Unless you’ve been stuck on a desert island for the last 15 or 20 years, you’ve probably heard about the Nigerian prince email scam and probably have had a laugh or two about it with friends and family. The fact is however, some of those friends and family are still falling for this “pay me now, get millions later” scam that, if the Boston Globe is to be believed, has been around for over 200 years.
Of course most new scams today are a bit more cleverly disguised than this one, because let’s face it that makes them more effective, but it seems that even the oldest and most obvious of scams are still being used with, unfortunately, great success. Today’s blog will update you on four of the top scams that have been around for ages and should definitely be avoided like the plague. Enjoy.
The first is what’s known as the “grandparent scam”. The fact is, most scams work because they take advantage of people’s emotions including desperation, fear, greed and concern. With the elderly, concern for a family member is combined with confusion about the facts, something that makes it much easier to scam grandma and grandpa. Most of these scams involve making a call to an elderly person’s home and claiming to be a child or grandchild in trouble and needing money fast. This particularly cruel yet quite effective scam relies on the fact that the average grandparent will do anything for their children and grandchildren.
The “IRS phone call” scam is second on our list and typically involves a phone call from someone claiming to be a representative of the IRS and demanding a payment immediately, using the threat of police involvement and jail time to get the listener’s attention. If you receive a phone call like this you should definitely hang up right away and never share any important information with anyone claiming to be from the IRS unless you have made the call to their direct number yourself. You can also go to IRS.gov to look up contact information if you do have issues with your taxes, and always keep in mind that if you get an email claiming to be from the IRS it’s not from the IRS because they don’t send emails.
In third place on our list of top scams is the “Disaster scam”. This scam usually comes in two flavors, the “fake charity” scam and the “click trap” scam, both of which usually begin in the wake of a disaster like a tornado, hurricane, flood or fire. These scams take advantage of the average person’s propensity to give willingly to help victims of these disasters who, unfortunately, then become victims themselves. The fact is, if you’re keen on donating to an organization or charity that has been erected in the wake of a disaster, you should research it first to make sure that it’s legitimate because, unfortunately, there are plenty of fake organizations out there that will take your money in a heartbeat and donate it to their favorite charity, themselves.
Keep in mind that sometimes these “disasters” can also be things like the recent release of nude photographs of celebrities online.
Last on our list is the “Debt collection” scam. Like most other scams, this one starts when the victim gets a phone call from a fake debt collector. Since most people hate dealing with debt collectors to begin with, dealing with fraudulent scammers who, in most cases, are using threatening and relentless language, can be even more stressful. The fact is, even real debt collectors can sometimes be as unpleasant to deal with as fake ones but, no matter who’s on the phone, keep in mind that you’re entitled to written confirmation about any debt that you might have. If the caller refuses to provide that, the chances that you’re dealing with a fraudulent debt collector become much higher.
Hopefully this information will allow you to avoid these scams in the future, and your families and friends as well. In fact, sending a link to this blog to all of your contacts might be one of the best emails that they get today.
The stock market is quite volatile right and many investors are a little bit panicky. One of the reasons is that the VIX, the system used to measure volatility in the S&P 500, double in the last month.
The fact is, when financial markets are in any kind of turmoil, it’s usually a good idea to do nothing. If you’re sitting on a lot of cash however, money that hasn’t been earmarked for any type of expense or that wouldn’t be better spent paying off any high interest debt that you might have, there are a few things you can do to make sure you get the most out of it.
Of course, as the holidays approach, many consumers think the best choice is to take that cash and spend it on gifts and other holiday festivities. While that’s not a completely bad idea, a better one would be to take at least a portion of that cash and put it towards an emergency fund.
There are literally dozens of surveys that have been taken over the last few years showing that the average American consumer is ill-equipped to handle a financial emergency. In fact, most aren’t even prepared to cover an expense of $1000.00, which could easily be spent om major car repairs or a new HVACX system for the typical home.
One survey showed that 64% of consumers would have to either sell an asset, borrow money or take money earmarked for other bills to pay that $1000.00. Bankraye.com reported just this past June that over 25% of American consumers have no emergency funds whatsoever, and that 75% don’t have enough to cover 6 months’ worth of expenses as experts say they should.
Taking some of that ‘spare cash’ and using it to purchase stocks that are on sale is also an excellent idea, especially considering the recent market sell-off. Indeed, some companies are trading cheaper right now than before they announced their quarterly earnings, including Goldman Sachs, Bank of America and Citigroup.
These companies, and many more like them, are down in price because of the stock market’s overall performance, not due to the actual business itself.
You could also use some of that extra cash to contribute to a retirement account that gives you tax advantages, like a 401(k) or Roth IRA. Not only will you then have more money when you go to retire, but saving now will force you to think about the fact that you won’t be working forever and get you into the ‘mind set’ of putting money into savings for later in life.
The plan that you choose depends on a lot of factors but, if you’re young, a Roth IRA is probably the best bet because it allows capital gains to grow tax-0free (as long as you don’t make any withdrawals that don’t qualify). If you’re employed by a company that has a matching 401(k) plan you’d do well to put money there and take advantage of every last dollar that they’re willing to give you.
With the strengthening dollar, and the weakening of just about every other currency on Earth, it might make sense to invest in foreign exchange trading in order to turn a profit. You may want to do some research before investing in currencies, but it can certainly be an added benefit. If you need more diversification in your portfolio this could be another option.
So before you go out and spend all of that ‘found cash’ on holiday gifts and frivolity, make sure to consider the three alternatives above and at least put some of that money aside for later. Go ahead and spend some, but don’t go overboard, and you’ll thank yourself later.
When it comes to investing, there is no reason not to listen to some of the best market minds in the world in order to get some great information on how to buy stocks, bonds and funds today. After all, they’ve made their billions and usually in a specific manner that, if copied, will usually end up with the same results; lots of money. Below is advice from three of the top market minds in the world that, when it comes to the stock market, is timeless. Enjoy.
Sir John Templeton was the Founder of Templeton Funds. One of his most famous quotes is this one: “If you buy the same securities everyone else is buying, you will have the same result as everyone else.” That’s sound, simple and powerful reasoning from a man whose indispensable wisdom said to buy at the point of maximum pessimism and sell at the point of maximum optimism.
In other words, Sir John was a bit of a contrarian. He was convinced that the best way to get a bargain in the stock market was to purchase that when all others were selling. Amazingly, when everyone was panicking at the start of World War II, he purchased shares from every single company listed on the New York Stock Exchange that was trading for less than $1.00. He ended up making a profit on nearly every single one that he purchased. Sir John was also the first to see the benefit of going outside of the United States to diversify his portfolio and indeed, investing internationally became sort of his signature. A person who invested $10,000 in Sir John’s flagship fund back in 1954 would have been sitting on a tidy $2 million sum by the time he retired in 1992.
The founder of Vanguard, Jack Bogle, can teach everyone a thing or two about avoiding fees when investing. One of his best quotes is this one; “Don’t let the miracle of long-term compounding of returns be overwhelmed by the tyranny of long-term compounding costs.” Back in 1976 when he launched the Vanguard 500, the first retail stock index fund, his detractors called it “Bogle’s Folly”. Since then however his idea, that since you can’t beat the market low costs and fees are the key to long-term success, has gained widespread acceptance. That’s not hard to understand considering that the Vanguard Group, with $2.6 trillion under management, is now the largest mutual fund family in the world.
Regarded by many as the top investor on the planet, Warren Buffett, is the chairman and CEO of Berkshire Hathaway and his annual letter to shareholders is picked over by investors looking to gain every bit of the man’s immense knowledge about the market and investing. One of his most famous quotes is this one: “Whether socks or stocks, I like buying quality merchandise when it is marked down.” One bit of indispensable wisdom from Mr. Buffett is that you should only invest in what you understand and only if it’s at the right price. Buffet listened well to his mentor, Ben Graham, who taught him that buying stocks was akin to buying businesses. When the market was willing to sell them for less than they were worth, that was a signal to buy. He’s built a $65 billion fortune since the 1950s adhering to this basic investing philosophy, and picking up some of the best companies along the way including Geico, Disney, Coca-Cola and American Express.
There you go. Sound advice from 3 of the best in the world at investing. Use it well and, if you have questions, please drop us a line or leave a comment.
Sometimes, in the rush to transfer a balance from one credit card to another and save money, a person can leave themselves open to increased interest rates and other charges. In fact, the Consumer Financial Protection Bureau (CFPB) recently sent out a warning to credit card issuers about their deceptive offers when it comes to reduced interest or zero interest balance transfers.
The problem lies in the information, or lack thereof, given by the credit card companies to consumers, information that should inform them that by creating a monthly balance, even if it has zero interest, the interest-free grace period that they would normally get on most purchases will be lost. For people who pay off their credit card balance in full every month, that could mean the loss of significant savings.
What normally happens when a person doesn’t carry a balance on their credit card is that, as long as they pay the charges in full by the payment due date, interest on new purchases doesn’t accrue. That changes instantly when they transfer a balance from another card as, in most cases, that grace period is given up until the transfer balance is paid in full. Unfortunately, even if they continue to make payments in full on their other new purchases every month, the loss of that grace period means those purchases will start accruing interest immediately.
The CFPB has a problem with the fact that most card issuers don’t make this information clear in their promotional materials, especially those that refer to their convenience checks, balance transfers, deferred interest/promotional interest rate purchases and so forth.
The agency says that the information is missing in some cases and, in others, it’s covered by language that’s too technical for the average person or buried under volumes of legal-speak. This results in many consumers being misled into thinking that the only fee they’re going to have to pay is the transfer-related transaction, which in most cases is entirely wrong.
Richard Cordray is the director of the CFPB and, in a statement that he made announcing the agency’s warning to credit card issuers, he said that “Credit card offers that lure consumers and then hit them with surprise charges are against the law.”
What can you do to avoid paying these extra fees and interest?
Simply put, before you take advantage of any balance transfer offer, make sure you read all of the fine print so that you understand the cost and transfer fees included. If you have any questions about anything, you need to ask before you sign on the dotted line and keep in mind that, even if you pay off your balance every month, there’s a very good likelihood that you’ll be getting charged interest on purchases from the moment that you make them. Depending on how many purchases you make every month, this could actually cost more money than if you haven’t made the transfer at all.
One excellent way to avoid this problem is simply to stop using any card where you just transferred a balance until that balance is paid off. Use a different credit card or cash, and don’t forget that most promotional offers require a minimum payment that you’ll need to make in order to keep getting their promotional rate. Paying off that transfer amount during that period is in your best interest as well because, if you don’t, you’ll be facing higher interest charges on any unpaid balance.
Something else to keep in mind is that you should never make a transfer to any card that already has a balance on it. The reason is because credit card issuers are allowed by law to apply the minimum payment portion of your future payments to your promotional balance. They don’t have to apply it to the higher interest rate balance that you’re trying to pay off.
One last technique that you might want to try is simply to call your credit card issuer and ask them to voluntarily lower your interest rate so that you’ll avoid transfer fees and other costs altogether. They don’t have to do it but, in some cases, they will, and so asking won’t hurt and won’t affect your credit score either.