Handling Market Volatility

Conventional wisdom says that what goes up must come down. But even if you view market volatility as a normal occurrence, it can be tough to handle when your money is at stake. Though there’s no foolproof way to handle the ups and downs of the stock market, the following common-sense tips can help.

Don’t put your eggs all in one basket

Diversifying your investment portfolio is one of the key tools for trying to manage market volatility. Because asset classes often perform differently under different market conditions, spreading your assets across a variety of investments such as stocks, bonds, and cash alternatives has the potential to help reduce your overall risk. Ideally, a decline in one type of asset will be balanced out by a gain in another, though diversification can’t eliminate the possibility of market loss.

One way to diversify your portfolio is through asset allocation. Asset allocation involves identifying the asset classes that are appropriate for you and allocating a certain percentage of your investment dollars to each class (e.g., 70% to stocks, 20% to bonds, 10% to cash alternatives). A worksheet or an interactive tool may suggest a model or sample allocation based on your investment objectives, risk tolerance level, and investment time horizon, but that shouldn’t be a substitute for expert advice.

Focus on the forest, not on the trees

As the market goes up and down, it’s easy to become too focused on day-to-day returns. Instead, keep your eyes on your long-term investing goals and your overall portfolio. Although only you can decide how much investment risk you can handle, if you still have
years to invest, don’t overestimate the effect of short-term price fluctuations on your portfolio.

Look before you leap

When the market goes down and investment losses pile up, you may be tempted to pull out of the stock market altogether and look for less volatile investments. The modest returns that typically accompany low-risk investments may seem attractive when more risky investments are posting negative returns.

But before you leap into a different investment strategy, make sure you’re doing it for the right reasons. How you choose to invest your money should be consistent with your goals and time horizon.

For instance, putting a larger percentage of your investment dollars into vehicles that offer asset preservation and liquidity (the opportunity to easily access your funds) may be the right strategy for you if your investment goals are short term and you’ll need the money soon, or if you’re growing close to reaching a long-term goal such as retirement. But if you still have years to invest, keep in mind that stocks have historically outperformed stable-value investments over time, although past performance is no guarantee of future results. If you move most or all of your  investment dollars into conservative investments, you’ve not only locked in any losses you might have, but you’ve also sacrificed the potential for higher returns. Investments seeking to achieve higher rates of return also involve a higher degree of risk.

Look for the silver lining

A down market, like every cloud, has a silver lining. The silver lining of a down market is the opportunity to buy shares of stock at lower prices. One of the ways you can do this is by using dollar-cost averaging. With dollar-cost averaging, you don’t try to “time the market” by buying shares at the moment when the price is lowest. In fact, you don’t worry about price at all. Instead, you invest a specific amount of money at regular intervals over time. When the price is higher, your investment dollars buy fewer shares of an investment, but when the price is lower, the same dollar amount will buy you more shares. A workplace savings plan, such as a 401(k) plan in which the same amount is deducted from each paycheck and invested through the plan, is one of the cost well-known examples of dollar cost averaging in action.

For example, let’s say that you decided to invest $300 each month. As the illustration shows, your regular monthly investment of $300 bought more shares when the price was low and fewer shares when the price was high:

Although dollar-cost averaging can’t guarantee you a profit or avoid a loss, a regular fixed dollar investment may result in a lower average price per share over time, assuming you continue to invest through all types of market conditions.

(This hypothetical example is for illustrative purposes only and does not represent the performance of any particular investment. Actual results will vary.)

Making dollar-cost averaging work for you

• Get started as soon as possible. The longer you have to ride out the ups and downs of the market, the more opportunity you have to build a sizable investment account over time.
• Stick with it. Dollar-cost averaging is a long-term investment strategy. Make sure you have the financial resources and the discipline to invest continuously through all types of market
conditions, regardless of price fluctuations.
• Take advantage of automatic deductions. Having your investment contributions deducted and invested automatically makes the process easy and convenient.

Don’t stick your head in the sand

While focusing too much on short-term gains or losses is unwise, so is ignoring your investments. You should check your portfolio at least once a year–more frequently if the market is particularly volatile or when there have been significant changes in your life. You may need to rebalance your portfolio to bring it back in line with your investment goals and risk tolerance. Rebalancing involves selling some investments in order to buy others. Investors should keep in mind that selling investments could result in a tax liability. Don’t hesitate to get expert help if you need it to decide which investment options are right for you.

Don’t count your chickens before they hatch

As the market recovers from a down cycle, elation quickly sets in. If the upswing lasts long enough, it’s easy to believe that investing in the stock market is a sure thing. But, of course, it never is. As many investors have learned the hard way, becoming overly optimistic about investing during the good times can be as detrimental as worrying too much during the bad times. The right approach during all kinds of markets is to be realistic. Have a plan, stick with it, and strike a comfortable balance between risk and return.

 

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2017

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* 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.

CUSO Financial Services, L.P. and its representatives do not provide tax advice. For such advice, please contact a tax professional.

Top Ten Verizon 2017 Breach Report Takeaways

Verizon recently released the tenth annual edition of its Data Breach Investigations Report. Inside was a lot of information based on 40,000 analyzed incidents and nearly 2,000 confirmed data breaches. While there are a lot of significant statistics and a plethora of good cybersecurity related information, there are a few important takeaways for any organization to consider, including that smaller organizations are also victims of data breaches and training might just be the most important tool in the cybersecurity toolbox. The top ten are listed below.

The 2017 report determined:

-61% of attacks were against businesses with fewer than 1,000 employees.
-75% of the attacks were perpetrated by outsiders, but 25% were from the inside.
-81% of the breaches leveraged stolen and/or weak passwords.
-24% were against financial organizations.
-73% were financially motivated attacks.
-95% of phishing attacks that led to a breach were followed by some type of software installation. Of those, -66% were via malicious email attachments.
-51% of the attacks involved malware.
-1 in 14 users were convinced via trickery to click on attachments or links in email messages. Unfortunately, -25% of them did it more than once.
-60% of the breaches involved some type of physical security breach. This category includes, but is not limited to insiders stealing data, snooping, or someone inside providing data to a competitor.
-88% of the intrusions fell into one of nine categories (in no particular order): Denial of Service (DOS), web application attacks, Point of Sale (POS), payment card skimming, physical theft and loss, crimeware such as ransomware, cyber-espionage, privilege misuse, and miscellaneous errors. This last category is defined as involving such items as publishing errors, improper disposal of information, and misconfiguration, as well as mailing paper documents to the wrong recipient; which was the most common.

While there are numerous areas on which to focus as a result of the findings in this report, there are a couple that should be high priority:

1. Train employees on the nine categories that see the highest number of intrusions.

2. Ensure that everyone who opens email knows how to identify potentially malicious attachments and links. Then provide continual awareness training to keep on top of the most recent threats.

3. Have a solid policy on creating strong passwords, teach users how to create good ones, and require them to be changed regularly.

Training should not happen one time and then put aside for a year or more. People forget and get too busy to pay attention to tiny indicators. Phishers get more creative. Threats evolve. Training should continually evolve along with them.

© Copyright 2017 Stickley on Security

Common Amazon Phishing Scam Getting Traction

It seems there is an uptick in a common phishing scam at the moment. Some people are reporting seeing several notices from a very popular online retailer that claims a recent order placed has been cancelled. Fortunately, the scammers put in all the necessary information making it very easy for the users to simply click a link to check up on the order and give away login credentials at the same time. However, they also make it easy to see that it’s a fake.

The email messages come with a “primitive” looking type stating that a recent order placed with Amazon was cancelled. It even has the description of the item included, which likely isn’t something the user ordered. When a popular movie or music album is released, for example, it’s common to see phishing spam with those purchases listed in emails like this one. The sender email appears as if it is from Amazon, but if you look at the actual address, it replied back to an “amazoncomrade.com” email.

The point of this poorly done scam isn’t necessarily to convince anyone that it is indeed real. It is trying to scare people into thinking someone acquired their credentials. The hope of the attackers is that users will quickly click the included link and enter actual Amazon credentials.

Always take a few minutes to think about such messages if they do manage to make it past your spam filters and into the inbox. There is no reason what-so-ever that an extra few minutes will make a difference. If you want to verify your orders, log in to your account directly from the site and make sure they reflect what they should. Don’t click links or attachments to verify account information, regardless of who the sender appears to be. Even if you are 95% sure it’s legitimate, don’t take chances. Just go to the site from a previously safe bookmark or another way you know is 100% safe.

© Copyright 2017 Stickley on Security

Life Stages: How to Manage Your Finances Through the Years

There are certain times in life when particular money management areas need special focus. The list below may remind you of areas of your finances that need special attention now or in the near future. Bear in mind that our stages are generalizations: some people are married with children in their twenties while others do not have dependents until their 50s, if ever. Whatever your situation, it’s important to plan ahead to accommodate the coming changes in your financial situation.

20s

This is a time when you probably finish your formal education and begin your first “real” job. Now is the time to start developing sound financial habits for a lifetime.

-Establish credit and maintain a good payment record. —Do not charge more than you can pay off in 3 months (or better yet, within the month).
-Set up an emergency savings fund, typically 3-to-6 months’ living expenses. Keep this money as liquid (accessible with few, if any, penalties) as possible.
-Start learning about investing and establish an automatic savings program to reach your financial goals.
-If you can, buy a home, or start saving for the down payment.
-Make sure you are taking full advantage of the savings benefits available to you through your employer: 401(k) or 403(b), et cetera.
-Make sure you have adequate insurance coverage (life, home, auto, health, disability, liability).

30s

-If you have children, begin investing for their education.
-Continue to keep credit under control and avoid paying finance charges and annual fees.
-Write a will or review the one you have.
-Review your insurance coverage in light of changes in your family situation, increasing assets, or professional activities.

40s

-As your income grows, look for investments and savings plans that shelter some of it from taxes.
-Use a retirement planning software program or see a financial planner to figure out exactly how much you’ll need to have saved to maintain your lifestyle in retirement.
-Step up personal and employer-sponsored retirement savings accordingly.
-Review your investment allocation and make sure you are still well diversified.

50s

-Review your will and estate plan.
-Pay off your debts. Depending on the going rates for different types of investments, it may or may not be wise to pay off your mortgage now.
-Maximize your savings for retirement.
-Make sure your growing assets are protected by liability insurance.

60s

-As you near retirement, switch a portion of your investments to low-risk types to produce income rather than higher-risk growth.
-With life expectancy increasing, make sure a portion of your retirement nest egg is invested so that it continues to outpace inflation.
-Maintain your health and long-term-care insurance.
-Remain wary of scams aimed at seniors.
-Research reverse mortgages if you are a homeowner. -You may need to tap the equity in your property to supplement your retirement income.

BALANCE
Revised February 2016.

Safely Cut the Cost of Elective Medical Expenses

Whether it’s a matter of comfort, appearance or safety, there are many medical procedures that you may want or need, but your health insurance won’t cover. Laser eye surgery may fall into the want category for most people and it can be a hefty investment with each eye costing several thousand dollars. For those wanting to start a family, infertility treatments, which can cost over $10,000, may be closer to a need. Yet most states don’t require health insurance to cover treatments.

Considering the lasting impact that these and other procedures can have on your life, you may not want to seek out the least expensive option. However, that doesn’t mean you should forgo attempts to save altogether. From tax-advantaged accounts to comparison shopping doctors, there are many approaches to safely cutting costs.

See if you could get a tax break. Although tax breaks don’t lower a medical procedure’s price, tax deductions can decrease your taxable income and by using a tax-advantaged account you may be able to pay for some medical procedures with income-tax-free money.

  • Take a medical expense tax deduction. If you itemize your tax deductions, you can get a deduction for your qualified medical expenses that exceed 10 percent of your adjusted gross income. Laser eye surgery and some fertility enhancement treatments may qualify. However, cosmetic surgery doesn’t unless it’s related to a congenital abnormality, disfiguring disease or an injury resulting from trauma or an accident.
  • Use an employer-sponsored flexible spending account (FSA). Some employers offer FSAs as an employee benefit. You can make tax-deductible contributions to the account each year and withdraw the money tax-free to pay for qualified medical expenses, including health insurance deductibles and copayments. However, this approach could require planning as you may forfeit remaining FSA money at the end of each year.
  • Enroll in health insurance with a health savings account (HSA). An HSA account is similar to an FSA in that you can contribute pre-tax money and withdraw funds to pay for eligible medical expenses tax-free. HSAs don’t have the use-it-or-lose-it requirement, but to qualify for an HSA account, you need to enroll in a High Deductible Health Plan (HDHP) and can’t be eligible for Medicare.

Ask your health insurance company about discounts. Even when a health insurance provider doesn’t cover a procedure, members may still be able to save money by going through their insurance.

For example, health insurance generally won’t cover the cost of laser eye surgery, but your provider may offer a 5 to 15 percent discount if you get the surgery at partner eye care centers.

Health insurance requirements can also vary from one state to another, and you should double-check your benefits before assuming something isn’t covered. Infertility treatment is one of these gray areas, as some states require health insurance plans to provide coverage while others do not.

Compare costs from different providers. Varying medical costs sometimes make headlines when patients find out that a $3,000 medical procedure at a hospital could cost several hundred at a nearby clinic. If it’s not an emergency, there are websites that you can use to comparison shop nearby medical centers and get estimated prices.

Some people also look for savings in other countries. Medical tourism is a growing industry, and millions of people travel outside their home countries seeking lower costs, higher-quality services, treatments that aren’t available at home, a relaxing environment to recover in or a combination of several of these factors. While the U.S. is a destination for some medical tourists, Canada, Southeast Asia, Latin America and parts of Europe are also popular.

Bottom line: Although you may not be able to convince your health insurance company to cover what it considers an elective procedure; you can turn to other methods to save money. As with other large expenses, you can take a dual big- and little-picture approach by looking for tax breaks that lower your effective cost and savings opportunities that can reduce a procedure’s price.

by Nathaniel Sillin

Cybercrime Prevention Tips

While cybercrime is on the rise, it is no longer subtle and behind the scenes. It has become a business with organized crime taking it under its wing and using it in ways not unlike the organized crime of days gone by. It’s also being embraced by nation-states in the form of spying, placing malware on networks to create backdoor access, and releasing information that those it’s stolen from would rather keep private.

At the center of today’s cybercrime is malware. While there seems to be a decline in the well-known banking Trojans such as Zeus and Citadel, it has only become new and improved with Dridex and Dyre, GameoverZeus, and Confiker. These are all designed to take your money more stealthily. In addition, there is a rise Remote Access Trojans (RAT) which use user-requested programs (games, apps, attachments in email) to create backdoor administrator access to systems.

E-commerce is creating a new way to commit payment fraud for cybercriminals. Fraudulent payment card crimes using a copy of a card have decreased over the years, particularly with the transition to the EMV chip cards. However, the continued data breaches into merchant systems has allowed card-not-present (CNP) crime to increase as criminals use the data gained in those to continue committing payment fraud.

Phishing, spearphishing, and vishing remain at the top of the list of ways cybercriminals get malware disseminated. People are still the number one vulnerability for thwarting security measures. This is an attack that uses very specific information about the target to gain access to confidential information. Business email compromise (BEC) or email account compromise (EAC) are on the rise and the FBI continues to issue warnings to all industries on the current targets.

Individuals do have some recourse:

-Be diligent at monitoring payment card charges. If anything looks unfamiliar or suspicious, report it to the card-issuing organization without delay.
-Monitor credit reports annually and report anything that doesn’t belong on them to the credit bureaus.
-Use unique login credentials for each online account and change passwords at least quarterly.
-Create secure and complex passwords and phrases and vary where you put those special characters.
-Don’t open attachments or click links in email messages unless you are expecting them and are 100% certain they are safe.
-Keep computers and all internet-connected devices including smart TVs and game systems updated with the latest patches and software versions. Remember to immediately check for updates when installing new hardware on your network. Often, these devices sit on store shelves for a long time and most likely at least one update is available once you get it set up.
-Install and update anti-virus and anti-malware software on all devices used on the internet and turn on automatic updates to be sure you don’t miss one.

Fortunately, law enforcement activities have had some success over the years. The FBI along with several multinational organizations have managed to take down some of the biggest malware threats, such as GameOver Zeus and CryptoLocker, if only temporarily. Don’t expect that to stop the cybercriminals though. It’s merely a delay.

© Copyright 2017 Stickley on Security