay substantial surrender charges to the insurance company, as well as tax penalties.

Variable annuities have a variety of investment options called subaccounts” available for your selection. The investment choices may include general equity stocks, balanced portfolios, bonds, and other specialty investments such as international stocks. Unlike a fixed annuity in which the issuer promises that a minimum rate of interest will be paid on your investment, the issuer of a variable annuity does not promise any rate of return on the underlying investment portfolios. There is no guarantee that you will earn any return on your investment, and there is a risk that you will lose money. Generally, earnings from variable annuities may be withdrawn in the same fashion as with fixed annuities. Also, like fixed annuities, most variable annuities allow for withdrawal of a stated percentage of the annuity’s account value without incurring withdrawal charges.

Caution: Variable annuities are long-term investments suitable for retirement funding and are subject to market fluctuations and risk, including the possibility of loss of principal. Variable annuities contain fees and charges including, but not limited to, mortality and expense risk charges, sales and surrender (early withdrawal) charges, administrative fees, and charges for optional benefits and riders.

Caution: Variable annuities are sold by prospectus. You should consider the investment objectives, risk, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the variable annuity, can be obtained from the insurance company issuing the variable annuity or from your financial professional. You should read the prospectus and consider the risks and objectives carefully before you invest.

Annuity Advantages

One of the main advantages of a deferred annuity is that any earnings accrue tax deferred until they’re withdrawn. However, annuities do not provide all the tax advantages of 401(k)s and other before-tax retirement plans, which not only allow you to defer taxes on income and investment gains, but also allow your contributions to reduce your current taxable income.

In addition, annuities may include a death benefit that will pay your beneficiary a specified minimum amount, such as your total purchase payments.

Another advantage of an annuity is that you can choose to receive payments from the annuity for your entire lifetime. Even if you live to the age of 100 or beyond, you will continue receiving payments.

There is no limit on how much you can invest in an annuity. In addition, most annuities have options available through riders, usually for a fee or charge, that add benefits to the basic annuity contract, such as an enhanced death benefit, guaranteed income without annuitization, and penalty-free access to annuity proceeds due to a terminal illness or disability affecting the annuity owner.

There is no age limit at which you must begin receiving payments or taking withdrawals. If you do not need the money from the annuity, you can continue to have the earnings accrue tax deferred.

If you die before the distribution period begins, the annuity proceeds will go directly to the beneficiary (or beneficiaries) you have named in the contract, bypassing probate.

Annuity Tradeoffs

Annuities normally come with higher fees and expenses when compared to other types of investments such as mutual funds and bank deposits. Almost all issuers of annuities, particularly variable annuities, charge a variety of fees for the administration and management of an annuity account, including mortality and expense risk charges, administrative fees, underlying fund expenses, fees and charges for other features and riders, and tax penalties if you withdraw your money before age 59½, unless an exception applies. Because variable annuities have more investment options than fixed annuities, variable annuity fees are generally higher, but in either case, fees can be costly.

Generally, deferred annuities assess surrender charges for withdrawals within a specified period, which can be as long as six to eight years, although these charges normally decline and eventually are eliminated the longer you hold your annuity. Also, withdrawals taken before age 59½ may be subject to a 10 percent tax penalty in addition to any gain being taxed as ordinary income.

Investments in an annuity are not tax deductible. You generally use after-tax dollars to purchase an annuity. And, annuity earnings withdrawn (but not principal) will be taxed at the ordinary income rate, rather than at the lower capital gains rates applied to investments in stocks, bonds, mutual funds, or other non-tax-deferred vehicles in which funds are held for more than one year.

While there are some exceptions, once you elect a specific distribution plan, annuitize the annuity, or buy an immediate annuity and begin receiving payments, there’s usually no turning back. For example, you are not allowed to change from an election to receive annuity payments for a five-year period to an election to receive payments over your whole life.

Another tradeoff with certain types of annuities (specifically immediate annuities) is that the income from the annuity may not keep pace with inflation over the long term.

If you choose to annuitize your deferred annuity or purchase an immediate annuity, and select a “life only” payment option, annuity payments will stop at the death of the annuitant. It is possible that the annuitant can die without receiving at least the return of the investment in the annuity.

ASSETS THAT GENERATE INCOME

When it comes to retirement income planning, the challenge is trying to figure out how to generate a steady and reliable payout from your investment portfolio without running out of money too soon. While your plan should involve an asset allocation personalized to meet your particular retirement needs, it is often necessary to combine assets oriented toward growth with investments that favor income.

Investments that generate a regular, steady stream of income give you a spending base and may help offset some of the ups and downs of the stock market. There are many investments that provide income, including certificates of deposit, Treasury securities, bonds, dividend-paying stocks, and real estate investment trusts. Income may be in the form of interest, dividends, or earnings.

Caution: Yields on income-oriented assets may not be enough to meet your retirement income needs. Also, inflation tends to  increase expenses over time, and some fixed-income investments may not keep up with these increasing costs. As a result, you  may need to combine income-producing assets with growth-oriented assets.

Caution: All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing  strategy will be successful.

Certificates of Deposit (CDs)

CDs, which can be purchased from banks and brokerage firms, can be used to provide regular income. CDs pay a fixed interest  for a fixed period of time, usually from three months to five years. They usually pay higher interest than a savings account, and a penalty is charged for cashing in the CD before its maturity date. Typically, you can have the interest earned from the CD paid to you as income, sometimes as frequently as monthly. Bank-issued CDs are insured by the federal government up to $250,000 per account.

Caution: A brokered CD is a bit different from a bank-issued CD. It may have a much longer term–up to 20 years–and a longer-term brokered CD may pay interest at designated intervals rather than at maturity. It also may have a call feature that permits the issuer to redeem it before maturity. If you needed to replace that income stream, there’s no guarantee you would be able to reinvest the proceeds of the CD at the same interest rate. Also, if a brokered CD is traded in the secondary market, the price you get if you sell it before maturity may be more or less than your original investment. Finally, if a brokered CD is issued through a bank or thrift where you already have an account, the $250,000 FDIC insurance covers both your CD and that account; anything over the $250,000 limit is not insured.

Higher yields are usually offered on CDs with longer maturities. However, to avoid the early surrender charge, you’ll have to keep the CD invested until its maturity. In order to obtain higher CD yields and still maintain some liquidity, you can buy CDs of varying maturities (this is referred to as laddering). This strategy allows you to take advantage of interest rates spread over several  maturities without sacrificing liquidity.

Dividend-Paying Stock

Some companies share their profits with their investors by paying shareholders a dividend. Companies that have regular profits and do not need to reinvest all of them back into the company may issue dividends regularly. Stocks that regularly pay dividends may supply an ongoing source of income. Dividends are taxed either as ordinary income or as qualified dividends. In order to be taxed as qualified dividends, dividends must be paid by a domestic corporation or a qualified foreign corporation, and you must have held the stock for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date. Qualified dividends are generally taxed at the rates applicable to long-term capital gains.

Caution: Because dividends on common stock are subject to the company’s performance and a decision by its board of directors, they may not be as predictable as income from a bond. Some mutual funds also are focused on providing income from stock dividends, bond interest payments, or some combination of the two.

Preferred Stock

Preferred stock may be used to generate income because it pays a fixed rate of return in the form of dividends. Dividends on preferred stock are paid before the common stockholders receive a dividend. Additionally, preferred shares usually pay a much higher rate of income than common shares. Also, while most preferred stockholders do not have voting rights in the company, their claims on the company’s assets will be satisfied before those of common stockholders if the company experiences financial difficulties. Almost all preferred stocks have a provision allowing the company to call in their preferred shares at a set time or at a predetermined future date.

Mortgage-Related Securities

Mortgage-related securities are fixed-income investments that generate interest revenue from pools of home loan mortgages. Mortgage-related securities represent an ownership interest in mortgage loans made by financial institutions such as savings and loans, commercial banks, or mortgage companies used to finance borrowers’ purchases of homes or other real estate. Examples include Government National Mortgage Association securities(GNMA or Ginnie Mae), Federal Home Loan Mortgage Corporation securities (FHLMC or Freddie Mac), and Federal National Mortgage Association securities (FNMA or Fannie Mae). The value of a mortgage-related security can vary depending on what is happening with the underlying mortgages. For example, if a large number of homeowners refinance those mortgages or default on them, as occurred in the months leading up to the 2008 financial crisis, the value of a security based on those mortgages can fall.

Corporate Bonds

Corporations issue bonds to help pay for expansion, equipment, or operating expenses. Corporate bonds are a company’s IOU for the money you’re lending to the company through the purchase of the bond. Corporate bonds provide a steady and predictable stream of income through interest payments. Though they are not risk-free(e.g., a bond issuer could default on a payment or even fail to repay the principal), bonds as a whole are considered somewhat less risky than stocks because a corporation must pay interest to bondholders before it pays its stockholders. If a company declares bankruptcy or dissolves, bondholders are compensated before stockholders.

However, bonds are subject to inflation risk. As inflation rises, interest rates also tend to rise. Because newer bonds would offer those higher rates, older bonds with lower returns are worth less on the secondary market. If you needed to sell a bond before maturity when its price was down, you could lose money. Also, if a bond is thinly traded, you could have difficulty selling it when you want to, or have to accept a lower price than you’d like.

If you’re considering using bonds primarily to provide current income, buying bonds at their face values and holding them to maturity provides a stable stream of income and the assurance that, unless a bond issuer defaults, you’ll receive your entire investment back.

In some cases, the issuer of the bond may exercise its right to call the bond–that is, to repay the debt evidenced by the bond before it is due. Each bond’s agreement specifies whether it is callable and how soon. Typically, a bond is called when interest rates drop and the issuer can refinance the loan at a more favorable rate. The higher the interest rate, the more likely the bond will be called. As with a brokered CD, if you needed to replace that income stream, there’s no guarantee you would be able to reinvest the proceeds of that bond at the same interest rate.

The variety of bonds available offers you the flexibility to tailor our portfolio to your individual needs and investing style. Strategies for bonds can range from something as basic as buying a bond and holding it to maturity, or earmarking the bond proceeds for a specific need, to strategies such as laddering maturities and bond swapping to achieve a higher yield or tax advantage.

Municipal Bonds

Municipal (muni) bonds are issued by state and local governments. Most state and local governments do not tax muni bond interest from that state, though regulations vary from state to state. Also, muni bond interest is usually (but not always)exempt from federal income tax as well. Whether muni bond interest is taxable at the federal level depends on how the issuing
government uses the money raised by the bonds. If the project that the bond is funding is deemed to have primarily a private rather than a public interest, the bond’s interest may be taxable at the federal level. Because of their tax-advantaged status, tax-free bonds almost always yield less than corporate bonds with the same maturity date. Munis are subject to the same risks as other types of bonds, such as interest rate risk, inflation risk, reinvestment risk, or default by the issuer (though the rate of muni defaults has historically been lower than that for corporate bonds).

Caution: Income from municipal bonds may be included in the calculation of the alternative minimum tax. Be sure to consult your tax professional about municipal bond income.

Treasury Securities

Treasury securities are sold on the open market by the Department of the Treasury and are backed by the full faith and credit of the U.S. government. That makes them a relatively safe investment, though they are subject to the same market forces as other bonds. The most commonly used Treasury securities are Treasury bills (T-bills), Treasury notes, Treasury bonds, and Treasury Inflation-Protected Securities (TIPS). Interest earned on these Treasury securities is not taxed at the state or municipal level, but is subject to federal income tax.

Treasury notes (usually issued in 2-year to 10-year maturities) and Treasury bonds (issued in 30-year maturities) pay interest semiannually until maturity.

TIPS are designed to adjust both your initial investment (principal)and the interest paid every six months to reflect changes in the Consumer Price Index (CPI), a widely used measure of inflation. If the CPI increases, the Treasury recalculates your principal to reflect the change. The interest rate is fixed; however, it also will change with inflation because it is applied to the adjusted principal amount. If the CPI figure rises, the principal will be adjusted upward with the interest paid based on the increased principal; if deflation occurs, your principal could actually drop, correspondingly decreasing the interest paid. When the TIPS matures, you will receive either the inflation-adjusted principal or your original investment, whichever is greater. TIPS are available in 5-, 10-, or 20-year maturities.

Caution: The inflation rate over time needs to exceed the difference between a TIPS’ yield and that of an investment without inflation protection; otherwise, the TIPS offers little advantage.

Real Estate Investment Trust (REIT)

A REIT is a company that buys, develops, manages, and/or sells real estate such as skyscrapers, shopping malls, apartment complexes, office buildings, or housing developments. Rather than investing directly in real estate, investors in REITs invest in a professionally managed portfolio of real estate or, in some cases, mortgage-backed securities. Some REITs trade on the major exchanges, just like stocks. Others, known colloquially as “non-traded REITs,” do not; these may involve both high fees and low liquidity, meaning you could have difficulty selling your shares when you want to. REITs may make money from rental income, profits from the sale of property, and other services provided to tenants. REITs also receive special tax considerations; they do not pay taxes as long as they pay out at least 90 percent of their net income to their investors.

However, REITs are subject to the same risks that apply to the underlying properties or securities. These may include declining property values, the failure of tenants to pay rents, lack of mortgage availability, oversupply of available space, changes in property tax or zoning laws, rising interest rates, natural disaster, early repayment of or default on mortgages, or a general decline in economic conditions. Those factors can affect an income stream from an REIT. There are many types of REITs, so before you invest, be sure you understand how the one you choose functions.

GROWTH-ORIENTED INVESTMENTS

Some retirees put all of their investments into bonds or other fixed-income investments when they retire, only to find that they haven’t accounted for the impact of inflation or potentially decreasing bond yields. Keeping a portion of your portfolio invested in assets oriented toward growth gives you potential for higher returns, albeit with increased risk associated with market volatility.

Stocks

What role should stocks play in your retirement income plan? Conventional wisdom had been that as you approach retirement, you should convert most of your stocks and equity investments to fixed-income assets such as bonds and cash. However, several factors have evolved that heighten the importance of including a growth component as part of your retirement portfolio. First, retirees are living longer than ever before, which means that your income will have to last longer. While past performance is no guarantee of future results, stocks historically have had better long-term returns than bonds or cash, while payments from bonds that are based on fixed interest rates can lose purchasing power to inflation over time.

MUTUAL FUNDS

Mutual funds can provide a way for retirees to conveniently obtain the benefit of owning a diversified and professionally managed portfolio. Each fund invests in numerous securities, and this diversification reduces the impact of a loss on any individual security.

A mutual fund spreads your investment dollars among several individual securities more efficiently than you might be able to on your own (though diversification alone cannot guarantee a profit or ensure against the potential for loss). Diversity can help you manage the degree of volatility you face, because gains from some investments can offset losses from others.

Tip: A new type of offering has merged in the mutual fund market that is designed to help retirees strike a balance between current income and future growth. Generically referred to as distribution funds, they are also known as managed payout funds and retirement income funds. These funds attempt to provide income while maintaining some equity for savings, though there is no guarantee they will always be able to do so. These funds can vary widely in their objectives and strategies for attempting to provide income. As a result, it’s especially important to familiarize yourself with a distribution fund’s specifics, which can be found in the fund’s prospectus, before purchasing shares.

Caution: Before investing in a mutual fund, carefully consider the investment objectives, risks, charges, and expenses for the fund.

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IMPORTANT DISCLOSURES

Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual’s personal circumstances.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax rofessional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer(Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. NASA Federal Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.

Pointy-Eared Yellow Creature Used as Bait to Rob You and Access Your Private Information

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Does the thought of a little yellow pointy-eared creature bring back a feeling of nostalgia for you?  If so, you’re not alone. The creators of the Pokémon games have figured out a way to bring back the popular critter to create a craze once again for those who grew up with it for a new generation of fans. This time, they use a free game app called Pokémon Go, which has been luring people to parking lots, rushing river banks, parks at night, and in some cases to their deaths. And that’s not all. It also tracks your every move and accesses your personal data.

In basic terms, Pokémon Go uses the GPS, clock, and camera from a user’s smartphone to detect where and when a player is in the game. Then the little Pokémon creatures “appear” around the area (actually on the phone screen) so that they can be captured. As the players move around, more Pokémon will appear. The idea is to get people to travel around the real world to catch the Pokémon.

It’s fun for everyone, but there are some concerns about privacy. Particularly for those using the game on iOS. It’s been reported that users logging in using their Google accounts are also allowing the game’s developer, Niantic, access to not only your location, but also to your calendar, your contacts, your browsing history, and all of your photos. Basically to anything you access with your Google account, Niantic can now access too.

That said, let’s not get carried away. Niantic isn’t snooping around your device to see when you have your next dinner date. However, it does point out that many apps ask for much more access than they need; and not just Pokémon Go. Always pay attention to what any app is asking permission to use. Unless it is a calendar app, it probably doesn’t need access to your calendar and most don’t need access to your microphone. So, don’t give them those rights. It’s always good practice to go into the settings for the apps afterward and make sure you are not giving it more access than it needs to function properly.

Also consider whether or not you want to sign into any app with another account such as Facebook or Google. If you do, make sure you check the privacy settings for those accounts too, because whatever rights you give them, you are also giving to the app using the account login. It’s better to just create a new account in the app or game itself. This allows you to control each one separately based on just what it needs to function.

There is a reported workaround and a way to remove the additional access for Pokémon Go by going into your Google account in the security permissions and revoke permissions. As long as you are still signed in on the game, it seems that you can still use it according to a blogger on CNET. However, if you get kicked out or close it, you will need to revoke permissions each time.

Niantic knows of this issue and is working on a fix. If you are one of those early adopters of the game, you should apply it as soon as it is available. Otherwise, consider waiting a few weeks before jumping on the bandwagon and let them work out some of the bugs.

In addition to the privacy issue, there are physical security concerns as well. Police in St. Louis, Missouri have warned that criminals are using the geolocation feature of the game to lure players to isolated locations and rob them. At certain levels, players can congregate at places to engage in virtual battles and another feature supposedly allows the creation of beacons to lure players to a particular place. All of these create more dangers.

It’s always a good idea to seriously consider how you want to use all the features of smart phones these days. While using geolocation features allow you to do a lot of great things with the device, it also can tell others with nefarious intentions where you are and when.

Keep in mind that often, the more popular an app the more likely it will eventually be used for spreading malware and this one is already extremely popular. In fact, some are saying this game is on the verge of overtaking Twitter on Android in terms of daily active users. Make sure that if you download any game or app, get it from your device’s official app store. Getting it from elsewhere is called sideloading and that comes with added risks that aren’t as high when you use the Apple Store, Google Play, or other official store.

Pokémania is getting a second wind. Although it has only been available in the United States for a little over a week, it is causing incidents. People are so busy staring at their phones that they aren’t paying attention to oncoming traffic and getting hit, doing faceplants on sidewalks, and in one case a teenage girl stumbled upon a dead body when tracking down one of the little critters. If you happen to be near a police station, it’s not advised to go lurking around either. Police in Duvall, Washington while encouraging game play, have advised players to “be smart about it. One way of NOT playing smart is to go creeping around the Duvall PD.”

© Copyright 2016 Stickley on Security