Financial News

How to Stay Calm During a Market Fluctuation

Emily Guy Birken — Mon, 02 Nov 2020 17:32:44 +0000

The last few weeks, I've been covering my eyes before I look at my investments, and only peeking through my fingers — as if I'm facing Freddy Kruger rather than a series of numbers. It doesn't help that the financial headlines are full of frightening potential futures: a possible recession, trade wars, and potential market corrections.

It's enough to make me want to take all of my money out of my investments and put it somewhere safe, like my mattress.

But no matter how overwhelming a market fluctuation may be, I also know that pulling my money out of the market is the worst thing I could do when my portfolio is trending downward. That's because the only way to guarantee that momentary losses become permanent is to sell.

Of course, knowing that you should stay the course is a lot easier said than done. If you're tempted to cut your losses when you hear gloom-and-doom financial predictions, it's especially important to learn how to keep your cool. Here are some ways you can stay calm when the market is scary.

Remember that it's okay to hide

Hiding your head in the sand gets a lot of flak, but there are times when it really is the best course of action. That's because of a cognitive bias that prompts us to take action in response to fear. We feel as though doing anything, even if it is counterproductive, is preferable to sitting around doing nothing. But listening to the action bias is the reason why people sell when the market is at its lowest and buy when it's at its highest. They're afraid of doing nothing.

Since it's nearly impossible to overcome the voice in our heads shouting at us to "Do something!" when the market is falling, the easier method of overcoming the action bias is to simply ignore your portfolio.

Of course, that doesn't mean you should never check on your holdings. However, obsessively consuming financial news and checking your portfolio on a daily basis will lead you to making fear-based (or greed-based) decisions, rather than following your rational investing strategy.

Instead, plan to check how your investments are doing on a regular schedule — either every month or every quarter. This will give you the information you need to keep your asset allocation balanced and make necessary changes, without falling victim to the action bias. (See also: 5 Ways to Invest Like a Pro — No Financial Adviser Required)

Take comfort in history

Although the phrase "past performance is no guarantee of future results" is all but tattooed on the foreheads of every stock market analyst and financial planner, there is good reason to look at the past performance of the market as a whole. If you study the long-term trends and overall historical returns, you'll see that markets inevitably trend upwards.

Knowing that the market will recover does not make the short-term losses and volatility any more fun to live through, but it is easier to put any momentary losses you're experiencing in context. Savvy investors who didn't panic through the market corrections of 2000 and 2008 saw their portfolios recover over time. As stressful as any decline may be, trusting in a solid investment plan and the long-term historical trends of the market can help you stay the course and feel confident that you and your money will get to the other side. (See also: How to Prepare Your Money for the Coming Economic Slowdown)

Make a volatility plan

One of the reasons why we tend to overreact to volatility is because we forget that it's a natural part of financial markets. Market downturns are normal, and we should expect to live through several of them in a long investing career. However, we often expect that markets will only go up. With that kind of expectation, even a minor dip can feel overwhelming.

A good way to counteract those expectations (and the resulting fear when they're not met) is to create a plan for what you'll do during a downturn.

Your volatility plan could be as simple as committing to your head-in-the-sand strategy for downturns. Knowing ahead of time that you'll reduce your portfolio check-ins when things are looking grim can help you stick to that plan.

Your plan can also be proactive, rather than just reactive. Since you know that market downturns are normal and natural, decide ahead of time how you'll incorporate these fluctuations into your investing strategy. You might decide to purchase more investments during a downturn, rather than see it as something to fear. (See also: 7 Easy Ways to Build an Emergency Fund From $0)

Don't panic

Human beings are not wired to be rational investors, which is why we tend to be so bad at it. Our emotions can get the better of our rational strategies, especially when we're feeling afraid. But selling your investments because of market volatility and scary headlines is using a permanent solution for a temporary problem.

Think through how to respond to frightening market changes before they happen. Then you know that you already have a plan to fall back on, and you're less likely to simply react out of fear.

Like this article? Pin it!

This article is from Emily Guy Birken of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Credit Card Signatures Are Going Away — Should You Be Worried?

Holly Johnson — Mon, 07 May 2018 08:31:19 +0000

Major credit card companies no longer require consumers to sign for credit card transactions, signaling a day when you can say goodbye to signatures forever.

That will eliminate a decadeslong practice. Having consumers sign a credit card receipt was considered the best way to protect against fraudulent purchases for many years. You may even remember the manual credit card machines that made an imprint of the card onto a sheaf of carboned receipts, and asked for a signature on one of the carbon copies. What a novel idea to make a carbon copy of your credit card for all to see!

Obviously, we've come a long way since then. Thanks to advances in technology, the way we have kept card details safe has changed dramatically over time. Many authentication methods have been invented and experimented with, such as the magnetic stripe, the PIN, and the CVV and CVV2 security codes.

Ultimately though, each of these methods could be stolen or counterfeited — that is, until EMV chip technology came along a few years ago. This type of technology is now considered the gold standard since it uses embedded microprocessor chips to store and protect cardholder data. As most card issuers have added EMV chips to cards, encrypted authentication is now nearly impossible to counterfeit.

According to Cyndie Martini, president and CEO of Member Access Pacific, an aggregator of card services for credit unions in the U.S., EMV chip technology has almost eliminated fraud at the point of sale as a result.

That's why the major card networks are eliminating the need for signatures at the point of sale.

Visa, MasterCard, Discover, and American Express all stopped requiring signatures for in-store purchases in April.

Transition will take time

The aim of the move is to speed up checkout lines and help you get out of the store faster.

Faster checkout lines will make merchants happier, too.

Merchants will also benefit because the change may "reduce administrative expense by freeing merchants from keeping all signature receipts and other records," Martini says. Imagine the time and expense involved in keeping track of all those receipts and storing them in case they're needed in the future. All of that will go away with this change, freeing stores to spend their time and resources elsewhere.

Walmart and Target have already moved to eliminate signatures for most transactions. Many people have long deemed signatures useless anyway. Most cashiers don't check them and if they're scrawled on an electronic signature pad, they're often illegible.

They are, nevertheless, valuable to merchants if a consumer tries to dispute a charge they actually made. Martini says retailers will still be responsible for ensuring the card belongs to the consumer who presents it for a purchase. That's why some retailers may still require you to sign for purchases, especially large ones.

Another option is that retailers could ask to see photo identification. Martini also notes that cardholders worried about the lack of signature can write "see I.D." on the back of their cards to increase the odds a cashier will ask.

In reality, local shops probably won't stop asking for your signature right away. They've got to update their systems and technology, and train salespeople. For all of those reasons, count on scribbling down your signature for a while longer, but also expect that one day, you'll sign your autograph for a purchase for the last time.

How to keep your credit cards and identity safe

If you are worried about the impact of not providing your signature, you shouldn't be. Martini says the best ways to keep your credit cards and your identity safe are the same strategies you've used before, and that her firm suggests the same tips to stay safe as the Federal Trade Commission (FTC):

Don't share your account number on the phone unless you've made the call to them and you're dealing with a reputable company. If you've never done business with a company before or they called you, make sure to research the business thoroughly before trusting them with your credit card number or personal information.
Don't carry all your credit cards in your wallet. The FTC notes your losses can be minimized by keeping some of your cards somewhere else if someone steals your wallet or purse.
Don't let a cashier or restaurant server take your credit card with them. Make sure to keep an eye on your credit card whenever you make a purchase or pay your bill. Don't let someone leave with your card.
Save receipts. Make sure to regularly go over your credit card bill to ensure every purchase is correct and accounted for.
Report fraud immediately. If you see a purchase on your credit card bill that you didn't make, call your card issuer right away.
Notify your card issuer if you move.
Notify your card issuer if you plan to travel so they can note that on your account.
Don't write your card numbers down where people may see them. Don't leave other personal details that could be used to steal your identity out, either.
Call your card issuer if you realize that your card has been lost or stolen. They can cancel it and send you a new credit card with a new number right away.

Finally, Martini says you should notify your card issuer if your credit card doesn't have the new EMV chip technology. While credit card issuers are either on board with the changes or getting there already, there's a chance they haven't gotten around to sending out your new card yet. If you call and ask, they will likely send you a newer version of your existing credit card with the updated safety and encryption features.

Like this article? Pin it!

This article is from Holly Johnson of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Tariffs: What They Are and How They Impact Your Finances

Tim Lemke — Fri, 16 Mar 2018 09:30:20 +0000

President Trump recently announced new tariffs on imports of steel and aluminum, in a move that got mixed reviews from business and political leaders. The new tariffs would increase levies on aluminum by 10 percent and steel by 25 percent.

There is much debate about the sensibility of these tariffs, but rather than wade into that morass, let's examine what tariffs are and how they impact the economy and your investments.

What is a tariff?

A tariff is essentially a tax that the government places on imported items. For example, the government may choose to place a tax on foreign cars or imported cotton. There are tariffs placed on an eye-popping number of products, from building materials and vegetables, to chemicals and even live animals. Tariffs can be imposed on a per-item basis, by weight or size, or by percentage of value.

Tariffs can even vary depending on the country. For example, the U.S. may impose a tariff on shirts made in China, but not in Vietnam. The United States imposes tariffs on imports from many countries, but also has free trade agreements with many nations that allow both parties to import goods without tariffs.

Why do tariffs exist?

The first tariffs in the United States came shortly after the nation ratified the Constitution, and were motivated largely by the government's need for revenue. Tariffs played a big role in funding the government in the days before income taxes.

Tariffs today still produce billions in revenue for the government, but they are also designed to help protect U.S.-based industries and companies. In essence, tariffs imposed on imported goods make those goods more expensive, thus giving a competitive advantage to American firms. But opponents of tariffs say they can hurt international trade and ultimately lead to lower economic growth worldwide.

How does a tariff impact prices?

Tariffs impact the cost of many of the products we buy. Just look at the label on the shirt you're wearing or your child's toy. Even if a product is manufactured or assembled in the United States, it may be made with materials that were produced overseas. Given that there are levies placed on thousands of imported goods, it's almost impossible to hold a product that isn't made more expensive by tariffs.

The specific impact on price varies, however. Some tariffs are relatively small and are barely noticed by consumers. Even significant tariffs may not impact the cost of an individual item by very much. (One analysis said the cost of a can of Campbell's soup may go up less than one cent as a result of Trump's higher tariff on steel.) At various times in history, however, tariffs have led to problematic increases in prices. For example, tariffs on agricultural imports during the Great Depression, which were designed to support American farmers, led to higher food prices at a time when people were struggling financially.

What industries are impacted by tariffs?

Nearly every business is impacted by tariffs to some extent, either directly or indirectly. A tariff on steel, for example, will impact the steel industry overseas but in turn could make costs higher for American construction companies that use steel. Similarly, a tariff on aluminum could mean higher costs for the beer industry because its beverages are sold in aluminum cans.

The U.S. has placed relatively high tariffs on clothing manufactured overseas, while electronics have tariffs that are much lower.

How does this impact my investments?

While tariffs are designed to protect and bolster U.S. industries, the actual impact on a company's bottom line — and investors — is not easy to predict. Consider the auto industry. There have long been tariffs on imported cars and automotive parts, but foreign car companies including Toyota and Honda have still recorded high sales while the U.S. auto industry has gone through struggles.

After President Trump's announcement regarding steel and aluminum tariffs, the S&P 500 dropped more than 1.3 percent. But analysts have downplayed any fear of a broader economic downturn, suggesting that companies and the national economy are too large for it to be impacted by any one tariff. Moreover, since many investors have diverse portfolios, the impacts may even out, as some companies may benefit from tariffs while others might see negative impacts.

"It usually takes more than cost pressures in one or two sectors to cause a recession," Fisher Investments wrote regarding the recent tariff order. "We don't mean to dismiss the personal impact any of this can have on workers and small business owners, but markets are callous, and at times like this, we think investors are best off thinking like markets."

Like this article? Pin it!

This article is from Tim Lemke of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How the End of Net Neutrality Could Impact Your Wallet

Toni Husbands — Thu, 04 Jan 2018 10:00:06 +0000

The net neutrality debate has been dominating headlines for some time now. A lot of people have trouble understanding all the fuss from either side of the political spectrum.

First of all, net neutrality is the idea that internet service providers have to treat all network traffic the same — a bit is a bit, no matter where it started and where it ends up. This means that providers can't offer various levels of service for various kinds of traffic. Whether it's from Netflix or your neighborhood bird-watching blog, ISPs have to treat the traffic equally.

Opponents of net neutrality tend to be telecommunications giants who saw the additional regulations imposed by the Federal Communications Commission (FCC) and the implementation of the 2015 Open Internet Order as problematic. Proponents of the net neutrality rules including Google, Facebook, and Netflix largely supported those rules.

But how did we even get to this debate?

How net neutrality came to be

In 2007, Comcast was told to stop blocking traffic from a file sharing service, BitTorrent. The FCC stepped in and accused Comcast of unfair business practices. Comcast sued, claiming the FCC didn't have the proper authority. Fast forward three years, and the courts agreed with Comcast.

Back then, Comcast was accused of throttling traffic between person-to-person file-sharing services on their networks. Comcast explained that they were clamping down on the spread of pirated material. Some online communities were outraged, but the government didn't have the authority to make them stop. Comcast was free to operate as they saw fit.

In another example, in 2012, AT&T stopped iPhone users from making FaceTime calls unless they purchased a new shared data plan package. Customers with older data plans were out of luck. AT&T claimed the video calling app would cause congestion on its networks. Opponents accused AT&T of disrupting a service that would compete with their primary business — making phone calls.

In 2015, new FCC commissioners and the Obama administration found a way to wrangle the authority needed by the FCC to weigh in when they felt broadband companies weren't using their power fairly. Thus net neutrality was born.

As you know, 2016 ushered in a new Trump administration. With that, new FCC commissioners recently voted to put an end to the Order of Open Internet. Net neutrality has been relegated to the history books.

Central to this debate is whether an internet service provider, or broadband company, should be treated as a public utility. If you agree, you believe it should be regulated by the FCC and forced to comply with rules aimed to ensure fairness. If you don't, you're in favor of letting the markets (i.e. consumers) decide and vote with their dollars, and were probably happy to see net neutrality go.

I tend to think most of us are in the camp that wonders how these rules, regardless of which side of the argument you're on, will impact our lives personally.

How the end of net neutrality may affect your wallet

As with most things in the news, I often wonder how this will affect my life.

The impact these changes will have may not be known for some time. If the FCC's long, storied history is any indication, these rulings will be challenged in court and the final outcome won't be settled for years. Public Knowledge and the National Hispanic Media Coalition, along with other public interest groups, have already announced plans to challenge the net neutrality changes in court.

For now, we must rely on the experts to understand how the rule changes may impact our wallets. Some are predicting that broadband companies could limit access to certain content providers unless you pay for higher tier services. This means that you have a choice; do without high-speed access to your Game of Thrones weekly fix, or upgrade to a higher-priced internet package.

We could also see higher costs passed on to us as content providers like Netflix try to ensure their customers retain the same level of access and enjoyment.

If experts in favor of the changes are right, fewer regulations will encourage competition and that could bring the prices down while encouraging innovation.

At this point, we're best served by keeping an eye on our expenses. If prices begin to rise to a point where your wallet is screaming uncle, shop around for alternative sources to supply your connection to the internet. And keep paying attention to how these changes may impact your wallet long after the debate has faded from the headlines.

One thing is for sure: This issue is far from settled.

Like this article? Pin it!

This article is from Toni Husbands of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

The U.S. Savings Rate Has Tanked — Here's Why That Matters

Dan Rafter — Tue, 21 Nov 2017 09:30:10 +0000

Are you stashing away fewer dollars in your retirement or savings accounts? You're not alone.

The U.S. Bureau of Economic Analysis reported that Americans are saving less money today than they have at anytime since 2007. The bureau reported that the U.S. savings rate fell to 3.1 percent in September 2017. That's the lowest it's been since this rate fell to 3 percent in December of 2007.

If you recall, 2007 wasn't a great economic time for the United States. It was the beginning stages of the housing crash and the Great Recession. This prompts the question: Is the low savings rate a warning sign that the national economy might be in line for a slowdown? And why are people saving less?

A lower savings rate could mean a few things

The lower savings rate might mean that consumers are more confident in the economy. Instead of putting their dollars in traditional savings vehicles, people are investing more in the stock market and other assets. That happens when the economy is strong and investors think they can realize stronger returns.

At the same time, consumers were spending more. The same report from the Bureau of Economic Analysis found that consumer spending rose 1 percent in September. That jump is the biggest since 2009.

Again, this could be an indicator that consumers are more confident in the national economy. But, it could also be a worrisome trend. The drop in the savings rate at the same time that spending is up might be a sign that Americans aren't necessarily earning more, but are spending more at the expense of their savings. This trend is a dangerous one, as it can put more people in financial trouble down the line.

Keeping your savings up to speed

Of course, you can't worry about what people across the country are doing. You can, though, take a look at your own finances to determine if you are saving enough money. Exactly how much should you be saving? That's a complicated question, but a few rules of thumb can guide you in the right direction.

Emergency fund

You should have an emergency fund in a low-risk savings account that you can use to pay for unexpected repairs or financial emergencies. Financial experts recommend that you have at least six to 12 months' worth of daily living expenses saved in an emergency fund. That figure might sound intimidating, but if you start saving just a bit now, your emergency fund can grow quickly. If you save $100 a month, for instance, you'll have $1,200 saved after a year. Boost that figure to $300 a month, and you'll have a financial cushion with $3,600 in it by the end of a year. (See also: 7 Easy Ways to Build an Emergency Fund From $0)

Retirement savings

How much you need for retirement varies depending on a host of factors; everything from what kind of retirement you want — one that involves a lot of traveling will cost more than one in which you spend most of your time golfing or fishing — and how much income you'll be earning each month.

As a general rule, financial experts recommend that you save 10 to 15 percent of your income each year for retirement starting in your 20s. If you hit this goal every year, you should be able to build a solid nest egg for your post-work years.

The challenge, though, is that this is such a general approach to retirement savings. It doesn't take into account the vagaries of your own financial situation. You might not have to save as much if you have royalty income, you plan to work part-time after leaving your full-time job, or you have inheritance money to rely on.

The best advice is to max out contributions to an IRA and/or 401(k) account. Then meet with a certified financial planner who can study your current financial situation to determine if you are on pace to meet your retirement goals. (See also: 10 Signs You Aren't Saving Enough for Retirement)

And about that national savings rate? Just because some Americans are spending more and saving less doesn't mean you have to follow the trend. Stick to your savings goals if you want to enjoy a lower-stress financial life.

Like this article? Pin it!

This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How to Protect Your Credit After the Equifax Breach

Dr Penny Pincher — Mon, 02 Oct 2017 09:00:06 +0000

Approximately 143 million records were stolen in the recent breach of Equifax, including names, Social Security numbers, birth dates, and addresses. Even before the Equifax incident, identity theft has been on the rise. With this recent theft of millions of records, the risk of credit fraud is sure to grow.

You can take measures to protect yourself from identity theft. These options range from watching out for suspicious activity on your accounts, to paying for credit monitoring services or even freezing access to your credit reports.

Is it worth the trouble and expense to freeze your credit report, or can less intensive steps sufficiently mitigate your risk of identity theft? Here are the options available to you.

Manual account monitoring

You can check your monthly statements from existing bank and credit accounts for unexpected transactions. If you see a transaction you did not make, you have a major red flag.

How much cost and effort?

The cost is zero, but it takes effort to stay on top of all your statements and look for unexpected activity. If you spot theft, you will need to work with your financial institution to undo the fraudulent transactions.

How much protection?

In many cases, you will not be responsible for fraudulent transactions if you report them to the financial institution and work to resolve the issue. (See also: Why Credit Is Safer Than Debit)

Manual credit report monitoring

In addition to monitoring transactions on your existing accounts, you need to keep watch in case thieves open new credit accounts using your stolen personal information. You can request a free copy of your credit reports every 12 months from the major credit bureaus (TransUnion, Equifax, and Experian) and manually check for new accounts that were created by someone else.

How much cost and effort?

Free if you use the free credit reports, limited to one per year per credit bureau. If you want to check your reports more frequently than once per year, you can pay a small fee, typically around $10 per report.

How much protection?

Even if you are diligent in requesting and checking your credit reports, a fraudulent account could go unnoticed for some time due to the delay between when a fraudulent account is created and when you obtain an updated credit report and notice the new account.

How to get your free credit reports

Visit AnnualCreditReport.com to request your free credit reports. You can request reports from all three credit bureaus at once, or you can order from one bureau at a time. Ordering one free report every four months can help you keep an eye on your credit throughout the year without paying any fees.

Credit report monitoring service

You can sign up for credit monitoring services that send alerts when new credit accounts are opened, or when a credit inquiry has been made on your report. (See also: Is Credit Monitoring Ever Worth It?)

How much cost and effort?

Credit monitoring services are offered by the credit reporting agencies and other companies with costs ranging from a few dollars per month up to $25 per month. Free credit monitoring is available from Credit Karma whose free service is supported by loan and credit offers.

Credit monitoring is automatic in the sense that it provides alerts when an inquiry occurs or a new account is opened, but you will need to check the alerts to see if the activity is legitimate. And if there is fraudulent activity, you will need to take steps to counter it.

How much protection?

Credit monitoring provides alerts when new credit accounts are opened, but it does not stop thieves from opening fake accounts. The automatic monitoring simply helps you spot fraudulent new accounts quickly and take action to reverse charges and close the accounts.

Identity theft insurance

Identity theft insurance pays for some of the expenses you could incur associated with restoring your identity, including legal fees and fees from financial institutions. Coverage may also include out-of-pocket losses from credit fraud or other misuses of your personal information.

How much cost and effort?

Identity theft insurance typically costs around $25 to $60 per year and may include credit monitoring and other services.

How much protection?

If you become a victim of identity theft and are covered by identity theft insurance, the ball will still be in your court to resolve the issues. The insurance will cover certain types of expenses you may incur and limits your out-of-pocket losses.

Fraud alert

You can place a fraud alert on your credit report, which notifies credit issuers to contact you for confirmation before setting up a new credit account. An initial fraud alert stays on your credit report for 90 days, and you can extend it for another 90 days after that. An extended fraud alert for confirmed cases of identity theft lasts for seven years.

In addition to putting a fraud alert on your credit report for new credit accounts, you can also request a security alert with ChexSystems for new checking and savings accounts.

How much cost and effort?

It is free to place a fraud alert on your credit file. Once you put a fraud alert on your file with any one of the three major credit reporting agencies, it will be shared with the other two.

How much protection?

When a fraud alert is on your credit report, credit issuers are supposed to contact you before opening a new credit account, but compliance may vary.

Credit report freeze

A credit freeze with the credit reporting agencies prevents your credit report from being shared unless you "unfreeze" your credit report. This prevents thieves from opening fraudulent new credit accounts using stolen personal information.

How much cost and effort?

A credit freeze comes with a higher level of hassle and cost than some other fraud prevention measures. You need to freeze your credit report with each of the three credit reporting agencies, which means requesting the freeze three times. Then every time you want to apply for a credit account, or allow access to your credit report for an employment or housing application, you will need to unfreeze your credit report, then refreeze it afterward.

You'll pay fees every time you freeze or unfreeze your account. The fees vary by state, but generally they range from $5 to $15 for each freeze and unfreeze. Note that in light of the security breach, Equifax is offering free credit freezes until November 21, 2017.

Each bureau will give you a personal identification number (PIN) that you'll need to keep track of in order to unfreeze your reports. You can also request a security freeze with ChexSystems to block new checking or savings accounts from being opened at no cost.

How much protection?

A credit freeze is effective at stopping new accounts from being opened, but you'll still need to monitor existing bank and credit accounts for fraudulent activity, since existing accounts are not affected by a credit freeze. If you know you'll be applying for credit (or a job or apartment that might require a credit check) multiple times in the near future — or if a credit freeze just sounds like too much hassle — you may be better off signing up for a credit monitoring service and perhaps placing a fraud alert on your credit report instead of doing a freeze.

If you rarely or never apply for credit, and will not need to provide access to your credit report for employers or landlords, you may be better off freezing your credit report indefinitely. Keep in mind, though, that it is possible that the PIN needed to unfreeze your credit report could be compromised by thieves, who could unfreeze your credit report themselves. For added protection, you could place a fraud alert on your credit report before freezing it.

A "lock" may be another option

Starting January 31, 2018, Equifax will be offering consumers a new, permanent service that gives them the ability to "lock" and "unlock" their credit report at will. This new service is reported to work in a similar fashion to a freeze, and it is yet to be determined what exactly will differentiate the two methods. Equifax claims the service will include more "modern authentication techniques" for unlocking and accessing your credit report. If you elect this route, make sure to carefully read the terms and conditions before signing up.

Like this article? Pin it!

This article is from Dr Penny Pincher of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Why the Dow Will Hit a Million, Eventually

Dr Penny Pincher — Fri, 29 Sep 2017 08:30:10 +0000

At an event earlier this month, Warren Buffett, one of the most successful investors of all time, revealed his prediction that the Dow Jones industrial average (DJIA) will be "over 1 million" in 100 years.

With the DJIA currently sitting at about 22,400, is it even reasonable to think that the stock market could grow that much? Growth from the current value of the Dow to 1 million would represent an increase of about 45 times over. My first impression was that a value of 1 million for the Dow is very high, and Mr. Buffett must be either confused or overly optimistic to put forth such a prediction.

But since this prediction came from someone who clearly has a good understanding of investments and the stock market, I decided to check out the math behind this prediction to see if it makes sense.

An important part of Warren Buffett's prediction is the "in 100 years" part. One hundred years is a long time, and although it may be surprising, Warren Buffett's prediction of the Dow topping 1 million is actually quite reasonable given the historical performance of the market. In fact, the prediction of the Dow reaching 1 million in 100 years may even be conservative.

Here's the math

Let's look at what kind of growth rate would be required for the Dow to reach 1 million in 100 years. As I mentioned, the Dow would need to grow by 45 times its current value. When thinking about investment growth, it is informative to look at the growth in terms of the number of doublings that would be required.

2ⁿ = 45

n ln(2) = ln (45)

n = ln(45) / ln(2)

n = 3.81 / 0.693

n = 5.5

So the market value would need to double 5.5 times from its current value to reach 1 million. Let's look at this in the form of a table to make sure it makes sense:

# of Doublings	Resulting Dow Value
0 doublings	22,400 (current Dow)
1 doubling	44,800
2 doublings	89,600
3 doublings	179,200
4 doublings	358,400
5 doublings	716,800
6 doublings	1,433,600 (Dow over 1 million)

From the table above, you can see that doubling the current Dow five times yields 716,800, and doubling six times yields over 1 million, so the number of doublings for the Dow to reach 1 million must be somewhere in between. Our estimate of 5.5 doublings makes sense.

So the Dow would need to double 5.5 times in 100 years — or in other words, it would need to double every 18.2 years: 100 years / 5.5 doublings = 18.2 years to double.

The next step to checking out Mr. Buffett's prediction is to figure out what rate of growth would be required for the value of the Dow to double every 18.2 years.

For a quick estimate, I turned to the "Rule of 72." The Rule of 72 is a handy approximation to find how many years it will take an investment to double — simply divide 72 by the annual rate of growth. I flipped the Rule of 72 formula around to check the rate of growth required:

72 / growth rate = years to double

72 / growth rate = 18.2 years

Solve for growth rate:

72 = 18.2 x growth rate

growth rate = 72 / 18.2 = 3.96 percent annual growth

So the "Rule of 72" approximation tells us that an annual growth rate of 3.96 percent would be required to double the Dow every 18.2 years, which is the rate of growth needed for the Dow to hit 1 million in 100 years.

If you don't want to settle for an approximation, or if you are just geeky in a cool sort of way, you can do a more exact calculation:

2P = Pe^Yr

2P = Pe^(18.2)r

ln(2) = 18.2r

r = ln(2) / 18.2

r = 0.038 or 3.8 percent

The approximation from the Rule of 72 matches pretty closely with the exact calculation, so it seems we have nailed down the rate of growth that is required for the Dow to reach 1 million.

It turns out that that an annualized growth rate of 3.8 percent is well within the historical growth rate of the stock market over the past 100 years. The average rate of return from the stock market is typically considered to be as high as 7 percent.

Of course the stock market does not march steadily along at an average rate of growth year after year. The market swings up and down from day to day and follows longer upward and downward trends during bull and bear markets. But over the long haul, the average trend for the stock market has been upward at a rate of well over 3.8 percent average growth over the past 100 years.

In addition to the mathematical consideration of the rate of growth required for the Dow to reach 1 million in 100 years, another consideration is whether the world's people and natural resources will continue to sustain economic growth over the next 100 years. With development of exciting new technologies and emerging global markets to drive growth, it seems reasonable that the stock market could keep going up.

So it looks like Mr. Buffett's thinking makes good sense as usual, and the prediction of the Dow 1 million makes perfect sense.

Like this article? Pin it!

This article is from Dr Penny Pincher of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

6 Ways the Government Helps Disaster Victims Recover

Christa Avampato — Fri, 22 Sep 2017 09:00:06 +0000

Hurricane season has captured big chunks of recent news cycles, with massive storms Irma and Harvey devastating areas in Florida and Texas. The IRS and other U.S. government agencies are working to help people get back on their feet after these terrible natural disasters. Here's what they're doing.

1. Allowing loans and hardship withdrawals from retirement funds

Usually, the IRS levels penalties against early withdrawals from 401(k) and 403(b) retirement accounts. But it recently announced that in the case of Irma and Harvey, victims can take loans and hardship withdrawals against their retirement funds without penalties. All of the specifics for this IRS initiative can be found on the IRS disaster relief page.

2. Offering tax relief

The IRS provides tax relief to those who are impacted by disasters. This relief takes the form of tax filing and payment extensions, as well as the ability to claim losses on tax returns that may lower the amount of tax owed. Once an area is a federally declared disaster area, the IRS automatically marks all taxpayers in that area as eligible for relief. The details about these tax relief programs are also on the IRS's webpage for disaster relief.

3. Helping victims find shelter

If you need to find short-term shelter after a disaster, the government has services to help you. You can search for open shelters in your area by texting SHELTER and your ZIP code to 4FEMA (43362). For example: SHELTER 12345. You can also visit FEMA's page on Interim Housing if you've been displaced by a disaster and you need to find a longer-term rental home.

4. Granting government relief funds

DisasterAssistance.gov makes it possible to find local resources and apply for assistance. There are also relief funds and programs available for small businesses and those who are self-employed.

5. Hiring temporary recovery workers after a disaster

Both FEMA and the Small Business Administration (SBA) are currently hiring temporary workers in affected areas to speed the recovery efforts. FEMA's website details the opportunities it has available and SBA has set up a special website where you can apply for hurricane response jobs.

6. Cracking down on price gouging

After a natural disaster, it isn't unusual to find crucial necessities like gas and bottled water sold at ridiculously inflated prices — including reports of water for $99 a case and gas for $10 a gallon following Hurricane Harvey. This is known as price gouging, and it is illegal. People who have spotted or been victimized by this practice are encouraged to report it to their state attorney general.

Like this article? Pin it!

This article is from Christa Avampato of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How to Select a Charity to Donate to After a Natural Disaster

Christa Avampato — Thu, 21 Sep 2017 08:31:10 +0000

With the hurricane season we're having, there's no shortage of nonprofit organizations you can support with your dollars and time to aid people in need. But how do you know which organizations have the most impact and do the most good with the resources they have? Here's how to find the most reliable charities of which to donate. (See also: Why Donating Money Is the Best Thing You Can Do After a Natural Disaster)

1. Utilize charity assessment tools

There are a number of sites that evaluate nonprofit programs and provide you with information on their efficiency and efficacy. Charity Navigator, GiveWell, and Guidestar all evaluate nonprofit donations. One of their main metrics tells you the percentage of donations that goes to programs, and the percentage that goes to administration costs. While this metric is important, it's not the whole story, and comes with a very large caveat: for a charity to do its work, it must have administrative costs and overhead. Without talented people, a nonprofit can't do its best work, and like all employers, a nonprofit must compensate its employees for their skills. Use this metric as one input to your donation decision, but don't let it make the whole decision for you.

2. Check news stories

Before donating to a charity, check out the latest news stories on a particular charity with a simple Google search. You will likely find stories that highlight the work the organization is doing through its programs and hopefully you'll also discover some firsthand testimonials about the organization's impact. If there have been any recent scandals or shady activities, you'll find them here, too.

3. Review testimonials

Before making a donation, take a look at the organization's website to get a sense of their programs and staff. There is often a press section that showcases recent news releases with the latest news coming from the organization. It's also a good idea to check out the leadership team to determine if you feel they are good stewards of your gift. It's also worth taking a look at their board, major donors, and supporters, if they highlight them.

Have they recently won a large grant or formed a reputable partnership? If so, it's another data point that can show someone has scrutinized their work and deemed it valuable. Like the administrative cost percentage, these grants and partnerships don't tell the whole story, but they are another point of reference to help your decision-making process. (See also: The 5 Charitable Donations That Do the Most Good)

4. Scan through social media channels

One great gift of social media is that it gives individuals and organizations a way to connect with supporters and beneficiaries of their work directly. Poke around on their Twitter, Instagram, and Facebook feeds to see their work in action and find out who supports them.

5. Think local

While the big international nonprofits often get the most attention when disaster strikes, local nonprofits can often be just as effective, if not more so. That's because they have such close relationships with people on the ground. For example, the local food banks in Texas and Florida have been able to mobilize quickly in areas impacted by Hurricanes Harvey and Irma. After Harvey, I made a gift to the San Antonio Food Bank because they were the closest food bank to the areas in and around Houston that were hit hard by the storm.

This same giving strategy can be applied to international work. After the massive earthquake that struck Haiti, I donated to Partners in Health because their dedication to Haiti over many years has allowed them to have a tremendous impact on the health and wellbeing of the Haitian people.

If you're more comfortable giving to a large organization such as the Red Cross, and the Salvation Army, make sure they have a chapter in the geographic location where you want to help and tag your gift to go to that specific relief program. Local hospitals and health centers are on the front lines, and are often the first places that local people turn to in the wake of a disaster.

6. Consider who you want to help

Many nonprofits have a mission that designates who they help and the causes that matter most to them. This can be children, animals, environmental protection, or education, to name just a few.

In the case of the recent hurricanes in the U.S., local chapters of the Humane Society and the ASPCA are helping to rehome pets that were left behind by their families. Save the Children has expanded its services and started new programs in key Texas locations in the wake of Hurricane Harvey. Natural disasters often destroy or damage housing. Charities such as Habitat for Humanity can make use of your financial contributions as part of the rebuilding efforts.

7. Support sustained efforts

Given the speed of our news cycle, there is a swell of concern immediately after a disaster, and then that concern fades over time. One of the best ways to contribute to sustaining support is to consider a gift to an institution that continually works in the area. Boys & Girls Club, YMCA, and local schools, places of worship, and community centers are key sources for sustained support in impacted communities.

When disaster strikes, it takes a large, collective effort to help people reconstruct their lives. Your donation and support is critical, and a thoughtful gift can make all the difference.

Like this article? Pin it!

This article is from Christa Avampato of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Why Donating Money Is the Best Thing You Can Do After a Natural Disaster

Christa Avampato — Tue, 12 Sep 2017 09:00:05 +0000

We're watching the news, following the updates on Twitter, and staying in close contact with friends and family members as we march through peak hurricane season. In the wake of Harvey and Irma, we all desperately want to help those who have been and will continue to be impacted. While we might reach for what's in our cupboards and closets, the donation of goods isn't the most effective way to help. In fact, it actually hinders recovery efforts. Here's why the best thing to donate in the wake of natural disasters is cash.

Dollars go further

When we go to the grocery store or shops, we pay retail price. When a food bank or another nonprofit buys goods to help people, they pay wholesale or bulk prices that are lower than retail prices. This means when you donate money directly to these organizations, they can make every dollar go further to help more people.

Most goods will be discarded

Here is a sad fact: Donating goods is more beneficial for the giver than the receiver after the natural disaster. We feel like we've helped when we give old blankets or coats, but truthfully, we're hindering the recovery efforts when we donate goods. The Center for International Disaster Information, a leading authority on recovery efforts, says unsolicited goods are rarely needed in the early stages of response. These unwanted donations compete with much-needed efforts when it comes to people power, transportation services, and storage space. So save the waste and send cash instead.

Text donations are too slow

While it is immensely helpful that we can send a quick and easy text to give money after a disaster, the nonprofits and relief agencies we are funding receive the donations much faster if we go right to their websites to make a donation there.

Stick with the establishment

If you are looking for a place to make a donation, it's best in these situations to go with established organizations. They have the networks, connections, and expertise to make the most of the donations. Religious organizations as well as national and local nonprofits that are registered as 501(c)3 nonprofit organizations are the best stewards for your money. They also allow you to deduct the donation on your taxes, making it possible for you to be even more generous. If you want to research nonprofits before making your gift, local United Way and local Community Foundation chapters have a wealth of information. In the case of Harvey, look to Houston's chapters. (See also: The 5 Charitable Donations That Do the Most Good)

Other donation options

There are two other ways to give that don't involve cash or material items, but are also extremely necessary in the wake of a hurricane or other natural disaster: shelter and skills.

Give your space

Do you have a spare bedroom or couch? Can your business location, community center, or religious organization provide space to shelter people? Can you take in a foster animal or adopt an animal to give them a forever home? The giving of your space is something that many people (and animals) need and appreciate more than we could ever imagine. Mattress Mack in Houston has become a national celebrity for opening up his mattress showroom as a shelter.

Airbnb is now waiving service fees and the requirement that hosts charge at least $10 per night; free accommodations are now permitted in selected areas that have been affected by natural disasters.

Give your expertise

Are you a doctor, veterinarian, social worker, carpenter, electrician, plumber, or attorney? Do you have extensive knowledge of insurance policies? Do you have strong government experience that you could leverage to help people? These kinds of skills and areas of expertise are often in demand in areas affected by natural disasters. Again, working through local government or relief agencies that are on the ground is the most effective way to give your knowledge and experience to those who need it.

The desire to give is necessary and appreciated. Let's help those in the need the best way that we can. Together, we can make a difference.

Like this article? Pin it!

This article is from Christa Avampato of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Unexpected Costs of Political Activism

Paul Michael — Mon, 20 Mar 2017 11:00:15 +0000

Protests are breaking out all over the U.S. these days. For frustrated Americans, taking part in a peaceful demonstration can help restore a sense of personal control. And protesting works. Not always, and sometimes not to the degree that people wish, but history is full of examples of how public movements have brought real and positive change.

If you're thinking of joining a protest, it helps to understand just what the personal repercussions might be. Not that you should always let fear rule out over conscience. But consider these unexpected costs of activism, so you know exactly what you're getting yourself into.

1. You can jeopardize your career

You have every right to protest whatever you want. It's what makes America, and many other civilized countries, great. However, just because it's your right doesn't mean your current or future employer will look favorably upon your decision to speak out. Employers may not agree with your political stance.

Even if they do, they may worry clients or the public will look down on it. And with smartphones and social media a staple of society, chances are, you'll be caught on camera. If you are in any kind of position that is public-facing, be it a teacher, a lawyer, or a public relations manager, you could be on shaky ground.

Almost all U.S. states are "at-will employment" states, meaning employers can terminate you for any reason and without warning. Unless there are state laws, or company or union policies in place that specifically protect you, you could be fired for engaging in lawful political activity. (See also: 4 Financial Reasons to Keep Your Political Views Private)

2. You may need to take time off work

Protesting is usually not convenient. It is frequently centered around an event or day that has meaning, and that means it will often fall on a work day. For those of us who have jobs that are flexible with hours — or allow vacation and personal days for such things — no problem.

But you may not have that luxury. Can you afford to take a day off without pay? Can you afford for that to become two, three, or four days without pay if the protest continues to gain momentum? Some people maintain that the monetary cost is nothing compared to the moral cost of staying silent, but remember, that noble reason will not fly with the bank when the mortgage is overdue.

3. Your protest may put you in the spotlight

Protests can turn a relatively unknown issue into something that everyone is talking about. That's good in that it leads to a greater chance for change.

Just make sure you're prepared to have the spotlight turned on you personally as well, even if it's only within your circle of friends and acquaintances. The 2016 election left the country more divided than any time in recent memory, so once you make your stance known, you will most likely be met with tension from the other side. Ask any outspoken person with a large following on Twitter, and they'll tell you how often their political opinions are met with threats. Not that you should let fear of internet trolls keep you from defending the greater good, but it is something to be aware of.

4. You could get arrested … or worse

Peaceful protests don't always stay that way. When two sides come together with vastly opposing views, tempers flare. When authorities are dispatched to keep the peace, it can be the start of unrest, which can turn violent.

Hopefully, you will be involved in a peaceful protest that makes its point without leading to chaos or physical harm. But this is not an ideal world. There may be fights. You might be arrested because of a simple miscommunication, intentional abuse of police power, or just for being in the wrong place at the wrong time. You may even be injured, perhaps severely. Many people believe these risks are worth taking, but if you have a family that depends on you, think twice.

5. You could fall out with family and friends

Polarizing opinions can be fatal for friendships and family dynamics. A recent news article told the story of how a 22-year marriage ended over the election of Donald Trump.

Attending a protest for anything could cause disruptions in your relationships, leading to arguments and irreparably hurt feelings. While it is important to have your own opinions, voicing them publicly can have consequences. Just make sure you are prepared for the fallout.

No matter which side your political views align with, you probably will never regret fighting for what you believe in. And fear of anything listed above certainly is not a reason to avoid political activism entirely. Just know what you're up against going in, so you're ready if any of these repercussions do begin to surface.

This article is from Paul Michael of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

The Fiduciary Rule Is Under Review — How Will This Affect Your Investments?

Matt Bell — Fri, 03 Mar 2017 10:30:38 +0000

If you have money invested in a retirement plan, such as a 401K or an IRA, chances are high you'll be impacted by an executive order issued recently by President Trump.

It centers on the "fiduciary rule," one of former President Obama's initiatives that was scheduled to go into effect on April 10th. President Trump put the brakes on it by ordering the Labor Department to study the issue further.

Whether the rule goes into effect or not, you would be wise to understand what all the fuss is about and how it could affect you.

Fiduci…What?

Financial professionals, such as financial planners, insurance agents, brokers, and others, are legally bound to adhere to certain standards of conduct, the highest of which is a fiduciary standard. Anyone working under that standard, which today includes Certified Financial Planners and Registered Investment Advisers, is required to act in their clients' best interests, detail all commissions and fees, and disclose any potential conflicts of interest.

Others, including many brokers and life insurance agents, are held only to a suitability standard. That means if two financial products could meet a client's needs, but one would pay the financial adviser a higher commission, he or she could recommend that product to their client.

The Obama administration estimated that biased advice steering people to needlessly high-cost, high-commission financial products and services costs investors $17 billion per year in fees and lost investment income. Its fiduciary rule would require any financial professional recommending retirement-related financial products or services to adhere to a fiduciary standard.

What It Means for You

Here are some steps you can take to help make sure your retirement accounts are run in your best interest, rather than the managers'.

If you participate in a 401K, 403(b), or other workplace retirement plan, ask questions about how your investment options were selected. Some plans have a very limited set of choices or offer mutual funds with high fees. In particular, take a look at the "expense ratio" tied to the funds. That's the percentage of the money you invest in the fund that goes toward the expenses of operating the fund. For example, if you buy shares of a fund with an expense ratio of 0.73%, for every $1,000 you invest, $7.30 will go toward the fund's operating expenses. (See also: Watch Out for These Sneaky 401K Fees)

According to Morningstar, the average expense ratio is .78% for an actively-managed mutual fund and .18% for a passively-managed (index) fund. If the funds in your plan are significantly higher than that, ask your plan administrator to explain why.

Find out if any of the companies behind the funds in your plan participate in "revenue sharing agreements" in which they pay to be part of your plan. Often, these are higher-fee funds.

A good resource is Bright Scope, an independent evaluator of workplace retirement plans. See if it has evaluated your employer's plan, and if so, see what it says about the fees charged by your plan.

Employees at some companies have even sued their workplace retirement plans over what they felt were needlessly high-cost investment options. In 2015, the U.S. Supreme Court gave employees the right to do so.

If you work with a financial planner, insurance agent, or other financial professional, ask whether the person you work with adheres to a fiduciary standard. As awkward as it may be, ask about the commissions or other compensation they receive from the products or services you purchase through them. Before committing to working with someone, interview a couple of others and compare costs.

Three Situations That Warrant Extra Caution

Be especially careful about deferred annuities, mutual funds with a "front-end load," and 401K "rollovers." In each situation, you may be especially vulnerable to receiving biased advice. (See also: 3-Step Plan to Choosing a Mutual Fund)

With deferred annuities, you invest now in order to receive a stream of income in your later years. Deferred annuities usually provide salespeople with high commissions and come with especially onerous surrender charges if you decide to cancel your contract. Be very cautious. Generally, the type of annuity that makes the most sense is an immediate fixed annuity purchased around the time of retirement, and even then only with a portion of your nest egg. If someone is recommending an annuity for you and retirement is far down the road, at very least, ask lots of questions about fees, commissions, and surrender charges. And carefully weigh the comparative advantages of investing in mutual funds outside of an annuity instead.

Some financial advisers exchange their advice for the commissions they receive by recommending mutual funds with front-end loads, or sales fees. If you put $1,000 into a mutual fund with a 5% front-end load, that means you've lost $50 right out of the gate. At a time when there are countless no-load funds available, including target-date funds that automate some of the most important steps an adviser would do for you (such as, determine and then manage your asset allocation), it's difficult to imagine a situation where it would make sense to pay such fees. (See also: Commission Free ETFs: A Great Option for Cost Conscious Investors)

When you leave your employer — whether for retirement or to move on to another company — plenty of brokers would love to have you rollover your 401K money into an IRA at their firm. Such rollovers often do make sense because an IRA will give you more investment options. Just be sure to ask questions. Are there account fees? Is investment advice available to you from a fiduciary adviser? Compare the costs and services of at least three brokers.

Bottom Line

No matter what happens with the fiduciary rule, it's in your best interests to require all financial professionals you seek advice from to adhere to a fiduciary standard. At very least, they should fully and clearly disclose any fees, commissions, and potential conflicts of interest.

This article is from Matt Bell of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

8 World Currencies That Took a Hit in 2016

Tim Lemke — Tue, 17 Jan 2017 11:00:10 +0000

It's been a tough stretch recently for global currencies. Economic uncertainty, political shake-ups, and other world events have sent the value of currencies down sharply over the past year in many countries. Moreover, the decision of some nations to float their currency on the foreign exchange market has had troublesome results. Currencies in South America have been hit especially hard, but others in Europe and Africa haven't been immune to weakening.

Here are eight currencies that dove in 2016.

1. British Pound

Thanks, Brexit! The UK's vote to leave the European Union stunned the world and sent the pound plunging over fear of the move's impact on the British and global economy. Right now, the British pound equals about $1.23 U.S., or nearly 20% less since June, 2016. The pound was worth $1.50 right before the Brexit vote. It dropped nearly 15% immediately and kept declining before rebounding slightly at the end of 2016.

2. Mexican Peso

In the spring of 2016, one U.S. dollar was worth about 17 pesos, but the value of the Mexican currency has been tumbling ever since. The anti-immigration and anti-trade message coming from Donald Trump during the presidential campaign led to a weakening of the peso, and Trump's election in November made matters worse. The dollar/peso trade is now above 21, marking a 23% decline in value for the peso.

3. Venezuelan Bolivar

The Venezuelan economy is a mess, with massive inflation, shortages of food and medicine, and general mismanagement. This has led to a collapse of the nation's currency, with the value dropping by more than 36% in late March of last year. But accurate data from Venezuela is so hard to come by that the actual value of currency is anyone's guess.

4. Argentine Peso

Argentina's currency began falling right at the start of 2016, then rebounded in the summer before enduring a long decline since. The U.S. dollar is now worth about 16 pesos. That means the value of the peso is down about 17% since this time in 2016. This drop is largely blamed on the decision to begin floating the currency on the foreign exchange market. The move was supposed to encourage foreign investment, but that has yet to bear out, and the currency has taken a hit as a result.

5. Turkish Lira

National security fears and inflation have hammered Turkey's currency, which hit a new all-time low in early January. The currency began tumbling last spring, and is now off more than 23% since a peak in April. Interest rate hikes in the U.S. have created additional pressure; it now takes about four lira to equal a U.S. dollar.

6. Egyptian Pound

Egypt's currency tumbled in October, after the nation's government announced it would free float its currency. The Egyptian pound's 45% loss in a single day is believed to be a record. The pound had been trading at an 8:1 ratio to the U.S. dollar, but now it takes 18 pounds to make a dollar. Observers say that in the long run, a weaker currency could boost exports and tourism, but there is concern about inflation in the short term.

7. Nigerian Naira

Nigeria also free-floated its currency in 2016 in an effort to lure investment, and results were not quite as bad as in Egypt. After being pegged to the dollar for more than a year, the naira dropped 30% in a day in June. One U.S. dollar is now worth about 315 naira, compared to 199 naira before the slide. To make matters worse, a decline in the value of oil has not helped the currency for this OPEC nation.

8. Euro

General concern about the European economy has depressed the value of the currency used by more than 330 million people on the continent each day. One euro is now worth about $1.05 U.S. It had been trading above $1.15 before enduring a long, slow decline over the second half of 2016.

This article is from Tim Lemke of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Could Trump Bring Higher Interest Rates and Inflation? Consider These Money Moves

Tim Lemke — Wed, 30 Nov 2016 12:00:11 +0000

In a matter of weeks, America will have a new President, and people are already speculating as to what a new man in the White House will mean for the economy.

Donald Trump outlined a series of policy proposals on the campaign trail, including some that, according to economists, may impact inflation and interest rates. This comes at a time when the Federal Reserve has been hinting at raising interest rates for a while. So if all of this happens, what should you do with your money? Here are some ideas.

If There's Inflation

Ifd the federal government opens up the fiscal spigot, inflation is sure to follow.

1. Take a Look at Gold

Gold has long been a popular investment for those seeking protection against inflation, especially during times of political and global uncertainty. Prices for gold spiked in the immediate aftermath of Trump's election, but are still quite low from a historical standpoint.

There are several ways to purchase gold. You can buy gold bars or bullion and store it, or purchase shares of companies involved in gold mining. There are also exchange-traded funds (ETFs) that track the performance of gold or gold-related industries.

2. Get Into TIPS

The U.S. Treasury offers something called Treasury Inflation-Protected Securities, or TIPS. These are pegged to the Consumer Price Index, so when the index rises, the value of the investment rises with it. These are solid, low-risk investments that are perfect for when inflation is a possibility, and they are exempt from state and local income taxes. It's also possible to own TIPS in a retirement fund, via an ETF or mutual fund.

3. Invest in Commodities

In addition to gold, there are other commodities that can be used as a hedge against inflation. Many commodities, including oil, wheat, and even live cattle naturally rise with inflation. If you're unsure of which commodities to buy, consider looking at a fund or ETF that invests in commodities broadly. The PowerShares DB Commodity Index Tracking Fund [NYSE: DBC]) and the Fidelity Series Commodity Strategy Fund [NYSE: FCSSX] are two examples.

4. Get Real With Real Estate

Real estate is another area that often does well during an inflationary period. There are many ways to obtain real estate, either by purchasing property directly, or by buying shares of real estate investment trusts, or REITs. The caveat here is that if interest rates rise, then the cost of a mortgage to purchase real estate will also go up. So it may be smart to get in now while interest rates are still at historic lows.

If Interest Rates Rise

The Federal Reserve is expected to tick interest rates up a bit soon, while Trump's economic proposals could accelerate that process.

1. Invest in Banks

Banks generally do better when interest rates are higher than they are now. Right now, these companies have a low "net interest margin" — the difference between the interest they earn and the interest they pay out. Higher rates will increase this margin, thus increasing the bank's profitability.

2. Lock in a Fixed Rate

If you have a mortgage with an adjustable rate, now is the time to lock into something more stable, before interest rates rise. Convert your mortgage to a fixed-rate loan now, while interest rates are low. If you don't do this, your rate could adjust upward to a level that you may find unsustainable.

3. Switch to Short-Term Bonds

If interest rates are about to go up, you don't want your money tied up in something that's not paying a high rate. Placing your money in shorter term bonds and bond funds will allow you to remove your money earlier and then reinvest it in something with a higher return once rates rise. Long-term bonds do pay a higher rate than short-term bonds, but you lose flexibility.

4. Bolster Your Cash Holdings

With interest rates at ultralow levels, there hasn't been much incentive to hold on to a lot of cash. But if interest rates rise, you may find it's worth it to have a little more cash on hand, as it will generate some income for you. Stocks and other investments will probably still be more lucrative, but higher interest rates means there won't be as much downside to having more liquid savings, and it may give you more peace of mind.

This article is from Tim Lemke of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

EpiPens and Other Ways Companies Have Profited From Your Pain

Paul Michael — Thu, 22 Sep 2016 10:00:05 +0000

The EpiPen literally saves lives. So naturally, the makers of the lifesaving product decided to cash in on that, raising the cost from $100 for a package of two, to over $600! (And that's with a coupon, by the way).

The reason behind the dramatic increase is awful. According to Tech Times, five top Mylan NV executives had to hit some pretty incredible sales figures to achieve their combined $82 million in bonuses. Knowing the EpiPen is essential to many people, they simply jacked the price up and hit their goals. But, as you'll soon discover, this isn't the first time companies like Mylan NV have stuck it to people in need of medications.

Daraprim, One Pill — $13.50 to $750

If the drug doesn't sound familiar, the awful person behind its price hike will. His name is Martin Shkreli, often described in news stories and social media outlets as a man with a face you'd love to slap. His company, Turing Pharmaceuticals, acquired Daraprim in 2015 for $55 million. The drug is used to fight AIDS, malaria, and is also an antiparasitic. On September 17th, 2015, it was reported that the price of the drug had spiked from $13.50 per pill to $750 per pill, an increase of 5,456%!

Shkreli defended the massive increase, saying "If there was a company that was selling an Aston Martin at the price of a bicycle, and we buy that company and we ask to charge Toyota prices, I don't think that that should be a crime." It was poetic justice to see Shkreli in court this year.

Cycloserine, 30 Capsules — $500 to $10,800

Used to treat drug-resistant tuberculosis, Cycloserine was already costly at $500 for 30 capsules. So when Rodelis acquired the drug and raised the price in September 2015, overnight, to $10,800 for the same number of pills, there was outrage. In fact, so much was said about it that biotechnology stocks suffered losses, with investors worried about the backlash. Rodelis caved to pressure and gave the drug back to its previous owners, a nonprofit organization affiliated with Purdue University. However, the drug did not go back to its regular price. The cost was doubled from $500 to $1,050 for 30 capsules.

Isuprel, One Vial — $180 to $1,472

A drug used to treat abnormal heart rhythms is, as you can imagine, vital to many people in the U.S. and around the world. Valeant Pharmaceuticals International didn't see that as a good enough reason to keep the drug at its already steep price, and jacked the cost up by 718% in February last year. Valeant were called before Congress to explain their actions, and agreed to set up discounts of as much as 40% on the drug. As of May 11th, many heart hospitals were still waiting for those discounts to appear.

Nitropress, One Vial — $215 to $881

The same company responsible for the Isuprel price hike were also behind the massive cost increase of Nitropress last year, a drug used to keep blood pressure low during heart surgeries. However, it wasn't quite as steep as the Isuprel rise, costing hospitals, and therefore patients, 312% more. The then CEO of Valeant, J. Michael Pearson (who has a net worth of $175 million) issued a statement saying the price increases were mistakes, saying "The company was too aggressive — and I, as its leader, was too aggressive — in pursuing price increases on certain drugs." That probably comes as little comfort to the people who receive their hospital bills.

Vimovo, One Tablet — $1.88 to $23.86

There are over 100 types of arthritis, including osteoarthritis and rheumatoid arthritis. If you are diagnosed with it, you will be suffering from joint pain that can be crippling and debilitating. So, a drug that helps ease this pain should not be just as painful to buy.

Horizon Pharma acquired the rights to the drug Vimovo, which helps to fight arthritis, in 2013. It then hiked the price by 597%, taking one tablet from $1.88 to $23.86. Considering a vast number of people suffering from this condition are in retirement and on a fixed income, this is a disgrace. But the company hiked the price again recently, with a pack of 60 tablets now costing over $2,000 (with a coupon). Ironically, the drug is simply a mixture of two very cheap drugs, esomeprazole and naproxen. Many doctors are encouraged (that means kickbacks) by big pharma companies to write "prescriptions made easy" for these combination drugs. Always ask your doctor if there is a cheaper alternative that works just as well.

Dutoprol, One Pill — $0.52 to $5.26

This drug is used to treat high blood pressure, and up until 2013, the price was fairly reasonable — around $15 for a bottle of 30 pills. Clearly, the company the manufactures Dutoprol, Covis Pharma, was not happy with a reasonable price. So, they hiked the price by 1,013% to $5.26 per pill, or $157.80 for a bottle of 30 pills.

Sprix Nasal Spray, One Bottle — $32.07 to $183.97

If you have severe nasal pain, you will require a good pain reliever. Sprix is the only nonsteroidal Anti-Inflammatory Drug (NSAID) on the market, and is preferred by people who do not want to use opioids or controlled substances. That preference will now cost a lot more. In February of 2015, Egalet Corp raised the price of one bottle from $32.07 to $183.97, an increase of 574%. And as the spray is often sold in packs of five, you will be paying over $900 for that much-needed pain relief.

Tasmar, One Tablet — $15.70 to $105.98

Perhaps the most famous person you'll know of that may need Tasmar is Michael J. Fox. It's a drug used to treat the effects of Parkinson's disease. And once again, Valeant Pharmaceuticals is behind the massive price hike. In April last year, the company decided to raise the price of one tablet from $15.70 to $105.98, an increase of 675%. While a movie star may not have issues paying that bill, most people will get serious sticker shock when they have to pay over $6,300 for their bottle of 60 tablets.

Edecrin, One Vial — $470 to $4,600

Used in the treatment of edema and heart failure, Edecrin is a diuretic that helps your body get rid of excess salt and water. When Valeant acquired the rights to this drug, it started raising prices. Not once. Not twice. Not three times. The price has been increased an astonishing nine times since 2014, and is now $4,600 per vial.

Targretin Gel, One Tube — $1,687 to $30,320

Those are not typos. You did read that correctly. There is clearly something going wrong somewhere when a company can charge more than the price of a Dodge Charger for a tube of topical gel. And, of course, it's used to address the symptoms of a form of cancer, which is one of the most expensive diseases to treat. Once again, those wonderful people at Valeant are behind the rise, and at over $1,600 a tube to begin with, it was hardly in desperate need of a price hike. But, they did it, making the small tube of gel 18 times more expensive after they bought the rights to the drug in 2013.

Valeant has defended the rise, saying full retail prices "rarely represent the prices that patients and insurers are paying or what the pharmaceutical company receives." If you don't have good insurance, or any insurance, you likely won't have the money needed for this drug. Incidentally, at the same time, Valeant raised the price of Carac cream, another topical treatment dealing with skin cancer, from $159 to $2,705. The message this company is sending is clear…you get sick, we get rich.

Like this article? Pin it!

This article is from Paul Michael of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: