Archive for Risk Management

WHILE YOU ARE AWAY, CYBERCRIMINALS WILL PREY by Paul Ferraresi

Travel seems to be on everyone’s calendar. Whatever your travel plans, you can address the cybercrime safety and security issues by reviewing the following checklist.

A SAFE-TRAVEL CYBER CHECKLIST

Don’t discuss travel plans on social media. Do not post travel dates or itineraries, and warn your children not to share their own or their parents’ travel plans – and never reveal when no one is home.

Be wary of public Wi-Fi. You should always use secure connection when going online in public places.

Be careful getting cash and making payments. Be cautious of where you make payments or get cash, since these are the key access points for identity theft among cybercriminals. Using ATMs at a bank branch is safer than using standalone ATMs, and using a credit card for merchandise purchases is safer than using a debit card, which provides direct access to a bank account.

Turn off home computers. The ‘always-on’ computers are more susceptible to hacking.

Back up all data. Storing all sensitive files in a secure facility on the cloud is recommended, as is backing up data onto a removable storage device that can be kept in a home safe.

Change passwords. If you are taking an iPhone on a trip it is suggested that you change your Apple ID password to something long and difficult to hack and turn on the lock-screen passcode.

Register for the Smart Traveler program. The State Department’s Smart Traveler Enrollment Program (STEP) at https://step.state.gov/ is a free service that allows citizens traveling abroad to enroll their trip with the nearest U.S. embassy. Enrollment enables embassies to reach travelers in an emergency, as well as help family and friends contact the travelers.

Protect the home while away. If you will be gone for any period of time you should take the following steps to protect their homes from cybercriminals: Alert the home alarm provider so they will know the house is vacant; ask your alarm company if they offer an encryption tool for their home security system to make it less vulnerable to hackers; disconnect the garage door opener and lock it manually to protect from criminals who can crack the electronic code; and unplug any devices or appliances connected to the internet.

Do You Really Need Life Insurance? Recommend by Paul Ferraresi

Let’s face it. Most people put off buying life insurance for any number of reasons. Take a look at this list—do any of them sound like you?
1. It’s too expensive. In the ever-burgeoning budget of having a family, things like day care and car payments and possibly even college tuition eat up a good chunk of the money each month, and a lot of people think that life insurance is just outside those “necessities” when money’s tight. But two things: life insurance is often not nearly as expensive as you might think, especially when you can get a good policy for less than the cost of a daily cup of coffee at the local café, and well, if money’s tight now, what if something happens to you?
People with no life insurance overestimate its cost by three times. And even those who have coverage, overestimate its cost by two times.1 While it is an expense that you have
to budget for imagine what the financial impact would be
for your family if something were to happen to you and you had no life insurance coverage at all.
2. That’s that stuff for babies and old people, right?
People of a certain age remember Ed McMahon telling
products for adults in their working and retirement years.
3. I’m strong and healthy! You eat right, you stay active, and everyone admires how grounded and centered
you are. You passed your last physical with flying colors! That’s GREAT! But you’re neither immortal nor
indestructible. It’s not even that something could happen to you—though it could—so much as when you’re at your strongest and healthiest, there’s no better time to get a policy to protect your loved ones. If you fall
seriously ill or suffer significant injury later, it will make it tougher to get that kind of policy, if any at all.
4. I have life insurance through my job. Many people are offered life insurance as part of their employee
benefit coverage—and often, it’s the first time they encounter life insurance and have no idea that a $50,000
policy, or one or two times their salary, isn’t as much as they think it is. It sounds like a lot of money (and it
is!), until you realize that it has to cover some or all of the expenses for your loved ones in your absence. Plus,
if you leave the job, it’s typically the type of insurance that doesn’t “move on” with you.

5. I don’t have kids. Sure, kids are a big reason why some people get life insurance. But that’s not the only
litmus test for needing protection. If there is anyone in your life who would suffer financially from your loss—
your spouse or live-in partner, a sibling, even your parents—a life insurance policy goes a long way in making sure everyone’s still okay even if something happens to you.
6. Life insurance—it’s on my list… eventually. There’s no deadline on life insurance, no mandate from the government on purchasing it. Your parents may have never talked to you about its importance, and it’s certainly not the most invigorating topic for conversation. But don’t let your “eventually” turn into your loved ones’ “if only.”
If any of this sounds daunting, just know that it doesn’t have to be. Be sure to talk things through with your
insurance agent. Your financial professional will help you figure out how much you may need, and find a policy that fits into your budget. There’s a policy to fit every budget, and a life insurance agent can help you find coverage that’s right for you.
Information for this article was provided by Life Happens, a nonprofit organization dedicated to helping consumers make smart insurance decisions to safeguard their families’ financial futures:
www.lifehappens.org.
Sources:
1The 2017 Insurance Barometer Study, Life Happens and LIMRA
The opinions voiced in this material are for general information only and are not intended to provide
specific advice or recommendations for any individual. To determine which investments or products may be appropriate for you, consult with your financial professional.
Adult Financial Education Services (AFES)September 2017

PRIVATE ALERT – MARKET CORRECTION from Paul Ferraresi

To: Our Valued Readers

From: Paul Ferraresi, Founders Group

PRIVATE ALERT: 401(k), IRA and Personal Investment

Recently, we have been concerned about the over valuation in the stock market. All valuations methods show the market is in a “frothy” condition that cannot be justified by any logical methodology. This condition has transpired by the irresponsible easy money policies of the Federal Reserve with ultra low interest rates and an unbridled $4 trillion of money creation. An asset bubble exists in the stock and real estate markets. Can the stock market continue to go up? Yes. Forever? No.

The majority of the astute money managers we employ and other well regarded managers have moved to a 20% – 25% cash position in anticipation of a correction.

A top may be approaching as all the institutional and professional managers have been selling while the public is on a buying binge.

Timing the markets is a fool’s game.

Too many investors have over subscribed to passive indexed investing. Which, in general, holds Large Cap stocks. When the public tries to head for the exits in panic selling as the markets correct it will be very nasty.

ALERT
For these groups:

• 401(k), 403(b) and TSP Investments:
Make sure you are up to date with your “Optimizer” program to enjoy the gains yet avoid the losses.

The Optimize program will signal when to move to cash and will preserve your capital. When it is time to reenter the markets you will get another signal to buy in.

• IRA and Personal Brokerage Accounts:
Make sure your risk level is up to date. Use your advisor to select the Tactical Money Manager that will move to cash as the markets turn down and then reenter as the markets turn up.

*Remember Mutual Funds and ETFs cannot move into 100% cash by their prospectus and will take a beating as in 2000 and 2008.

If you need more information on how to safeguard your investments contact us.

Founders Group, Inc.
(713) 871-5919
Jamie@fgmci.com
www.foundersgroupusa.com

RESETTING YOUR INVESTMENT STRATEGIES by Paul Ferraresi

John Maynard Keynes had a great quotation: “A speculator is one who runs risks of which he is aware, and an investor is one who runs risks of which he is unaware.”

So which are you?

Americans for more than 200 years have participated in the stock market as “passive investors”. A more common term used is a “buy and hold” investor. Over a long period of time this has proven to be a good way to accumulate wealth. Mind you, not an optimal way, but rather, a good way. Just set it, leave it alone, add to the account on a consistent basis and deal with the inevitable ups and downs.

Wall Street pundits continue to sing this happy tune of buy and hold as the only way to invest (you see if you took another approach then they would have to “resell” you each time in order to get you back into the market after each correction). Many people do not have the knowledge or time to produce better results, hence, they stay passive investors.

Things began to change for passive investors in the 1970’s as computers came onto the scene of investment management. Many people today do online investing with discount brokers or with their retirement accounts thinking they are being active. Yet, they are still passive investors, in that they go through the ups and downs of the markets. Funny these same investors get out of the market after it corrects. Conversely, as the markets reach new highs they start buying.

These activities confirm academic research which shows the small passive investor has obtained about a 2% return while the markets have averaged 10% – 12%. The results: passive investors, trading or trying to time the market does not work.

Today, worldwide trading is being done 24 hours per day. So while you are sleeping, markets, and your wealth, can be crumbling. Thus, the challenges for the passive investor will continue to increase in an exponential way.

Many passive investors who hold accounts at, say, Vanguard, Fidelity or others have their monies invested in good mutual funds and think they are safe. Unfortunately, as listed in the fund’s prospectus (you have read every page), it states that the manager can never move to more than a 10% – 12% cash position. Consequently, when the market corrects the small investor panics and sells their mutual funds. With only 10% – 12% of assets in cash, this forces the fund manager to sell more shares in a declining market which creates an even larger debacle in share prices.

An alternative to passive money management is known as Tactical Money Management (TMM). Here, selected professional money managers, using computer algorithms, not timing, move client’s money into and out of the market. This is not done on a daily, weekly or monthly basis. Rather, the moves are done when changes in money flow or activities in the market change (their “secret sauce” algorithms).

A Tactical Money Manager’s objective is to capture 70% – 80% of the market upside while eliminating 70% – 80% of the downside. They never pick the exact top nor the exact bottom. At anytime they can move your money into 100% cash or 100% in the market or some combination. The results compared to “passive investing” have been remarkable on the investors behalf.

So, if you think the market will continue to go up and up and never drop then stick with passive investing. If you feel there will be a correction, and a pretty severe correction then you may want to investigate Tactical Money Management.

I believe passive investment strategies will come under severe selling pressure in the coming years. Many investors have their core (and retirement) portfolios in these passive strategies. If you are prepared to ride out another 2001 – 2002 or 2008 – 2009 and then go through what I think will be and even longer and weaker recovery (until our debt issue is fixed), then stick with your passive strategies.

If you are looking for another option let me offer you one.

Contact us at (713) 871-5919 or at Jamie@fgmci.com and we will be pleased to educate you on the time tested successful Tactical Money Management strategies.

Here is to your safe wealth building strategies.

Insurance You Should Have by Paul Ferraresi

Most people try to buy the least amount of insurance in all areas hoping to save on premiums. But penny wise may be pound foolish…

Here is a short article written by Russell Hall. I suggest you share this with friends and family.

Most discussions of insurance and estate planning focus on the value of life insurance to your heirs. Not this one. Instead, let’s consider insurance to protect your income and assets now, and to shield your executor later.

What happens if you’re in a car accident with serious injuries or death – and it’s your fault? Expect to be sued, and to pay a large judgment. Every driver is at risk of losing bank accounts, stocks, bonds, mutual funds, rental property, and other non-exempt assets to a lawsuit.

In Texas, you may keep your homestead, pension, retirement accounts, annuities, and life insurance. However, cash distributions are not exempt, and may go to the alert creditor. You may have substantial non-exempt assets, but what good are they if you cannot spend them?

As a rule of thumb, carry liability insurance equal to your non-exempt assets plus five to ten years of income. Suppose you have a home, an IRA, a modest checking account, and $300,000 in CDs. The home and IRA are exempt from creditors’ claims. The CDs are not. That suggests at least $300,000 in liability insurance. If Social Security and IRA income total $50,000 a year, another $250,000 to $500,000 in liability insurance is indicated. Even someone of modest means may want $500,000 to $1 million in liability insurance.

The typical automobile or homeowners’ policy offers no more than $500,000 in coverage. However, our agent can often provide an inexpensive umbrella policy from the same carrier with limits of $1 to $5 million, which is more than enough for most people.

Suppose you stop driving, pay off the mortgage, and die, judgment-free, without any liability insurance. Who cares at that point? Your executor should. An executor is a fiduciary with the most dangerous, thankless task known to law. They must collect all your assets, pay all your debts, distribute the remainder to your beneficiaries and make no mistakes. As one summarized it, “Whatever happens, it’s the executor’s fault.”

Both liability and property insurance will go a long way to protect the executor, and, ultimately, your heirs. New executors should review the estate with an insurance agent. Existing policies may be adequate. If not, the executor may obtain insurance at the estate’s expense. Better though, that you yourself review your insurance, and develop a plan to protect yourself in retirement. Doing so minimizes everyone’s risk, and leaves one less task to be done when you’re gone.