Investor Education This Week 
FINANCES FOR GEN Y
9/1/2010
From CFP Board: Just starting out? You need to make smart financial decisions - and a plan. That's the message from Eleanor Blayney, CFP®, the consumer advocate for Certified Financial Planner Board of Standards, Inc., in the first segment of the non-profit organization's Lifelong Financial Strategies initiative. The first stage - "Starting Out" - focuses on ways Generation Y can avoid some of the pitfalls of earlier generations by making smart financial decisions today and establishing smart financial habits for a lifetime. "Young people today face significant financial challenges - and opportunities, especially in this economy," Blayney said. "Most start out their adult lives with more debt than assets. At this stage, it is crucial to set goals, get out of the negative, and create a sound financial plan." Tips for this phase, which focuses on people 18-25 years of age, cover such topics as: fight the urge to splurge; understand the new rules; do the car math; keep score; and commit now to good credit habits ...
BOND MUTUAL FUNDS: RISKS AND RETURNS
9/1/2010
From ICI: Bond mutual funds - like all mutual funds - involve investment risk, including the possible loss of principal. A fundamental principle of investing known as the risk/reward tradeoff means that when you make an informed decision to assume some risk, you also create the opportunity for reward. Investors should be aware of the risks and potential for losses associated with bond mutual fund investing. How do the risks and returns of bond mutual funds compare with those of other investments? Investing in bond mutual funds usually entails less risk-and less reward-than investing in stock mutual funds. Similarly, bank accounts and money market funds entail less risk and less reward than do bond mutual funds. Money market funds invest in very short-term, high-quality securities and attempt to maintain a constant share price (value). However, an investment in a money market fund is not insured or guaranteed by the FDIC or any other government agency ...
IRA INVESTOR INFO
8/25/2010
From ICI and SIFMA: A new database that collects account-level data of more than 10 million individual retirement accounts (IRAs) is providing unique, new insights into IRA investor demographics and activities. The IRA Investor Database - a joint project by the Investment Company Institute (ICI) and the Securities Industry and Financial Markets Association (SIFMA) - is designed to shed light on key determinants of IRA contributions, rollover and withdrawal activity, and the types of assets that investors hold in these accounts. The new database supplements existing household surveys and IRS tax data about IRA investors and is designed to increase public understanding in this critical area of retirement savings. IRA investments, which totaled $4.2 trillion at year-end 2009, represent more than one-quarter of total U.S. retirement market assets and almost 10 percent of U.S. households' total financial assets ...
MILITARY FINANCIAL COUNSELING
8/25/2010
From FINRA: Nearly 200 military spouses throughout the U.S. and overseas have been awarded the FINRA Investor Education Foundation's 2010 Military Spouse Fellowship. The fellowship gives spouses the training they need to earn the Accredited Financial Counselor (AFC) designation, which gives them marketable job skills and provides them with the knowledge and tools they need to help military families overcome financial challenges. The program is administered in partnership with the Association for Financial Counseling and Planning Education and the National Military Family Association. The fellowship covers the costs associated with completing the AFC training and testing. The 184 military spouses who received the fellowship will immediately join a corps of nearly 800 U.S. military spouses worldwide who provide military families with important financial counseling services-including budgeting and credit management, retirement planning and financial planning in advance of PCS moves and deployments ...
MONEY NIGHT TALK
8/18/2010
From CEE: American Express, personal finance expert Jean Chatzky and the Council for Economic Education (CEE) announced the launch of "The National Money Night Talk." This new program, which culminates on September 16, encourages families around the country to sit down and talk about money and financial responsibility. "We are at a pivotal teachable moment in our history," said Nan J. Morrison, President and CEO of the Council for Economic Education. "Even with classroom instruction on economics and personal finance, it is vital for parents to discuss financial responsibility with their children." To help parents get prepared to have "the talk," American Express and Chatzky have created a new online resource now available at www.moneynighttalk.com. On the site, parents can sign a pledge that they will talk to their kids about money and can gain access to exclusive Jean Chatzky videos and resources endorsed by the Council for Economic Education based on the organization's national content standards ...
STRETCHING YOUR NEST EGG
8/18/2010
From AAII: Having suffered severe losses in their retirement nest eggs last year, many retirees living off of their savings are reviewing their investment and spending plans, searching for new plans of action to ensure their savings can sustain them throughout their lifetime. There is no question that bear markets can be devastating-particularly for new retirees-if action is not taken to compensate for the loss. The sooner you adjust, the better. But what is your best course of action? While the instinct may be to flee the risk of equity markets, postpone retirement or go back to work, an alternative strategy would be to consider temporarily reducing annual withdrawals from your nest egg. A new T. Rowe Price retirement income study compared various withdrawal adjustment strategies for new retirees who suffered a 30% decline in their portfolios in their first year of retirement ...
INSIDE TARGET-DATE FUNDS
8/4/2010
From EBRI: The use of target-date funds, a relatively new 401(k) plan option, is more likely among participants who are younger, have lower account balances, and have shorter tenure at their current job, according to a study released by the nonpartisan Employee Benefit Research Institute (EBRI). The reason for this pattern is that is new workers are the most likely to be automatically enrolled in their employer's 401(k) plan, with a target-date fund (TDF) often being the default option. The EBRI analysis also shows that target-date users are likely to stick with their fund over time. Target-date funds are designed to make it easier for Americans to save for retirement by providing simplicity for investors. The name of these funds usually includes a date that represents the year in which the investor intends to retire. While their growth has been rapid in 401(k) plans in recent years, TDFs are still relatively new for most participants ...
25 TIPS IN 25 DAYS
8/4/2010
From CFP Board: Life is full of changes, and with each new phase of life comes new financial responsibilities, needs and goals. With that in mind, CFP Board's Consumer Advocate program is starting a "25 Tips over 25 Weeks" initiative as a way to promote financial planning for all Americans during five key phases of their life and to help mark CFP Board's 25th anniversary this year. This consumer education and awareness initiative will feature a series of relevant and timely tips and strategies for the five key milestone phases in a person's life. Once a month - from August through December 2010 - CFP Board will release a multi-media packet of information to the public and the media. Each packet will include a press release, podcast and video. Information will be distributed as well to the 62,000 CFP® professionals across the country, posted online at www.CFP.net, to the media, and through Twitter and Facebook ...
AMERICANS ANXIOUS ABOUT FINANCES
7/21/2010
From CFP Board: A new survey of 1,002 Americans shows that two years after the financial meltdown, most Americans (65 percent) are more anxious about their personal finances than they were when the crisis began. The survey was conducted to mark the 25th anniversary of CFP Board, which grants the CFP® certification and upholds it as the recognized standard of excellence for personal financial planning. A bright spot in the findings - 44 percent of Americans expect the U.S. economy to improve in the next six months, while only 28 percent expect things to get worse. A smaller group (22 percent) anticipates no change in the economy. However, only a bit more than a third of Americans (37 percent) expect to see their personal finances improve in the next six months, versus less than half (46 percent) who expect to hold onto what they currently have, and 16 percent who expect to lose money ...
WHAT IS YOUR RETIREMENT READINESS?
7/21/2010
From EBRI: With Americans living longer in retirement, the 2010 EBRI Retirement Readiness Rating™ released today shows dramatically high percentages of Americans-even in the upper income categories-are likely to run short of money after 10 or 20 years of retirement. The new analysis by the nonpartisan Employee Benefit Research Institute (EBRI) finds that almost two-thirds (64 percent) of Americans in the two lowest preretirement income levels will be running short after 10 years in retirement. However, the EBRI study also finds that after 20 years of retirement, almost a third (29 percent) of those in the next-to-highest income level will run short of money, as will more than 1 in 10 (13 percent) of those in the highest-income level. Not surprisingly, those with the highest income are at the lowest risk of running short of money ...
INVESTOR ED FOR ACADEMICS
7/14/2010
From ICIEF: The Investment Company Institute Education Foundation (ICIEF) is awarding an investor education grant in the amount of $19,250 to the University of Maryland to provide retirement planning and investment education to university faculty and staff, including a series of workshops designed for those who speak English as a second language. "We need to make sure that all workers get retirement information they can understand and use to make investment decisions based on their own goals and circumstances," said ICI President and CEO Paul Schott Stevens. ICIEF established grant programs in the fall of 2009. Including the University of Maryland grant, to date the foundation has awarded more than $130,000 to Washington, DC area organizations including STRIVE DC, the Arlington Country Office of Virginia Cooperative Extension, Junior Achievement of the National Capital Area, UNCF, and SIFMA Foundation for Investor Education ...
EQUITIES AND RETIREMENT
7/14/2010
From AAII: Retirement investors must balance two fundamental risks-the risk of not having enough growth in their portfolios to sustain income for many years in retirement versus the risk of a steep market decline that could substantially cut into assets at the worst time, such as retiring during a bear market. Prior studies have noted that a lower equity exposure in a retirement portfolio has helped protect against short-term market setbacks, but provided less retirement income over the long run. A new analysis shows that even those who pursue a more conservative investment strategy to avoid large losses at retirement might not do as well as those with a more aggressive strategy. This was the case even for some risk-averse retirees who started withdrawing their retirement savings on the eve of the 2008 market crash ...
BEGINNER’S FINANCIAL GUIDE
6/30/2010
From NEFE: Opening a checking account, maintaining a budget, and saving for the future are familiar concepts for many professionals, but countless Americans still need to learn the basics of money management. To help, NEFE has introduced an updated version of Your Spending, Your Savings, Your Future: A Beginner's Guide to Financial Readiness. The booklet serves as an easy-to-understand introduction to establishing financial stability and maintaining financial wellness. Topics covered in the resource include: tracking spending; smart buying and time value of money; borrowing and managing debt; using credit cards and checking accounts; establishing savings and retirement plans; and investing and goal setting. The updated booklet is available for download ...
NEW OPTIONS CLASS FOR FREE
6/30/2010
From OIC: The Options Industry Council (OIC) has added a new Language of Options class to its extensive line of online educational offerings. This new course is a beginner's guide to basic options terminology or the "language of options" and is now available on OIC's website. Investors new to options will find this latest class from OIC provides a solid foundation on which to build their options knowledge. This course presents options fundamentals in a series of short lessons in quiz question format, each building logically on the one before. Along with clear definitions of each term, investors will find a concise and simplified explanation of underlying concepts. Additionally, informational pop-up boxes and modules of interactivity are also included to enhance user engagement and provide information relevant to the course content. As with the majority of OIC offerings, this online class is offered to investors at no charge ...
UNDERSTANDING TARGET DATE FUNDS
6/23/2010
From SEC: The Securities and Exchange Commission voted unanimously to propose rule amendments to help clarify the meaning of a date in a target date fund's name and enhance the information provided to investors in these funds as they invest for retirement. Target date funds are designed to make it easier for Americans to invest for retirement by providing the simplicity for which many investors yearn. They've been marketed as a "set it and forget it" approach to investing. The name of these funds usually includes a date that represents the year in which the investor intends to retire. The rule changes proposed by the SEC would enable investors to better assess the anticipated investment glide path and risk profile of a target date fund by, for example, requiring graphic depictions of asset allocations in fund advertisements ...
SIPC SEEKS INPUT
6/23/2010
From SIPC: The Securities Investor Protection Corporation (SIPC), which maintains a special reserve fund mandated by Congress to protect the customers of insolvent brokerage firms, launched a new Web site, http://www.SIPCModernization.org, and also announced the formation of a 13-member SIPC Modernization Task Force. The twin efforts are part of a full-scale review of the operations of SIPC, which has not been the focus of major new legislation in 30 years. The state-of-the-art SIPCModernization.org Web site will be used to gather input from the public through online comments, live interactive forums and national Webcast. Beginning with its initial gathering on June 17, 2010 in Washington, D.C., the SIPC Modernization Task Force will meet in person and via the Internet to review and discuss the mission and operations of the Securities Investor Protection Corporation ...
OPTIONS BENEFITS AND RISKS
6/17/2010
From OIC: Most strategies that options investors use have limited risk but also limited profit potential. For this reason, options strategies are not get-rich-quick schemes. Transactions generally require less capital than equivalent stock transactions, and therefore return smaller dollar figures - but a potentially greater percentage of the investment - than equivalent stock transactions. Even those investors who use options in speculative strategies, such as writing uncovered calls, don't usually realize dramatic returns. The potential profit is limited to the premium received for the contract, and the potential loss is often unlimited. While leverage means the percentage returns can be significant, here, too, the amount of cash changing hands is smaller than with equivalent stock transactions. Although options may not be appropriate for everyone, they're among the most flexible of investment choices. Depending on the contract, options can protect or enhance the portfolios of many different kinds of investors in rising, falling, and neutral markets ...
FINANCIAL EDUCATION AT WORK
6/17/2010
From AICPA: The American Institute of Certified Public Accountants and the Society for Human Resource Management are creating the first national award that recognizes employers for financial education programs for staff. The AICPA and SHRM will begin accepting applications for the award later in 2010. All employers-corporate, not-for-profit, government and academic-will be eligible for a Workplace Financial Education Award. Research shows that a substantial percentage of financially distressed employees spend time at their jobs worrying about personal finance issues instead of working. The National Federation of Independent Business found in a 2008 survey that just over 10 percent of small- and medium-size businesses offer workplace financial education. "In a time of economic stress, a comprehensive financial-education program is an employee benefit," said Jordan Amin, CPA, chair of the AICPA National CPA Financial Literacy Commission ...
DECIPHERING THE MARKET
6/9/2010
From AAII: To be a successful investor, you can't just buy a good stock. You have to buy the very best stocks at the very best time. And it's not enough for you to simply study the stock itself, you also need to analyze the market conditions in which it is trading. Five decades of historical studies on past market cycles show that three out of four stocks decline when the general market averages correct. That's why market direction is one of the several critical factors in making money in stocks. How do you tell which way the market is headed? You really don't need a crystal ball. The key is learning to decipher the day-to-day market action - in other words, what the market's doing right now. Successful investing isn't about following pundits' predictions or analysts' estimates or going by how you feel. It is about studying the market itself. There are a few key market indicators to look for that provide a trustworthy lens into how the market is behaving overall ...
FINANCIALLY SAVVY KIDS
6/9/2010
From SIFMA Foundation: Who's smarter than a fifth grader? Not many if that fifth grader is financial guru Kelly Decker. Just ask her teacher Judy Pinkston at Park Hill Education Center in Kansas City, Missouri. The Securities Industry and Financial Markets Association Foundation (SIFMA Foundation) announced Decker's rise to the top as the elementary school winner of SIFMA Foundation's Spring 2010 InvestWrite Competition. Decker is one of 10,000 students this semester, and 20,000 this school year, who competed for coveted recognition and prizes in the annual national essay competition. To establish healthy financial habits and essential financial knowledge for life, the SIFMA Foundation challenged students across the country again this year to submit highly analytical, comprehensively researched financial essays that demonstrated a savings goal achieved over the long-term. And with nearly 2,000 industry experts judging the essays, the Spring 2010 InvestWrite winners had much to prove ...
RETIREMENT PLANNING FOR THE WORKPLACE
6/2/2010
From NASAA: NASAA recently unveiled its newest investor education outreach program, "Planning Your Retirement With Confidence," which brings retirement planning assistance to the workplace. NASAA responded to the growing concern that increasing numbers of workers are planning for retirement amid a decline in the traditional safety net of defined benefit pension plans. The "Planning Your Retirement With Confidence" program was developed by the NASAA Investor Education Section's Informed Investor Outreach Project Group to provide these workers with the information they need to build and protect their retirement savings. The "Planning Your Retirement With Confidence" program helps prepare pre-retirees for the financial challenges they will face in retirement through workplace seminars led by investor education experts from state and provincial securities regulatory agencies. The seminars address the specific retirement planning needs of individuals at every stage of their working lives - early career, mid-career, near retirement and retirement ...
FINANCIAL CHECKLIST FOR COLLEGE
6/2/2010
From NEFE: The 3.3 million students projected to graduate from high school this year might feel they are ready to attend college or enter the work force. But those students' diplomas don't guarantee that they are prepared financially for their new ventures. "We make a point of talking to our kids about sex, drinking and drugs to keep them safe," says Patricia Seaman, director of marketing and communications for NEFE. "We have to put money on that list, too. When parents take the time to discuss good financial practices, their kids are better prepared to navigate their way through budgeting, banking and credit cards." Summer is the perfect time for parents to talk to their children about handling personal finances before they start their own lives. NEFE offers some tips for covering banking basics with your child before he or she leaves the nest ...
TEACHING TEENS TO MANAGE SUMMER INCOME
5/26/2010
From AICPA: Summer jobs give teens new found freedom and money to spend. Just how well your teen handles his or her first paycheck may set a precedent for life. AICPA's 360 Degrees of Financial Literacy offers some advice that may help your teen make the most of his or her summer salary and develop a solid basis for future financial success. Parents should provide a good example of financial responsibility and involve their children in money management activities. It's important that teenagers see their parents live within their means and practice sound money management -- budgeting, setting long-term financial goals, making wise purchases, saving and investing. Start by reviewing the family budget and making your teen aware of monthly bills. Demonstrate how saving helps you buy the things your family needs, rather than charging. Also, explain your investment plans and strategy ...
CHANGING RETIREMENT PLANS
5/26/2010
From SIFMA Foundation: What do you do when you parents' retirement plans change? When their finances, benefits and insurance no longer enable them to maintain the lifestyle they envisioned in their older years or to meet their current financial and personal needs? How do you help them think through their options and make choices that will help them preserve the resources they have to meet their goals? An article from the SIFMA Foundation's Tomorrow's Money Web site lays out how to determine if your parents' retirement plans are changing, topics to discuss and possible actions you can take to help them still meet their retirement goals and enjoy their life after leaving the workplace. There are several ways that you may learn about your parents' retirement plans changing - or needing to change ...
DECIPHERING THE MUTUAL FUND PROSPECTUS
5/19/2010
From AAII: The mutual fund prospectus is essential reading for any prospective investor. However, this document is often written by the fund's legal department-with disclosure requirements in mind rather than the provision of understandable investment information. When you are comparing several funds, how can you hone in on the salient features of each? Some funds employ the fund profile to introduce their funds. The format of the profile is a standard nine points in a specific sequence, and the discussion is lean. The same information will appear for each mutual fund in a family, in the same place and in the same form. A step-by-step walk-through of the nine points will give you an idea of what the profile can tell you. The nine points can also be used as a guide if you are looking at a fund's prospectus or information at a fund's Web site ...
TEACHING ECONOMICS WITH PIZZA
5/19/2010
From Federal Reserve Board: The GDP and Pizza: Economics for Life course is a two-day, online course designed to help students in civics, economics and other social studies classes grasp the challenging economic content-and to explain why these topics are important for citizens to understand. Teachers can use the online course to teach the difference between nominal and real GDP, the definition of per capita GDP, how economists measure economic growth, and how monetary and fiscal policy are related to GDP. Taught by Federal Reserve economic education specialists, this program is designed to help high school teachers meet state and national standards in economics. The course includes numerous interactive checks for understanding, video clips of a Fed economist explaining concepts and everyday examples that will make sense to students. In addition, students complete a pre- and post-test to assess learning ...
SAVING THROUGH THE RECESSION
5/13/2010
From AICPA: Although 54 percent of adult Americans say they've not been able to save money over the last 12 months, a surprisingly large number have been able to save money in the past year in spite of the country's economic turmoil, according to a survey conducted for the American Institute of Certified Public Accountants by Harris Interactive. Forty-six percent of the survey respondents said they managed to save, and many said they did so by curtailing their spending. Most of their cutbacks were on discretionary items, such as dining out (50 percent), travel (46 percent) and clothing (35 percent), though 31 percent of the savers said they've curtailed home renovations. The overwhelming majority of savers are optimistic about their future saving practices, saying they expect to save either as much (44 percent) or more than they are now (44 percent) ...
WHAT DO PERSONAL FINANCE EDUCATORS KNOW?
5/13/2010
From NEFE: While 89 percent of K-12 teachers agree that students should either take a financial education course or pass a competency test for high school graduation, relatively few teachers believe they are adequately prepared to teach personal finance topics. But in order to advance life-skill learning, many teachers would welcome more learning opportunities in both financial education subjects and teaching methods. University of Wisconsin-Madison researchers Wendy L. Way, Ph.D., and Karen Holden, Ph.D., surveyed more than 1,200 K-12 teachers, students currently enrolled in teacher education programs, and university teacher education faculty to better understand their training and education in personal finance, their opinions about the importance of financial education, and their capacity to teach these topics. The study, Teachers' Background & Capacity to Teach Personal Finance, was funded by the National Endowment for Financial Education ...
ARE YOU AN OPTIONS INVESTOR?
5/5/2010
From OIC: The Options Industry Council (OIC) released the results of the latest study conducted by Harris Interactive Inc. and found that not only are investors who use options more educated and affluent than investors who don't use options, they also tend to be more strategic investors who are more open to new ideas. The Options Industry Council (OIC) sponsored this study, as well as studies in 1995, 2000 and 2005, to assess interest level, knowledge and usage of options by investors to better direct its options education efforts. The studies have shown options users are more likely to have a wider diversity of investments in their portfolios beyond listed stocks compared to non-options users. Finally, the demographic trends throughout the surveys recurrently show people who invest in options are more likely to be college graduates, have higher incomes and a higher value of liquid assets than those who do not use options ...
NATIONAL ECONOMICS CHALLENGE
5/5/2010
From CEE: Six student teams emerge as finalists to compete in the 10th Annual National Economics Challenge May 24 in New York City, sponsored by the Council for Economic Education. The six teams defeated 26 high school teams in the National Semifinals to advance to the 2010 National Championship. Teams vying to win the national title are: Iolani School, Honolulu, HI; Bellaire High School, Bellaire, TX; Carmel High School, Carmel, IN ;Vestavia Hills, Vestavia Hills, AL; Long Beach Polytechnic High School, Long Beach, CA; and Mt. Hebron High School, Ellicott City, MD. The 10th Annual National Economics Challenge started with 1,200 teams in 32 states. The championship round will employ a "quiz bowl" format, as teams answer difficult questions on complex economic concepts and theories involving micro- and macroeconomics, international economics and current events ...
RETURNS VS. RISK
4/28/2010
From AAII: Every builder starts with a foundation. If you are new to investing, you are building an investment portfolio, and you need to start with an investment foundation. That foundation consists of the basic investment principles. Boiled down to its bare basics, investing concerns returns and risks. An investor's return consists of current income, plus capital gains due to growth, minus any losses from the investment. Return = current income + capital gains due to growth - any losses. Sounds simple, and it is, except that most investors would prefer to know the return before making the investment. Absent a crystal ball, investors can only make an educated guess as to what kind of return to expect. A recent AAII Investor Classroom item walks through how to balance return ideals with the realities of risk ...
TARGET DATE FUNDS
4/28/2010
From ICI: Target date funds, which are also called lifecycle funds, are designed to offer a convenient way to invest for a person expecting to retire around a particular date. A target date fund pursues a long-term investment strategy, using a mix of asset classes (or asset allocation) that the fund provider adjusts to become more conservative over time. Research shows that asset allocation is one of the most important factors in long-term portfolio performance. Target date funds are designed to help investors avoid some of the most common investment mistakes. Their features include: diversification across asset classes; avoiding extreme asset allocation; automatic rebalancing; and automatic adjustment for changing risk profile. If you are interested in investing in one of these funds and want to learn more about how they work, review the related FAQ from the Investment Company Institute...
INCOME LIMITS ON ROTH IRA?
4/21/2010
From AICPA: Around tax time, people often wonder about how much they can contribute to various retirement account option. AICPA's 360 Degree of Financial Literacy's Ask the Money Doctor recently fielded a question about whether there are upper income limits after which you cannot contribute to a Roth IRA. The answer? Yes, there is an upper limit for income when contributing to a Roth IRA. For single taxpayers, the Roth IRA limit is fully available at $105,000 and under. Between $105,000 and $120,000 of income, it phases out. Over $120,000, it is fully phased out. For married taxpayers, the Roth IRA limit is fully available at $166,000 and under. Between $166,000 and $176,000 of income, it phases out. Over $176,000, it is fully phased out ...
OPTIONS EDUCATION ON THE GO
4/21/2010
From OIC: The Options Industry Council (OIC) is bringing options education to e-Reader devices such as the Kindle DX™. Investors looking to learn options on the go can now download an e-Reader version of the options book An Investor's Guide to Trading Options on OIC's website. Developed by Lightbulb Press, the creators of The Wall Street Journal Guide to Money & Investing, in collaboration with The Options Industry Council, this guide explains what options are and how they work, and provides real-world investing scenarios and options strategies for various markets. An Investor's Guide to Trading Options is designed primarily for investors who trade equities but have not added options to their portfolios, those who trade options occasionally, and brokers who want to demystify options for their clients or colleagues ...
FIGHTING FRAUD IN CHICAGO
4/14/2010
From NFA: National Futures Association (NFA) and AARP will co-sponsor a seminar that aims to provide individuals with the tools they need to help protect themselves and others from the risk of consumer and investment fraud during the economic downturn. The seminar, "Operation Fight Fraud", will be held on Tuesday, April 20 from 12:00 p.m. to 1:00 p.m. in the Chicago Authors Room, 7th floor of the Harold Washington Library. The library is located on 400 S. State Street in Chicago, Illinois. The event is one of more than 450 free classes, seminars and activities promoting financial education that will take place during Money Smart Week Chicago (April 17-24). During the seminar, an AARP representative will discuss the AARP Foundation Fraud Fighters program. Immediately following, an NFA representative will provide attendees with advice on how to avoid becoming victims of investment fraud ...
MUTUAL FUND FEES DOWN
4/14/2010
From ICIEF: The average expense ratios of stock funds and bond funds rose slightly in 2009, but the total fees and expenses, including load fees, paid by investors remain largely unchanged on an asset-weighted basis, according to research published by the Investment Company Institute. Rising expense ratios of stock funds-attributable in significant part to the effects of the stock market downturn-were offset by a decline in sales charges, or loads, paid by investors. In 2009, the average maximum sales load on stock funds offered to investors was 5.3 percent. However, the average sales load investors actually paid was only 1.0 percent, as a result of fee discounts and fee waivers on many funds, such as those purchased through 401(k) plans. "Mutual fund fees and expenses have declined by half since 1990," said ICI Senior Director of Industry and Financial Analysis Sean Collins ...
OPENING A BROKERAGE ACCOUNT
4/7/2010
From FINRA: Think opening a brokerage account is difficult? Learn about what goes into it in the most recent FINRA podcast. You may wish to invest for your retirement or a child's education, or simply to try to grow some cash you have set aside. This podcast explains what to expect if you do decide to open a brokerage account, including what information you will be asked to provide, what decisions you will be asked to make, what questions you should ask your broker and what your rights are as a customer of a brokerage firm. When you decide to open an account, there will be paperwork to complete. This will include a new account application. The new account form will also ask you to make some important decisions about your account, including how you will pay for your transactions, how any uninvested cash will be managed and who will have control over your account ...
LOWERING RISK THROUGH ASSET ALLOCATION
4/7/2010
From AAII: At first glance, many investors assume that the basic asset allocation decision is easy. After all, at this level you are focusing on only three choices-stocks, bonds and cash (money market funds and short-term certificates of deposit). While the choices are few, the way you allocate your portfolio among these three categories will have by far the greatest impact on your performance of any investment decision you make, assuming that you don't violate the basic investment principles. Why? If you follow basic investment principles-and in particular are well-diversified within each category-you will eliminate many of the specific risk characteristics that are unique to a single investment. Most of what will remain, however, are the broad risk and return characteristics of the overall category ...
TIME FOR COMMODITIES?
3/31/2010
From CFA Institute: A new study forthcoming in the Journal of Investing suggests that investors can enhance their equity portfolios by allocating a portion of the portfolio to commodity futures. The study "Is Now the Time to Add Commodities to Your Portfolio?" suggests that commodities can serve as a valuable hedge against inflation, but determining the appropriate time to add commodities to a portfolio requires a review of monetary conditions. The authors apply a straightforward tactical asset allocation strategy based on Federal Reserve policy to examine portfolio returns over the past 36 years. They find that allocating a portion of a portfolio to commodities produced significant improvements in portfolio risk and return; however, the improved performance varied significantly across monetary environments. Given current inflationary concerns and the fact that the Fed recently raised interest rates, the study's results suggest that an allocation to commodity futures may be appropriate ...
TAX SCAMS: PROTECT YOUR IDENTITY
3/31/2010
From NEFE: Tax season is the one time of year when nearly every American divulges personal information about his or her financial life to outsiders. Although services such as electronic filing and refund anticipation loans are convenient if you're busy or need quick access to your refund, be aware that this creates perfect conditions for people to take advantage of you. Some of the red flags to be aware of this tax season include: criminals wanting to steal your identity; businesses offering you expedited refund loans carrying high fees and triple-digit interest rates; and tax preparers filing fraudulent returns on your behalf. For example, if an e-mail from the Internal Revenue Service (IRS) lands in your inbox, don't hit reply. The IRS doesn't send unsolicited e-mails to taxpayers ...
EVALUATING PERFORMANCE CLAIMS
3/24/2010
From AAII: Claims about the performance of different stock investment theories are constantly being thrown about. Sometimes it is in the promotion of an investment letter or mutual fund, sometimes in a research summary of a variety of approaches. While this research can be of value, it is also important to realize its limitations so that you can place the results in the proper perspective. As an investor, what you really want to know is how a specific investment approach is going to perform in the context of your own portfolio in the future. Obviously, this information is not going to be available. But you can look at performance research and see if it provides any insight into how the strategy might perform in the future. To help you decide if the research you're reviewing is useful, the American Association of Individual Investors provides some handy Q&A ...
AUTO 401K BENEFITS LOW INCOME WORKERS
3/24/2010
From EBRI: New research from the nonpartisan Employee Benefit Research Institute (EBRI) finds that auto-enrollment of participants in 401(k) plans is likely to be most beneficial to young and low-income workers, although high-income workers are likely to benefit from it as well. It also confirms earlier results that large employers adopting auto-enrollment have significantly increased the employer "match" to their workers' own 401(k) contributions. The EBRI research is the first to compare actual plan design parameters from large employers that adopted automatic enrollment since 2005. The results show an even greater positive impact on workers' 401(k) accumulations than earlier simulation analysis by EBRI performed two years ago. Concerning the higher employer match rates, EBRI's research notes that this may result from large employers providing a "quid pro quo" to their workers in return in return for either freezing or closing their defined benefit (pension) retirement plan ...
INVESTOR CONFIDENCE RETURNING?
3/10/2010
From EBRI: Americans' confidence in their ability to retire appears to be stabilizing, now that the economic volatility of the recession has abated, but their self-described preparations for retirement continue to erode, according to the 2010 Retirement Confidence Survey (RCS) released by the nonpartisan Employee Benefit Research Institute (EBRI) and Mathew Greenwald and Associates, a market research firm. However, the RCS also finds that a growing number of American workers are also planning to delay retirement-which has negative implications for the U.S. job market. As older workers stay at their jobs longer, the RCS results suggest that fewer existing jobs are likely to open up. And Americans continue to lack confidence in institutions. They are most likely to express confidence in private employers and least likely to express confidence in the federal government. Both workers and retirees expressing low levels of confidence in banks and insurance companies ...
HOW DO TEACHERS TEACH INVESTOR ED?
3/10/2010
From IPT: The Pennsylvania Securities Commission (PSC) received a grant from the IPT to conduct the Pennsylvania Teacher Investor Education Research Project (PA TIER). In today's ever-changing financial marketplace, it is more important than ever to ensure that young people receive quality instruction in the basics of saving and investing. The PA TIER Project sought to gain a better understanding of what teachers: 1) know about saving and investing topics, 2) how comfortable they are teaching about investing and 3) the extent to which they incorporate certain concepts into their curriculum. To ascertain answers to these questions, the PSC commissioned a survey of Pennsylvania high school teachers that teach at least one course with personal finance and investing content and select findings are now available. The Pennsylvania Securities Commission hopes to use the results of the PA TIER project to guide its investor education efforts with Pennsylvania teachers ...
GOVERNMENT BOND PRICING DATA
3/4/2010
From SIFMA Foundation: The Securities Industry and Financial Markets Association announced that it now carries price data for approximately 25,000 federal agency bonds on its investinginbonds.com website. The new data is available via a feed from the Financial Industry Regulatory Authority (FINRA) following an expansion of its Trade Reporting and Compliance Engine (TRACE) to include debt issued by federal government agencies, government corporations and government sponsored enterprises (GSEs). Investing in Bonds is a unique partnership between SIFMA members, SIFMA and the SIFMA Foundation for Investor Education. Named one of two Kiplinger's 2009 Best Investing Websites and managed by the SIFMA Foundation, Investing in Bonds provides real-time bond price information and a wide variety of market data, news, commentary and educational content on how the US bond markets work ...
BATTLING THE MONEY MURKTIDE
3/4/2010
From CEE: The Council for Economic Education (CEE) has launched Gen i Revolution, an online game developed to teach personal finance skills to middle and high school students. The competitive online game includes 15 Missions in which students complete a variety of activities to beat back the insidious "Murktide" infestation. The "Murktide," a confusion about basic personal finance principles, is rapidly spreading across the population, and middle and high school students are the last line of defense against a lifetime of poor financial decisions. Once middle and high school teachers join the Gen i Revolution, they assign their students to teams. The students then strategically select their Operatives, and begin to explore and earn points as they work to complete each crucial Mission ...
AMERICA SAVES WEEK
2/24/2010
From ICI: The Investment Company Institute is encouraging Americans to assess their personal savings and set a savings goal as part of the "America Saves Week" national campaign. This year's America Saves Week is February 21-28. Approximately 89 million Americans use mutual funds to save for their financial goals. ICI research has found that 94 percent of mutual fund-owning households identified saving for retirement as one of their financial goals; 76 percent said it's their primary goal. In addition, despite the recent bear market, 95 percent of defined contribution plan participants kept contributing during the first three quarters of 2009. Many other AIE members participate in "America Saves Week," including the SEC, Federal Reserve Board, FINRA Foundation, NEFE, EBRI/American Savings Education Council, CFP Board of Standards, and NASAA ...
UNDERSTANDING CREDIT
2/24/2010
From Federal Reserve Board: Although credit cards are not an investing tool, understanding and properly managing your credit is important to your overall financial planning. The Federal Reserve Board launched a new interactive website to help consumers better understand the new credit card protections that went into effect on February 22. These rules ban several harmful practices and require greater transparency in the disclosure of the terms and conditions of credit card accounts. The site, which can be found at www.federalreserve.gov/creditcard, summarizes the main provisions of the rules and explains how they will affect credit card users ...
ECONOMIC CRISIS 101
2/17/2010
From NEFE: Ninety-five percent of college students say the economic crisis has impacted their family's finances and 93 percent have felt an effect on their own financial lives. The crisis also ultimately affected students' confidence, behavior, and trust in financial institutions and overall well-being. This data stems from the landmark study Arizona Pathways to Life Success in University Students (APLUS), funded by the National Endowment for Financial Education. At the height of the economic crisis, researchers at the University of Arizona completed Wave 1.5 of a longitudinal study of how young adults develop financial attitudes and behaviors. One of the most significant outcomes researchers found from the economic crisis related to students' perceptions of their financial capabilities. Although students' factual knowledge of financial basics held steady, students rated themselves less knowledgeable, 19 percent less, than when previously surveyed ...
INVESTOR CLASSROOM: THE BOND MARKET
2/17/2010
From AAII: While people speak of the bond market as if it were one market, in reality there is not one central place or exchange where bonds are bought and sold. Rather, the bond market is a gigantic over-the-counter market, consisting of networks of independent dealers. Whereas stocks sell in one of three independent exchanges, most bonds are sold dealer to dealer. Overwhelmingly, this is an institutional market. It raises debt capital for the largest issuers of debt, such as the U.S government, state and local governments, and the largest corporations. The buyers of that debt are primarily large institutional investors. Enter the individual investor. To learn more about the bond market as an individual investor, check out the American Association of Individual Investor's Investor Classroom item titled, [Getting a Handle on the Bond Market] ...
STRENGTHENING MONEY MARKET FUNDS
2/10/2010
From SEC: The Securities and Exchange Commission adopted new rules designed to significantly strengthen the regulatory requirements governing money market funds and better protect investors. The financial crisis and the weaknesses revealed by the Reserve Primary Fund's "breaking the buck" in September 2008 precipitated a full-scale review of the money market fund regulatory regime by the SEC. A money market fund "breaks the buck" when its net asset value (NAV) falls below $1.00 per share, meaning investors in that fund will lose money. The SEC's new rules are intended to increase the resilience of money market funds to economic stresses and reduce the risks of runs on the funds by tightening the maturity and credit quality standards and imposing new liquidity requirements ...
BOOST FOR LEGAL CLINICS
2/10/2010
From FINRA: The Financial Industry Regulatory Authority (FINRA) Investor Education Foundation announced $1 million in grants to launch four law school clinics that will provide legal help to underserved investors involved in securities disputes. These start-up grants will help fill the gap in legal representation for investors with small claims who do not have the financial resources to obtain legal counsel. The Foundation awarded $250,000 each to: Florida International University College of Law, Miami, Florida; Howard University School of Law, Washington, D.C.; Pepperdine University School of Law, Malibu, California; and Suffolk University Law School, Boston, Massachusetts. The FINRA Foundation chose these law schools because they are well-positioned to launch and maintain clinics that will allow supervised law students to take on securities disputes. As a condition of the grant, each law school was required to demonstrate institutional support of the clinic beyond the three-year grant program and provide investor education and outreach in their community ...
FRAUD: AN INSIDE LOOK
2/3/2010
From FTC: During uncertain economic times like these, a lot of people are looking for ways to earn some extra money and make ends meet. You may have noticed ads that tout business opportunities. They guarantee you can make a lot of money, in a short period of time, with little to no effort. Although tempting, many of these operations are run by scam artists who take your money up front and never deliver on the earnings they promised. Fraud: An Inside Look is a video from the Federal Trade Commission that takes you behind the scenes with a convicted business opportunity scammer as he reveals the tricks he used to cheat people out of their money. You'll also hear first-hand from two people who got caught up in bogus business opportunities and learn what questions to ask to tell if a business opportunity is a scam or the real deal ...
DECIPHERING THE MARKET
2/3/2010
From AAII: To be a successful investor, you can't just buy a good stock. You have to buy the very best stocks at the very best time. And it's not enough for you to simply study the stock itself, you also need to analyze the market conditions in which it is trading. Five decades of historical studies on past market cycles show that three out of four stocks decline when the general market averages correct. How do you tell which way the market is headed? The key is learning to decipher the day-to-day market action-in other words, what the market's doing right now. Successful investing isn't about following pundits' predictions or analysts' estimates or going by how you feel. It is about studying the market itself. A recent article from the American Association of Individual Investors highlights a few key market indicators to look for that provide a trustworthy lens into how the market is behaving overall ...
401(k) CONFIDENCE HOLDS
1/27/2010
From ICI: In late 2009-having weathered a bear market in stocks that started in late 2007 and continued through early 2009-a large majority of Americans still have confidence in their 401(k) and similar retirement plans and their investment options, according to new research released by the Investment Company Institute. In a survey of 3,000 households, ICI found that overall 73 percent of households surveyed indicated that they are confident that retirement plan accounts can help people reach their retirement goals. Among households that participate in defined contribution (DC) plans or own individual retirement accounts (IRAs), 78 percent expressed confidence in these plans. Even larger majorities supported key features of the 401(k) system, including tax advantages for employee and employer savings, payroll deduction, and individual choice and control ...
EMPLOYER 401(k) MATCH RISING?
1/27/2010
From EBRI: New research from the nonpartisan Employee Benefit Research Institute (EBRI) finds that employers adopting automatic enrollment in their 401(k) plans have also generally increased the "employer match" to participant's accounts-in some cases, by a significant amount. The EBRI research is the first using actual plan information on both actual auto enrollment and actual match rate information both before and after adoption of auto enrollment. The new EBRI analysis uses plan-specific data for large employers from Hewitt Associates, and finds that employers instituted more generous contribution rates after adopting automatic enrollment, and did so when measured by several different standards. The EBRI results contradict an earlier publication of the Center for Retirement Research (CRR) and by the Urban Institute, which concluded that match rates are lower among firms with automatic enrollment ...
BOOSTING RETIREMENT SAVINGS
1/20/2010
From NEFE: Urging employees to participate in retirement savings plans has always been a challenge. However, the findings of a study by researchers at Dartmouth College, through a grant provided by the National Endowment for Financial Education, show that specific low-cost strategies succeed in boosting employee participation rates. During the 18-month study, a unique methodology was formulated involving surveys, focus groups, in-depth interviews and ethnographic studies of low-income, young, short-tenured and female employees. Annamaria Lusardi, Ph.D., and Punam Anand Keller, Ph.D. focused the study on low-income employees and female employees because those employees appear to be particularly challenged with disproportionately low financial literacy levels and low participation in savings and tax benefit programs ...
NEW FRAUD PROTECTION MEASURES
1/20/2010
From SEC: The Securities and Exchange Commission announced a series of measures to further strengthen its enforcement program by encouraging greater cooperation from individuals and companies in the agency's investigations and enforcement actions. The new initiative establishes incentives for individuals and companies to fully and truthfully cooperate and assist with SEC investigations and enforcement actions, and provides new tools to help investigators develop first-hand evidence to build the strongest possible cases. The cooperation initiative is expected to result in invaluable and early assistance in identifying the scope, participants, victims and ill-gotten gains associated with fraudulent schemes. These measures are the latest in a series of initiatives that are part of the most significant reorganization of the Enforcement Division in more than 30 years ...
FRAUD PROTECTION FOR SERVICE MEMBERS
1/13/2010
From IPT: Members of the U.S. military and their families in California benefit from investor education and protection from financial fraud through the California's TAP$ (Troops Against Predatory Scams) program, thanks to the sponsorship by the Investor Protection Trust (IPT). Since 2005, over 40,000 copies of "Protect You and Your Family from Financial Fraud" have been distributed to tens of thousands of servicemembers stationed in California, their families, and veterans at outreach events across the State. Additionally, the TAP$ program serves as a resource for base financial counselors at California military installations. California staff made dozens of TAP$ presentations at Naval and Marine Corps installations in Southern California in 2007, 2008 and 2009. In 2009, California TAP$ partnered with the States of New Jersey and Texas to produce a Spanish-language version of "A Salute to Smart Investing," an investment guide designed for military servicemembers and their families ...
10 MYTHS OF RETIREMENT PLANNING
1/13/2010
From AAII: Think you won't need as much money during retirement as you do now? Or that Social Security or your pension plan will provide enough income for your retirement years? Do you believe you can afford to start planning for your retirement just a few years before your retirement date? Or that your investments are all in safe vehicles for long-term accumulation and don't need to be watched too closely? Do you think Medicare will take care of your health insurance costs? Do you believe your retirement won't last that long? Retirement planning requires a clear-eyed analysis of future needs and income. Yet many individuals view retirement through rose-colored glasses. The American Association of Individual Investors highlights some of the most common myths and how you can bring reality into focus ...
INSIDE FINANCIAL MICROSITES
1/6/2010
From NEFE: Although experts say the recession is likely over, consumers are still in the midst of some of the biggest economic challenges of their lives. The downturn's impact on the economy won't reverse overnight, and the effects continue to hurt those who have lost their jobs and homes and suffered damage to their credit. To help, NEFE's SmartAboutMoney.org offers microsites to make sure Americans focus on what they need to do now, and do always, for specific aspects of their financial health. Through interactive technology, the microsites break down actionable information and establish a community where users can share their experiences and learn from one another. Through text and video components, the microsites focus on the areas in which individuals are suffering the most: job change, housing, spending, and credit and debt. Rather than having to weed through broad stories, consumers can listen to, and read about, action items geared toward the particular challenges they're confronting ...
INVESTOR ALERT: SWISSCASH INVESTOR RESTITUTION
1/6/2010
From SEC: The U.S. Securities Exchange Commission shared information about a restitution fund established by the Securities Commission Malaysian for investors in "Swisscash." On November 13, 2009, the Malaysian SC announced a settlement with Albert Lee Kee Sien and Amir Hassan, two of the principals of Swisscash. According to the Malaysian SC, Swisscash is an internet-based investment scam that operated worldwide under variations on the name "Swisscash." Swisscash claimed to have invested in a range of investments such as equities, commodities and foreign exchange, and promised investors returns of up to 300% within 15 months of investment. Instead, according to the Malaysian SC, Swisscash did not produce the promised returns, and the scheme defrauded investors worldwide of as much as $83 million. As part of the settlement, the Malaysian SC plans to make a distribution to injured investors ...
PRIVACY AND FRAUD LESSONS FOR KIDS
12/9/2009
From FTC: The Federal Trade Commission opened new areas of a "virtual mall" with content that will help kids learn to protect their privacy, spot frauds and scams, and avoid identity theft. The FTC Web site, www.ftc.gov/YouAreHere, introduces key consumer and business concepts and helps youngsters understand their role in the marketplace. "YouAreHere presents practical lessons about money and business in a fun and familiar setting," said David Vladeck, Director of the FTC's Bureau of Consumer Protection. "The new content takes kids behind the scenes to raise their awareness of advertising and marketing, pricing and competition, fraud and identity theft." For parents and teachers, the site offers detailed fact sheets with ideas for related activities. Teachers can use the site to complement lessons in consumer economics, government, social studies, language arts, and critical thinking ...
FINANCIAL ED IN THE CLASSROOM
12/9/2009
From CEE: While people today are coping with the economic meltdown, our schools can take the lead in providing financial and economic education to our children today so they may avoid a similar fate tomorrow. While many states have addressed this gap in education curriculum, there is still a large segment of the American K-12 student population that is not being exposed to economic and financial education. To gauge how widespread economic and financial education is in our schools, the Council for Economic Education (CEE), in partnership with State Farm Insurance, recently completed their sixth "Survey of the States 2009: Economic, Personal Finance, and Entrepreneurship Education in Our Nation's Schools." The Survey of the States 2009 report shows that while some states are taking a lead on educating students, many others are failing to provide the educational support on these ever-important issue ...
TIPS FOR THE LONG TERM
12/3/2009
From SEC: Given recent market events, you may be wondering whether you should make changes to your investment portfolio. The Securities and Exchange Commission's Office of Investor Education and Advocacy is concerned that some investors are making rapid investment decisions without considering their long-term financial goals. While the SEC can't tell you how to manage your investment portfolio during a volatile market, they hope to give you the tools to make an informed decision. Tips include: evaluate your current financial roadmap; evaluate your comfort zone in taking on risk; consider an appropriate mix of investments; create and maintain an emergency fund; consider dollar cost averaging; consider rebalancing portfolio occasionally; and avoid circumstances that can lead to fraud ...
YOUR FINANCIAL PRIVACY
12/3/2009
From Federal Reserve: You've probably been receiving privacy notices from banks and other financial companies for a while. But have you taken the time to read through them? Have you wondered whether there is anything you need to do about them? Financial companies share information for many reasons: to offer you more services, to introduce new products, and to profit from the information they have about you. If you like to know about other products and services, you may want your financial company to share your personal financial information; in this case, you don't need to respond to the privacy notice. If you prefer to limit the promotions you receive or do not want marketers and others to have your personal financial information, you must take some important steps outlined by the Federal Reserve Board. It is important to read these privacy notices as they explain how the company handles and shares your personal financial information ...
NO FREE LUNCH FOR SENIORS
11/25/2009
From NASAA: More than three-quarters of older Americans are concerned that financial scams will damage their retirement nest eggs or those of someone they know, AARP and the North American Securities Administrators Association (NASAA) reported. In a survey entitled Protecting Older Investors: 2009 Free Lunch Seminar Report, 78 percent of Americans age 55 and over surveyed indicated that they are very or somewhat concerned about financial scams affecting them or someone they know. A common setting for fraudsters to engage with their victims is by offering a free lunch or dinner, by which an older individual near retirement age is solicited to attend and learn more about investing in retirement. For attendees of these free seminars, the potential cost can be quite high ...
IRAS GAIN GROUND
11/25/2009
From ICI: Americans are accumulating significant resources in individual retirement accounts (IRAs) through rollovers from employer-sponsored retirement plans and contributions, according to a new report by the Investment Company Institute. At year-end 2008, IRAs accounted for one-quarter of all U.S. retirement wealth and 8.5 percent of total U.S. household financial assets. The report, The Evolving Role of IRAs in U.S. Retirement Planning, found that changes in law and the evolution of employer-sponsored retirement plans have elevated the importance of IRAs for many U.S. households. IRA ownership was widespread across many different demographic dimensions, including age, income, and educational attainment, with 40.5 percent of U.S. households owning some type of IRA ...
EMOTIONS AND THE SELL DECISION
11/18/2009
From AAII: Facing criticism from a colleague over modifications he made in his economic analysis, the famous economist John Maynard Keynes said: "When the facts change, I change my mind. What do you do, sir?" Keynes' question is a relevant one for investors. Unless you are a buy-and-hold-forever investor, you will frequently be faced with the challenge of changing your mind. A decision to buy a stock will eventually and inevitably be followed by a decision to sell the stock. And when you decide to sell, you are effectively changing your mind about the prospects of the investment. Unfortunately, however, changing one's mind is easier said than done. This is particularly true in the world of investments where uncertainty reigns and emotions run high. That combination often leads to poor judgment ...
U.S. AND CHINA INVESTOR PROTECTION COOPERATION
11/18/2009
From SIPC: The Securities Investor Protection Corporation (SIPC) and the China Securities Investor Protection Fund Corporation (SIPF) have entered into a memorandum of understanding (MOU) that will act as a framework for cross-border communication and cooperation with respect to the similar functions undertaken by the groups and covered by the laws of each country. In the U.S., the Securities Investor Protection Corporation (SIPC) maintains a special reserve fund authorized by Congress to help investors at failed brokerage firms. The new SIPC-SIPF MOU lays the groundwork for the two entities to cooperate on projects that would further securities investor protection in both China and the U.S. ...
$10,000 INVESTOR CHALLENGE
11/11/2009
From SIFMA Foundation: Do you learn best by doing? Now you can put the knowledge and skills you've gained at Path to Investing to the test with a virtual, real-time portfolio. The Investor Challenge lets you invest a hypothetical $100,000 in a real-time stock portfolio. Try your hand at researching, buying, and selling stocks, and building a winning portfolio. Test out what you've learned about diversification or more advanced investing strategies. Trading stocks with the Investor Challenge is just like trading stocks with a real online portfolio - but without the risks. This exciting, easy-to-use game is free for Path to Investing users. The Investor Challenge puts all the information you need at your fingertips, including links to major market indexes and other resources, point-of-need information, research tools, and more ...
NIFTY FIFTY ECON CARDS
11/11/2009
From Federal Reserve: The Nifty Fifty Economic Concept Cards are designed for elementary and middle school students to assist them in developing a knowledge base of economic and personal finance words. Teachers can use the accompanying Teacher Resource Guide to introduce the word cards and meanings to students should help provide a foundation in economic thinking. The resource guide activities and games will help teachers integrate economic vocabulary into the school day through language, math, social studies and art. View the chart of economics and personal finance concepts or the glossary of econ concept cards to find grade-appropriate words for your students. Teachers can order the cards using an online form on the Web site and tips for classrooms activities are also available ...
OUTSMARTING INVESTMENT FRAUD
11/6/2009
From FINRA: Investment fraud does happen...and it can happen to you. Coming this fall: "Tricks of the Trade: Outsmarting Investment Fraud" is a 60-minute documentary on preventing investment fraud. Utilizing compelling stories of victims and perpetrators, the video uncovers the persuasion tactics that con artists use to defraud their victims and the basic tools investors can use to defend against fraud."Tricks of the Trade: Outsmarting Investment Fraud" was developed by the FINRA Investor Education Foundation, in partnership with AARP. You can pre-order this free DVD via email, phone, fax or mail. Or, if you live in Washington State, you can check out a screening at a theater near you ...
FINANCIAL LIT NYC STYLE
11/6/2009
From CEE: A new campaign, Financial Literacy Now: New York, has just been launched to better prepare all New Yorkers to make informed decisions about their finances. The initiative has three priorities: raising awareness of the importance of financial literacy to effect real change in people's knowledge and behaviors; providing greater access to the training, services and information people need to develop these skills; and enhancing professional development opportunities for teachers so they are equipped to teach financial literacy to students of all ages. The Council for Economic Education is one of the lead partners in the effort and you can see CEE Board Member Terry McGraw discuss the campaign and the importance of financial education in schools...
“RISK-FREE” ASSETS
10/28/2009
From AAII: What is a risk-free asset, and what role should it play in your portfolio? That's one of the first questions many investors ask when struggling with the asset allocation question. In today's market environment, the sudden and steep drop in the stock market as well as anxiety over the future of the banking industry and the financial health of long-term bond issuers have all caused a massive rush to-and an exclusive focus on-"risk-free" assets. Yet only two years ago, these assets appeared "boring" to many investors who were focused on the long-term return and current income attributes of the major asset classes (stocks, bonds and cash). The role these assets play in your portfolio should be based on a perspective that encompasses both long-term and short-term considerations ...
MADOFF LIQUIDATION UPDATE
10/28/2009
From SIPC: As of noon EDT on October 27, 2009, the total amount of Securities Investor Protection Corporation (SIPC) advances committed to customers in the Securities Investor Protection Act liquidation proceeding for Bernard L. Madoff Investment Securities LLC (BLMIS) has topped half a billion dollars ($534.25 million), with a total of 2,861 direct customer claims determined to date, according to BLMIS Trustee Irving H. Picard, who is a partner of Baker & Hostetler LLP. In another major milestone: Securities Investor Protection Corporation President Stephen Harbeck announced that the SIPC advances committed in the Madoff proceeding now exceeds the total of all advances made in the 321 prior liquidations handled under SIPA since the act creating the Securities Investor Protection Corporation was passed by Congress in 1970 ...
AMPING UP YOUR SAVING & INVESTING
10/21/2009
From EBRI: A penny saved is a penny earned for more investing; a kilowatt saved can be more than a few pennies earned. When looking to invest, too often people fail to reduce spending as a way to have more income. There are often very simple things that can be done to reduce the money spent on energy in a home that will pay for themselves in a few months to a year. These efforts can have significant dollar savings while making a home safer and more comfortable. The American Savings Education Council highlights an upcoming chat on Thursday, October 29th at 11 a.m. Eastern time to discuss ways to put more money in your pocket by reducing home energy consumption. The chat will be text only and the session record will be posted shortly after the conclusion of the chat ...
BANKING ON INVESTOR EDUCATION
10/21/2009
From IPT: Employees at financial institutions in Wisconsin will have easy access to online investor education and protection, thanks to the sponsorship by the Investor Protection Trust (IPT), Wisconsin Credit Union League (WCUL) and others of a new program. The goal was to provide on-line investor education to 4,000 employees of credit unions and then study how investing behaviors changed among both employees and members of the credit unions but it may exceed that due to its popularity. Partly because of the volatility in investor markets over the last 12 months, the project team has added 5 other components to the project, including a free tax program and a low cost tax preparation program. These are made available at the credit unions as a means to help employees make wise and safe investment decisions when most tax payers have access to new financial resources ...
STOPPING FINANCIAL FRAUD
10/14/2009
From SEC: Mary L. Schapiro, chairman of the U.S. Securities & Exchange Commission, will discuss the Commission's priorities for fighting financial fraud during her keynote luncheon address at the AARP Solutions Forum on October 22 entitled, "How Consumers and Policy Makers Can Stop Financial Fraud." This AARP Solutions Forum, in collaboration with the National Consumers League, will look at how fraud impacts financial security, especially for older Americans-and explore innovative solutions and policy options for combating these scams. There will also be three panel discussions at 9 a.m. featuring leaders at NASAA, the FTC and other key consumer organizations and government offices. You can find details and registration information at AARP's Public Policy Institute ...
NEW PHISHING SCHEME
10/14/2009
From FINRA: FINRA recently issued an Investor Alert to warn the public about a recent auction rate securities (ARS) "phishing" scam that promises compensation from ARS settlements in exchange for personal information. The email looks like it originated from FINRA-although it did not. It purports to inform the recipient of regulatory actions, including fines imposed by FINRA related to ARS, and states that the recipient is due $1.5 million regardless of the amount of their ARS investment or loss. The email then "phishes" for personal information, including occupation, address and phone number. FINRA-along with the Securities and Exchange Commission and state securities regulators- recently has announced final settlements with numerous brokerage firms relating to the sale of ARS. Contrary to the "phishing" email, FINRA does not contact investors directly to advise them of the settlements or settlement procedures ...
CONSUMERS: RETIREMENT IS TOP CONCERN
10/7/2009
From CFP Board: Preparing for retirement and managing income while in retirement are among the top issues confronting American consumers, according to the 2009 National Consumer Survey on Personal Finance released by Certified Financial Planner Board of Standards, Inc. (CFP Board). Despite these concerns, however, nearly two thirds of those households do not have a written financial plan. CFP Board's survey of 1,742 consumers shows that 51 percent of the respondents listed building a retirement fund as one of their most important financial concerns. Managing retirement income was cited in 40 percent of the responses. Despite the personal finance concerns cited by the survey respondents, nearly two-thirds (64 percent), did not have a written financial plan in place. Only 17 percent indicated that they have a written plan in place and update the plan regularly ...
UNDERSTANDING EXCHANGE FUNDS
10/7/2009
From CFA Institute: To diversify a concentrated position in a single stock, investors can simply sell some or all of the position outright, but this transaction, of course, is a taxable event. Tax-sensitive investors often use derivative securities to hedge and monetize their position. The use of an "exchange fund" is yet another tool that can be used to achieve the goal of diversification in a tax-efficient manner. An exchange fund is a partnership (an investment fund) whose partners have each contributed low-cost-basis stock in lieu of cash. After the contribution to the partnership, each partner owns a pro rata interest in the partnership, which now holds a diversified pool of securities. A recent article in the CFA Institute's Private Wealth Management Newsletter explains how to evaluate exchange funds and their pros and cons ...
CONSUMERS: RETIREMENT IS TOP CONCERN
10/7/2009
From CFP Board: Preparing for retirement and managing income while in retirement are among the top issues confronting American consumers, according to the 2009 National Consumer Survey on Personal Finance released by Certified Financial Planner Board of Standards, Inc. (CFP Board). Despite these concerns, however, nearly two thirds of those households do not have a written financial plan. CFP Board's survey of 1,742 consumers shows that 51 percent of the respondents listed building a retirement fund as one of their most important financial concerns. Managing retirement income was cited in 40 percent of the responses. Despite the personal finance concerns cited by the survey respondents, nearly two-thirds (64 percent), did not have a written financial plan in place. Only 17 percent indicated that they have a written plan in place and update the plan regularly ...
ECONOMIC SURVIVAL TIPS
9/30/2009
From NEFE: In these tough economic times, we all are wondering how we can ensure our financial well-being. The National Endowment for Financial Education has developed "Economic Survival Tips," a Web-based resource filled with action-oriented information on how to remain financially afloat-not only in this difficult economy, but beyond. Within NEFE's Economic Survival Tips, you can find answers to commonly asked questions, like how to rebuild emergency savings and whether to contribute to a 401(k). The tips identify a course of action, both short-term and long-term, for each question no matter your current situation. Available through NEFE's SmartAboutMoney.org Web site, they include how to manage credit and debt, protect the roof over your head, the money in your pocket, and your income ...
529 COLLEGE SAVINGS PODCAST
9/30/2009
From FINRA: 529 College Saving Plans are designed to help investors save for the cost of college and other postsecondary school education. When established by states, 529 Plans are considered municipal securities and so must comply with rules issued by the Municipal Securities Rulemaking Board. The latest addition to the Financial Industry Regulatory Authority's Investor Podcast series will teach you how state savings plans could help you save for college and cut your taxes too. Investor podcasts from FINRA discuss the timely financial issues and information you'll need to save smarter and weather today's turbulent stock markets. The podcasts will also help you protect your portfolio by reporting trends in investment fraud and other traps investors at all wealth and experience levels should avoid ...
REPAIRING RETIREMENT INCOME DAMAGE
9/16/2009
From AAII: Having suffered severe losses in their retirement nest eggs last year, many retirees living off of their savings are reviewing their investment and spending plans, searching for new plans of action to ensure their savings can sustain them throughout their lifetime. There is no question that bear markets can be devastating-particularly for new retirees-if action is not taken to compensate for the loss. The sooner you adjust, the better. But what is your best course of action? While the instinct may be to flee the risk of equity markets, postpone retirement or go back to work, an alternative strategy would be to consider temporarily reducing annual withdrawals from your nest egg. A study also found retirees can boost their chances of not outliving their assets over a full 30-year retirement period by simply holding their withdrawals constant for the next five years ...
FINANCIAL PLANNING FOR END-OF-LIFE
9/16/2009
From AICPA: It doesn't matter if you are 35 or 75: If you have dependents, own property or a business, you need to figure inheritance and succession into your financial plans. The American Institute of Certified Public Accountants offers direction in A Guide to Financial Decisions: Implementing an End-of-Life Plan, available free of charge. The guide, published in concert with the Institute's 360 Degrees of Financial Literacy program, covers an array of critical topics, including planning for yourself; dependents; your property and assets, including business ownership, retirement accounts, and long-term and disability insurance; and your estate, which covers overall estate planning, wills and living trusts. It was written with several audiences in mind, including the sandwich generation; active retiree; younger families who decide to be proactive; and families with special needs ...
FSI: FRAUD SCIENCE INVESTIGATOR
9/9/2009
From NASAA: Just in time for the start of school, the North American Securities Administrators Association offers FSI:Fraud Scene Investigator, an online interactive investor education program that teaches and empowers students how to detect and stop a million-dollar investment fraud and put the mysterious con man, "Mr. X," behind bars. Through this free resource, students will learn how to research companies and understand the warning signs of fraudulent investment pitches. The FSI program offers a guide to provide additional resources to teachers. An FSI board game, which can be used as a paper or online resource, has middle- and high-school students flip coins to travel a winding path riddled with red flags of fraud ...
AVOIDING INVESTMENT SCAMS
9/9/2009
From FINRA: Did you know that investment fraud comes in five classic types? Can you name the different types? Do you know the differences between the various types of investment fraud? Do you want to learn how to spot a scam's red flags? The latest addition to the Financial Industry Regulatory Authority's Investor Podcast series offers tools you can use to steer clear of investment fraud. Investor podcasts from FINRA discuss the timely financial issues and information you'll need to save smarter and weather today's turbulent stock markets. The podcasts will also help you protect your portfolio by reporting trends in investment fraud and other traps investors at all wealth and experience levels should avoid ...
IT WORKS: STOCK MARKET GAME
9/2/2009
From SIFMA: A rigorous randomized controlled trial of the Securities Industry and Financial Markets Association (SIFMA) Foundation's Stock Market Game found that students who played the game scored significantly higher on mathematics tests than their peers who did not play the game. Students playing The Stock Market Game, a financial literacy program taught in elementary, middle, and high schools, also scored significantly higher than their peers on tests measuring their financial literacy. Students who played The Stock Market Game also significantly outperformed their peers in their knowledge of financial concepts. Regardless of the classroom techniques-basic or more advanced-an analysis of students' test results found that students playing The Stock Market Game showed better performance on the mathematics and financial literacy tests than their nonplaying peers ...
TEACHING KIDS ABOUT FINANCES
9/2/2009
From Federal Reserve: With the school year starting and the U.S. moving toward recovery from tough economic times, financial education of school age children is more important than ever. Two new role plays, developed by the Federal Reserve Bank of Kansas City, are now available in the Teacher Resources section on their site. "There's No Business Like Bank Business" is targeted toward 3rd through 5th grade students and introduces the benefits of saving money in a bank and how banks work. Payment Parliament, for 5th through 8th graders, covers different payment methods available to consumers. Both role plays include fun characters and an interactive way for students to enhance their reading skills while learning about key financial concepts ...
FINANCIAL CHECK-UP: YOUR FUND PORTFOLIO
8/26/2009
From AAII: Surprised at how your mutual fund portfolio behaved in the last market swoon? Want to do some practical return and risk planning for all your mutual funds together? The American Association of Individual Investors features an approach and a simple worksheet in a recent AAII Journal article that will help you get a grip around all your funds as a portfolio. It will give you insights into your funds individually and force you to assess whether the funds you own make sense when they are taken together as a portfolio. The worksheet provides you with a framework to evaluate expected risk and return for individual funds and your portfolio of funds ...
UNDERSTANDING FUTURES RISKS
8/26/2009
From NFA: The decision to participate in futures trading should not be taken lightly. First and foremost, because futures trading is highly volatile and very risky, investors should only trade futures using risk capital - capital you can afford to lose. It should be capital over and above that needed for necessities, emergencies, savings and achieving long-term investment objectives. Before you open a futures trading account, you should thoroughly understand the futures markets, as well as the opportunities and risks involved in futures trading. Investors can now access information on best practices for investing in futures as part of an expanded investor education section on the redesigned National Futures Association Web site ...
ETF INVESTOR ALERT
8/19/2009
From SEC and FINRA: Leveraged and inverse ETFs typically are designed to achieve their stated performance objectives on a daily basis. Some investors might invest in these ETFs with the expectation that the ETFs may meet their stated daily performance objectives over the long term as well. The SEC staff and FINRA have issued an Alert because they believe individual investors may be confused about the performance objectives of leveraged and inverse exchange-traded funds (ETFs). Investors should be aware that performance of these ETFs over a period longer than one day can differ significantly from their stated daily performance objectives. ETFs are typically registered investment companies whose shares represent an interest in a portfolio of securities that track an underlying benchmark or index ...
LOW-COST MUTUAL FUNDS STILL FAVORITE
8/19/2009
From ICI Education Foundation: Low-cost mutual funds with below-average turnover continued to attract 401(k) investors' assets, according to an annual report by the Investment Company Institute. At year-end 2008, nearly half of the $2.3 trillion in 401(k) assets was invested in mutual funds. The bulk (78 percent) of mutual funds held in 401(k) accounts was invested in stock funds. The Economics of Providing 401(k) Plans: Services, Fees and Expenses, 2008 finds that in 2008, 79 percent of 401(k) assets held in mutual funds were in "no-load" funds-funds that do not have any sales charges. "Investing in mutual funds through a 401(k) plan at work represents one of the very best and most cost-effective ways to save for retirement," said Sarah Holden, ICI senior director of retirement and investor research and report co-author ...
INVESTING FOR RETIREMENT
8/12/2009
From PathToInvesting: A long-term investing strategy depends on where you are in relation to your financial goals. Whether you're starting out or retirement is around the corner, learn how to ensure you'll have the money you need. Having enough money to enjoy a secure retirement is a financial challenge that almost everybody shares. Fortunately, you can take advantage of a variety of tax-deferred savings plans to help you build the financial resources you'll need. And if - like many people - you're behind schedule, there are strategies to help you make up for lost time. PathToInvesting.org has an entire section of resources about investing for retirement, including information about IRAs, employer-sponsored plans, annuities, and information about strategies for retirement savings for the variety of stages we go through in our lives ...
PETROLEUM MARKET PROTECTION
8/12/2009
From FTC: The Federal Trade Commission issued a Final Rule that will prohibit market manipulation in the petroleum industry. The Rule will prohibit fraud or deceit in wholesale petroleum markets, and omissions of material information that are likely to distort petroleum markets. The Rule prohibits fraudulent or deceptive conduct that could harm wholesale petroleum markets. Specific examples of such conduct include false public announcements of planned pricing or output decisions, false statistical or data reporting, and wash sales intended to disguise the actual liquidity of a market or the price of a particular product. The Rule also prohibits material omissions from a statement that, although true, is misleading under the circumstances. Anyone violating the Rule faces civil penalties of up to $1 million per violation per day ...
THE RIGHT TAX POCKET
8/5/2009
From AAII: One big advantage of a 401(k) plan is that it is tax-advantaged-it helps minimize the amount of money Uncle Sam can grab from your pockets in the form of taxes. According to this American Association of Individual Investors (AAII) article, the best way to limit Uncle Sam's reach is to make sure you are putting the right assets in the right pocket. In this instance, the pockets are either taxable savings accounts or tax-deferred 401(k) accounts. The decision as to which account-taxable or tax-deferred-will hold your stock assets and which will hold your fixed-income assets while attaining your desired asset allocation is often referred to as the "asset location" decision. If you are just starting out and have savings only in your 401(k) plan, the decision is relatively easy...
FINANCIAL LITERACY SUMMIT
8/5/2009
From IPT: Many Kentucky high school teachers will bring investing to their classrooms this year, thanks to the sponsorship by the Investor Protection Trust (IPT) of the Life Fundamental$ 2009 Financial Literacy Summit. The summit was conducted by the Kentucky Council on Economic Education (KCEE) with support from the Kentucky Jump$tart Coalition, the Kentucky Department of Financial Institutions and others, on June 23 in Lexington, KY. This second annual summit highlighted the need for financial education in Kentucky schools, with an emphasis on investing knowledge. More than 120 high school teachers attended, and other attendees included school board members, administrators, KCEE board directors and guests...
THE CASE FOR AUTOMATIC SAVINGS
7/29/2009
From RSP: Roughly half of all working Americans work for employers that offer no retirement plan. Thus about 78 million workers have no way to save on the job for the day when they stop collecting a paycheck. A paper from the Retirement Security Project (RSP) spells out an ambitious yet practical set of initiatives to expand retirement saving dramatically. RSP proposes making saving automatic-and hence easier, more convenient, and more likely. This strategy has been shown to be remarkably effective at boosting participation in workplace-based 401(k) retirement savings. The paper proposes extending this strategy to most employees who have no access to 401(k) plans by combining several key elements of our current system: payroll-deposit saving; automatic enrollment; low-cost, diversified default investments; and individual retirement accounts (IRAs) ...
RED FLAGS FOR INVESTORS
7/29/2009
From AAII: Bernie Madoff is now behind bars. But the uncovering of his enormous and long-running Ponzi scheme, and the fraud committed by several other financial hucksters, highlight the importance of asking the right questions and doing your own due diligence before selecting an advisor or participating in an investment. What areas should you focus on when performing a due diligence review? The American Association of Individual Investors (AAII) offers 10 basic steps all investors can take - as well as certain indicators that should serve as red flag warning signs of the potential for trouble down the road. Steps include questioning everyone before handing over your money, questioning where your money will be held, and asking for and keep any written materials about a firm with which you are considering doing business ...
RECESSION SCAMS TARGETED
7/22/2009
From FTC: The Federal Trade Commission announced a law enforcement crackdown on scammers trying to take advantage of the economic downturn to bilk vulnerable consumers through a variety of schemes, such as promising non-existent jobs; promoting overhyped get-rich-quick plans, bogus government grants, and phony debt-reduction services; or putting unauthorized charges on consumers' credit or debit cards. Dubbed "Operation Short Change," the law enforcement sweep includes 15 FTC cases, 44 law enforcement actions by the Department of Justice, and actions by at least 13 states and the District of Columbia. To help consumers understand how easy it is to be conned--and how to avoid fraud--the FTC produced a new consumer education video featuring a former scammer who hawked phony business opportunities and ultimately served prison time for deceiving investors ...
COLLEGE FINANCIAL FITNESS
7/22/2009
From TomorrowsMoney.org: Going to college can be exciting, fun...and expensive. And we're not just talking about tuition, room and board. There can be a lot of unexpected, small expenses that can add up. Expenses like new clothes, school supplies, books, furniture, a computer, and spending money. Get a good start on your higher education by learning, or brushing up on, some personal finance skills while you're hitting the books. TomorrowsMoney.org offers a few tips to help you stay on top of your expenses and be financially fit come graduation day, including: don't let debt sneak up on you; be very careful about using credit cards; stick to cash; balance your checkbook before you bounce; identify some practical ways to save; and stay focused on your future...not someone else's bank account ...
INVESTOR ED IN THE WORKPLACE
7/15/2009
From NASAA: The North American Securities Administrators Association (NASAA) announced a new investor education initiative to equip millions of union and employee association members with the knowledge and skills they need to protect themselves from investment fraud. Through a new outreach program, "United Against Investment Fraud" (UAIF), NASAA is working with unions and employees associations to bring investor education to the workplace. The UAIF program teaches union members how to spot con artists and how to check the background of stock brokers and investment advisers. Through the program NASAA members will provide representatives for unbiased workplace presentations. More information about the "United Against Investment Fraud" program can be found at the UAIF Resource Center ...
STATE’S IOUs ARE SECURITIES
7/15/2009
From SEC: The staff of the Securities and Exchange Commission has expressed its belief that the State of California's recently issued IOUs are "securities" and therefore those holding the IOUs are entitled to protections provided under federal securities laws. California began issuing the IOUs, or "registered warrants," on July 2 to certain individuals and entities, including citizens who were entitled to a tax refund or vendors who were entitled to payments. These IOUs bear interest and are negotiable, which means they can be sold to third parties. As securities, the IOUs are subject to the antifraud provisions of the securities laws. Buyers and sellers will have certain rights and remedies for fraud, and the Commission will be able to take action against any person committing fraud in connection with the IOUs ...
INVESTMENT FRAUD WEBCAST
7/8/2009
From NFA: Does the recent spate of investment fraud have you looking for ways to protect your savings and investments from unscrupulous characters? Are you looking for ways to check on the firms and individuals that help you manage your money in order to make sure it is safe? A new Webcast from the National Futures Association can help you avoid becoming a victim of investment fraud. NFA President and CEO Dan Roth discusses the common characteristics of an investment scam, different types of investment swindles, and what investors can do to help protect themselves from investment fraud. As part of its education and training, NFA offers periodic webcasts - streaming video presentations addressing a variety of investor-related topics ...
RETIREMENT LESSONS FROM AUSTRALIA
7/8/2009
From RSP: Achieving financial security in retirement is an increasing challenge as more responsibility is placed on individuals to put aside enough money during their working lives to last through their non-working years. Lessons from Australia's mandatory retirement savings system-the Superannuation Guarantee-continue to have a great deal of relevance to American policy-makers. On July 16, the Retirement Security Project and the Urban-Brookings Tax Policy Center will host Australian Assistant Treasurer Nick Sherry, an architect of the Superannuation Guarantee, who will discuss the system and recent changes to it. Following the assistant treasurer's address, a panel of international experts will discuss the relevance of the Australian system to several key proposals in the United States and other countries ...
FIGHTING ELDER FINANCIAL ABUSE
7/1/2009
From NASAA: The North American Securities Administrators Association (NASAA) and the National Adult Protective Services Association (NAPSA) announced they will join forces to protect seniors from the growing threat of elder financial abuse, which includes financial exploitation and securities fraud. Financial abuse is considered to be the most common form of abuse to elders, costing its victims an estimated $2.6 billion a year, according to a recent study. And for every one case of abuse reported to authorities, an estimated four or more cases go unreported. The NASAA and NAPSA partnership aims to eliminate elder financial abuse by providing tools to identify and report financial exploitation. NASAA and NAPSA will work together to inform and connect their members to share information and resources on
how they can help prevent elder abuse in their jurisdictions ...
MADOFF PAYMENTS TOP $230 MILLION
7/1/2009
From SIPC: A total of $231 million in Securities Investor Protection Corporation (SIPC) funds has been committed in the determination of 543 claims submitted by Bernard L. Madoff Investment Securities LLC (BLMIS) investors, according to Irving H. Picard, the court-appointed trustee for the liquidation of BLMIS under the Securities Investor Protection Act (SIPA), and SIPC President Stephen Harbeck. As such, the amount of SIPC funds committed in the Madoff liquidation exceeds the total amount paid in the previous 11 largest SIPA liquidations. The amount reflects major progress since May 14, 2009, when Picard and Harbeck announced a total of $61.4 million in SIPC funds committed in determination letters sent to 125 BLMIS claimants ...
RETIREE FRAUD AWARENESS
6/24/2009
From NEFE: In a volatile economy consumers are susceptible to losing money. But one of the largest and fastest growing segments of society, the retirees, are being jeopardized by another risk-financial scams, according to the National Endowment for Financial Education. Many older Americans rely on their retirement savings nest eggs to supplement Social Security. But with frequent losses in the stock market, and receiving little to no return on some investments, many retirees seek ways to get higher returns and protect the assets that took a lifetime to build. This opens the door to the financial predators lurking in the shadows. While con artists don't discriminate, perpetrators of investment and securities fraud frequently target wealthier Americans who are retired or are nearing retirement ...
PERSONAL FINANCE WORKSHOP FOR TEACHERS
6/24/2009
From CEE: The Council for Economic Education, formerly known as the National Council on Economic Education, unveiled two personal finance and economics workshops that will be held on June 26, 2009 at the American Association of Family and Consumer Sciences 100th Annual Conference and Expo in Knoxville, TN on June 25th to June 28th. During the workshops, teachers will discover invaluable tools to prepare their students for real-world financial decisions. With engaging videos, thought-provoking activities and interactive lesson plans that cover key concepts like saving, investing, credit and budgeting, teachers will explore new teaching strategies that cater to all learning styles. Teachers will leave with ready-to-use lesson plans they can use in their classroom right away ...
INFO FOR RESERVE PRIMARY FUND INVESTORS
6/17/2009
From SEC: The Securities and Exchange Commission posted information on its Web site for investors in the Reserve Primary Fund, which "broke the buck" last September when its net asset value fell below $1 per share. Since then, the fund has withheld a significant amount of money from investors pending the outcome of numerous lawsuits filed against the fund, its trustees, and other officers and directors of Reserve entities. The SEC filed suit on May 5, 2009, seeking, among other things, an order to distribute the fund's remaining assets to investors expeditiously on a pro rata basis. Pursuant to the court order, the SEC is directing investors to additional information on its Web site, including the SEC's proposed distribution plan as well as the SEC's evidence in its case against the operators of the Primary Fund ...
SUSPENDED 401(K) CONTRIBUTIONS STUDY
6/17/2009
From EBRI: A review by the nonpartisan Employee Benefit Research Institute (EBRI) of 251 401(k) plan sponsors that have suspended 401(k) matching contributions for their 4.4 million workers finds that those employing 50 percent of the workers also maintained an open defined benefit plan. An additional 16 percent of the workers were with employers that were still obligated to fund a frozen defined benefit plan. Further, 8 percent of the workers were with an employer that had both an open and a frozen defined benefit plan that carried funding obligations. Because of the current economic conditions, many of these employers must make what are unexpected contributions to a defined benefit plan as a result of asset losses and liability growth, but they can eliminate what are discretionary matching contributions to a 401(k)-type plan ...
NEW RESOURCES FOR INVESTING
6/11/2009
From BetterInvesting: In preparing for a comeback in stocks, investors now have all the stock analysis tools and education resources they need to build their portfolios and their long-term wealth. The merger of the National Association of Investors Corporation (BetterInvesting) and ICLUBcentral, the two leaders in investment education, creates the largest provider of unbiased, time-tested tools and resources. With this merger, investors of all experience levels have everything they need to analyze stocks and mutual funds and prepare for the next bull market. BetterInvesting's and ICLUBcentral's tools, resources and education programs revolve around the time-tested principles of building wealth over the long term by investing in well-managed growth companies whose stocks are selling at reasonable prices. Their investors can attest to how these products and services empower them to make sound investment decisions and successfully manage their portfolios ...
NEW FINANCIAL ED TEACHING CENTER
6/11/2009
From CEE: The Council for Economic Education and HSBC-North America have opened the HSBC National Center for Economic and Financial Education. The National Center has been created to be a hub for innovative and state-of-the-art teaching materials and programs in economic and financial education. Educational programs will be piloted and field-tested; research and evaluation of programs will be conducted; and panels featuring economic educators, teachers, prominent economists, business leaders, and policy-makers will be held to discuss topics relevant to economic and personal finance education. And as part of the National Center's mission to increase the awareness of economic education, domestic and international visitors will be invited to visit and view the National Center's broad array of financial, economic and entrepreneurial education programs ...
TARGET DATE-TYPE RETIREMENT PLANS
6/3/2009
From EBRI: The nonpartisan Employee Benefit Research Institute (EBRI) published a study of target-date fund investments, exploring whether plan demographic characteristics would affect individual participant contribution rates and target-date fund investments for participants in relation to plan demographics by considering target replacement income and its success rate. The U.S. Department of Labor's Employee Benefits Security Administration (EBSA) and the Securities and Exchange Commission (SEC) will hold a joint public hearing on June 18, 2009, to hear testimony on the investment of 401(k) and other retirement plans in target date-type plans. The study finds empirical evidence that 401(k) plan participants' contribution rates and participants' investments in target-date funds with different equity allocations both differ by plan demographics based on participants' income and/or tenure ...
TEACHING THE TEACHERS
6/3/2009
From IPT: The Investor Protection Trust has awarded a grant to The North Dakota Securities Department for their 14th Annual Invest North Dakota Teachers Academy in July 2009, a program that provides teachers the information they need to integrate investor education into their classroom activities. The objective of the Academy is to provide K-12 educators with both the training and the curriculum resources necessary to facilitate the integration of investor education and personal finance into their classrooms. The Academy is an intense 4-day (30-hour) course that focuses on this objective through approximately 25 business, professional and educational leaders conducting training and informational sessions relative to specific topic areas. The educators also receive ready-to-use grade-specific curriculums for their classrooms, as well as many additional resources for professional and personal use ...
NEW INTEREST IN ANNUITIES
5/28/2009
From FINRA: Market events over the last nine months may have caused many investors to re-examine how their retirement funds are invested. Recent press articles and questions we have received from investors suggest that there is renewed interest in annuities as an investment vehicle. Annuities are complex financial products and it is important to understand the difference between the various types of annuities that exist and whether they are an appropriate option for you. While variable annuities can be appropriate as an investment under the right circumstances, you need to be aware of their restrictive features, understand that substantial taxes and charges may apply if you withdraw your money early, and guard against fear-inducing sales tactics. Equity-indexed annuities (EIAs) are complex financial instruments that have characteristics of both fixed and variable annuities ...
$235 MILLION MADOFF SETTLEMENT
5/28/2009
From SIPC: The Securities Investor Protection Corporation (SIPC), which maintains a special reserve fund authorized by Congress to help investors at failed brokerage firms, today applauded the nearly quarter of a billion dollar settlement reached by Optimal Investment Services (Optimal) by Irving Picard, the trustee for the liquidation of Bernard L. Madoff Investment Securities LLC (BLMIS). The $235 million settlement resolves all claims that the Trustee has against Optimal, which has agreed to pay an amount equal to 85 percent of the amount of the Trustee's original claims. To date, the Trustee has collected over $1.2 billion for victims of the Madoff fraud. As of Memorial Day, letters for commitments in excess of $116 million had been sent by the Trustee to 237 claimants in the BLMIS liquidation ...
$61 MILLION COMMITTED TO MADOFF CLAIMANTS
5/20/2009
From SIPC: Even as forensic accountants and lawyers continue to untangle what is believed to be the most complicated and far-reaching financial fraud in U.S. history, a total of $61 million of Securities Investor Protection Corporation funds already has been committed in determination letters sent to 125 claimants in the Securities Investor Protection Act (SIPA) liquidation proceeding for Bernard L. Madoff Investment Securities LLC (BLMIS), according to Irving H. Picard, the court-appointed trustee, and SIPC President Stephen Harbeck. Picard and Harbeck said that the commitment of SIPC funds is expected to reach or exceed the $100 million level by Memorial Day ...
NYSE “EXCHANGES” BLOG
5/20/2009
From NYSE Euronext: If you want to get interesting and timely information about the markets, products and services of NYSE Euronext, the world's leading exchange group, look no further. The Exchanges blog shares information and insights about cash equities, futures, options, exchange-traded products, bonds, market data, and commercial technology solutions, and allows consumers to share their thoughts. The name of the blog signals not only that it's about marketplaces but also that NYSE Euronext wants to have an open, multi-way exchange of ideas. All of the bloggers on Exchanges are employed by NYSE Euronext. The blog usually posts at least one, if not more, entries that are of interest to investors each day ...
INTEREST RATE CHANGES AND THE PRICE OF BONDS
5/13/2009
From AAII: Interest rates are heading down. Is that good or bad news for the bond investor? The answer is more complicated than many realize. Whether the interest rate movements are caused by Federal Reserve actions, economic conditions or inflation fears, the impact on the bond investor is the same. Rising interest rates reduce existing bond values and falling interest rates increase existing bond values. Seems simple enough. But because bonds differ--by maturity, coupon rate, type of issuer and other factors--figuring out how your bond or bond portfolio will be affected by interest rate changes can be complex. Fortunately, you don't need a math degree to understand the basic concepts. This American Association of Individual Investors Commentary offers some guidelines for judging the price volatility of your bonds ...
BETTERINVESTING 2009 NATIONAL CONVENTION
5/13/2009
From BetterInvesting: At the 2009 BetterInvesting National Convention, June 25-28, Westin Peachtree Plaza in Atlanta, GA, attendees will able to choose from more than 100 classes at all levels of investing sophistication, from beginner to advanced. They will have the opportunity to listen to corporate presentations, ask questions of investor relations experts, gain hands-on experience with BetterInvesting software, get software questions answered by experts, and learn about what's new at the national level. In addition, free admission is open to all on Saturday, June 27, to the Investors EXPO; participants can pick up a wealth of educational and organizational materials to take back to their clubs or to help them build a personal portfolio. To register online click here ...
TACKLING SENIOR INVESTMENT FRAUD
5/6/2009
From NASAA: The North American Securities Administrators Association has announced its strong support for the "Senior Investment Protection Act of 2009" (S. 906), legislation designed to protect senior investors from unscrupulous and unqualified financial advisers. Reports NASAA President Fred Joseph: "The use of misleading senior designations that imply expertise in the financial needs of seniors often results in unsuitable investments being sold to unsuspecting seniors." The Senior Investment Protection Act of 2009 would provide grants to states to enhance the protection of seniors from being misled by false designations. The grants would support a range of senior investor protection efforts, such as hiring staff to investigate and prosecute senior-related cases; funding new technology, equipment and training for regulators; or providing educational materials to increase awareness of designations ...
2009 NATIONAL ECONOMICS CHALLENGE
5/6/2009
From CEFE: High schools from across the country will compete in New York City in the 2009 National Economics Challenge on May 18, sponsored by the Council for Economic Education and the Goldman Sachs Foundation. Established in 2000, the Challenge is the only national economics competition for high school students. The competition honors students and teachers for their hard work and outstanding achievement, and showcases the critical need for an in-depth understanding of the subject. "In the current economic climate, the need for economic education has never been more crucial," said the CEFE President and CEO Robert Duvall. "The public recognizes that economic education for students in grades K-12 is no longer an option, it is a necessity"...
STOP ONLINE BROKERAGE ID THEFT
4/29/2009
From SEC: Let's hope this never happens to you: You go online to check your brokerage account information. You see several wire transfers of money from your account to an outside checking account. But you never authorized those transactions--instead, an identity thief did, and that thief has now stolen your cash as well as your personal information. If you don't take steps to protect your personal information when you go online, you could be telling your own sad story of identity theft. Some safeguards the Securities and Exchange Commission urges online investors to employ: beef up your security; use a security token (if available); be careful what you download; use your own computer; don't respond to emails requesting personal information; be smart about your password; log out completely; and use extra caution with wireless connections--wireless networks may not provide as much security as wired Internet connections ...
COMING SOON: CARBON INVESTING REGULATION
4/29/2009
From CFTC: Even before legislation to address global warming has passed the U.S. Congress, government regulators are preparing for what could be the largest commodity market ever: carbon trading. The U.S. Congress is expected to consider in the very near future climate change and energy legislation centered around a cap-and-trade system that would reduce American greenhouse gas emissions by 2020 and even more by 2050. "Regulation of these important environmental markets is something we need to get right," said Commodity Futures Trading Commission Commissioner Bart Chilton, who chairs an advisory committee addressing the issue. The CFTC regulates futures markets and is expected to monitor and oversee the trading of derivative products associated with carbon dioxide allowances. "The mission, mandate and membership of the [CFTC's Energy and Environmental Markets Advisory Committee] is being expanded to ensure that we are ready for what could be a $2 trillion market in the future" ...
SHAREHOLDERS--KNOW YOUR RIGHTS
4/21/2009
From CFA Institute: The CFA Institute Centre for Financial Market Integrity, the global policy authority on professional conduct and investment performance standards, financial reporting, and capital markets, has launched Shareowner Rights across the Markets: A Manual for Investors to assist investors in understanding their rights in 22 of the largest markets in the world and to reinforce the correlation between strong shareowner rights and lower costs of equity capital. "Especially in the current financial market turmoil, many investors seek diversification of risk and return opportunities by investing outside of their home markets," said Kurt Schacht, CFA, managing director of the CFA Institute Centre. "Anyone who invests internationally will find this manual useful because, with each country, we looked at a standard set of investor concerns such as the election and independence of board members, proxy voting procedures, share ownership limitations, lawsuits, and compensation" ...
UNDERSTANDING ADRs
4/21/2009
From AAII: "Direct Purchase Plans: The Foreign Option" discusses the benefits of American depositary receipts (ADRs). With current growth rates in many international markets outpacing growth in the U.S., many individual investors are casting a longing look at the foreign markets. Mutual funds that invest overseas are one approach to foreign diversification. But for investors who want to purchase individual foreign stocks, ADRs offer an alternative. An ADR is a negotiable certificate that trades like a common stock; it is issued by a U.S. bank and represents shares of a non-U.S. publicly traded company. They are priced in U.S. dollars and owners avoid many costs associated with direct foreign investment. To help fuel interest in their ADR offerings, several banks have set up investor-friendly direct purchase plans (DPPs). As international returns have recently beaten the U.S. markets, DPPs have grown in popularity, and the banks have increased their number of company offerings ...
HOW TO AVOID FORECLOSURE SCAMS
4/15/2009
From the Fed: In the Federal Reserve Board's ongoing series of consumer tips, "5 Tips to Avoiding Foreclosure Scams" is the latest offering. The guidance for working with foreclosure counselors is this in a nutshell: work only with a nonprofit, HUD-approved counselor and verify the operator's credentials with HUD; don't pay an arm and a leg--you should not have to pay hundreds (or thousands) of dollars or pay any upfront fees; be wary of "guarantees"; remember that a reputable counselor will never give guarantees; know what you are signing--and be sure you sign it; and don't forget that if it sounds too good to be true, it probably is ...
MONEY SMART WEEK IN CHICAGO
4/15/2009
From NFA: The National Futures Association will participate in two events in Chicago associated with Money Smart Week (April 18-25), which will include more than 450 free educational classes, seminars and activities that will focus on financial topics for people of all walks of life. On April 21, NFA and AARP will cosponsor a seminar to advise people on making ends meet during the current economic downturn and how to avoid becoming a victim of investment fraud. NFA will join several other regulatory and enforcement agencies on April 22 at a Financial Regulators Fair, where representatives from 10 agencies, including the FINRA, SEC and FDIC, will distribute information on financial protection, banking, credit and investing. Click here for more information on these and other Money Smart Week events ...
FINANCIAL ED FOR COEDS
4/8/2009
From NEFE: Partnering with the National Direct Student Loan Coalition, the National Endowment for Financial Education is taking action against the lack of financial knowledge in college students by promoting CashCourse to its members. CashCourse, NEFE's unbiased and noncommercial online financial education resource for students, is available free to all public and private nonprofit colleges and universities in the U.S. Students need financial tools for their transition to adulthood, including saving, investing, taxes and evaluating the financial aspects of job offers. Increasing concern over this issue has led to the joint effort between NEFE, organizations and universities to fill in the missing gaps of financial knowledge that many college students have. "CashCourse offers a reliable resource to help young adults develop financial know-how," said Ted Beck, president and CEO of NEFE" ...
FINANCING YOUR HEALTH CARE
4/8/2009
From EBRI: Employers have long sought ways to stem rising health care costs. Some are using a relatively new idea--consumer-directed health plans, which link high-deductible plans with tax-favored accounts. The Employee Benefit Research Institute has published the findings of a recent policy forum, "Outlook for Consumer/Patient Engagement in Health Care--30 Years into the Experiment." Forum participants heard two very different presentations on the prospects for consumer-directed plans. One speaker said that consumer-directed plans work because people have substituted less expensive care for more expensive care to minimize out-of-pocket costs. Another was skeptical, saying their impact will be "marginal" ...
MONEYTRACK TV IS BACK
4/1/2009
From IPT: MoneyTrack, the public television series that empowers people of all income levels to be savvy stewards of their money, is back. An updated round of the weekly half-hour series will be released during April 2009. Four of the 15 episodes are being updated to reflect current economic conditions, making the series more timely and valuable than ever. The updates will address the changes on Wall Street in recent months, and a cautionary story about high-risk real estate investment. MoneyTrack has aired on more than 200 public television stations. The secret of the series' success? Refreshingly free of bewildering jargon and dry-as-dust lectures by talking heads, MoneyTrack presents information in a down-to-earth, often humorous way that appeals to viewers who might normally find themselves intimidated or bored by a television show about finance and investment. MoneyTrack is funded entirely through a grant from the Investor Protection Trust ...
UNTANGLING COMPANY REPORTS
4/1/2009
From FINRA: As most investors already know, the annual reports of U.S. companies are becoming increasingly complex. One factor: an increase in required disclosures that accompany financial reports as the reason for the upsurge in difficulty when deciphering a company's performance. FINRA recently tracked the information used by more than 300 investors to examine how they cope with such complex information. In the article, "Where do Investors Prefer to Find Nonfinancial Information?" the authors look at some key questions: How much of the information in an annual report do investors use to make decisions? How do investment professionals (financial analysts) differ from nonprofessional (retail) investors? If they can choose where to find specific types of information (i.e., in the footnotes or other sections), what do they prefer? ...
THE TAO OF RETIRING
3/25/2009
From AAII: The dream of a happy retirement is the very reason why so many of us are willing to spend the time required to learn the ins and outs of investing. The American Association of Individual Investors has published the article "Retirement Planning: Myths and Misconceptions About Life in Retirement," which suggests achieving that dream by avoiding the pitfalls embodied in the many prevalent myths about retirement that persist. The article details 12 myths; here are a few: The Female Exclusion Myth--homemakers often have a more difficult voyage than those who retire from a job. The Money Will Go Further Myth--retirement dollars do not stretch any further than pre-retirement ones, and there are usually fewer of them. The Piece of Cake Myth--many seem to feel retirement will take care of itself. The opposite is often true. For example, many retirees go back to work because they cannot handle leisure time ...
TAX TIME TIPS FOR INVESTORS
3/25/2009
From BetterInvesting: Just in time for April 15th - some helpful tax tips! Taxpayers and businesses spend 7.6 billion hours every year to file. That's the equivalent of 3.8 million people working full time for a year. And that doesn't even count time spent responding to IRS notices and audits. A simpler U.S. tax code probably isn't in the cards, but with some planning and perseverance--whether you're racing to the finish this year or already starting to plan for April 15, 2010--you can still reduce the time needed to prepare your return. BetterInvesting's tax-time tips include suggestions for organizing tax documents to save time, ways to create a folder system, ideas for making a document checklist, and tips for dealing with canceled debt ...
BEAR MARKET AND YOUR 401(k)
3/18/2009
From EBRI: The Employee Benefit Research Institute has published, "The Impact of the Recent Financial Crisis on 401(k) Account Balances"--using a database of 21 million participants--of the impact of the recent financial crisis on 401(k) retirement balances January 2008-January 2009. Losses were largely determined by account balance, age, and job tenure. Some key points: balance--accounts with a less-than $10,000 balance saw an average growth of 40%, those with $200,000 or more, an average loss of more than 25%; age/job tenure--401(k) participants near retirement had average changes from a positive 1 percent for short-tenure individuals to more than a 25% loss for those with long tenure (more than 20 years) ...
SPOT THE CON ARTIST
3/18/2009
From FINRA: To help investors spot fraud, the Financial Industry Regulatory Authority offers an alert and two online tools. "Avoiding Investment Scams," explains common frauds, including Ponzi schemes, pump-and-dumps, and offshore scams. It lays bare the psychological tactics fraudsters use to lure victims. The tools, the Scam Meter and Risk Meter, help investors evaluate offerings and determine if their personality makes them vulnerable to fraud. "Recent frauds have robbed victims of their life savings," said John Gannon, president of the FINRA Investor Education Foundation. "These tools can help investors shut the door on con artists who come knocking." The alert also outlines a series of red flag warnings, that should arouse investors' suspicions...
PLAY “DOUGH” ECONOMICS
3/11/2009
From CEE: Will the Three Little Pigs get swept up in the foreclosure crisis? Defending their homes against the Big Bad Wolf wasn't tough enough-now they have to battle a credit crunch? To help California K-12 teachers cover the current economic crisis in their classrooms, the Council for Economic Education conducted a series of teacher workshops in early March. Teachers discovered how Play Dough can transform mundane concepts like opportunity cost, money, and bartering into exciting clay creations. Second, teachers analyzed how the Three Little Pigs learned the value of natural resources and the meaning of scarcity as they each built their homes. This combination of children's literature and sculpting clay gives teachers an array of resources that make introducing economics to young students both fun and engaging ...
TIPS FOR SHAKY HOMEOWNERS
3/11/2009
From the Fed: The unstable economy has many Americans living in fear of the loss of their most valuable financial asset--their home. To empower homeowners feeling the effects of the housing crises, the Federal Reserve Board's Web site offers useful consumer information for those in danger of falling behind on their mortgages. In "5 Tips for Protecting Your Home from Foreclosure", consumers can access a wide range of links to helpful resources, including counseling services, reliable loan and selling information, and scam alerts. The five tips in a nutshell--don't ignore your mortgage problem, do your homework before you talk to your lender or housing counselor, know your options, stick to your plan, and beware of foreclosure rescue scams ...
SALUTE TO SMART INVESTING
3/4/2009
From IPI: Created as a resource for the men and women serving in our Armed Forces and their families, "A Salute to Smart Investing" explains in clear language the basics of financial security, including saving and investing, while also helping them to identify and avoid investment frauds and other scams that specifically target the military and their loved ones. The Investor Protection Trust is helping to distribute this useful booklet by highlighting it on the IPI Web site. Key topics covered in this 17-page booklet include: basic training in personal finance, saving, investing basics and strategies, appropriate investments, balancing risk and return, retirement planning, scams and how to avoid them. "A Salute to Smart Investing" also provides contact information for federal and state agencies, military resources, and other organizations that Armed Forces personnel and their family members can turn to for financial information and guidance ...
FOR SHOPAHOLICS, ONLINE RESOURCES ABOUND
3/4/2009
From NEFE: The popularity of the recent film, Confessions of a Shopaholic, may cause retail-obsessed viewers to reflect on their own excessive spending habits. Online resources can help. It's time for a little anti-retail therapy. Shall we confess? One outlet is Spendster.org, from the National Endowment of Financial Education. This site lets visitors confess their own shopaholic tendencies, including overspending on gym equipment, vehicles, beauty supplies and way too much Diet Coke™. What motivates overspenders to air their dirty laundry online? Does a confession--albeit an anonymous one--help? The short answer is yes. With the sluggish economy and rising unemployment, buyer's remorse is on the rise. For those shopaholics who just need to vent, there are the one-off, self-disclosure sites like Spendster.org or personal notes on Facebook or MySpace. For the seriously debt-ridden, the Web is full of budgeting articles and financial tools on sites such as SmartAboutMoney.org, Geezeo.com, and Wesabe.com. But what if you really, truly have a shopping problem? Go here to discover the warning signs of compulsive shopping and tips that will help cure retail binges and hangovers ...
PENSION PLANS ON THE WANE
2/25/2009
From EBRI: A new study by Employee Benefit Research Institute shows that workers increasingly see defined contribution plans (401(k)-type) as their primary retirement plan type, with about two-thirds of workers identifying these as their most important plan. As defined contribution plans have become more important-and as defined benefit (pension) plans continue to fade in the private sector-workers' contributions to these plans are likely to need to grow even faster if they expect to be able to afford to maintain their current lifestyle in retirement, writes Craig Copeland, EBRI senior research associate and author of the study, which appears in the February 2009 EBRI Notes. Among the study's key points: 67.1 percent of retirement-plan participants had a defined contribution plan as their primary plan in 2006, more than double the level found in 1988; 30.9 percent in 2006 had a defined benefit retirement plan as their primary plan: substantially lower than the 56.7 percent level found in 1988 ...
AVOID FRAUD, PROTECT WEALTH
2/25/2009
From NASAA: The North American Securities Administrators Association has joined America Saves Week to encourage investors not only to save but also to protect their assets through fraud prevention. NASAA calls on investors to participate in America Saves Week events to discover how they can save, invest and, most importantly, safeguard their assets from investment fraud. NASAA recommends these investment fraud prevention tips for savers: verify before you buy. If it sounds too good to be true, it probably is; check out the license and background of anyone selling investments; take your time -- don't give in to high-pressure sales tactics; and if you've been a victim of fraud, contact your state securities regulator ...
AVOIDING SCAMS, EN ESPAÑOL
2/19/2009
From NFA: National Futures Association now offers a Spanish-language version of its investor education booklet, "Scams and Swindles: An Educational Guide to Avoiding Investment Fraud." It describes common characteristics of investment scams and outlines steps for avoiding them. "Unfortunately, investment fraud can occur in every community," says NFA's Senior Vice President of Strategic Planning and Communications Karen Wuertz. "We are pleased to provide this very important information in a format that will reach a wider population." Single copies of both the English and Spanish versions of "Scams and Swindles" are free. To view and print the publication, download it from NFA's Web site. NFA offers several other publications, including "Opportunity and Risk: An Educational Guide to Trading Futures and Options on Futures" and "Trading in the Off-Exchange Foreign Currency Markets: What Investors Need to Know"...
IN TOUGH TIMES, INFO IS POWER
2/19/2009
From the FTC: This year's National Consumer Protection Week-sponsored by the Federal Trade Commission and a variety of government agencies and national consumer groups-features as its theme "Nuts and Bolts: Tools for Today's Economy." The National Consumer Protection Week Web site has information to help consumers manage their money wisely and protect themselves against fraud. Whether consumers are trying to stretch their paychecks, find a quick fix for a spotty credit history, or tell the difference between a real deal and a potentially fraudulent product or service, information is one tool that can always help them get the most for their money. Practical information is one tool that retains its value, especially in tough economic times ...
THE ABCs OF CDs
2/11/2009
From AAII : A certificate of deposit (CD) is an interest-paying savings vehicle. A CD has a stated maturity date, a specified interest rate and can be issued in any denomination by commercial banks, thrifts and credit unions. A certificate of deposit is a promissory note issued by a bank, thrift institution or credit union. It is a time deposit, meaning the institution keeps your money for the stated time and you are restricted (in the form of a penalty) from accessing the money prior to the maturity date. If you must access the money before maturity, you will pay a penalty, which will eat into your total return. A typical CD can be purchased for any amount and has a number of time period options. The most popular are between three months and five years. Usually, a longer holding period means a higher interest rate. CDs are insured by the FDIC up to $100,000 ...
MILLIONS RETURNED TO INVESTORS
2/11/2009
From the SEC : The Securities and Exchange Commission announced that it has completed the first in a series of disbursements from fund that will
return approximately $321 million to more than two million investors who were harmed by undisclosed market timing in the Alliance mutual funds complex. The Fair Fund resulted from an SEC enforcement action charging Alliance Capital Management, L.P. with unlawful conduct for allowing widespread market timing trading between January 2001 and September 2003 in Alliance mutual funds, contrary to those funds' public disclosures. During this period, Alliance Capital, now known as AllianceBernstein, L.P., served as the investment adviser to the Alliance mutual funds. More than $46 million in Fair Funds have been distributed to approximately 300,000 investors in this first disbursement ...
UNDERSTANDING EXCHANGE TRADED NOTES
2/4/2009
From NYSE Euronext: An Exchange Traded Note (ETN) is a relatively new type of investment vehicle that is unfamiliar to many investors. Before you decide to invest, there are some basic questions which you should consider in order to make an informed investment decision. An Exchange Traded Note (ETN) is a common name for a senior unsecured debt obligation designed to track the total return of an underlying market index or other benchmark, minus investor fees. The creditworthiness of an ETN is itself not rated, but instead is based on the creditworthiness of the issuer. Individual investors, not qualified for redemption election, can purchase or sell their ETNs in the secondary market, sell at a specified issuer call event, or allow them to mature. ETNs can offer investment exposure to market sectors and asset classes that may be difficult to achieve in a cost-effective way with other types of investments ...
WORKSHOPS FOR MICHIGAN TEACHERS
2/4/2009
From CEE: The Council for Economic Education (formerly known as the National Council on Economic Education) announced its lineup of workshops for Michigan teachers, who will explore a variety of print- and technology-based lesson plans that help them teach economics and personal finance. The workshops will be held at the Annual Michigan Conference for the Social Studies at the Grand Amway Hotel in Grand Rapids, Michigan, on Monday, February 9th, 2009. Not only will teachers discover the latest teaching strategies, they will also leave with ready-to-use lesson plans and activities that help them bring a real-world perspective to today's economic turmoil. "After these workshops, Michigan teachers will have the tools they need to align their curriculum to the Grade Level Content Expectations and High School Content Expectations," says Troy D. White, the Council for Economic Education's director of Product Marketing and Sales ...
RETIREMENT ACCOUNT ROLLOVERS INCREASE
1/28/2009
From EBRI: An increasing percentage of retirement plan participants are preserving their retirement assets in tax qualified accounts, but a significant number are using at least some these assets to pay off debts, start a business, or buy a home, according to a study released today by the nonpartisan Employee Benefit Research Institute (EBRI). According to the study, "Lump-Sum Distributions at Job Change" (available at www.ebri.org), the percentage of those rolling over their most recent lump-sum distribution to another tax-qualified retirement plan, thus preserving the assets for retirement, increased to 44.3 percent through 2006, compared with 19.3 percent of those who received their most recent distribution through 1993 ...
SMART INVESTING@YOUR LIBRARY
1/28/2009
From FINRA: The Financial Industry Regulatory Authority Investor Education Foundation and the American Library Association (ALA) have announced nearly $882,000 in grants to 12 recipients as a part of the Smart investing@your library® initiative, which funds library efforts to provide millions of patrons with effective, unbiased financial education resources. The latest group of grantees marks the second year of this educational partnership, which awarded more than $853,000 to 13 public libraries and library networks in 2008. Grant recipients will use the funds to implement a variety of programs and create resources designed to increase patrons' access to and understanding of financial information. The grantees will partner with community organizations including schools, universities, community centers and local governments. Library patrons will be empowered to make smart financial decisions for both long-term investing and day-to-day money matters ...
FINANCIAL ED FOR INDIANA TEENS
1/21/2009
From NEFE: As the state and nation face a gloomy economic outlook, hundreds of teachers in Indiana have hit the classroom to ensure their students will not have to learn about personal finance from the school of hard knocks. "Indiana and America face critical economic challenges, challenges not seen in generations. We owe it to the next generation to prepare them, to teach them fundamental financial and life skills," says Indiana Secretary of State Todd Rokita in a public service announcement launching statewide today that promotes financial literacy for teenagers. The PSA was produced through a grant from the Indiana Department of Financial Institutions to support the Colorado-based National Endowment for Financial Education and its effort to place its High School Financial Planning Program (HSFPP) in more Indiana high schools. The seven-unit personal finance course covers savings, investing and spending. It is available free of charge to any high school or home schooling group ...
SENIORS/MILITARY INVESTOR ED
1/21/2009
From FINRA: The FINRA Investor Education Foundation devoted significant resources in 2008 to helping two vulnerable and often under-served groups weather the current financial and economic crisis - the nation's seniors and U.S. military service personnel. The FINRA Foundation launched a campaign last April in Florida and Washington State to help seniors identify and resist persuasion tactics common to many types of fraud. The centerpiece of the Foundation's campaign to protect seniors is a 90-minute intensive workshop "Outsmarting Investment Fraud." The FINRA Foundation conducted 21 financial education forums in 2008 at military installations across the country. The Foundation awarded 189 military spouses with fellowships to fund the education necessary to earn the Accredited Financial Counselor designation and to provide financial counseling and education within the military community. The Foundation has also made BrightScore, an online credit management tool, available free of charge to over 45,000 active duty military personnel and their spouses to help them manage their credit wisely ...
TIPS TO AVOID DISHONEST FINANCIAL ADVISERS
1/14/2009
From NASAA: The North American Securities Administrators Association (NASAA) is offering investors a series of tips to avoid dishonest investment services providers in the wake of the unfolding scandal in which scores of investors lost upward of $50 billion after a New York money management firm tumbled like a house of cards. "While the vast majority of investment services providers are honest professionals, the potential for fraud should concern us all," said NASAA President and Colorado Securities Commissioner Fred Joseph. With more people in charge of their own investment portfolios than ever before, state securities officials are warning investors of the increasing sophistication of investment professionals who steal money from unsuspecting clients. "Anyone, regardless of income, education, or profession, can become a victim when unscrupulous individuals use the growing field of financial advice to line their own pockets," Joseph said. Joseph recommended investors consider five tips to help protect themselves from dishonest advisers ...
SUSTAINABLE RETIREMENT
1/14/2009
From FPA: When voluntary or involuntary retirement arrives, many retirees find that they don't have enough money in their nest egg to sustain their current standard of living. But instead of drastically cutting back expenses, retirees can salvage their retirement by working part time and annuitizing a portion of their portfolio, says an article in the January 2009 issue of the Journal of Financial Planning, published monthly by the Financial Planning Association. In an earlier published paper, Gordon B. Pye, Ph.D., a financial consultant and planner in New York City, explored the problem of people reaching retirement but finding that withdrawing only what is typically considered a "safe," sustainable amount will leave them well short of their living expenses. But Pye found that by using a "retrenchment rule" retirees could postpone a painful reduction and withdraw a significantly higher percentage of the account's value, at least during the early years. Nevertheless, the strategy still runs an uncomfortable risk of having to take very low withdrawals later in retirement. So what can retirees do to reduce that risk of severe retrenchment? ...
MAJOR INVESTOR EDUCATION CONFERENCE PLANNED
1/8/2009
From FINRA/SIFMA/IPT: In the wake of the recent market downturn and tightening of credit, the work of investor education professionals is more important today than ever before. Investor education will be critical to restoring confidence in markets and in helping investors develop a long-term perspective about the benefits of investing. The International Forum for Investor Education (IFIE) and the International Organization of Securities Commissions (IOSCO) have organized an investor education conference taking place 2-3 March 2009 in Washington, D.C. Several members of the Alliance for Investor Education -- including FINRA, SIFMA, and IPT - are involved in the IFIE/IOSCO event ...
AMERICAN SAVER ASSETS
1/8/2009
From ICI: American savers held $16.9 trillion in retirement assets at the end of the second quarter of 2008, accounting for nearly 36 percent of all household financial assets in the United States, the Investment Company Institute reported. The finding is from The U.S. Retirement Market, Second Quarter 2008. The report covers assets held in private-sector pension plans, both defined benefit and defined contribution; government pension plans; annuities; and Individual Retirement Accounts (IRAs). Between March 31, 2008 and June 30, 2008, retirement assets remained largely unchanged from a revised finding of $16.9 trillion in the first quarter. During the second quarter, total return on equities was -2.7 percent, while bonds returned -1.2 percent, according to the Standard & Poor's 500 stock index and the Citigroup Broad Investment Grade Bond Index. At the end of the second quarter, IRAs held $4.5 trillion of retirement market assets; another $4.3 trillion was held in employer-sponsored defined contribution plans, of which $2.9 trillion was held in 401(k) plans. Mutual funds managed 47 percent of IRA assets and 51 percent of defined contribution plan assets ...
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