Time Is Money

Saving for retirement has taken a back seat to other items in your budget for far too long. You may be waiting for the economy to recover, feel you don’t have enough money to save, or have simply decided to wait until you are “older”. Although planning for retirement can seem daunting, you will find relief in knowing that an early start is one of the most successful strategies. By putting time on your side, you increase the number of years your money has to grow and decrease the monthly amount you’ll need to set aside to secure a comfortable nest egg. 
Let’s look at it in action. If you had a choice of receiving $100,000 toward your retirement today or a penny that doubled for 30 years, which would you choose?  Most would choose the $100,000 and miss out on a whopping $10.7 million.                                             

Although financial institutes don’t offer an annual percentage rate of 100% the above example illustrates the power of compound interest.  Compound interest is the concept of earning interest on top of interest. It’s the reason a penny can grow to ten million dollars without another cent being added to the account. Each year the dollar amount of interest earned increases in response to a growing balance.  Without compounding, the account would have only gained $0.01 a year and grown to a measly $0.30.


Getting a head start on savings will also lower your monthly retirement bill making it easier to fit into your budget. Imagine you discover by using a retirement calculator that you’ll need $500,000 to retire at 65.  If you start saving at age 25 your monthly commitment would be $78 to achieve your goal, if you wait until you're 35 that number increases to $219. That extra $141 a month could be used to save for a house, pay off debt or take a vacation. What you use the money for money for is insignificant to the high price you pay for procrastinating.  


Now that you’re clear nothing can replace the rewards of starting early, here are three things to remember when socking away money for retirement:    

  1. Maintain a positive attitude

Don’t look at saving as a burden. Focus on how you’ll feel once you’ve reached your goal and take pride in knowing you are taking the necessary steps to plan for your tomorrow today.   


  1. Perform Checkups 


Examine your progress at least twice a year.  Make sure you’re on track to retire at your desired age. Verify your money will last throughout retirement and confirm you'll be able to afford the lifestyle you want during retirement. To help with your examination work with a financial advisor or try one of the free retirement calculators on bankrate.com.  


  1. Keep a long-term perspective 


Sometimes you’ll look at your balance and feel you’ll never reach your goal. You’ll come up with a million and one reasons to withdraw your money.  DON’T DO IT! Remember you can only replace missed time with more money and who's signing up for that?  
We must be proactive in planning our financial future.  With the cost of living increases, staggering health care cost and a troubled social security system we must partner with time to accumulate an adequate retirement fund.       


Copyright © Manyell L. Akinfe-Reed 2020 All Rights Reserved. No part of this document may be reproduced without written consent from the author.


photo of a chain

Protect Your Neck: Avoiding a Personal Security Attack

With every crisis comes a ton of identity thieves and fraudsters; the COVID pandemic is no different. Having your identity compromised can be a nightmare. On top of dealing with the uncomfortable feeling that someone has invaded your privacy you’re forced into crisis management to avoid further collateral damage.  While many of us have previously taken this topic lightly, attitudes are quickly shifting due to the percentage of time we spend communicating, working and transacting on our phones and computers.

As of May 28, 2020, the Internet Crime Complaint Center received nearly the same amount of complaints in 2020 (about 320,000) as they had for the entirety of 2019 (about 400,000). In addition, the Federal Trade Commission reported a 46% year-over-year increase in identity thefts from 2018 to 2019.

I predict this number will be higher in 2020 and continue to rise through 2021.  Avoiding the attitude, it will never happen to me is the first step to protecting your identity. It’s important to understand that you can be a victim of identity theft even if you have bad credit, a small bank account and no job. Although, there’s no bullet proof strategy for avoiding identity theft, implementing a few best practices can provide you piece of mind and may reduce the time you are inconvenienced.


Invest in Identity Protection

Sign up for identity theft protection. Every major credit card company and commercial bank offers this service. It usually ranges from $10-$30 per month. I suggest purchasing a package that monitors all three reports: Experian, Equifax and TransUnion.

If you’d prefer an independent provider, I recommend LifeLock. They have services that not only protect your credit but monitor all activity using your name and social security number. If you experience a breach these services will help sort through the mess and save you a lot of time.


Update your Contact Information

Ensure your contact information is updated on all your bank, credit and other important accounts. They will often reach out to you if they see abnormal activity on your account. Recently, I couldn’t gain access to my account because the verification code was going to an old cell number. I’d never been locked out of my account and had to jump through hoops to confirm my identity.   Thankfully it wasn’t one of my major accounts, but the experience was totally avoidable. This is an easy win but it’s a step we sometimes overlook.


Embrace Unique Passwords

Your passwords need to be unique and different for all your accounts. I know it’s a pain to keep track of them all, but an easy password is like leaving your front door unlocked. Passwords should include numbers, special characters and both upper and lower case letters.  They should not be your birthday, address, phone number or anything else that can be found in a simple Google search. While short passwords are easy to remember, using the maximize number of characters permissible significantly reduces the chances an attacker will crack it.


Back it Up

Backup all the information on your cell phone and computer. I recommend using an external hard drive and committing to a time in your schedule biweekly or monthly to ensure the information is updated.  I know everything is in the “cloud’ these days, but there were over 9,600 reported data breaches last year, so a good old fashion tangible hard drive is still a safe bet.   


Spot Phishing Emails

Phishing is a scam where criminals send a fake email that appears to be legitimate to steal your access codes and gain access to personal or company data. Over the past six months, I’ve received several emails claiming my Apple ID was used to make a purchase.  If I wasn’t conscious, I would have exposed my personal information. To avoid a phishing attack be sure to check the sender’s address and ask yourself, “do I know this person and does this person usually send this type of request to me?”  Review the email address not the name shown. It’s usually long and abnormal.  Phisher’s emails also frequently try to convey a sense of urgency creating the feeling that you need to act immediately.

Being proactive can decrease the stress and anxiety that arises when your identity and safety have been jeopardized. Trust me, I’ve had my share of scars and attempts of my information being compromised. Let my hindsight be your 20/20.


Copyright © Manyell L. Akinfe-Reed 2020 All Rights Reserved. No part of this document may be reproduced without written consent from the author.

Sam Cook. Identity theft facts & statistics: 2019-2020. Comparitech, https://www.comparitech.com/identity-theft-protection/identity-theft-statistics/

COVID State of Mind

Earlier this year, a Capital One study reported that 77% of Americans felt anxious about their personal financial situation. While we can only guess what the percentage is today, we can predict it’s higher. Today’s levels of uncertainty are impacting everyone regardless of where your mental health stood pre COVID.  Anxiety is a result of stress, and stress shifts our brain into survival mode where decisions are made decisively but not always accurately. Before making changes to your finances during this time ask yourself three important questions. 

What’s my why?

Why are you making this decision now? Are you acting out of fear or necessity?  Avoid making decisions immediately after listening or reading financial news.  While the state of the economy is important, it may have little bearing on your current financial situation.  Take a moment to digest information you hear and consider how it applies to you before acting upon it.  


What are the consequences?

Are there positive or negative consequences to the decision you are making? Many companies are offering flexible payment terms, and the passage of the CARES act relaxes access to tax advantage retirement funds. Before taking advantage of any concessions you need to ensure it won’t unexpectedly worsen your situation. If you delay payment, or take a loan how much will it cost you in interest or time? What are the terms? Sometimes slight relief now means more grief later. Be sure you take the time to perform a full analysis of all the consequences.  


Am I making a change to my financial goals?

Every decision you make brings you closer or takes you further from your financial goals. Nobody wants to sign up for the latter, but in times like these your circumstances may call for it.  If you need to borrow money, miss a payment or shift things around to make ends meet, that’s okay. What’s not okay, is failing to establish a plan to get back on track as soon as possible. The power is in the plan. 


Not many personal finance decisions require a knee jerk reaction. Investing the time to ask yourself these questions will decrease the chances of you making a financial move you’ll later regret.