Ransomware Attacks and Cyber Scams Surge in 2020

Posted on by

Ransomware attacks surged 300% in calendar year 2020, according to Chainalysis. And in 2020, $406.3 million was paid out in cryptocurrency ransoms, 337% more than the previous year. This calendar year’s ransom payments are on pace to pass seven figures.

The attacks have crippled supply chains and critical infrastructure by holding digital information hostage.

  • Colonial Pipeline, one of the largest fuel pipelines in the US, was forced offline for six days in May.
  • An Iowa grain co-op was hit by a cyberattack, and hackers demanded $5.9 million to unlock the organization’s data.

Ransomware is something that government agencies are extremely focused on these days. They’re viewing it on par with terrorist financing attacks. The victims of ransomware attacks are mostly big businesses, where more sophisticated attack appear to be sanctioned by foreign governments such as Russia, China, North Korea or Iran.

However, big business are not the only victims of cybercriminals. Nearly 7,000 individual investors lost a collective $80 million to cryptocurrency scams from October 2020 to March 2021, according to the Federal Trade Commission.

Currently, the biggest type of cybercriminal activity in terms of volume is scamming: your investment scam, your Ponzi scheme, or just a phishing attack. Retail investors are oftentimes more vulnerable to being taken advantage of by scammers. But these scams impact the government as well, because the SEC is chartered to make sure they’re protecting consumers.

The bottomline is that “illicit activity on the blockchain is heating up, from minor scams to elaborate ransomware attacks”, explained Kimberly Grauer, director of research at Chainalysis.

The majority of cryptocurrency activity is legal according to the U.S. Treasury Department. But, cryptocurrency can be exploited by cybercriminals and leveraged for ransomware attacks. Crypto’s decentralized nature can make it more difficult to track down hackers.

The SEC’s Office of Investor Education and Advocacy issues periodic Investor Alerts to help investors identify signs that what is offered as an investment may actually be a scam or fraud. They urge investors to be on high alert in order to protect themselves and others from becoming victims of investment cyber fraud.

The key to avoiding investment fraud and scams is to be an educated investor. Below are five tips from the SEC website investor.gov to help you avoid investment fraud:

  1. Be Wary of Unsolicited Offers to Invest – Cybercriminals look for victims on social media sites, chat rooms, and bulletin boards. If you see a new post on your wall, a tweet mentioning you, a direct message, an e-mail, or any other unsolicited – meaning you didn’t ask for it and don’t know the sender – communication regarding a so-called investment opportunity, you should exercise extreme caution.
  2. Look out for Common “Red Flags” – Wherever you come across a recommendation for an investment – be it on the Internet or from a personal friend (or both), “red flags” such as (a) It sounds too good to be true since any investment that sounds too good to be true probably is; (b) The promise of “guaranteed” returns since every investment entails some level of risk, which is reflected in the rate of return you can expect to receive; and (c) Pressure to buy RIGHT NOW because should not be pressured or rushed into buying an investment before you have a chance to research the “opportunity.”
  3. Look out for “Affinity Fraud” – Never make an investment based solely on the recommendation of a member of an organization or group to which you belong, especially if the pitch is made online. An investment pitch made through an online group of which you are a member, or on a chat room or bulletin board catered to an interest you have, may be an affinity fraud. Affinity fraud refers to investment scams that prey upon members of identifiable groups, such as religious or ethnic communities, the elderly, or professional groups. Even if you do know the person making the investment offer, be sure to check out everything – no matter how trustworthy the person seems who brings the investment opportunity to your attention (think Bernie Madoff). Be aware that the person telling you about the investment may have been fooled into believing that the investment is legitimate when it is not.
  4. Be Thoughtful About Privacy and Security Settings – Investors who use social media websites as a tool for investing should be mindful of the various features on these websites in order to protect their privacy and help avoid fraud. Understand that unless you guard personal information, it may become available for anyone with access to the Internet – including cybercriminals.
  5. Ask Questions and Check Out Everything – Be skeptical and research every aspect of an offer before making a decision. Investigate the investment thoroughly and check the truth of every statement you are told about the investment. Never rely on a testimonial or take a promoter’s word at face value. You can check out many investments using the SEC’s EDGAR filing system or your state’s securities regulator.

Investors on the Internet and social media should always be on the lookout for cyber scams and fraud. If you have a question or concern about an investment, or you think you have encountered fraud, you should contact the SEC or FINRA,

References:

  1. https://www.morningbrew.com/daily/stories/2021/08/23/blockchain-expert-fights-crypto-crime
  2. https://www.sec.gov/oiea/investor-alerts-bulletins/ia_5redflags.html
  3. https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-alerts/updated-11
  4. https://www.sec.gov/oiea/investor-alerts-and-bulletins/investment-scam-complaints-rise-investor-alert

Best Investment Advice – Mark Cuban

Posted on by

“You can’t buy health and you can’t buy love.” Warren Buffett

“The best investment you can make is paying off your credit cards, paying off whatever debt you have.” Mark Cuban

Cuban lived for years on the budget of what he referred to as “a broke college student”, driving lousy cars, eating lousy food and saving, saving, saving. He believed that overspending can be an unnecessary cause of stress, and he advocates for living like a student if that’s all you can truly afford. “Your biggest enemies are your bills,” Cuban wrote. “The more you owe, the more you stress. The more you stress over bills, the more difficult it is to focus on your goals. The cheaper you can live, the greater your options.”

A forward-thinking investor and notorious taker of calculated risks, he built his wealth slowly over time and he derived as much pleasure out of saving as he did spending.

Here is top investing advice from Mark Cuban to builde wealth and achieve financial freedom:

  • Pay Off Debt, Then Invest – Paying off debt before you invest delivers the best returns for your money (capital). “The best investment you can make is paying off your credit cards, paying off whatever debt you have. If you have a student loan with a 7% interest rate, if you pay off that loan, you’re making 7%, that’s your immediate return, which is a lot safer than picking a stock, or trying to pick real estate, or whatever it may be,” Cuban said.
  • Never Invest To Get Out of Trouble – Just like you should never gamble if you absolutely have to win, the same rules apply to investing as a remedy for financial trouble. “If you are buying because you need the price to go up and solve a financial hole you are in, that is the EXACT WRONG time to trade,” Cuban commented. “And we all have to respect people who choose to sell because they need to. Bills don’t care what the market does. Get right and come back later.”
  • Don’t Invest In the Stock Market – Cuban disagrees with investors who think capitalism’s greatest wealth-generation machine is the stock market. “Put it in the bank. The idiots that tell you to put your money in the market because eventually it will go up need to tell you that because they are trying to sell you something. The stock market is probably the worst investment vehicle out there. If you won’t put your money in the bank, NEVER put your money in something where you don’t have an information advantage. Why invest your money in something because a broker told you to? If the broker had a clue, he/she wouldn’t be a broker, they would be on a beach somewhere.”
  • But If You Invest in the Stock Market, Buy an Index Fund – Avoid picking your own stocks or buying into expensive mutual funds — buy an index fund. “For those investors not too knowledgeable about markets, the best bet is a cheap S&P 500 fund,” according to Cuban.
  • Buy a Stock You Believe In and Hold on for Dear Life – Ignore short term volatility and market gyrations. “When I buy a stock, I make sure I know why I[‘m] buying it. Then I HODL until … I learn that something has changed,” using text-slang acronym for “hold on for dear life.”
  • Take Risks — But Play It Safe 90% of the Time – Without risk, there can be no reward, and the bigger the risk, the bigger the potential payout. Cuban suggests that investors to go for broke and swing for the fences — but only with a sliver of their investments. “If you’re a true adventurer and you really want to throw the hail Mary, you might take 10% and put it in Bitcoin or Ethereum, but if you do that, you’ve got to pretend you’ve already lost your money,” Cuban commented. “It’s like collecting art, it’s like collecting baseball cards, it’s like collecting shoes. It’s a flyer, but I’d limit it to 10%.”
  • If One of Those Risks Is Crypto, Stick With the Big Boys – If you’re considering jumping on the cryptocurrency bandwagon, you’d be wise to place your bets on the biggest names in the game because Cuban sees way too many similarities to 1999 for comfort. “Watching the cryptos trade, it’s exactly like the internet stock bubble. exactly. I think Bitcoin, Ethereum, a few others will be analogous to those that were built during the dot-com era, survived the bubble bursting and thrived, like AMZN, EBay, and Priceline. Many won’t,” commented Cuban
  • If You Don’t Understand an Investment, Walk Away –  Investing fundamentals dictates against investing in things you don’t understand. “If you don’t fully understand the risks of an investment you are contemplating, it’s okay to do nothing,” Cuban wrote. “No. 1 rule of investing: When you don’t know what to do, do nothing.” Always invest in what you know.
  • Knowledge Is the Best Investment – The best way to avoid investing in something you don’t understand is to understand whatever you’re invested in. “At MicroSolutions it, “knowledge advantage”. gave me a huge advantage. A guy with little computer background could compete with far more experienced guys just because I put in the time to learn all I could. I read every book and magazine I could. Heck, three bucks for a magazine, 20 bucks for a book. One good idea that led to a customer or solution paid for itself many times over.”

You must be able to earn, save, and manage your spending, then you can start investing and building wealth.

Cuban was influenced by a book called “Cashing in on the American Dream: How to Retire by the Age of 35.”“The whole premise of the book [Cashing in on the American Dream] was if you could save up to $1 million and live like a student, you could retire” Cuban said. “But you would have to have the discipline of saving and how you spent your money once you got there. I did things like have five roommates and live off of macaroni and cheese and really was very, very frugal. I had the worst possible car.”

  1. https://www.gobankingrates.com/money/wealth/millionaire-money-rules/
  2. https://www.gobankingrates.com/investing/strategy/mark-cubans-top-investing-advice

Patience is the Key to 10X Investing

Posted on by

“The stock market is a device to transfer money from the impatient to the patient.”  Warren Buffett

Patience and successful investing are necessary natural partners. Investing is a long-term prospect, the benefits of which typically come after many years. Patience, too, is a behavior where the benefits are mostly long-term. To be patient is to endure some short-term sacrifice or difficulty for a future reward. Patience is an important investment skill which we need to develop more fully and learning it could help you reach your financial goals.

Patience involves staying calm in situations where you lack control. Being a patient investor might not be easy, but there are tools to help you overcome impatience. Here are a few strategies you can use to cultivate patience and clarity of thought in your investing decisions.

  • Have a plan and think long term. Set long-term financial goals and keep them front of mind during volatile times. A written financial plan is a great idea. Long-term thinking helps you mentally separate your investing journey from your long-term financial destination. Keeping a long-term perspective will give you the psychological fortitude you need to grow your portfolio over the long term.
  • Understand that market volatility is normal. Market volatility is a normal part of life. It might still be unpleasant in the moment, but recognizing that you’ll encounter volatile markets will help you mentally prepare for corrections or other downturns.
  • Look for fear or fundamentals. Consider whether a recent stock decline reflects investor fear or actual negative fundamentals. If markets are driven more by fear, you may not need to worry too much about it: Fear-based corrections often turn around quickly. Even if fundamentals have declined, markets may be pricing in a future far worse than reality. In either situation, be patient and stick to your investment strategy.
  • Remember, time is on your side. Take solace in the long history of capital markets. Corrections are temporary and usually brief, and even bear markets eventually end. Historically, markets go up far more often and by a much greater margin than they go down. Owning stocks for the long term is one of the best ways to profit from economic progress, innovation and compound growth.

Time and patience are two of the most potent factors in investing because it brings the magic of something Albert Einstein once called the 8th wonder of the world- Compounding. It’s not easy, but hopefully these practices can help you focus on the long term and take comfort in stocks’ exceptional performance history.

Its difficult to be patient

Your brain makes it hard to be patient. Human beings were designed to react to threats, either real or perceived. Stressful situations trigger a physiological response in people. This is called the “fight-or-flight” response — either attack or run away, whatever helps alleviate the threat.

The problem is, your mind doesn’t recognize the difference between true physical danger and psychological triggers, like a market crash. Being patient is difficult because it means overcoming these natural instincts. Turbulent financial markets can trigger the response causing real-world impacts you’ll need patience to overcome.

During pandemic-driven bear market, your brain perceives a threat to your financial well-being. Even though stock market volatility isn’t a physical threat, the fight-or-flight response kicks in, emotion takes over, and your brain starts telling you to do something. Your investment portfolio is perceived as being harmed and your metabolically influenced to take action.

With investing, action too often translates into selling something because selling feels like you’re shielding your portfolio from further harm. But selling at the wrong time — like in the middle of a major downturn — is one of the biggest investment mistakes you can make.

If you can find a way to invest inexpensively in the market and stay in the market, you can start to build your net worth. Success in investing requires patience.

“In the end, how your investments behave is much less important than how you behave.” Benjamin Graham

You need patience when what you are invested in is performing poorly—and you need it when what you don’t own is performing well.

one of the most valuable traits an investor can have is patience. If you are a patient investor and decide on great businesses, there is virtually no scenario where you will not make money.

Investing your money in great companies over time will grow into a fortune. Switching in and out of investments cost investors significant returns over time.

“Waiting helps you as an investor and a lot of people just can’t stand to wait. If you didn’t get the deferred-gratification gene, you’ve got to work very hard to overcome that.”  Charlie Munger

When it comes to investing, staying invested is quite often the most prudent and smartest approach for long-term investors. While there will always be market volatility and corrections, the key to successful investing is to stay focused on your goals.

References:

  1. https://www.entrepreneur.com/video/342261
  2. https://www.etmoney.com/blog/time-and-patience-two-key-virtues-to-become-successful-in-investing/
  3. https://www.thestreet.com/thestreet-fisher-investments-investor-opportunity/patience-the-most-underused-investing-skill

Believe in the Power of Compounding

Posted on by

“Compounding is the eighth wonder of the world.” Albert Einstein

It is said that Albert Einstein once noted that the most powerful force in the universe is the principle of compounding. In simple terms, compound interest means that you begin to earn interest on the interest you receive, which multiplies your money at an accelerating rate. This is one significant reason for the success of many top investors.

Believe in the power of compounding

The key to successful investing is patience to search and wait for great companies that are selling for half or less than what they were worth (intrinsic value), and to hold the investment for the forever. The task is to try to buy a dollar of value for a fifty cents price, and to hold the investment for the long term.

  • Compound interest is the interest you earn on interest.
  • Compounding allows exponential growth for your principal.
  • Compounding interest can be good or bad depending on whether you are a saver or a borrower.
  • Think of stocks as a small piece of a business
  • Think of Investment fluctuations, volatility, are a benefit to a patient investor, rather than a curse.
  • Focus your attention on businesses where you think you understand the competitive advantages
  • The more people respond to short term events allow patient and value investors to make a lot of money.
  • Buy stocks when things are cheap. It’s important to control your emotions.

The key is that if you spend less than you earn, you put something away, and that little something can become more and more and eventually what you want to do is you want to be your own boss.” Mohnish Prbrai

Four important factors that determine how your money will compound:

  1. The profit you earn on your investment.
  2. The length of time you can leave your money to compound. The longer your money remains uninterrupted, the bigger your fortune can grow.
  3. The tax rate and the timing of the tax you have to pay to the government. You will earn far more money if you do not have to pay taxes at all or if the taxes are deferred.
  4. The risk you are willing to take with your money. Risk will determine the return potential, and ultimately determine whether compounding is a realistic expectation.

Rule of 72

The Rule of 72 is a great way to estimate how your investment will grow over time. If you know the interest rate, the Rule of 72 can tell you approximately how long it will take for your investment to double in value. Simply divide the number 72 by your investment’s expected rate of return (interest rate).

“The first rule of compounding: Never interrupt it unnecessarily. The elementary mathematics of compound interest is one of the most important models there is on earth.” Warren Buffett

The power of compounding is truly visible with billionaire investor Warren Buffett, the Oracle of Omaha. He first became a billionaire at the age of 56 in 1986. Today, his net worth is over $100 billion at the age of 90-plus. And that’s after he donated tens of billions of stock to charity. His wealth is due to compounding, over 99% of the billionaire’s net worth was built after the age of 56.

When you understand the time value of money, you’ll see that compounding and patience are the ingredients for wealth. Compounding is the first step towards long-term wealth creation.

References:

  1. https://www.thebalance.com/the-power-of-compound-interest-358054
  2. https://www.valuewalk.com/2020/07/power-compounding-getting-rich/

Taper Trantrum

Posted on by

The Federal Reserve is discussing tapering, or slowing down the loose monetary policiy of bond purchases (quantitative easing).

The Federal Reserve has started dropping hints it’s going to begin tapering the quantitative easing that has been going on since March 2020 in response to the COVID-19 pandemic and subsequent economic shutdown.

Tapering is the process when the Federal Reserve reduces Quantitative Easing (QE) and begins scaling back their asset purchase program.  By gradually backing off or ending their asset purcase program by the middle of 2021, they would avoid disrupting financial markets.

The taper tantrum refers to the reaction of financial markets to the Fed’s announcement in 2013 that it might begin to scale back the pace of its asset purchases. The taper tantrum was an indicator that markets had become far too dependent on the Fed’s stimulus for their financial well-being and were addicted to its easy money / loose monetary policy.

Reducing bond purchases could provide more flexibility for the Fed to raise interest reates if inflation stays high within the economy and unemployment continues to fall.

No one know for sure how the market will response when the Fed slows Quantatative Easing. The fear of Wall Street is that the Fed could begin tapering much faster than had previously been expected.

References:

  1. https://seekingalpha.com/article/4435971-welcome-to-the-taper-tantrum-of-2021-and-buckle-up

Greater Financial Transparency of Chinese Stocks

Posted on by

“The problem is, there’s all sorts of incentives to raise money on public markets in China, and there’s no penalty for fraud. So why should you not commit fraud in order to raise more money?” Anne Stevenson-Yang, Research Director at J Capital Research

Gary Gensler, Chairman of the U.S. Security and Exchange Commission (SEC), wants greater transparency of Chinese stocks listed on U.S. exchanges. He wants the risks of investing in Chinese companies that list on U.S. exchanges and that cook their books and commit rampant fraud to be made more clear and apparent.  Gensler, like many American investors, consider investing in Chinese stocks extremely risky because they don’t completely trust Chinese companies’ financial reporting.

For example, the Chinese company, Luckin Coffee, was found to be a fraud after an internal investigation revealed the fabrication of approximately $300 million in revenue. The investigation found that the fabrication of sales began in April 2019, and involved inflating costs and expenses by almost $200 million, as well as booking $300 million in false revenue.

Recently, the Senate passed a bill that could essentially ban many Chinese companies from listing their shares on U.S. exchanges, or raising money from American investors. The companies would be subject to audits by U.S. regulators for three consecutive years. If they do not comply, they would be banned from trading on the exchanges.

Anne Stevenson-Yang believes that the SEC should not wait for three consecutive years of non-compliance. Instead, she believes that this three year look will not happen expeditiously enougn to save U.S. investors from Chinese fraud and scams. She suggested that U.S. auditors should get “immediate and thorough access” to audit papers. “If they’re not given access, then the companies should immediately be delisted. Why wait three years?”

Delisting Chinese stocks on US exchanges that do not comply with US accounting and listing standards would be justify because of financial fraud or lack of transparency.

Delisting means that a Chinese company traded on an exchange like the Nasdaq would lose access to a broad pool of buyers, sellers and intermediaries. The centralization of these different market participants helps create what’s called liquidity, which in turn allows investors to quickly turn their holdings into cash.

“Chinese financial authorities have gone out of their way to reassure foreign investors and markets have responded with a powerful rally,” said billionaire investor George Soros. “But that is a deception. Xi [Jinping] regards all Chinese companies as instruments of a one-party state. Investors buying into the rally are facing a rude awakening. Xi’s China is not the China [foreign investors] know. He is putting in place an updated version of Mao Zedong’s party.”

References:

  1. https://www.cnbc.com/2020/07/06/investing-fraud-at-china-luckin-coffee-fraud-case-warning-for-investors.html
  2. https://www.fool.com/investing/2021/09/05/should-you-worry-about-fraud-with-chinese-tech-gia/
  3. https://www.fool.com/investing/2020/07/01/luckin-coffee-reveals-findings-of-internal-fraud-i.aspx
  4. https://www.cnbc.com/2021/01/05/heres-what-happens-if-you-own-a-share-of-a-chinese-company-that-gets-delisted.html
  5. https://www.msn.com/en-us/money/markets/investors-who-buy-into-chinas-stock-market-rebound-are-set-for-a-rude-awakening-says-george-soros/ar-AANUgci

Auto Enrollment Retirement Plans are Here

Posted on by

“Americans aren’t saving enough for retirement and nearly half of people 55 and older have nothing saved for when they stop working. Government Accounting Office

Nearly one in four working-age Americans aren’t saving for retirement, and those who are say they aren’t saving enough, according to a PwC analysis. Further, a majority (55%) said they either are not participating in a workplace sponsored retirement plan like a 401(k) or they don’t know if they are in a plan.

The Government Accountability Office reports that nearly half of people 55 and older have nothing saved for when they stop working, meaning there is a building retirement-savings crisis and a wave of future retirees threatens to overburden an already fragile Social Security Administration. Consequently, this can upset a balanced economy that relies on older Americans spending money in the housing and health-care sectors.

Auto-enrollment retirement plans

Auto-enrollment and auto-escalation programs implemented by a few states have proved successful at closing that gap, particularly for workers in retail and service sectors of the economy. These sectors in the past have rarely offered retirement benefits to low-income staff.

In fact, plans that used automatic enrollment had a 92% participation rate in 2020, compared with 62% for plans with voluntary enrollment, according to Vanguard’s “How America Saves 2021” research. And, employees who worked for firms with automatic enrollment saved more than 50% more for retirement in 2020 than those employed at firms with voluntary enrollment.

Further, research shows that participants enrolled in a plan with automatic increase save, on average, 20% to 30% more after three years in the plan, compared with participants in an automatic enrollment plan that does not automatically increase participants.

As a result, Congress is proposing a Federal mandatory framework for workplace retirement plans. Starting in 2023, the retirement saving plan would require employers with more than five workers to automatically enroll new hires for retirement benefits, the contributions to which would automatically increase over time.

In short, businesses would automatically deduct 6% of new workers’ income into a low-cost retirement plan and automatically escalated that contribution to 10% over time, unless workers themselves opted for something different.

It’s mandatory for employers, but not their employees, who can choose to opt out of the savings plan or change their contributions. But the default choice would always be to signup, essentially making retirement funds a statutory benefit like unemployment or workers’ compensation insurance.

Failure to provide a low-cost retirement option such as a 401(k) or individual retirement account would cost a business an excise tax liability of $10 for every worker per day of noncompliance, which would add up.

Over the last two decades, continued adoption of automatic solutions has increased employee savings and the use of professionally managed allocations. Thoughtful retirement plan designs are helping people save and invest for retirement.

References:

  1. https://news.bloomberglaw.com/daily-tax-report/retirement-savings-and-democrats-latest-tax-plans-explained
  2. https://www.pwc.com/us/en/industries/asset-wealth-management/library/retirement-in-america.html
  3. https://institutional.vanguard.com/content/dam/inst/vanguard-has/insights-pdfs/21_TL_HAS_InsightsToAction_2021.pdf

Apple Issues Emergency Security Update

Posted on by

Apple released critical software patch to fix latest security vulnerability

Apple issued an emergency software update to fix a security flaw that researchers said allowed hackers and governments to invisibly spy on Apple users without so much as a click.

The “zero-click” exploit was discovered by cybersecurity research group Citizen Lab. The researchers said Israeli cybersecurity group NSO Group has been exploiting the software vulnerability since February.

To install the software fix, ensure your iPhone is plugged in or has at least 50 percent battery life. Then:

  • Go to Settings.
  • Click General.
  • Click Software Update.
  • Click Install Now to update to iOS 14.8.

Although cyber security experts contend that the retail iPhone, iPad and Mac users generally need not worry, since such attacks are highly targeted, the discovery still alarmed cyber security experts. “Users of mobile and computing platforms need to make checking for security updates a part of their weekly, if not daily routine,” wrote Steve Turner, an analyst at the tech consulting firm Forrester.

References:

  1. https://www.huffpost.com/entry/cybersecurity-apple-security-update_n_613faff0e4b0628d095f108
  2. https://support.apple.com/en-us/HT201222
  3. https://us-cert.cisa.gov/ncas/current-activity/2021/09/13/apple-releases-security-updates-address-cve-2021-30858-and-cve

Spending Less in Retirement | Kiplinger

Posted on by

“Expect to spend 55%–80% of your current income annually in retirement.” Retirement Income Replacement Ratio assumes you’ll spend about 55% – 80% of the income you’re making before you retire every year in your retirement.

Effectively, spending patterns change during retirement, according to an analysis of Bureau of Labor Department. For example, starting at age 55, spending tends to increase slightly, as some younger retirees travel or take on new pursuits. In the age range when most are retired at 65+, there is a significant drop in overall spending, according to Fidelity.

This chart shows average annual household spending by age group. Spending ranges from $57,725 per year for those under age 55 to $36,717 per year for those in households over age 75.*

Specifically in retirement, spending on food, entertainment, and transportation remains relatively stable, while spending on housing tends to go down and spending on health care goes up.  According to research by Fidelity Financial Solutions, you should plan on factoring in approximately 15% of your retirement expenses will be related to health care expenses.

Lifestyle is another big factor to consider in estimating how much you will spend in retirement. Increasingly people tap into their savings to create a more active lifestyle that includes travel, adventure, and new activities.

Fidelity’s research suggests if you plan an active lifestyle in retirement, it will,ratchet up your overall retirement budget by 6 percentage points compared with a less active lifestyle.

Reference:

  1. https://www.kiplinger.com/retirement/602328/10-things-youll-spend-less-on-in-retirement
  2. https://www.fidelity.com/viewpoints/retirement/spending-in-retirement

Humble Leaders Make the Best Leaders

Posted on by

“A great man is always willing to be little.” Ralph Waldo Emerson

One of the most important traits of top leaders and performers in any organization is humility, according to an article written by Jeff Hyman for Forbes. Yet, humility is not typically the first trait that comes to mind when you think about great business leaders. The idea of a humble, self-effacing leader making the best leader for an organization doesn’t come to mind.

Humility is defined as the act of being humble and as the opposite of narcissism.

“A number of research studies have concluded that humble leaders listen more effectively, inspire great teamwork and focus everyone (including themselves) on organizational goals better than leaders who don’t score high on humility,” Hyman writes.

In the book Good to Great, author Jim Collins found two common traits of CEOs in companies that successfully transitioned from average to superior market performance: “humility and an indomitable will to advance the cause of the organization”.

Further, according to research cited in the Journal of Management, “humble leaders enhance team collaboration, information sharing, and joint decision-making. After examining 105 small-to-medium-sized companies, the researchers discovered that humility and leadership had profound effects on performance. Another study that analyzed nearly 100 business leaders also showed increased team effectiveness when humility and leadership existed side-by-side.”

A recent Catalyst study shows that humility is one of four critical leadership factors for creating an environment where employees from different demographic backgrounds feel more valued and included. In the survey, they found that when employees and team members observed altruistic or selfless behavior in their leaders, they performed measuredly better. The factors are characterized by:

  1. Acts of humility, such as learning from criticism and admitting mistakes;
  2. Empowering followers to learn and develop;
  3. Acts of courage, such as taking personal risks for the greater good;
  4. Holding employees responsible for results.

“Rather than telling employees how to do their jobs better, start by asking them how you can help them do their jobs better.” Daniel Cable, author of Alive at Work

The study raises one universal implication: To promote inclusion and reap its substantial rewards, leaders should embrace a selfless, servant leadership style. Here are the practices to promote inclusivity at one company, Rockwell Automation:

  • Share your mistakes as teachable moments. When humble leaders share their mistakes, they create a culture of continuous learning and growth.
  • Engage in dialogue, not debates…to truly engage with different points of view. Inclusive and humble leaders suspend their own agendas and beliefs
  • Embrace uncertainty. When leaders humbly admit that they don’t have all the answers, they create space for others to step forward and offer solutions.
  • Role model being a “follower.” Inclusive leaders empower others to lead. 

Secret sauce of humble leaders

“Rather than calling attention to one’s self, humble leaders readily acknowledge the contributions and greatness of others. Instead of constantly showing how right they are, humble leaders look at their weaknesses and work on their areas for personal improvement.” Bold Business

Humble leaders understand that they are not the smartest person in every room and know how to get the most from their people and teams. “They encourage people to speak up, respect differences of opinion and champion the best ideas, regardless of whether they originate from a top executive or a production-line employee.”

When a leader works to harness input from everyone, other executives and line managers emulate the leader’s approach, and develop an internal culture of getting the best from every team and every individual takes root.

Additionally, when things go wrong, humble leaders admit to their mistakes and take responsibility. When things go right, they recognize their people and shine the spotlight on others.

Media and society tends to trumpet and “to be impressed by charismatic candidates with powerful personalities and a commanding presence”, according to Hyman.  Instead, Hyman’s advises managers during the hiring process to “search for quiet confidence, humility and a focus on others”.

In short, when leaders are humble, show respect, and ask how they can serve employees and team members to perform better, the outcomes can be outstanding and provide a much better recipe for success.

References:

  1. https://hbr.org/2014/05/the-best-leaders-are-humble-leaders
  2. https://www.catalyst.org/research/inclusive-leadership-the-view-from-six-countries/
  3. https://hbr.org/2018/04/how-humble-leadership-really-works
  4. https://www.forbes.com/sites/jeffhyman/2018/10/31/humility/?sh=33d404041c80
  5. https://www.boldbusiness.com/human-achievement/humility-leadership-combination