Jan 06

Opening scene, a dimly lit office with racks of servers visible to the right. A man in a very expensive suit leaving for the day, a suddenly the sound of breaking glass, our superhero Helaine Olen draws her bow and declares, “Financial Industry, you have failed this country.” No murderer, she bears right and in a flash an arrow strikes the server starting a chain reaction of explosions.

I don’t know if this is more my fantasy than her’s, but it’s fair to say that the subtitle for Pound Foolish, ‘Exposing the Dark Side of the Personal Finance Industry.’ is a pretty clear glimpse into the book itself.

pound-foolish-181x300

The book opens with a bit of a look back to the start of the genre of personal finance columns, the name Sylvia Porter among them. Next, an overview of some of the celebrities of finance, Suze Orman, Dave Ramsey, David Bach, and more. What’s clear is that these folk are all salesmen, pushing books, courses, and in Suze’s case, a debit card that went a long way in tarnishing whatever good reputation she had.  Regarding Ramsey, Ms Olen discusses the famous debt snowball, and why the “pay lowest balance” is more costly over time versus paying the debt with the highest rate. She manages to do it in a few sentences compared to how I can ramble on about this subject. She highlights the hypocrisy of how Ramsey filed for bankruptcy yet preaches to his listeners that they should pay their debts and in Suze’s case how her money is invested anywhere but in stocks, yet her advice is to be invested in the market.

Next, how the 401(k) has failed the worker. This was the theme of the PBS Frontline program, The Retirement Gamble, where Helaine Olen was interviewed as a critic of the high fees many companies were charging their account holders. As Jack Bogle pointed out, the fees make a remarkable difference over an investing lifetime. A 2% annual fee can result in a next egg less than half of what it would be with low cost index funds. High fees in mutual funds, annuities, and other financial products are often not well disclosed, why would they be? Worse, the question of whose best interest is such a product often is answered with “the salesperson.”

The book wouldn’t be complete if it weren’t for a discussion of the “Rich Dad” expensive seminar series and other similar real estate millionaire schemes. Olen exposes the story behind Robert Kiyosaki’s ‘dads’ and how much of his wealth doesn’t come from real estate but from seminars. Tens of thousands of people looking to strike it rich. These courses have been around for a long time, as Olen notes Robert Allen’s ‘Nothing Down’ was a best seller in the early 80′s.

In the end, I found Pound Foolish to be a cynical view of a corrupt industry. Note – the definition of cynic – “a person who believes that people are motivated purely by self-interest rather than acting for honorable or unselfish reasons.” It would be tough to argue that the financial industry has anything but its own self-interest in mind. This book should serve as a wake up call at the very least to check the fees your own accounts are being charged and to tread very cautiously when making investments. Ms Olen has received criticism for her writing, but that should come as no surprise. When you publicly state the emperor has no clothes or worse, that the emperor is systematically lying to you and stealing from you, he’s not going to react too kindly.

If you read the book, you’ll note, no solutions are offered. There’s a reason for this explained at her blog in the article What Should Be Done? I hope the dialog she starts can help us all achieve a better retirement. And financial industry, you better watch your a$$ets.

written by Joe \\ tags: , , , , ,

Sep 28

A guest post from Crystal -

We live in an amazing era of unparalleled convenience, thanks to the Internet. With just a computer and a connection, you can correspond with someone on the other side of the globe, or buy groceries and have them delivered right to your doorstep. You can even pay your bills, manage your money, and take care of all your budgeting needs without leaving your desk. In fact, there are so many online outlets for doing so, it’s a bit confusing figuring out where to start.

Of course, the Internet is also a top resource for finding the necessary information to answer such questions. If you’re just beginning to test the waters of online financial applications, we recommend visiting these sites for starters.

Mint    Mint

 

Image via Mint.com

Considering the vast assortment of online finance-advice outlets out there, why not start at the top? Most visitors consider Mint.com to be one of the best money-management tools available on the Web. Its greatest strength lies in the broadness of its potential application and the simplicity of its design. The site monitors your transactions to paint an exact picture of your current budget, and presents the results to you with no frills or mess, emphasizing easy readability.

Geezeo

Geezeo

Image via Geezeo.com

Simple, no-frills information is a definite plus. That said, another major strength of the Internet lies in its social aspects, and its ability to foster a community. Geezeo.com is a financial site that draws upon that strength, giving users the power to seek advice and tips from one another. The website also offers investment and budgeting services similar to those of Mint, but it truly shines for its tailored expert advice and community reviews.

HelloWallet

Nerd Wallet

Image via HelloWallet.com

It’s tough to beat the professional quality of established sites like Mint and Geezeo, but recent startup HelloWallet is a strong contender, offering a refreshing, independent take on financial planning. Like its peers, the site offers comprehensive budget planning in an easily digestible package for the average layperson. However, using its custom software, it also boasts powerful forecasting potential. Besides tracking your transactions and goals, HelloWallet will adjust on the fly based on recent changes in activity or projected patterns.

AnnuityAssist

Annuity Assist

Image via AnnuityAssist.com

If you’re asking yourself, “How does a variable annuity work?” This site will help you sort it all out. The topic of annuities is fairly complicated, so it makes sense to seek help with it on the Internet. Unfortunately, though, a lot of annuity sites are thinly veiled sales pitches, or worse, pressure you into giving them your personal info in exchange for any sort of service. What if all you’re looking for is a bit of education? You can find what you’re looking for on AnnuityAssist, for one. The site provides educational annuity assistance for free above all else — it does offer options for paid services, should you want them, but doesn’t force them on you.

Buxfer

Buxfer

Image via Buxfer.com

Not all budgeting tasks are solo activities. In fact, managing money for the sake of a group can stand out as more complex and difficult than most financial tasks, and can involve hurt feelings and stepped-on toes if you’re not careful. Luckily, sites like Buxfer exist to help you out here. The site tracks expenses and IOUs among various members in a group, and is perfect for handling all sorts of potentially sticky situations, from splitting a restaurant bill to covering expenses for an international vacation.

WePay

We Pay

Image via WePay.com

Another good example of a site that emphasizes group budgeting is WePay, which offers many services similar to those of Buxfer. However, it specializes more in budgeting for small businesses, charities, and other organizations. This site is a valuable resource for the tech-savvy small business owner, providing tools to handle customer transactions and keep track of where your money’s coming and going.

SmartyPig

Smarty Pig

Image via SmartyPig.com

Sometimes the smartest thing to do with your money is to simply save it. It’s no longer the norm to keep your cash in a piggy bank, but SmartyPig offers a modern, electronic take on the concept. The site helps you set up a savings fund with a specific end goal in mind, such as a vacation, a wedding, or a big-ticket item. It will then track your progress towards the desired amount, encouraging you to keep building up your nest egg until it’s ready to hatch.

In your quest towards better budgeting and financial sense, perhaps your greatest asset is information, and the Internet has that in spades. Take a look through a few of the above sites, and arm yourself appropriately to give yourself the confidence to manage money like a real pro.

Sources:

http://www.annuityassist.com/

http://www.geeksugar.com/Websites-Track-Money-Finances-18794219

http://www.kiplinger.com/article/spending/T007-C000-S001-the-six-best-budgeting-sites.html

http://www.kiplinger.com/article/credit/T007-C000-S002-best-personal-finance-web-sites-to-track-your-cash.html

written by Joe \\ tags: ,

Jun 20

This was a remarkable week for guest posts, here’s the latest from a partner -

When you need financial assistance and want to invest you need to find a professional who can successfully balance the quest for sound advice with the need to make a living. There have been several scandals recently whereby financial advisors put their own needs first, at the detriment of the clients, losing them millions in ill advised investments. To avoid this you need to find an advisor who is a fiduciary- someone who is legally required to put your interests first. Only registered investment advisors are obliged to adhere to this standard so a request to provide certification is reasonable.

A broker or advisor who works for commission is not bound by this fiduciary code; they are only obliged to assure that that an investment is suitable. However, it can be a mistake to assume that your advisor has your best interests at heart purely because they are a fiduciary. Although they are obliged to act in the best interests of the client there are many times that they act otherwise due to increased returns available. For example, if you win big at a site like www.androidcasino.ca your advisor might wrongly assume that because you won the money you would be happy to invest it in a high risk scheme rather than in a solid, long term investment.

To ensure your best interests are always paramount you need to exercise control over your portfolio and have ongoing contact with your advisor. A registered financial advisor is not allowed to charge commissions for investments; instead they charge a flat fee or earn a percentage of the assets they are managing. This helps to remove conflict of interests and stops them from following a hot tip or backhand that will benefit them rather than you, as no option will compensate them more than the other.

Some in-depth research into your potential financial advisor’s history is always recommended and you can determine whether they have a history of negative qualities such as:

  • Selling a product instead of advice
  • Maximised risk regardless of goals
  • Failed to maintain basic investment and fiduciary standards
  • Losses that exceeded the standard benchmarks

If these are prevalent qualities rather search for someone with a better track record and who you are confident will have your best interests at heart.

written by Joe \\ tags: ,

Jun 03

Today’s guest post is from Noreen Ruth -

Warning signs are everywhere with some so downright hilarious that the seriousness of the issue is lost in the hilarity. For example, “Not intended for human consumption” was a warning on a bottle of bubble bath. Or this one found on the packaging for a set of earplugs, “These ear plugs are nontoxic but may interfere with breathing, if caught in windpipe.” Or this warning on a hairdryer, “Warning: Do not use while taking a shower.” Well, duh!

While we may get a little chuckle from these seemingly silly warnings, their intent to protect is serious business. Consider the consequences of simply ignoring any of these warnings. In the same way, signs that point to poorly managed finances have dire consequences, if you don’t take them seriously.

Ignoring the Wisdom of Others
One reason some people are surprised to find themselves in financial trouble is that they were indifferent to the clues that were clearly on display. Inexperience and arrogance often go hand-in-hand when troubles are left unresolved. Wise advice is considered irrelevant or out-dated for the situation. Those who step up to point out clues to trouble ahead might include family and friends who have more experience to draw from. They offer their help so that you might avoid pitfalls that they may have gone through – perhaps because they ignored the signs.

The right attitude about money is vital to establishing and maintaining excellent financial management skills. If you still rely on parents or friends to support your way of living, you need to resolve your dependency or miss wonderful opportunities for growth and personal success. Money is a means to an end and should be thought of as a tool to be used to build and live a sustainable life.

To write about all of the warning signs of a poorly managed financial lifestyle would fill a book. For our purposes and with word count restraints in place, the most common warning signs are included in this checklist.

  • Has Little or No Savings: The target to shoot for is a minimum of six months worth of savings to cover any unexpected job loss or emergency. Without this safety net, you’ll be inviting disaster. A recent survey shows that nearly half of Americans have less than $500 in the bank.
  • Doesn’t follow a Budget: Anything well managed incorporates a plan to reach their goals; and so it goes with finances. Without one there’s no direction and will be easy to get off track.
  • Insufficient Income/Poor Job Performance/Outdated Job Skills: These issues are interrelated with one impacting the other two and vise versa. Begin by learning a new skill and being more responsible on the job and the income will resolve over time with a new job or a pay raise.
  • Uses Payday Loans: Using one of these is an act of self-imposed desperation. Not only are you borrowing on your own future income, you’ll be paying interest to someone else to borrow your own money.
  • 5+ Year Car Loan: Pushing an auto loan beyond 60 months is a warning sign that the loan is too much to handle in your current situation.
  • Denied a Loan or a Credit Card: If lenders consider you too high risk to approve additional credit, this is a warning sign that you already have too much debt in relation to your income.
  • Uncontrolled Credit Card Spending: Credit cards should never be used as supplementary income. Never use one to purchase everyday necessities – do without until cash is available. Eventually it all needs to be paid back to the lenders, a bumpy road for sure when you’re overwhelmed by credit card debt on multiple accounts.
  • Agreeing to Debt Consolidation while Continuing to Use Credit: This strategy will backfire, as you will basically be standing still while incorporating a plan that would normally help lower debt. Consolidating all your debt into one account can be a great way to dig your way out of debt, but not if you keep using your available credit.

Personal reasons unrelated to finance that may be triggers to future financial problems, include a lack of or insufficient insurance coverage on your health, car and home. Disputes and disagreements between couples about money are the most common relationship problem. Sometimes one partner lies or hides the truth about how they’re spending the couple’s money. Issues like these need to be addressed and worked on until a joint agreement has been reached.

By keeping alert to the warning signs of poor financial management and correcting your course when one crops up will free up funds to invest in college for the kids or to pad your investments set aside to secure a carefree financial future for your retirement years.

Identifying the warning signs is the first step; the second is equally important. You need to take action to resolve the issues to protect your financial integrity and future in the best interest of yourself and your loved ones.

About The Author: Noreen Ruth is a staff writer for www.asapcreditcard.com, a site that provides credit tips, news, credit card comparisons and reviews. She is interested in educating consumers about using credit responsibly and taking actions that will affect their ability to borrow the money they may need in the future.

written by Joe \\ tags: ,

May 21

A guest Post from Tim Aldiss -
Financial regulations are always put in place with the intention of lending further transparency to decision making processes. However, the eventual results do not always mirror the initial vision. Although providing a new breed of qualified investment advice may help investors avoid financial pitfalls, many individuals are now distancing themselves from this prepaid and often times still confusing arena. The end result has been that markedly fewer people are seeking the services of a financial adviser; indeed, less than one-third of all adults will consult these professionals.

Although some analysts will state that a reduction in the number of professional advisers is one of the goals of many regulatory authorities, others will feel that the do-it-yourself tendency being witnessed may usher in dire consequences for those inexperienced in the financial industry. Is this a future financial debacle waiting to unfold?

regulations

Another effect that this shift has had is in the way financial companies now communicate with potential clients. Unsurprisingly, many professionals are now learning to embrace the internet as a means to drive business forward and to disseminate their services. It seems that online execution-only platforms may be the way forward. In fact, the investment giant Hargreaves Lansdown now boasts a website that attracts more visitors in the United Kingdom than The Times or the Post Office. They have also adopted an iPad version of their newsletter and cater to thousands of Twitter followers each month.

Additionally, it should come as no surprise that garnering investment advice from social media sites has also increased in popularity in recent times. Many of those who follow the do-it-yourself mentality will utilize the knowledge base of the larger, interactive populace to help shape their financial decisions. Although this methodology is still in its infancy, some feel that the purchase of equities and deciding upon the correct investment fund may be the next logical step forward in the social media arena.

It is obvious that financial companies and fund managers need to quickly adapt to a generation increasingly focused on mobile devices, business apps and real-time flexibility. No longer does this approach represent but a small portion of investors; rather this will be considered the norm in the relatively near future.

So, while the landscape of financial advice may be changing dramatically, the ability to acquire sound and secure advice is more important than ever before. While companies continue to modify their practices to accommodate this growing trend, individuals need to avoid the pitfalls often times associated with such a malleable environment.
Tim Aldiss writes on behalf of Broadgate Mainland, the financial services PR experts.

written by Joe \\ tags: