Tag Archive: security


Personal Finance and Investing Basics and Security

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October 24, 2010

Personal Finance and Investing Basics and Security

The foundations of the basics of personal finance are security stability and growth and protection as well as management. Investment growth begins with security.

The subject of personal finance is very broad, but as a beginning, I would like to discuss what I consider the foundations of personal finance: Security, Stability, Growth and Protection & Management. This article will discuss security. Investment growth and financial freedom begins with security.

A good question to ask yourself is what is security? For the average individual it means that you have health, disability, auto and home insurance on top of life insurance. These policies will insurance that if something happens to you your family will be taken care of. If you are the head of household and you make most of the financial decisions make sure you leave explicit instructions for your family to follow. These should include the names and locations of all your insurance policies. The names and numbers of your insurance agents. Include all the basic policy information like account numbers and associated costs. Make sure all your important paper is placed in a secure local like a safety deposit box, at work, or at a friend house. Keeping the only copies of your insurance information in the house may be a problem especially if the house is damaged by a fire.

Additionally you should maintain a emergency fund. This is money which is placed into a money market account which checks can be written from. This is money that can be used if there is a financial or natural disaster. Make sure you have at least six months of income saved up, a year would be even better. This can be done by putting a side a little bit of money each month as well as adding gifted money to the account (from birthdays or inheritances). It is also important that you have will which reflects what you want to be done in the case of your death. It should include references to both finances, personal property, and your personal opinion about life support and end of life options.

Making sure your family is safe and secure can give you the piece of mind to invest fully in the stock market. Often times investors are held back by the fear of risks and losing money. No can predict your success in the stock market. The one thing that all investors know is that sometimes you will fail and lose money. This is less devastating if you do not have all your money wrapped up into your stock portfolio. Having an emergency fund means losing money in the stock market is not the end of the world. It also means that for unexpected bills and expenses can be paid without having to sell of stocks which are mean to be long term investments. Especially in the case of mutual funds and IRAs where they are severe penalties for withdrawing money before retirement. Security is your first step to starting your investment portfolio.

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The Security of Online Personal Finance Software

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October 7, 2010

The Security of Online Personal Finance Software

As the lives of the average American becomes more and more digitally based, online security has become a bigger and bigger issue. For many years, there were constantly stories of identity theft and hackers breaking into credit card company databases. The tales of people losing their life savings or companies surrendering millions of pieces of customer information scared many people into being hesitant about what they put into cyberspace. And for the most part, this has been good advice. There’s obviously no reason to be cavalier with one’s information. As technology has improved, online personal finance software has become more and more popular which has advanced to where it is now able to pay bills, analyze spending habits, and assess taxes. These features are very attractive, especially to people who’ve had a hard time budgeting on their own. But these people are often concerned about security, so its important to consider all of the features of online personal finance software to see if it makes sense from a security perspective.

Online personal finance software features the ability to automatically pay all bills each month on a specified date. This is one of the best features of online personal finance software, but it is one that scares a lot of people. People must submit their checking account information as well as the account numbers for whatever bills they would like to automatically pay. One of the reasons it is safe is because generally the information is stored on the person’s computer, not on the software company’s site, and is then used to pay the bills. Since many banks have offered this feature for years, a lot of people are comfortable with it.

Tax information is also a pretty private matter to most people. Online personal finance software can automatically sift through tax returns and analyze where deductions were missed and the best strategies to use. In some cases, the software can link to the checking account with the auto bill pay feature to deduct the amount of tax owed and transfer it to the IRS. This seems incredibly handy, especially to people with very complex taxes, but having all of that information in one central location seems frightening to some people. It really shouldn’t, especially because most people use a tax preparer and the information is kept at their office anyway. In the case of the online personal finance software, at least it’s kept on the person’s own computer. As a feature to assist with budgeting and other aspects of economic life, online personal finance software has been extremely helpful to many people. There are still concerns about how safe data is. Generally, as long as a person is smart and doesn’t give away their passwords and has good anti-virus software, everything should be incredibly secure. As people warm up to the reality of life in this century, more people are becoming accepting of having online personal finance software help with their financial well-being.

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Europe-wide Small Business Security Survey Reveals Many Problems

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August 9, 2010

Europe-wide Small Business Security Survey Reveals Many Problems

Enforcing basic levels of security seems to be something small European businesses have mastered, especially those that use the Internet as the main medium to conduct their business.  Spyware and viruses are the first terms that come to mind when someone asks for talks about Internet security but the fact of the matter is that there are many more threats that can compromise the valuable data small businesses in Europe rely on.

The recent security survey conducted by Symantec Corp. has revealed some interesting information about the level of security European small businesses put in place and how their data may become compromised by e-mail spam tactics known as phishing.

Spammers and fraudsters seem to be moving away from high tech tools such as viruses or spyware and have begun to focus on methods that require less work (as far as technology) and are more cunning in order to get valuable information from small business owners and use it against them.  E-mail phishing is nothing more than an e-mail that appears to be official and has a set of instructions that will ultimately lead to a data leak.

In order to detect phishing scams one needs to take a hard look at the e-mail address that was used to send the message, the language that is being used and the links such e-mail has.  As a European small business owner you should never assume that an e-mail is legitimate only because it appears to come from an established business.  Copying the images and appearance of a site and applying that “theme” to an e-mail is not hard to do, if a small business owner assumes that an evil message is legitimate just because it looks like the website of a trusted financial institution or business partner to risk being taken is very high.

Phishing e-mails will often contain hyperlinks that will take the reader from the message to a website, paying attention to the URL of the page where you are being redirected can help you identify potential scam.  The Symantec Corp. has revealed that small business owners may not be as vulnerable to viruses as they are to phishing scams, especially when to phishing e-mail targets an employee in charge of the accounts payable or receivable (known as minnowing) or when targets the small business owner and people working in important positions (also known as whaling)

In order to combat such problem it is recommended that European small businesses train their staff in order to make them fully aware of the threats and security breaches that can be caused by a simple phishing e-mail and how to recognize a fraudulent message when it arrives at their inbox.

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The Necessity of Security Education for Small Business

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July 26, 2010

The Necessity of Security Education for Small Business

Email and document security is no longer just an option for
companies, it is a necessity. Couple that with the costly user
licensing of most enterprise software solutions and many small
business operators can be locked out of taking advantage of Best
Practice strategies that ensure the privacy of intellectual
property and communication. Setting rights permissions to
documents and encrypting email will be essential to future
security practices for all businesses.

Common knowledge has been that the less sophisticated small
business operates on a pricing sensitivity and is more apt to
take advantage of promotions, whereas the more sophisticated
make security decisions based on perceived business necessities.
Overall, small businesses tend towards waiting to implement
internet security measures until after suffering an email breach
or informational leak. By this time privacy and accompanying
monetary loss may have already done irreparable harm to a
company’s intellectual property and reputation. Large enterprise
solutions make it necessary to adopt complex IT infrastructures
and processes that are usually dependent on an IT staff – a
solution that does not fit well into the budgets of most small
businesses.

According to published reports in PCWorld.com, there are nearly
70 million small businesses worldwide and over 20 million in the
U.S. alone. Small business is a major part of the global economy
- that means it’s time to replace a general passivity towards
the possible threats from email and document theft with a look
towards initiating security measures as a business standard. The
increasing level of security risk due to email and intellectual
property theft make it imperative for small businesses to raise
their level of security knowledge and investment.

Recent studies show that although information security is a high
concern for small business owners, lack of actual knowledge and
awareness of the economic impact of security incidents is
equally high. Imparting an awareness to the small business
community of the real threats in regards to security
vulnerability should be top priority. Through education in this
arena, small businesses can better enable them to not only
determine their own level of risk but also choose the necessary
email and document security solutions.

The responsibility of raising awareness of security provisions
needs to come not only from governing agency reports, but also
from security solution vendors. Providers of business tool
solutions are better equipped than any other entity to position
themselves as leaders in educating businesses on not only the
dangers but the appropriate basic security measures to
complement a small company infrastructure. Especially here,
being informed on which internet security products best suit a
company need is important as the needs of small businesses are
vastly different than that of enterprise businesses.

Look to numerous market survey and analysis reports that
specialize in studies on information security and small
business. A little research will show they repeatedly state the
same warning to small businesses – they need to change their
attitude towards security and begin adopting a security plan.

Taking the time to gather information on creating good internet
security practices will lead to a decrease in the future cost of
lost productivity, and by educating your workforce you create an
even wider prevention of productivity loss

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Mortgage Security not That Costly

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July 23, 2010

Mortgage Security not That Costly

Forget everything you thought you knew about the benefits of taking a variable-rate mortgage instead of locking in for the long term.

A new study suggests the security of a five-year mortgage costs little or nothing beyond a riskier variable-rate mortgage, providing you get a jumbo-sized rate discount.

“Interest costs on discounted closed five-year mortgages have been close to, and often lower than, those of variable-rate mortgages since late 1996,” senior Canada Mortgage and Housing Corp. economist Ali Manouchehri writes in the study.

Homeowners have made variable-rate mortgages hugely popular in the past few years in the belief that you can save on interest costs by pegging your mortgage rate to your lender’s prime lending rate. As the prime rises, or as has generally happened in the past few years, fallen, so goes your mortgage rate.

The prime rate at the major banks is now 4.5 per cent, while the posted five-year rate at the big banks is 6.15 per cent. In just one year, the variable-rate choice would save you about ,700 on monthly payments toward a 0,000 mortgage amortized over 25 years (assuming a level prime rate).

Historically, you would also have saved a lot. The CMHC study shows that five-year mortgages taken out from 1993 through 1998 would have cost anywhere from ,000 to ,000 in additional interest paid over the term of the loan (the example is based on a 0,000 mortgage amortized over 25 years).

The flaw with this analysis is that it doesn’t reflect real-world mortgage pricing. These days, very few people take out a mortgage without a sizable discount off the posted rates at major banks.

For that reason, the CMHC’s Mr. Manouchehri decided to compare discounted five-year mortgages with discounted variable-rate mortgages. Incidentally, five years is the most popular term by far for fixed-rate mortgages at about 59 per cent of the total.

The size of the discounts Mr. Manouchehri applied was based on the difference between posted major bank rates and the best deals available from other lenders. For five-year mortgages, he used a discount of 1.25 of a percentage point; for variable-rate mortgages, it was 0.4 of a point off prime.

For five-year mortgages taken out between 1993 and mid-1996, the five-year mortgage was costlier in terms of interest costs. Since then, however, variable-rate mortgages have generally been a little bit more expensive.

Obviously, there’s nothing in this study that decides the fixed-rate versus variable-rate debate once and for all.

In fact, the CMHC study may just confuse anyone who recalls some research done for Manulife Financial back in 2000 by York University finance professor Moshe Milevsky. His research found that the extra interest charged on a five-year mortgage would have cost ,000 on average between 1950 and 2000 for a 0,000 mortgage amortized over 15 years.

To make some sense of the variable-rate versus five-year question, let’s go back to the CMHC study.

It shows that five-year mortgages, discounted or otherwise, were especially bad choices for a three-year period starting in mid-1993. Rates were high for a while back then, but they subsequently fell.

You were a spectator to these rate declines if you were stuck in a five-year mortgage, while people in variable-rate mortgages would have benefited almost immediately.

It’s a different world now, though. Five-year mortgage rates are close to a 50-year low, which suggests they’re far more likely to rise over their term than fall.

So what’s the best choice here, variable-rate or five-year fixed rate? People who want to pay rock-bottom mortgage rates for as long as possible will probably still want a variable-rate mortgage. Remember, you can lock this sort of mortgage into a fixed term without penalty in most cases.

The case for the five-year term looks almost as strong, though. First, the CMHC study tells us there may not be a significant cost to locking your mortgage in for five years, and you might even save a little over a variable-rate mortgage.

Second, the likelihood of higher rates in the years to come would suggest that this is a good time to lock in.

If you had a variable-rate mortgage discounted to 4 per cent, the prime would have to go up by 0.85 of a percentage point to equal the current five-year rate. That’s not a lot of ground to cover in the span of 12 to 18 months when the economy is doing well.

Arguably, the variable-rate versus fixed-rate debate is all about risks and rewards. Right now, the five-year option offers much less risk, and almost as much reward.

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Family Finance

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May 16, 2010

One of the hardest things that young couples report during their first year of marriage is getting to grips with joint finances. While most are willing to share what they have with their partner, they are not sure on the best way to bring this sharing into effect so that they can share with their new partner, but at the same time maintain financial security and a degree of independence. Some couples resolve this by resorting to separate finances and others find a way to keep things together, but it is generally reported as one of the biggest strains on newly married couples.

As well as this, there is also the problem that many people find it difficult to budget and control their finances. It is one thing to fail to keep track of expenditures when you are single, but when you are married you have more to answer to than just yourself. This is especially true once you have children. If one partner fails to keep control of their spending while the other is forced to worry about finances, it can create an enormous strain on the relationship.

Family Budget

One of the best answers to this dilemma is to create a family budget. This should outline what is allowed for the various expenses, which is to be responsible for what expenses and how much each partner can spend on discretionary expenses. While this may seem like a drastic response that takes away all the responsibility and financial independence from both partners, all it is really doing is getting both parties to sit down together beforehand and work out how much they can afford to spend on what, and then sticking to this. It is about being in control of your expenses rather than letting them have control over you.

Other ways of taking care of difficulties between married couples is to divide out the family expenses depending on how much each partner earns. This way both will feel responsible for the security of the family and will feel like they are an important contributor to the family finances.

Financial Matters

While each partner should have a degree of financial freedom, and also privacy, finances should be discussed openly and with without shame. Past debts or mistakes that one party has made should be put in the past and should be forgotten. At the same time, if one partner shows that they are unable stick to the budgets they have agreed, their financial freedom will have to be taken from them and they should be given a tight leash in financial matters.

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