Quote: Freedom Involves Risk

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“To laugh is to risk appearing the fool,

To weep is to risk appearing sentimental,

To reach out for another is to risk involvement,

To expose feelings is to risk exposing your true self,

To place ideas and dreams before the crowd is to risk their loss,

To love is to risk not being loved in return,

To live is to risk dying,

To hope is to risk despair,

To try is to risk failure,

But risk must be taken because the greatest hazard in life is to risk nothing. The person who risks nothing, does nothing, has nothing, and is nothing. He may avoid suffering and sorrow, but he simply cannot learn, feel, change, grow, love and live. Chained by certitudes, he is a slave, he has forfeited freedom.

Only a person who risks is free.”

Author Unknown

“Freedom is never free. It requires risk taking.” Nassim Nicholas Taleb.

Preventing Scams and Cybercrime

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Fraudsters and cybercriminals are getting sneakier – sometimes even claiming to be your bank or financial institution. Outsmart scammers with these tips.

With more than 2 billion people worldwide accessing the internet through smartphones, hackers have never had greater incentive to devise new scams. Getting scammed is an unpleasant experience, but you can be one step ahead.

For example, you look at your phone and you have a new text message saying it is from your bank or financial institution. The message tells you to click this link and download a new app to secure your identity or customer account. It’s strange because you’ve never received a text from your bank at this number before, and you already have your bank’s app downloaded, or at least you thought?

STOP! Don’t click that link. There are a number of red flags to watch out for to recognize a phishing attack. Although this trick is commonly employed over email, savvy thieves are now trying to install ransomware or steal your financial or personal information by impersonating a bank, credit card company or service provider by phone calls or even text messages. Phishing is when a fraudster tricks a consumer into providing their personal information through a fake app or website. The site may appear have a copy of your bank’s or another company’s logo and appears legit. So how do you tell it’s not?

  • With increasing number of cases related to cyber frauds or online scams, it’s recommended that you follow these tips to detect a scam by text and protect your identity:
      • Check the number and search for how your bank has texted you in the past. Are they different? Don’t click the link!
      Is this message irregular? If you have not recently conducted business, used your cards or logged into your bank via the app, mobile or desktop, it may feel out of context to be receiving this request. Don’t click it!
      Are they using the right terminology for you and your account? Does your bank refer to you as a member but this text message says “customer.” Don’t click it!

    REMEMBER: Do not download any software or click on unknown links sent to you by email or text! Banks will typically never ask you to download software in an email or while you are on the phone with us..

    Emails

    There are some easy ways to ensure the email is from bank. Bank emails typically include a Security Zone to help you distinguish a legitimate email from a fraudulent one. Here is what to look for to help identify authentic emails:

    • Always hover over the sender’s email address to verify who it is from. Banks will only send emails from an address that clearly indicates it is from your bank.
    • To be effective, you must verify the spelling of your first and last name and the accuracy of the last four digits of your USAA member number every time you receive an email from USAA.

    Phone Calls

    RING, RING, RING

    The caller ID says your bank across the top. It’s not a 1-800 or a 1-877 number, but when you answer, the caller says they are with your bank and now asks for your customer service identification number to verify you. The caller may offer to assist with installing software you need for your financial services … what do you do?

    STOP! Don’t share your personal information before verifying the caller. If your bank is calling you, they typically will never ask for your “customer” identification number, credit card number or other personal information.

    Follow these tips to detect a scam by a phone call and protect your identity:

    • Do not share security or personal data: Your bank will never call you and then ask you for your one-time verification code, PIN, password or other personal identification details.
    • Always realize that you can call your bank to determine if any request for information is valid. When you call us, know that we’ll use the multifactor identification code from your phone to verify you.

    “Grandpa, I need your help. My car won’t start. Please send me money using this app…” OR

    “Hi, how are you? I can’t deposit any money into my bank account because I am deployed. Can you send me some money for my phone card so we can continue talking? I really miss you.”

    STOP! Imposters have many tricks up their sleeves when they are trying to access your information or steal your assets. As discussed above, it could be by impersonating a company through a phone call, email or text, but now they are even trying to contact you on third-party social platforms, like Facebook or Twitter, or through dating apps and sites.

    Follow these tips to avoid a grandparent or romance scam:  

    • Never send money to someone you don’t know in real life, especially using a third-party app like Zelle, CashApp, etc.
    • If someone claims to be a family member, verify with that family member by calling them directly! If you think your grandson needs help, call him or call his parents before sending money unintentionally to a scammer.
    • Do your research. If you are getting to know someone online, make sure you look them up, validate they are who they say they are. Some also claim to not have access to common resources overseas because they are serving, which is often untrue.

    If any of these situations should happen to you, reach out for advice before giving out any personal information. And, if you get a suspicious email, text, instant message or phone call, you can report it to your bank or to the Federal Trade Commission at ftc.gov/complaint.

    If a scam does trip you up in real life, get help! The FBI has an Internet Crime Complaint Center at ic3.gov. You can also report identity theft to the Federal Trade Commission to 1-877-ID-THEFT (84338).

    There are also some easy ways to ensure a text message is from your bank.  Based on your request, many banks may send a one-time code as part of its multi-factor authentication process. If you suspect fraud, you should:

    •  REPORT! Even if you didn’t share personal information or click a questionable link, if you suspect fraud, let us know so we can help prevent it to protect you and other members in the future.
    • If you receive a suspicious call from someone claiming to be your bank and is requesting account information or security credential information, hang up immediately!
    • If you provided any personal identifiable information prior to hanging up, alert your bank.
    • If you did not provide any information, you should still send an email to your bank reporting the phone number or text message and message details. This helps them to actively work to shut down fraudulent callers, sites and emails.

    Imposters can come from the least expected places and they are constantly changing their tactics. That’s why it is so important to always be on alert. While financial institutions can use sophisticated detection processes, they are most effective in fighting fraud when they work together with their customers.

     

    Global Inflation Worries

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    “Inflation will be higher and more persistent than people expect.” Mohamed El-Erian, Allianz & Gramercy Advisor

    Higher and more persistent inflation may now be an unavoidable economic fact of life for Americans, and it’s starting to make a lot of economists, investors and public leaders worry. They, specifically economists, collectively believe inflation is primed for rapid growth domestically as trillions in federal stimulus spending is layered on top of the Federal Reserve’s loose monetary policy.

    This level of unadulterated fiscal spending could mean that investors will have to get used to inflation, higher interest rates, more market volatility and lowered returns on invested capital.

    In conjunction to domestic and global inflation concerns, there exist two significant global economic worries for individuals and investors:

    • Global supply chain constraints which are significant and will get worst whether it is disrupted supply chains or labor worries, and
    • Global tightening of monetary conditions and less liquidity.

    But, major shocks to the economy tend to be caused by either a major policy mistake or market accidents. Yet, we’re unlikely to witness double digit inflation in the United States.

    The Federal Reserve and the Biden Administration contend that the elevated inflation readings will prove transitory. The Fed and Administration view that the current inflation stems chiefly from temporary factors such as supply bottlenecks and a spike in post-pandemic consumer demand.

    The August inflation report showed that prices increased by 5.4% year over year in July. Wages increased, too—but not by enough to offset inflation.

    And, Americans know inflation when they see it: retail shops and restaurants are raising their prices on consumers, and prices of used cars and trucks were 32% higher in August than they were a year earlier, and workers are discovering bargaining power over wages for certain positions for the first time in years, according to Barron’s. “Inflationary pressures are likely to rise because everyone is spending—including the government—and it becomes a self-sustaining cycle,“ says Karen Karniol-Tambour, co-chief investment officer for sustainability at Bridgewater Associates.

    “When you live in a world of abundant liquidity, investors tend to take on too much risk.” Mohamed El-Erian

    Congress has assigned a dual mandate for the Federal Reserve: Foster maximum employment and maintain price stability. The FOMC has interpreted maintaining price stability as keeping inflation growing at about 2% a year over the long-term.

    Over the past two decades, the Federal Reserve has been unable live up to its two percent inflation mandate. Using the Fed’s preferred gauge of inflation, core Personal Consumption Expenditures (PCE), which tracks price changes over time without volatile energy and food costs, inflation has remained stubbornly below the Fed’s 2% annual target since the 2007 – 09 Great Recession, except for a brief stretch in early 2012 and much of 2018.

    Going from a disinflationary world to an inflationary world

    Evidence that some of the issues that might spur inflation could abate ahead, particularly some of the supply chain issues. Additionally, unit labor costs remain low, meaning that companies still aren’t spending substantially more for productivity, which also could tamp down inflation.

    Federal Reserve Chair Jerome Powell has been resolute in his commitment to seeing the whites of inflation’s eyes before raising rates or paring back quantitative easing. But some market observers believe the Fed is being too lax.

    “Financial conditions should remain quite accommodative for a while and in our view risks an overshoot,” said Rick Rieder, BlackRock’s Chief Investment Officer of Global Fixed Income.

    The drivers of global inflation are many and complex. They include global economic and policy forces as well as domestic. Yet, it’s important to keep in mind that the rise in inflation isn’t necessarily life altering. Although, policy makers can’t hold on to the “mystical attraction of transitory inflation” when the facts on the grow indicate the contrary, according to Mohamed El-Erian. Given the extraordinary level of fiscal and monetary economic stimulus, inflation may be less transitory than previously thought.

    References:

    1. https://www.forbes.com/advisor/investing/inflation-worries/
    2. https://www.cnbc.com/video/2021/10/25/mohamed-el-erian-were-not-anywhere-near-risk-of-hyperinflation.html
    3. https://www.pimco.com/en-us/insights/viewpoints/want-to-mitigate-inflation-take-a-portfolio-approach
    4. https://www.barrons.com/articles/government-economy-stock-market-51633705211

    Financial Health

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    “Despite positive financial health trends at the national level, the majority of people in America are still not financially healthy.”

    U.S. Financial Health Pulse, we find that more people in America were Financially Healthy as of August 2020 than they were in 2019.

    Building upon the foundation of a strong pre-pandemic economy, it appears that an array of stimulus policies, debt relief measures, economic shutdowns, and consumer behavior changes have temporarily blunted the worst effects of the economic crisis for many people.

    But a majority of people in America (67%) are not financially healthy; these individuals have little financial cushion should relief measures subside and economic conditions worsen. Among those who are struggling financially, millions of people are experiencing extreme financial hardship. We also find that profound disparities in financial health have persisted, and in some cases widened, across race, income, and gender.

    From the U.S. Financial Health Pulse, we find that more people are Financially Healthy in 2020 than they were last year. But many people are still struggling financially and there is evidence that financial health disparities have widened over the past three years.

    In the long-term, solutions that address systemic barriers to financial health – such as policies that ensure pay equity, living wages, workplace protections, affordable healthcare, and access to high-quality financial products and services – are necessary to ensure equitable financial health outcomes for all.

    • Indicator 1 – Spend Less than Income – As of August 2020, 57% of people in America said their spending was less than their income over the last 12 months, a significant increase from the 54% of people who reported this in 2019 and the 53% of people who reported this in 2018 (Figure 6). This increase is likely the result of strong economic
      growth over the past two years, combined with a confluence of recent interventions and events that have increased people’s income, while reducing their overall expenses over the last few months. On the income side, the stimulus payments, the additional $600 in federal unemployment insurance, and the Paycheck Protection Program loans temporarily increased many people’s disposable income over the spring and summer.11
    • Indicator 2 – Pay Bills On Time:  As of August 2020, 69% of people in America said they paid all of their bills on time over the past 12 months, an increase from 2019 and 2018, when 66% and 64% of people reported this (Figure 9).17  This upward trend is likely the result of the confluence of factors discussed in the previous section: economic growth prior to the onset of the pandemic, government stimulus measures, forbearance and relief measures, state lockdowns, and changing consumption patterns have left people with more money to put toward bill payments. In fact, as of May 2020, nearly half of people (45%) who had received a stimulus payment by May said they used the funds from that payment to pay their rent, mortgage, or utility bills (Table D5)
    • Indicator 3 – Liquid Savings:  As of August 2020, 59% of people in America said they had enough savings to cover at least three months of living expenses, an increase from 53% in 2019 and 55% in 2018 (Figure 12). The upward trend over the past year is likely the result of strong economic growth since 2018, the recent stimulus and relief measures, and a reduction in consumption during state lockdowns.24 These self-reported trends align with reports from the U.S. Bureau of Economic Analysis showing that the U.S. personal savings rate hit an all-time high in April 2020.25
    • Indicator 4 – Long-Term Savings:  As of August 2020, nearly half of people in America (47%) said they were confident they were on track to meet their long-term financial goals, a significant increase from 2019 when 39% of people reported this, and 2018 when 40% of people reported this (Figure 15). These sentiments are supported by national data from Fidelity showing that average balances in IRAs, 401(k)s, and 403(b)s grew significantly during the second quarter of 2020 as the stock market soared.29
    • Indicator 5 – Manageable Debt:  As of August 2020, more than half of people in America (55%) said their debt was manageable, an increase from 2019 and 2018 when 52% and 53% of people reported this (Figure 16). A decrease in overallhousehold debt is likely driving people’s improved perceptions about the manageability of their debt.  According to the Federal Reserve, total household debt decreased by $34 billion from April to June 2020, as people cut back on their expenses, reduced new borrowing, and focused on paying off outstanding debt.30 Mortgage payment deferrals and the federal moratorium on student loan obligations may have also contributed to improved sentiments about debt manageability.31
    • Indicator 6 – Credit Scores:  In August 2020, nearly seven in 10 people in America (69%) said they had a prime credit score, an increase of 3 percentage points from previous years, when 66% of people reported this (Figure 22). These figures align with nationally representative data from Experian showing that VantageScores generally improved in the early months of 2020.36 While credit score calculations are based on a variety of inputs, an overall reduction in household debt (pg. 27), changes in credit reporting requirements per the CARES act, and a reduction in credit utilization may be driving improvements in credit scores nationally.37
    • Indicator 7 – Adequate Insurance:  In August 2020, 52% of people in America said they were confident they would have sufficient insurance to manage an emergency, a significant decline from the 58% of people who reported this in 2019 and the 61% of people who reported this in 2018 (Figure 23). This indicator was the only one of the eight financial health indicators that declined between 2019 and 2020. Some of this decline may be due to a change in survey logic preceding the question used to measure this indicator.38 However, some of the decline may beexplained by a longer-term trend in declining rates of health insurance ownership
    • Indicator 8 – Planning Ahead:  As of August 2020, 64% of people in America said their household plans ahead financially, a significant increase from the 59% of people who reported this in 2019 (Figure 24). While it may seem counterintuitive that more people are planning ahead during such a volatile time, it may be precisely the uncertainty of the current moment that makes planning so compelling.41 Without knowing when the next round of stimulus and relief measures will arrive, many people continued to keep their expenses low, even as states began to reopen their economies. Much of the decrease in spending has been driven by people with higher incomes (as we discuss on pg. 25), but people with lower incomes have attempted to reduce their expenses as well.42

    Return on Equity (ROE)

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    Return on Equity provides insight into how efficiently a company’s management is using financing from equity to operate and grow the business.

    Return on Equity (ROE) is the measure of a company’s annual return (net income) divided by the value of its total shareholders’ equity. It is a simple metric for evaluating investment returns and it brings together the income statement and the balance sheet, where net income or profit is compared to the shareholders’ equity.

    “ROE is a way to think about how much money you are getting back from an investment,” says Mike Bailey, director of research at FBB Capital Partners in Bethesda, Maryland

    The number (ROE) represents the total return on equity capital and shows the firm’s ability to efficiently turn equity investments into profits. To put it another way, it measures the profits made for each dollar from shareholders’ equity.

    It is a ratio that investors can use to compare firms operating within the same industry to assess which one presents better investment opportunities.

    Comparing ROE for different companies in the same industry helps investors to see which ones have generated the highest rate of return. ROE is a useful metric for service-based businesses.

    A sustainable and increasing ROE over time can mean a company is good at generating shareholder value because it knows how to reinvest its earnings wisely, so as to increase productivity and profits. 

    “ROE tells you how good or bad management is doing with your investment,” Bailey says. “Higher ROEs generally stem from profitable businesses that enjoy competitive advantages within a given industry.”

    In contrast, a declining ROE can mean that management is making poor decisions on reinvesting capital in unproductive assets.

    In short, Return on equity measure, of how efficiently a company is using shareholders’ money. Efficient companies tend to be more profitable companies, and more profitable companies tend to make better investments, investors like companies with higher ROEs.

    For capital-intensive businesses that require a larger investment in assets, like those in manufacturing and telecommunications, return on invested capital (ROIC) is a more useful measure, as it takes into account their capital expenditure.

    Return on Invested Capital is calculated by taking into account the cost of the investment and the returns generated. Returns are all the earnings acquired after taxes but before interest is paid. The value of an investment is calculated by subtracting all current long-term liabilities, those due within the year, from the company’s assets.

    The cost of investment can either be the total amount of assets a company requires to run its business or the amount of financing from creditors or shareholders. The return is then divided by the cost of investment.

    References:

    1. https://corporatefinanceinstitute.com/resources/knowledge/finance/what-is-return-on-equity-roe/
    2. https://money.usnews.com/investing/articles/what-is-return-on-equity-the-ultimate-guide-to-roe
    3. https://capital.com/return-on-equity-roe-definition

    Things to Consider When Saving, Investing and Building Wealth

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    Saving for the future, investing to grow your money and building wealth has little to do with the economic cycle, the stock market valuation or even how much money you earn.

    It’s your mindset that can hinder your financial outcome and keep you trapped at an unsatisfying level of financial success. And, unless you can embrace a positive financial mindset, your ability to save, invest and build wealth will be hindered for the rest of your financial life.

    The process of investing and wealth-building can be improved by a adhering to the following tips to set yourself up for potential financial success and freedom:

    1. Start Early

    It’s important to invest a percentage of your salary each month. And, starting early could be a way to dramatically increase your savings over time. The good thing about starting early is you can get the benefits of compound interest!

    2. Set Investment Goals

    Are you saving up to buy a house? Or putting money away for retirement? Investing with a purpose will help you determine the right strategy and keep you on track to pursue your financial goals. Determine your financial freedom number.

    3. Know Your Time Horizon

    If you think you’ll need the money within the next five years, you might consider less volatile investments, like fixed income securities. Investing for the long-term (think: 15 or more years)?  You might think about adopting a less conservative strategy.

    4. Assess Your Risk Level

    Knowing how much risk you’re willing to take on will help you narrow down your investment choices and keep you from letting your emotions guide your investing during periods of high market volatility.

    5. Analyze Your Budget

    Take your monthly income and take a list of your monthly expenses and create a budget (for instance, the popular 50/30/20 budget). By looking at your spending, you may discover extra money to invest each month.

    6. Know Your Investment Choices

    Familiarize yourself with different investment types to see what makes sense for you. Are you interested in international stocks and ETFs (exchange-traded funds)? Maybe bonds and mutual funds?

    7. Go It Alone or Use an Advisor

    If you’re the independent type, you may be drawn to Self-Directed Trading. Or if you prefer an advisor or to automate your investments with a Robo Portfolio.

    8. Consider Avoiding Individual Stocks and Bonds; Invest in Market Index Funds

    If you’re still learning the ropes, you might be more comfortable sticking to broader based investments like index funds and ETFs. These types of investments require less of your time and are less risky since they invest in numerous companies. As an alternative, an market index fund is an investment that tracks a market index, typically made up of stocks, like the S&P 500, or bonds. Index funds typically invest in all the components that are included in the index they track,

    9. Diversify Your Portfolio

    If all your investments are your company’s stock, and they go out of business, you’ll wish you had a diversified portfolio. You may reduce your risk by holding a variety of securities that react differently to market changes.

    10. Think Long-term

    History shows whenever the market takes a dip due to volatility, it eventually bounces back. Be patient and disciplined: Give your money time, make consistent contributions and wait out inevitable market downturns.

    11. Don’t Forget High Interest Debt

    School loans or credit card debt can make allocating money to investments a tough choice. It’s possible to reduce your debt and invest, and we can help you accomplish both.

    12. Get Your Match

    Many employers offer a 401(k) match, which can be a great incentive to invest for retirement, helping you to potentially build tax deferred savings.

    13. Save and Invest for Retirement

    When you’re young, retirement seems like eons away — but for many, regardless of age, now is the best time to start saving for your golden years. You may consider looking into Traditional and Roth IRAs to get started. The typical retirement strategy is built on the pillars of your pension, 401(k) plan, your Traditional IRA, and taxable savings.

    14. Automate Your Contributions and Pay Yourself First

    Pay yourself first instead of saving what remains after monthly expenses. Set up recurring investments to take advantage of dollar cost averaging. With this strategy, instead of trying to time the market, you invest the same amount each month — sometimes you might buy high, but other times, you’ll purchase low.

    15. Beware of Fads

    Just because everyone is jumping on the latest meme stock or investing app doesn’t mean you should. Fad stocks are often unpredictable, so if this doesn’t align with your investment strategy, feel confident to sit them out.

    16. Be Informed

    A prospectus sheet details the performance of a company to help you understand its stock performance. And digital tools can help you track your investments, too. If you cannot dedicate time to read and research, invest in a market index fund which is one of the easiest and most effective ways for investors to build wealth.

    17. Don’t Neglect Your Emergency (or Peace of Mind) Fund

    Investing grows your money and helps build long-term financial freedom, but you need to be prepared for short-term unexpected expenses. So when setting out on your own, don’t forget to start setting aside funds in an emergency (or peace of mind) fund. This money should be liquid (not invested in securities), so you can access it for unexpected expenses.

    18. Watch Out for Fees

    Some brokers will charge a commission fee whenever you buy or sell stocks, which add up and make a dent in your overall returns. Trade U.S. stocks and ETFs commission-free with our Self-Directed Trading.

    19. Ask for Help

    Investing can get complicated. Don’t be afraid to reach out to a financial advisor for advice and support.

    20. Adjust as You Go

    As life circumstances change, it might make sense to move your money into different types of investment accounts or change up how much you contribute. Any time your financial circumstances change, remember to reassess your financial goals, plan and investments.

    21. Create and Follow a Financial Plan

    Every living adult needs to financially plan. A financial plan is a comprehensive overview of your financial goals, net worth, cash flow, debt, taxes, risk tolerance, time horizon and it provides the steps you need to take to achieve and manage them.

    22. Investing has risks.

    No one knows exactly what will happen in the future and investments could lose money, so be aware of how much you are able to invest and be comfortable leaving it there for a period of time since it may have ups and downs.

    23. A Wealthy (or Positive Financial) Mindset

    It’s imperative that you refocus your mindset and change how you think about yourself, your finances, and the world around you. If you keep thinking about things the same way, you’re going to get the same results. Change in the world around you doesn’t happen until you change yourself. Embrace and grow your positive financial mindset about money, wealth and financial freedom.

    Getting Started

    Getting started is often the hardest step for most new investor to take, but starting to invest today is advice worth implementing! “The best time to plant a tree is twenty years ago; the second best time is today.” And, what’s true for a tree is also true for growing your money.

    References:

    1. https://www.ally.com/do-it-right/investing/things-to-know-when-investing-in-your-20s/
    2. https://www.harveker.com/blog/11-principles-infographic-financial-freedom/

    Think Before You Click

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    #ThinkB4UClick

    The global pandemic has tested the online security resilience and vigilance of people world-wide, while at the same time the pandemic is pushing more and more individuals to conduct their daily personal and work lives online.

    Unfortunately, cyber criminals have sought opportunities to create havoc and financial gain in the midst of the chaos caused by the pandemic.

    Since our lives have shifted into the digital dimension, educating the online user on cyber security has become more important than ever before.

    As a result, cyber security has become increasingly important domestically and globally. But we must all remember that cyber security begins with a few basic steps such as: being vigilant, changing your password often and most important… think before you click on or open a link.

    Tips for Securing Your Digital Accounts

    Like keeping our doors locked to keep our homes safe from burglars, keeping our online accounts secure is vital to help protect ourselves from cyber criminals – and passwords are the key.

    Here are some tips to help you keep your accounts safe online.

    1. Choose strong passwords

    The stronger your password is, the more difficult it is to hack your account.

    Create passwords that are at least 15 characters long and include a combination of upper and lower case letters, numbers and symbols if allowed.

    A good way to do this is to create a passphrase – use a sentence that includes unusual words, or words from different languages.

    In addition, always use unique passwords for all your online accounts.

    2. Use a password manager

    A password manager is a convenient way to take care of your passwords.

    Several very good password managers are free and easy to use. It will create strong passwords for you and keep them secure.

    If you’d prefer not to use a password manager, write your passwords into a notebook and keep it in a secure place away from your computer.

    3. Enable Multi-Factor Authentication (MFA)

    Multi-factor authentication (like 2FA) provides an extra layer of security to help protect your accounts.

    It is an electronic authentication method where you need to present two or more pieces of evidence (factors) to confirm your identity and access your account, for example a password and a code that is sent to your mobile phone. Your account cannot be accessed without entering this code.

    4. Do all of the above!

    For extra security, use a password manager that will create strong passwords for you and enable multi-factor authentication when available for your best chance to keep your accounts secure.

    References:

    1. https://cybersecuritymonth.eu/resources/top-tips-for-securing-your-accounts/

    FinTech: OppFi

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    Building consumers’ financial health over time.

    There exist a large and widening gap in financial inclusion and economic equality in America, according to OppFi. On average, the median U.S. consumer is employed, has a bank account, earns median wages, but has little to no savings or investments. Some have experienced a hardship or emergency; others are struggling to make ends meet; others have unplanned expenses.

    Overall, the state of the American middle class is precarious. Among other things,

    • 150 million Americans have less than $1,000 in savings,
    • 115 million live from paycheck to paycheck, and
    • 60 million Americans lack access to traditional credit.

    The median FICO score in the U.S. is 711. Borrowers with a score of below 620 are considered to be subprime, a group that represents a third of people with credit histories.

    Americans with subprime credit struggle to cover a $400 emergency. Although many consumers in this category are unemployed or under-employed, Experian found that the average income for a subprime borrower (pre-pandemic) was $65,000 annually. These consumers may have income fluctuations, but they are generally members of the middle class.

    Surveys have found that when these consumers face an unexpected bill, such as a medical bill, car or house repair that someone with a high credit score would simply put on a credit card, they have very few options: their family and friends are often in the same situation, and any credit cards are maxed out. They generally have nowhere to turn.

    Borrowers with low credit scores are not naïve. Research on the sector has found that while these consumers may face desperate financial situations, they also understand the consequences of borrowing at high interest rates. They make the determination that taking out a high-cost loan is better than losing access to their doctor, being unable to get to work, or living without a working oven.

    Source: OppFi

    OppFi has designed a FinTech platform around the subprime customer with the ability to facilitate credit access that is simple and accessible. OppFi focuses on providing access to credit as well as building financial health through financial education and resources.

    FICO score alone is not the only measure of a potential customer’s ability and willingness to repay a loan. According to OppFi, there is a way to operate profitably providing loans to this underserved population without gouging them with high interest rates. This addressable market has expanded because of artificial intelligence and alternative data that make has made it easier to model risk without relying solely on FICO scores

    Empower everyday consumers to rebuild financial health.

    OppFi is an online installment lender that has facilitated over 1.5 million loans with a total origination volume of over $2.3 billion, which works out as an average loan size of around $1,500.

    OppFi began life as a direct lender with multiple state lending licenses. They moved to a bank partnership model a couple of years ago and are now fully committed to that model. They have multiple bank partners today and will continue with this model as they release new products.

    OppFi is focused on building a financial ecosystem to help the tens of millions of Americans whose only alternatives are predatory lending options, like payday or title loans. OppFi meets its mission—Empower Everyday Consumers to Rebuild Financial Health— by helping consumers gain access to transitional financial products with transparent pricing and affordable payment schedules, help rebuild their credit and financial health, and graduate them back into mainstream credit.

    OppFi meets the demand for non-bank lending products in a way that empowers customers to not only meet their short-term financial needs, but also build credit for their long-term financial future. The loans we service are designed for:

    • Access: Loans we facilitate are for people who do not qualify for prime loans. Non-traditional credit quality standards are used to help more people have access to loans to meet short-term, small-dollar emergency needs.
    • Affordability: Loans through our platform are underwritten to ensure that a consumer has the ability to pay off their loans, with amortizing payments, longer pay-off periods, and lower monthly payments. While rates through our platform
    • Transparency: We provide terms that are simple and transparent to customers. There are no fees: no origination fees, late or NSF fees, or prepayment penalties. We don’t want borrowers to have surprises. That makes things easier for us and for them.
    • Graduation: We report positive payments and payment history to the three major credit bureaus, and when a customer pays off their loan, we work to facilitate access to lower cost credit. This helps our borrowers’ credit scores improve so that they will not need us if they have another financial shortfall.
  • OppFi proves that facilitating access to credit to consumers with poor credit does not need to involve high rates, fees, or tricks to meet their needs at a profit. There intent is to help consumers who have no other place to turn, but they also offer a path to a better financial future through financial literacy and referrals to nonprofits.

    • References:

    1. https://www.oppfi.com/wp-content/uploads/OppFi-2020-Social-Impact-Report.pdf
    2. https://www.experian.com/blogs/ask-experian/what-is-the-average-credit-score-in-the-u-s/, accessed 7/2/2021
    3. Elkins, Kathleen. “Here’s how much money Americans have in their savings accounts.” CNBC.com, Sept 13, 2017
    4. Bureau of Labor Statistics U.S. Full and Part Time Workers; Friedman, Zack. “78 percent Of Workers Live Paycheck to Paycheck.” Forbes.com, January 11, 2019
    5. https://www.oppfi.com/media/credit-access-whitepaper.pdf

    Protecting Yourself Against a Cyberattack

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    The Top Three Things That Anyone Should Do to Help Protect Themselves Against a Cyberattack

    The top three things that anyone should do to help protect themselves against a cyberattack.

    1. Incorporating multi-factor authenication (MFA)
    2. Understanding phishing and how to identify phishing attempts
    3. Discussing with colleagues, families and cyber professionals

    FinTech…An Investing Opportunity

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    The financial technology (FinTech) services industry continues to attract tech companies that transform how people and businesses spend, save, borrow, invest, and more. And, FinTech startups continue to attract a growing amount of entertainment media attention and private capital.

    Effectively, these companies have transformed an already existing, and one of the world’s largest industries, finance, by minimizing the friction and pain points that are commonly connected with it.

    Currently, the millions of these businesses’ customers and clients can simply go online to one of the many FinTech companies and transfer money to any location in the world in their currency at excellent exchange rates, and have the money deposited within a day, and in some cases, minutes.

    Conversely, there are literally several hundred public and private FinTech companies offering a variety of products and services. The 2021 FinTech 250 list, shown below, features the most promising private FinTech companies from around the world, according to CB Insights’ Intelligence Unit.

    Source: CB Insights

    Some of the biggest names in the FinTech industry in 2021, according to www.reportsanddata.com, include:

    • Ant Group
    • Stripe
    • Adyen
    • PayPal
    • Coinbase
    • Robinhood
    • Square
    • Klarna
    • SoFi
    • Credit Karma

    Many traditional financial companies have incorporated technology into their operations in order to respond to changing trends and become more innovative and inventive in order to attract new customers. However, FinTech still refers to new startups that have emerged in the last two decades or so and are co-existing with established large financial nce companies.

    Don’t look past FinTech giant Amazon

    Amazon is dipping its enormous enterprise toe into FinTech and financial services, according to CB Insights. From payments and lending to insurance and checking accounts, Amazon is engaging in financial services from every angle without even applying to be a conventional bank.

    Amazon’s has an existing strategy in financial services and a vast array offerings — what they have launched and built, where the company is investing. The company remains very focused on building financial services products that support its core strategic goal: increasing customers participation in the Amazon ecosystem.

    “What people never realize or truly understand about Amazon is that part of the recipe for success is daring to try things you have no idea whether will succeed or not, and if you think that you have a notion of how to succeed … you try again.” Patrick Gauthier, ex-PayPal employ and ‘Pay with Amazon’ team lead

    References:

    1. https://www.cbinsights.com/research-fintech-250
    2. https://www.reportsanddata.com/blog/top-10-leading-fintech-companies-in-the-world
    3. https://www.forbes.com/fintech/2021/#33ba693931a6
    4. https://www.cbinsights.com/research/report/amazon-across-financial-services-fintech/
    5. https://millennialmoney.com/fintech-stocks/