A little knowledge is dangerous - Financial Literacy

Over the years I cannot tell you how many people hear something at a dinner party and want to run with it. While we learn a great deal through our regular daily interactions it is still prudent to fact-check what you hear from friends and family before plunging yourself into an investment nightmare. Many lack the basic financial literacy required to navigate their way through many of the investment vehicles available for use when building wealth.  If you are one of the few that are comfortable in admitting something is "above them" then seeking the assistance of a professional will always serve you well.  No need to commit to a purchase with said professional, simply make it known right from the beginning that you are merely researching.   

FINRA requires that at the time you set up account an investment professional required to ask you suitability questions.   These may appear to be an invasion of your privacy but, truth is as invasive as the questions may appear, they are a guideline to what sort of investments are suitable for you personally.  You are under no obligation to answer said questions but by withholding any relevant information you only serve to undermine your own success.  Even with purchases where you are not subjected to suitability questions it is prudent that you personally seek to ensure the investment vehicle at hand is right for you.  There are checks and balances that you as an individual should do.  FINRA has suitability guidelines are a handy resource.

When purchasing a home or a car never buy more than you can afford nor more than you need.  If you are single no point is buying a six bedroom house.  Tying funds up in one asset is a drawback to your goal of wealth accumulation.  One needs to categorize the items purchased for use separate from items purchased for investment.  With this in mind when making an investment choice it is unwise for you to look solely on the rate of return. There is the concept of "risk/reward" but more importantly you cannot risk more than you can afford to lose.  As such you need to pay attention to the Risk-return trade-off.

There are various free online courses that one can take in the comfort of their home that will go a long way towards ensuring basic financial literacy.  

Job Creation - The disparity between the needs of Main Street and Wall Street’s targets

Most of us see the change in economy as having begun in 2008 but in reality the problems started years before that.  The rise in unemployment has many contributing factors.  While we constantly find ourselves looking to politicians to put in place the right policies to encourage job creation, we forget our part in electing officials that are able to conceptualize our needs and put said policies in place. If we do not participate at the early of the process we really do not have the right to voice our displeasure nor be disgruntled at the policies in place.

Many of us are lukewarm at best during local elections but get caught up with the excitement of nationwide candidates.  If you asked the next person on the street who their local representatives are I would hazard a guess and say 1 in 4 are aware who represents them.  Asking who actually took time to know who is on the ballot before elections would give us less encouraging numbers.  Flip the question and nearly all of us know exactly who Mark Zuckerberg, Steve Jobs, Warren Buffet or Bill Gates is.  Others are even more familiar Miley Cyrus, Kim Kardashian or the crew from Duck Dynasty.  All in all most are more committed to the votes on "The Voice" or "American's Got Talent" than to their electoral duties as citizens. 

The corporate world's first loyalty is to its investors and its a relationship that requires constant nurturing. Rightly so in a world where capitalism is supposed to reign supreme.  Capitalism encourages competitiveness among us and it is through this that we have made huge strides innovation.  United States rose to greatness through innovation and manufacturing.  The manufacturing provided good paying jobs for the workers as well as good quality products that the workers purchased, plus surplus to supply the world markets.  The innovation has continued unabated with it the rise of companies such as Apple and Facebook.

The most profitable of corporate America, Apple, does most of it's manufacturing overseas but USA is the biggest market for Apple.  So the benefits of the manufacturing are being enjoyed by other countries but the consumption of said products are still in USA.  In the first quarter of 2014 Apple reported earning of $11.62 per share on sales of $45.6 billion.  Apple is not alone.  GE is rumored to have put forward an offer to purchase the French company Alstom as solution to GE long standing large cash being held overseas.  GE is not the only company with large cash reserves that Wall Street has been lobbying for a tax holiday to bring the funds into the USA.  As good as the reports being posted by Facebook the actual number of employees is a mere 6,818.  Apple on the other hand has 50,50 employees.

Needless to say it is abundantly clear that there is no relationship between the targets/estimates Wall Street sets for companies and the much needed job creation that Main Street has been yearning for badly so long.  The Federal Reserve for its part continues to weight the tools it has on hand to decide when the economy will be on sound ground so that they in turn can raise the historically low interest rates.  All in all Main Street continues to struggle.  While its not something we can expect Wall Street to changes it is something that deserves more attention than Congress is paying to the need of job creation.  The decrease in the number of unemployment are but a mere reflection of disgruntle job seekers giving up.

Identity Theft

Most of us have security alarms systems at home or on our cars.  Few of us walk away from our cars without double checking to see if we really locked the car.  All of these extra steps only serve confirm just how visual a society we are but yet we live in a world that is anything but visual.  Why is it that we pay so little attention toward preserving the things that we have worked so hard, if not for the time it has taken us to accumulate our assets but also for our precious future.

All that awareness seems to fall away as soon as we see an item being advertised for a lower purchase price.  We quickly pick up our electronic device and start the process of making the purchase.  The Target and Neiman Marcus security breaches should have taught us many lessons but we learnt very little if anything at all. Target sent emails to all those affected offering credit monitoring for a year but one wonders just how many of us actually went through with the application.  Yes we do tend to dismiss the possibility to something happening to us.  Many echo “what are the odds?” or alternatively “I do not have anything that someone would want to steal”.

It will not always be that we are made aware of our information being comprised.  Most organizations have an obligation to inform you as well offer some solution to limit losses but what if the breach was either at your home or maybe via your electronic device.  Do not make the mistake of thinking that since you do not how to monetize stolen data that it is useless information. 

Ensure that protecting your information is second nature to you.  Change your passwords on a regular basis ensuring that you avoid the usual mistakes of using any of the following:

1.      Words you can find in the dictionary.

2.      Passwords shown as "example strong passwords."

3.      Personal information, such as names and birth dates, names of your children.

4.      Avoid sequences of numbers in order as well as keyboard patterns

5.      Repeating characters, such as mmmm3333.

6.      Universal password (same password for all your accounts).

One needs to be equally careful when disposing of mail, i.e. bank and credit card statements; even regular mail that just has your address on it.  Thieves have become extremely resourceful at piecing together any information that you are reckless with, as well as any additional information that they can find online without much effort.  Shredding is the way to go but if you are going to buy one then it is advisable to purchase one that “cross-cuts” as there now is available software that can put together papers that are shredded the normal way.

This past tax season many people had the misfortune of being victims of identity theft with “refund fraud”.  The IRS has "Tips for Taxpayers, Victims about Identity Theft and Tax Returns"“ that are worth your while to read over.  For those that have been victims the IRS has been issuing pin numbers to allow filing your tax return.

Regardless of how tedious this may all seem it is extremely beneficial to follow through with all the suggested precautions as well as checking your credit report annually.  There are also various companies out there that now offer credit protection at differing levels but this too can be pricey.

We are constantly looking for bargains but are we aware of indirect cost said bargain

I do believe there are many of us out there who are constantly searching for bargains for our everyday needs.  In fact I must confess it has been a number of years since I last paid full price for clothing, that is of course not including my running shoes.  I justify this by living by my own self proclaimed motto of not living by trends set by some stranger who really does not understand me.  Dressing for comfort is first and foremost after that I believe the 50-70% off original price sale is closer to the real price we should be paying than the huge "needless markup" we are often subjected to.  With that I do acknowledge that everyone goes into business to make a profit.

This concept of making a profit should also be applied when looking at one's own compensation whenever you are employed but seldom do people know their true own value.  Whether you have sacrificed time and/or money to educate yourself, or over the years you have acquired a skill-set, haunted by the great recession we allow employers to protect their margins by paying us less than we are worth.  

While the majority of Americans, regardless of political party affiliations, are all in support for an increase in the minimum wage there are those like Rep. Joe Barton (R-Texas) who feel it has outlived its usefulness and should be repealed.  It will continue to be a battle of wills until people begin to realize that by continually accepting to be underemployed are unknowingly reinforcing depressed wages and it trickles down to the minimum wage.  Of course the large numbers of unemployed do factor in but something has to be said for the disadvantages to employers should they be constantly retraining new employees because they refuse to pay a just wage.  "A bird in hand is worth two in the bush".

One would think that any costs relating to increasing employee compensation would be handled like any other cost a business owner comes across in the course of doing business.  Gas prices go up all the time as does the cost of most materials and these increases are taken in stride.   Why should the employee be the one to "suck it in"?  Well it turns out employees are the weakest link and as such employers feel this is the cost they can bargain - your desparate need to be employed at a minimum!
Big box stores like Walmart often make statements on how difficult it would be increase wages especially since theirs customers have come to rely on low prices.  Slate has a video that is worth looking at - "Would  Walmart's prices spike if they paid their employees more?