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When was the last time you received a phone call or email from a scammer? It you were contacted recently, you aren’t alone.
Internet scams show no signs of letting up. In fact, the problem may be getting worse. In its most recent report from the Internet Crime Complaint Center (IC3), the FBI said it saw the largest number of complaints and the highest dollar losses reported since the center was established 20 years ago. The FBI said it recorded 467,361 complaints in 2019 and more than $3.5 billion in losses to individuals and businesses. The costliest scams involved business email compromise, romance or confidence fraud, and mimicking the account of a person or vendor known to the victim to gather personal or financial information, the FBI said. “Criminals are getting so sophisticated,” Donna Gregory, the chief of IC3 said. “It is getting harder and harder for victims to spot the red flags and tell real from fake.” But you can avoid becoming a victim with vigilance and common-sense steps.
Here is one example from the Federal Trade Commission (FTC): You may receive an email that appears to be from a company you are familiar with, such as Netflix. Not everyone subscribes to Netflix, but tens of millions do. You receive the email requiring that you update credit card or bank information for payment. If you comply, you’ve given criminals personal information they can use to steal from you. (If you are unsure, go to the website of the company and check your information there.) Also be careful about clicking on links or attachments that could compromise your personal information or lock up your computer. Use these four steps to protect yourself from phishing:
Please note that some of these email/texts now include a warning not to give out the passcode to anyone. Why is this needed? Some scammers will attempt to log into your account, then call claiming they are from that company and need your passcode. Just hang up. 7. Steer clear of the fake Facebook page Scammers sometimes set up a fake Facebook page of a well-known company. Scammers then add a post claiming they will give away autos, free airline tickets, or thousands of dollars to “hundreds of lucky winners.” Simply share the post, comment, click on a provided link, and fill out the requested information. If you look at the FB page, you’ll notice it’s brand new as there are few posts, and it lacks a verified FB badge indicating its authenticity. However, you’ll see hundreds of individuals who have dutifully complied with the scammer’s requirements. Sadly, they will win nothing but grief. What to do if you are scammed Be vigilant and use common sense. Anyone can fall victim to these scams. If you have paid someone, call your bank, money transfer app, or credit card company and see if they can reverse the charges. If you gave personal information, go to [[https://www.IdentityTheft.gov IdentityTheft.gov]] to see what steps you should take, including how to monitor your credit. Did a scammer take control of your cell phone number and account? Contact your service provider to take back control of your phone number. Once you do, change your account password. Passwords should be lengthy and include numbers, letters, special characters, and capitalized letters. Short passwords can easily be hacked using computer programs. When you report a scam, the FTC can use the information to build cases against scammers, spot trends, educate the public, and share data about what is happening in your community. If you were scammed, report it to the FTC at ReportFraud.ftc.gov. Finally, be vigilant and use common sense. Avoid clicking on suspicious links, and never give out personal information to a stranger over the phone. You’d never tell your best friend your annual income, so why would you give a suspicious caller your passwords, bank information, date of birth or your Social Security number
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The year 2020 presented us with unique challenges. Never has a singular event had such wide-ranging repercussions as the Covid pandemic.
It has touched nearly every area of our lives. Schooling, socializing, family gatherings, travel, and more. And the restraints from social distancing and restrictions implemented to slow the spread of Covid remain in place. Of course, it wasn’t just our daily routines that were impacted. The economy and our investments saw unprecedented swings in 2020. Yet, we are an optimistic nation. As the economy was set to climb out of a deep hole, investment legend Warren Buffett said, “I remain convinced…nothing can basically stop America. The American miracle, the American magic has always prevailed, and it will do so again.” Last year’s strong finish for stocks suggests Buffett is on the right track. As we enter a new year, we tend to look back at our successes, our challenges, and new goals for the upcoming year. Without a doubt, we all faced challenges in 2020. But I believe we've all had personal victories, too. I’m convinced most of us are hopeful as we look to 2021. I know I am. New Year’s resolutions are one tool that offers us guideposts as we begin the cycle anew. Surveys say that more than half of adults make resolutions--yet, we know far fewer keep them. The top two resolutions center on money and health. My goal is to keep things simple and realistic, focusing on resolutions for your finances. I’ll offer you options. Some may seem simple, but the foundation of any financial plan must be built on the basics, the fundamentals. Some may apply to you. Others may not. But I encourage you to grab ahold of what is realistic. 7 financial resolutions to get you started in 2021
The seven resolutions are simply guidelines and suggestions. Does it seem overwhelming? Then focus on one or two. Or, grab hold of the ones that apply to you and tackle one per month. As I always remind you, I'm here to assist you, encourage you and point you in the right direction. If you have questions, I am no further away than a phone call or email.
The end of the year is fast approaching. As the calendar days march toward 2021, let’s keep in mind that there are several ideas we should review as you work to get your year-end financial house in order.
While procrastination is tempting, remember how checking items off our ‘to-do’ list always gives us a sense of accomplishment. Before we get started, the tips below are simply guidelines. Feel free to check with your tax advisor, as various nuances can crop up. As always, we would be happy to assist you 1. Health care open enrollment has begun. If you obtain your health insurance through the Health Insurance Marketplace, now is the time to purchase your health insurance for 2021. This is the one time of year you can change your health insurance coverage or enroll. If you don’t act by December 15, you will miss out on coverage for 2021 unless you qualify for a special enrollment period. Plans sold during open enrollment start January 1, 2021 2. On a similar note, open enrollment for Medicare has begun. You can sign up for Medicare health and drug plans between October 15 and December 7 Decide if your coverage will meet your needs during 2021. If you like what you had this year and it is still available next year, you won’t need to take any action. 3. Did you max out your retirement accounts? You can put up to $6,000 into an IRA in tax year 2020; $7,000 if you are 50 or older. You will have until Tax Day to make a 2020 tax-year contribution. The sooner you contribute, the longer your assets can grow tax-deferred Contributions to your 401(k) are automatically deducted from each paycheck. Contributions for tax year 2020 must be made by the end of the year to count against 2020 income. The 401(k) contribution limit is $19,500 for 2020 and the catch-up limit is $6,500. Your employer or plan administrator will let you know if you can adjust changes to your contribution this year. As we have said in the past, we strongly suggest that you contribute the minimum amount necessary to receive your entire employer’s match. It’s free money. Don’t leave free money on the table. 4. This year’s RMD waiver. If you are 72 (or turned 70½ before January 1, 2020), you are obligated to take a required minimum distribution (RMD) from your IRA. But this year is an exception. Thanks to the CARES Act, the RMD is waived in 2020. This RMD waiver applies to everyone with a 401(k), IRA, 403(b) or 457(b) account. Owners of inherited IRAs may suspend RMDs for 2020, too. 5. If you are over 70½, you may be eligible to transfer up to $100,000 from your IRA to a charity without paying taxes on the distribution. This is called a qualified charitable distribution or QCD. Moreover, a QCD satisfies the RMD requirement as long as certain rules are met. 6. Let’s consider “harvesting” tax losses. Do you own stocks, exchanged-traded funds, or mutual funds that are below the purchase price? If so, you may sell by the end of the year and offset up to $3,000 in ordinary income or capital gains. However, please be aware of the ‘wash sale’ rule and treatment of long-term and short-term losses. The rule defines a wash sale as one that occurs when an investor sells a security at a loss and, within 30 days before or after the sale, buys a "substantially identical" stock or security. If so, the IRS disallows the loss. Short-term capital gains occur when an asset that is sold was held for one year or less. Short-term capital gains are taxed as ordinary income. Long-term gains are taxes at a more favorable rate. 7. Consider converting your traditional IRA to a Roth IRA. Depending on the outcome of the election, tax rates may rise next year. Therefore, converting a traditional IRA into a Roth IRA this year would require taxes to be paid at 2020’s rate, but it would enable the account holder to withdraw funds without paying federal taxes at retirement. Whether or not tax rates rise next year, a Roth IRA is an excellent retirement vehicle. Final thoughts Let me remind you that these year-end financial planning steps are guidelines. One size does not fit all. The advice I recommend is tailored to your specific needs and goals. I would be happy to discuss any questions that you may have. I'm simply a phone call or email away. I trust you’ve found this review to be helpful and educational. I've addressed various issues with you, and I have an open-door policy. If you have questions or concerns, let’s have a conversation. That’s what I’m here for. As always, I’m honored and humbled that you have given me the opportunity to serve as your financial advisor.
When I take a step back from what's happening in the economy and look at the major U.S. market averages, we see some interesting behavior.
U.S. Gross Domestic Product (GDP), which is the broadest measure of the value of goods and services in the economy, fell at an annual rate of 32.9% in Q2 2020, the largest decline on record (U.S. BEA data – quarterly data began in 1947). Now to be clear it didn't decline 32.9% in Q2, it was 9.5% lower. If it continued to decline at that same 9.5% rate for three additional quarters (so, four quarters in all), it would be 32.9% lower than it was in Q1. The prior record, a 10.0% annualized decline, occurred in 1958 and coincided with the Asian flu pandemic. The contraction can be blamed on the unusually swift decline in the economy that began in March and quickly accelerated in April. It doesn’t take an economist piecing together a complex puzzle to discover the culprit. Simply look at the lockdowns which were intended to slow the spread of Covid-19. They stifled economic activity and threw tens of millions of people out of work. In April alone, employment fell by a record 20.8 million (St. Louis Federal Reserve). For perspective, 152 million individuals were employed in February. However, May and June saw a significant improvement from these very depressed levels. The economy generated a record number of jobs in May and June, erasing one-third of March and April’s job losses (U.S. BLS data). We also saw big gains in retail sales following a record decline in April (U.S. Census), as businesses began to reopen, furloughed employees returned to work, and stimulus money ($1,200 checks and generous jobless benefits) found its way into the economy. Nevertheless, the economy remains far below its pre-coronavirus state, as evidenced by the steep decline in Q2 GDP. Here’s another way to look at the economy with one simple data point. In February, the unemployment rate was at a 50-year low of 3.5%. In July, the jobless rate stood at 10.2% (below April’s 14.7% peak). The major market averages tell a different story. As July came to a close, the broad-based S&P 500 Index turned positive for the year, while the tech-heavy NASDAQ Composite is having an impressive year. Some of the larger tech stocks appear to be more insulated from the initial impact of the Covid Recession, and investors have taken notice. The Federal Reserve’s massive response to the crisis, coupled with a strong response by the federal government, has also encouraged buying. In addition, investors may be looking beyond a dismal Q2, both in terms of GDP and profits, and attempting to price in more favorable conditions later in the year and into 2021. Very limited visibility The recession that began in February (per the National Bureau of Economic Research) appears to have ended in April, which would make it the shortest on record. However, it may be months before the NBER, which is the official arbiter of recessions and expansions, decisively calls the bottom. I don’t want to dismiss May and June’s upturn in the economy. It has been encouraging to see economic activity bounce higher and millions return to work. Still, the outlook remains uncertain. As states around the country began to reopen, the number of Covid-19 cases has spiked, injecting a new round of uncertainty into the outlook. In order to contain the virus, some states have slowed reopenings and others have implemented new restrictions. If we look at what is called “high-frequency data,” such as daily air travel through TSA checkpoints, daily restaurant books via OpenTable, and daily requests for directions via Apple Maps, economic progress slowed or stalled in July. These metrics don’t correlate perfectly with the economy or the larger S&P 500 firms, but they approximate what is happening in the broader economy. Further, layoffs remain at historically high levels as measured by weekly jobless claims (Dept. of Labor). Yes, a record number of people are going back to work, but layoffs remain high. The prescription The spread of Covid-19 is hampering the recovery and creating a new round of uncertainty. Might this be temporary? Might new cases begin to slow in August and September? Could we see a second wave in the fall and winter? There are no clear answers. Today, the path of the economy is linked to the virus. Hence the unusual degree of uncertainty. Yet, there has been encouraging news regarding a vaccine. If and when developed and readily available, a vaccine could be just the right prescription that could greatly increase confidence to venture back into restaurants, movie theaters, airplanes and sports arenas. Fed Chairman Jerome Powell said in prepared remarks in late July, “The path forward for the economy is extraordinarily uncertain and will depend in large part on our success in keeping the virus in check.” The economy may not be the same when the pandemic is eventually in the rearview mirror, but we are a resilient people, we will persevere, and we will adapt. I hope you’ve found this review to be helpful and educational. I understand the uncertainty facing all of us. We are grappling with an economic and a health care crisis. It’s something none of us have ever faced. We have addressed various issues with you, but I have an open-door policy. If you have questions or concerns, let’s have a conversation. That’s what I’m here for. As always, I’m honored and humbled that you have given me the opportunity to serve as your financial advisor.
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