The Fiscal Cliff and Long Term Investments
If it bleeds it leads! That supposedly is an old adage of the news reporting profession. I don’t know if hard-nosed newspaper editors ever did actually say that to fledgling reporters any place other than in a film noir movie script but it does symbolize a true human tendency. We pay attention to negatives.
Why we do it, I don’t know. Disasters and crime, personal scandals of celebrities, politicians and the powerful are hot topics. Weather reporters breathlessly (and endlessly during my favorite TV programs) train their radar on every wind that shows the slightest circular motion during every thunderstorm that blows through regardless of how mild. And we watch.
It’s the same with financial news. You still occasionally see an investment person on television today bragging about how they predicated the stock market crash of 1987! Cable TV hosts, authors of magazine articles and investment newsletter writers thrive on highlighting negatives because it gets your attention and helps them sell the commercials, ads and newsletter subscriptions from which they make their living.
Today we hear about the fiscal cliff approaching with the New Year, the sovereign debt crises in Europe, the declining U.S. dollar, geo-political upheavals abounding, the greater regulatory burden being put on business, and the ups and downs of the stock markets which appear to be of greater magnitude than before. This gloomy haze of negative news and focus on the short term makes it easy to lose sight of the long range reasons to be invested in the stock market.
Most of the financial news media is geared towards short term trading otherwise, why would you need to watch every day? If you own a local dry cleaning business or florist shop you don’t pay much attention to how much you could sell your business for on any given day. Your focus is on taking care of your customers so you can increase sales and profits and continue to pay yourself an income that rises over the years. If you do that, the market price of the business will also increase over time.
For most people, investing in stocks should be the same. Stocks represent businesses that you own a piece of. Selection of good businesses that take care of their customers and have rising sales, profits, and dividends (income to the owners) should be the primary concerns. Day-to-day or quarter-to-quarter fluctuations are generally insignificant in the long run. This doesn’t mean you don’t keep an eye on value or change investments from time to time just try to focus more on your long term objectives.
There are many, many companies in the U.S. and elsewhere that have survived depressions, recessions, world wars, socialist governments, and other adversities while paying a cash dividend every year for 50, 60, or 100 years or more. They followed the short term ups and downs of the market but generally are worth much more today.
A business-owner approach to investing with a long term focus may make you lose interest in most of the financial news. Maybe that’s a good way to go ahead…live a better life.
This post is written by David Riggs, Vice President and Trust Investment Officer of MutualWealth Management Group.
A Season of Thanksgiving
Someone I know well told me that I was a rather odd duck, both very philosophical yet entertained by some of the most mundane and simple of things (read sophomoric humor!). It is with that premise that I ruminate on the whole season of Thanksgiving. While some of the auspices of how it started may be left to the historian to argue, it does seem to me that we now have a holiday whose sole purpose is to cause us to reflect for a moment on those things for which we are truly thankful.
I have also noticed many Facebook friends are taking this period of time to express their thankfulness for various things each day apparently culminating in the holiday itself. While I am certainly glad for this, what strikes me is the fact that we have to create a holiday to remind us to be thankful. And so it is that I commit to a new resolution long before the New Year (a whole month!) to pause whenever I can and be in a state of thankfulness as often as possible.
So with that beginning, let me launch into the many things for which I am thankful.
- Family – I have a wonderful wife who I adore and continue to find to be the joy of my life, two daughters who are succeeding in their own careers, two dogs who show boundless joy when I get home, and of course, a brother, nieces, parents, in-laws, and others who make my life so much better.
- MutualBank – Wow, where to start. A great group of people, a bank that still values its ability to focus on the community, and an ethos that is second to none.
- MutualBank Clients – It is because of our phenomenal clients that MutualBank gets to succeed every day. Our clients are some of the most loyal customers that I have ever encountered and they do us proud every time they tell a friend what a great bank we are. I am truly thankful for all of our clientele.
- Friends – one of my insights into how good life is runs proportional to the deep friendships that my wife and I have developed – there is a direct correlation to the two.
- United Way – MutualBank is a heartfelt supporter of United Way as are many of my colleagues. Why? Because the United Way does great work in helping others that need it most and bringing together community partners to make our hometowns better for all. By the way, there are many other great community partners that MutualBank and its many team members support – part of our ethos of being true to our community bank philosophy.
- Health – yes, I’m getting older and the joints are not quite as supple, the muscles take a little longer to quit aching, and my brain doesn’t seem to remember as much (maybe because I have many decades of stuff in it now – I hope that’s it!). In spite of that, I’m still thankful that I can move easily and can still have deep and meaningful dialogues with friends and family. So I try not to complain about the aging process and just be thankful that I am where I am.
That’s my list; I hope that as we conclude the year that you take a moment to write down yours. When we approach things with an optimistic and thankful attitude, we find that the world is indeed slightly more positive and certainly more appreciative. I wish you a wonderful Thanksgiving and way in advance, a very Happy New Year!
Live a (Financially) Healthier Life
Healthy, wealthy, and wise….And the most important of these is, (you fill in the blank).
For me, it’s health. Those that have read my prior blog posts know I’m in that nefarious “over age 50” category. Physically, it’s true. Mentally, possibly but it’s debatable, especially If you know me! I believe being healthy deserves a closer look – it is closely tied to our financial freedom in many ways, and it deserves a post on our bank blog!
Our bank just completed a two-year health & wellness Get Fit Program. Health-conscious team captains were asked to lead employee teams that included family members. We kept track of healthy things that got our heart rate up from walking and running to playing volleyball just to name a few. Getting an annual physical (yes, men, this means you, too!), keeping a nutrition log, even coaching a child’s sport team earned us points. Our employees focused on doing healthy things hoping some of those things they did would become habits. Prizes were awarded a few weeks ago and our winning team will get some extra paid time off, cool logo wear, and the ‘bragging rights’ for this year’s event culmination.
Not only did we create new, healthier habits, we put up some pretty fantastic results too. At week 26 this year, we had 8 participants who had lost 10% of their total body weight and 4 more that lost 20% of their body weight. One employee stopped smoking, and 10 employees reduced one prescription (under physician care) previously needed due to health issues. Those are winning statistics, for me, and much more important than who won.
We will all have to seek ways to continue our healthy habits. I know the bank will support endeavors to keep this mindset at the forefront. We are generally a sedentary workforce, so any efforts can only bring positive results.
From the financial side of things, how can being healthier help? Let’s see, that former smoker is saving money they formerly spent on cigarettes, right? If they smoked 1 pack a week, that translates to $260/year in savings. If they smoked 1 pack a day, that equals $1300. It does start to add up. Similarly, the folks that were able to reduce one prescription medication as a result of being healthier gained back some financial rewards, too. I cannot analyze the numbers on that, but the facts prove the healthier lifestyle puts money back into the pockets of our employees.
As one of 80+ million Americans in the age 45-64 category (U.S. Census, 2010), health has become more important to me. Hindsight is indeed 20-20, and I only wish I had paid more attention to my health when I was younger. Now, I have to reduce weight, increase & maintain regular healthy activity, and pay much more attention to my eating habits. Had I done this as a 30-40 year old, I might be sitting differently. There are more people in my age group, 31% more according to the U.S. Census, 2010, than in 2000 and we account for more than a quarter of the US population. When our large demographic gets ill, or when we fail to take good care of ourselves, that can be detrimental in cost – of health care, to name just one.
Getting back to “just me”… I’m thinking more now about retirement and wanting to have fun when I do retire. I’m putting money into my 401(k), trying to pay down debt, preparing for ‘the teenager’s’ college expenses by contributing to a 529 plan and keeping some amount of ‘nest egg’ cash available to me for emergencies.
I look forward to both taking it easy in my “golden years” and enjoying travel time, family time, volunteer time and of course one of my favorites - future fabulous (old) girls’ trips. I won’t be able to have much of that fun if I’m overweight, tired, out of shape, and fighting more possibilities of disease that run in my family – diabetes, heart issues, cancer. Keeping myself healthier – er, getting myself healthier now can pay off for me when I get to retirement. Excuse me, I need to get up and get moving before it’s too late!
Email Phishing - Protecting Your Home and Small Business Computers
Whether you own a small business or use your home computer for financial activities, you need to be aware of Email Phishing which can ultimately lead to identity theft and corruption of your small business and home computers.
What is Email Phishing?
Phishing emails are crafted to appear as if they have been sent from a legitimate organization or known individual. These emails often attempt to entice users to click on a link that will take the user to a fraudulent website that appears legitimate. – United States Computer Emergency Readiness Team (US-CERT)
Common forms of Email Phishing
Phishing emails are becoming very personalized posing as your cable company, utilities, credit cards, mobile phone carrier, banks, and many more entities that you do business with on a regular basis. The most common threat of Email Phishing right now is malware. If you click on a link inside of an email that was intended for phishing; your computer can become infected with malware. The malware will attempt to steal your personal information, usernames and passwords to systems such as online banking.
Trigger events that can lead to Email Phishing
Here are some trigger events that fraudsters may try to leverage with Phishing Emails.
- Natural disasters (Hurricane Sandy, Southern Indiana tornados)
- Political elections
- Economic conditions
- Tax season
Here are some steps to take in order to protect you against Phishing.
- Make sure that email spam/junk filters are turned on and configured properly. Consult with your email provider or IT specialist for assistance.
- Do not click on links or open attachments in suspicious looking emails. Delete them immediately and tag them as spam/junk within your email system.
- Log into your known sites from your web browser to verify if an email is legitimate as the links in emails can be easily spoofed to go somewhere other than where it looks like it will go.
- Be leery of unsolicited emails asking for personal information or presenting links to click on in order to update account information, track orders, overdue bills, cancelled ACH/Wire transactions, etc.
- If something sounds too good to be true, then it probably is.
- Do not email sensitive information in email unless it is encrypted. Banks and other businesses should provide secure email systems to communicate regarding account information.
- Do not store usernames/passwords, account information, SSN numbers, or other personal information in your email systems as if you do become infected with malware it will attempt to scan your email for this information.
- Make sure that you have anti-malware/virus programs installed on small business and home computers and they are always updated and perform frequent scans.
- Make sure that you keep other programs such as Java, Adobe programs, Internet browsers, and other online programs updated with the most current patches.
More information about Email Phishing and Cybersecurity
Here are some good web sites to obtain more information about email phishing.
Information about anti-malware programs
MutualBank does not endorse the products listed below and are provided as examples of free anti-virus/malware detection and removal tools.
Remember, you can call us anytime. Let us know if you have questions or concerns for your bank accounts. Call 800-382-8031or email email@example.com.
Do You Dread Going to Work?
I thought about this after I listened to a very inspiring keynote speaker who gave a glimpse into her organization's culture. Culture, in my opinion, is a really fun word that somehow describes (without a formal written definition) the foundation of a company. It shapes how employees are treated, how employees work, how employees treat each other and how employees treat customers. Much like a family, each company culture is different; each has different expectations, rules and ideals. I realized during my nearly 13 years at MutualBank, I have been part of a caring, family-type culture, that wants its employees to be their very best.
Now, let's get back to my original question, do you dread going to work? I can honestly say I haven't and I don't. I admit, on occasion, I might have dreaded some aspect of the day, for example getting up in the middle of winter when it's dark, cold and I have to brave the icy roads. This, however, is no reflection on MutualBank. It's more due to my love for my warm bed and sleeping in.
What really struck me when listening to the keynote speaker is how managers should support, encourage and uplift the important things in their employees' lives - both personally and professionally. Thankfully, I work for a manager and company that does support and uplift employees in their professional and personal quests. Specifically for me, MutualBank provides me paid time off to pursue one of my all-time passions - Drag Racing. Yes, believe it or not, I work at a bank during the week and I am a high-speed drag racer on the weekend. Technically, I wear suits, on average, six days a week - one or two of those days just so happen to be a racing suit. But, I digress.
This type of culture and this type of flexibility from my manager and from MutualBank further invests me into my job and the company. I'm not the only employee who benefits from this culture. Several employees take time to volunteer, belong to philanthropic organizations, serve on boards or participate in a variety of other activities. It goes back to that culture I talked about earlier. MutualBank employees are encouraged and coached to pursue personal goals just as much as they are coached to achieve their professional goals.
Do you have a desire to achieve more, personally and professionally? If so, I would encourage you to check out a career opportunity at MutualBank Visit our career page and see if there is an opportunity waiting for you.
Equal Opportunity Employer
Using Social Media? Protect Yourself Against Fraud.
Social media is great! We love to post our pictures, chat with friends and connect with companies and people with which we may have lost touch. However, we need to make sure that what we put on social media doesn't affect our security.
I'm sure you're asking me, "how could this happen?" Let me give you a hypothetical example.
Mary Jones has accounts at her local bank. She loves her online banking and bill pay for its convenience. Mary is a busy mother who doesn't have time to write checks and send in payments. Her local bank, who is very security minded, makes Mary set up security questions on her account so they can verify if Mary is the one accessing her account. Mary is very busy so she just does the normal security questions, mother's maiden name, etc. She doesn't want to, nor has time to think about it too much. Mary also loves social media and puts pictures of her family and pets on social media.
One day Mary goes online to check her balance and realizes money is missing. What happened? Did she leave her debit card somewhere? No, it's still in her purse! What happened?
What happened is that Mary chose easy passwords and security questions/answers. A cyber thief figured out Mary's password was her dog's name. And when Mary changed her passwords as her bank advised, the thief was able to get the new one because he knew the security questions. How did he get them, you ask? Her social media account! Remember, she posted pictures of her dog and of her mother, tagging her in the photos, which shows her mother's maiden name!
So what do you do? Get rid of your computer? Live like a hermit? No, I'm not suggesting anything that drastic. Here are a few tips:
- When choosing or creating security questions, make them something people don't know and won't know about you. (Consider providing a different answer to the security question than what the correct answer would be.)
- Make your passwords difficult to crack. Use letters and characters. Check and change them often.
- Be careful what you post on social media. Talking about your family is certainly OK, but if something you are posting is an answer to your security question, think again before you post.
Everyone loves social media. It truly is a great tool for connecting with others. But, with just a little work, you can make it safer and help protect against fraud.
Small Business - Protect Against Account Takeover
Do you own a small business? Did you know that small business is one of the top targets for online fraud? According to Symantec's June 2012 Symantec Intelligence Report, 36 percent of all targeted attacks during the first half of 2012 were directed at businesses with 250 or fewer employees and they continue to increase at a minimum rate of 24 percent with an average of 151 targeted attacks being blocked each day during May and June.
As a business owner you must take steps to protect yourself against online fraud such as corporate account takeover. The American Bankers Association defines corporate account takeover:
What is Corporate Account Takeover?
Corporate account takeover is a type of fraud where thieves gain access to a business' finances to make unauthorized transactions, including transferring funds from the company, creating and adding new fake employees to payroll, and stealing sensitive customer information that may not be recoverable.
The American Bankers Association has created a resource for small business owners to access information about account takeover and steps to take to protect yourself and your business. Please go to the American Bankers Association website for more information regarding Corporate Account Takeover.
Remember, you can call us anytime. Let us know if you have questions or concerns for your bank accounts. Call 800-382-8031 or email us at firstname.lastname@example.org.
Who's on First? Account Titles and Why It's Important.
What names are on your checking account? This sounds like a pretty simple question, but you would be surprised how many people are unclear about it. If you are married, perhaps you do not have both you and your spouse on the same account. There are many reasons why this may be the case. Maybe you and your spouse have separate accounts. Perhaps when you opened the account, the other person wasn't present or maybe you have had major life changes. There can be many reasons why.
Think back to when you opened your account one, five, 15 or more years ago. Is everything the same as it was back then? Have you revisited your account set up to ensure your account reflects the stage of life you're in now? Let's discuss why it might be important to do a quick review of your accounts. It's something that may take you a few minutes, but can be very worthwhile.
- Access to your money- This is the most obvious reason, but very important. Anyone named as an "owner" on an account has access to the money within it. They can write checks (on checking accounts), withdraw money, or even close the account. It is important to ensure whoever is named an "owner" on your account is someone you trust and is supposed to have access to your money.
- Estate Planning- If you were to pass, do you have beneficiaries named on your account? Having a beneficiary named can help with the distribution of your funds should something happen to you. Also, you may consider having an additional owner that may be able to help with bills if you are unable to do so.
- FDIC Insurance- FDIC Insurance coverage can vary depending on how your account is titled. Please consult your MutualBanker to see what would benefit you the most.
- Peace of mind- Sometimes it helps us relax if we know that in the event of something happening, expected or unexpected, our accounts are in order. It can provide peace of mind knowing there will not be a burden left on those responsible for handling your estate.
Account titling can be something that we would be glad to help you with at your local MutualBank Financial Center. You should have an account review on at least a yearly basis to make sure your present life situation is reflected in your bank accounts. This is very important as banking becomes more dependent on electronic banking, such as mobile banking, online banking, etc. Also, as an estate planning tool, you need to be sure that your assets pass to who you want them to go to in the event of an unexpected tragedy. This is important whether you are 18 or 80!
Let us at MutualBank help you live a better life!
The Importance of a Well-Diversified Investment Portfolio
It’s only early September but the somewhat below normal temperatures makes it feel like autumn even though the official start is still a few weeks away. That cool crispness of the early morning brings back memories of heading off to school for another year. As I sit here thinking about the young men and women returning to a Ball State that is much different since my last class there I recall other changes.
In the mid-1980s well before most of today’s college students were born, I was a young stock broker working in a world most of them would find horrifying- no iPods, no cell phones, no texting(!), and almost no personal computers. We did have a computer or two around the office mostly for the accounting department. They weren’t an essential tool for me as they are today.
Somewhere back in that time a certain trend in the investment markets began. As the 80’s boom got rolling and the economy grew, interest rates started falling. While there have been ups and downs along the way the overall trend has been down for decades.
I laugh a little now recalling a conversation with the head of the firm I worked for back then and agreeing with him that an 8% long-term municipal bond rate was what seemed to be acceptable to most of our clients who wanted tax-free income. Anyone looking for even half that rate of interest today is going to be very disappointed.
Declining interest rates are a problem for people who depend on their savings to generate income for them as many of our clients do. The situation has never been worse than the last few years as our government has tried to revive the economy with policies that push rates down even more. The benchmark 10-year Treasury note recently hit an all-time low under 1.5% and that’s reflected in all interest bearing investments.
People who invested in 5-year bank certificates of deposit as recently as 2007 received 5% interest but now face a 70% reduction in income as those CDs mature. The rates being offered do not even make up for the reduction in the buying power of the dollar caused by inflation.
Another trend that represents a possible solution to this problem is the tendency of stock dividends to rise over time. The dividends paid by the stocks in the S&P 500 stock market index have more than tripled since 1988 and have increased or stayed the same in all but 19 out of the 98 quarters since then.
But isn’t there more risk to principal in stocks? Yes there is or at least there has been greater volatility. The S&P 500 has grown in value more than fivefold in the last 25 years but there have been and will be periods of decline. The last significant one was in 2008 and the index has recovered about 80% of that decline so far. Dividend income also fell in 2008 but surpassed its old high two years ago.
Of course not every stock in the S&P 500 is a dividend payer and not every one is an attractive investment. MutualWealth Management Group can select stocks appropriate for your needs and design a well-diversified, managed portfolio that may minimize volatility risk and maximize your income and growth potential. A total portfolio may also include some bonds which may further dampen volatility.
Costumes for a Cause
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As the summer draws closer to an end, we start gearing up for all things Fall. This includes working with companies who offer Health Savings Accounts (HSAs) to their employees, reviewing retirement plans and investments and helping individuals prepare for the upcoming holiday season. One staple event for MutualBank this time of year is the beginning of our United Way campaign.
MutualBank is a pacesetter company, meaning we run our company campaign prior to the start of the formal United Way campaign. This year, we wanted to do something a little different with our campaign kickoff meeting.
In order to make it fun and raise extra money for United Way, we thought of a contest. We selected several fun costumes and thought about who our employees might be willing to pay money to see wearing them. A couple of executives came to mind and we put the plan into action. Employees voted on the costume by paying $1.00 per vote. At the meeting, we provided a photo opportunity where employees could pay $1.00 to have their photo taken with our executives.
Fortunately, Pat Botts, President, and Lynda Stoner, Vice President and Regional Manager, were great sports! They are willing to do whatever it takes to raise money for United Way. Clearly, you can see that based on their costume. The winning costumes were "Thing 1" and "Thing 2" from The Cat in the Hat.
And who says bankers can't be fun?
Above: (L to R) Lynda Stoner, Pat Botts
Below: (L to R) Lynda Stoner, Sue Godfrey-United Way,
Michael Brown-United Way, Pat Botts