So many of us are focused on how we can make the maximum amount of money possible. While this is important, learning how to protect your money is equally as critical. There are many different threats and risks out there that you need to be aware of, such as fraud, identity theft, stolen bank cards, and hackers. Thankfully, there are a variety of measures you can take to help protect your money.

protecting your money

Potential Risks

  • Fraud: Fraud is a major risk that you need to be aware of. Fraud simply means somebody attempting to deceive you or someone else for either personal or financial gain. An example of this are the spam calls that all of us have been getting about your car’s extended warranty expiring. In this example, the scammer is attempting to deceive you into giving them your credit card or bank account information to then steal your money. 
  • Identity Theft: Identity theft, although it is a form of fraud, is an extremely dangerous risk to your money. Identity theft is where somebody attempts to steal your identity, usually by obtaining your social security number and other important personal information. In some cases they even use digital synthetic identities that are so realistic most fraud detection services are fooled. They then use your identity to open up new credit cards or bank accounts, among other things. The risk of this is that, as the account is tied to your identity, any debt can potentially be your responsibility and severely impact your credit score.
  • Stolen Bank Cards: Most people, at least once in their life, have checked their bank accounts to see a bunch of charges they didn’t make. Usually, this happens through somebody illegally obtaining your debit or credit card, whether it’s through theft or you simply misplacing your wallet.
  • Hacking: Another common risk you need to be aware of when learning how to protect your money is a hacker gaining access to your bank accounts. This can happen either through hacking the bank directly (which is extremely difficult, as banks and other financial institutions have a ton of safeguards in place) or by hacking either your phone, app, or username and password.

Best Practices: How to Protect Your Money

Now that we’ve shared a few common risks that you should be aware of, we’d like to give you a few basic, simple best practices that will help you protect your money. You might already be aware of some of these, but they are all important when thinking about how to protect your money.

Check Your Accounts Often

One of the easiest things you can do to protect your money is to check your checking, savings, and credit card accounts daily.  Although it might sound a little extreme, taking the 5 minutes to briefly check your accounts allows you to stay on top of any potentially fraudulent transactions. 

monitor credit score

Monitor your Credit

There are many sources available to monitor your credit and even get notified if your credit is being checked or a new account is being opened in your name.

Lock your credit file when you are not applying for new credit. This can be a simple way to protect your identity and restrict fraudsters from impersonating you even if they gained access to your personal data. In order to lock your credit file, you will need to contact each of the following three credit bureaus: Experian, Equifax, and TransUnion

Do Research on Your Bank

One of the most important steps you can take in learning how to protect your money is to thoroughly research your current and/or future banks. You will want to make sure your bank is FDIC-insured, which protects your money up to $250,000 per account. Another crucial thing to research is whether or not your bank has good customer service. Lastly, you’ll want to learn about any potential missteps that your bank has had in the past, such as the Wells Fargo scandal a decade ago, where employees were fraudulently opening new accounts without customer awareness.

Don’t Share Your Bank Info With Anyone

This seems like a no-brainer, but it’s actually one of the most common ways to have your identity or money stolen. Unless you are calling your bank directly, under no circumstances should you share your bank account information with anybody, even if they seem legitimate. 

two factor authentication

Use Strong Passwords & Multi-factor Authentication (MFA)

Strong passwords and MFA can help prevent unauthorized access to your accounts. By having long, complex passwords that you change frequently, you reduce the risk of somebody or a computer program guessing your password. Multi-factor authentication is another way to keep your accounts safe. MFA uses 2+ checks to confirm your identity, such as entering a password and then inputting a numerical code texted to your phone number. 

Be Sure You’re Using Secure Devices & Networks

You should only log in to your financial information from a secure, personal device and secure (password-protected) wifi network. It’s much easier for hackers to gain access to your data if you are using an unsecured, public device or wifi network. In a perfect world, you’d have a dedicated computer to access your finances, but this obviously is not realistic for most.

Protect Your Money w/ Marygold & Co.

Marygold & Co. is a new financial services app that’s dedicated to helping organize your financial life and reach your financial goals.

Not only is it revolutionizing budgeting and expense tracking through a new feature called Money Pools, but Marygold & Co. is extremely concerned with safety and security. That’s why we employ state-of-the-art technology like biometrics with facial authentication to determine if a government-issued identification is authentic and a selfie of a live person matches the picture on the ID.  This is highly effective because fraudsters don’t like to have their real picture taken and faking a real face is not an easy task. 

Other security measures like multifactor authentication and fingerprint credentials offer additional layers of protection once an account is opened.

You shouldn’t entrust your hard-earned money to just anybody, and Marygold & Co. will not only help protect your money but it gives you all the tools needed to push towards your financial goals.

A basic thesis on Wall Street is that what has worked well in the last market cycle is likely to underperform in a new cycle, and conversely, the underperformers of the last cycle can or should be the outperformers of the new cycle.

The basic logic is intuitive – an asset class that had been a leader in the previous run-up will, at some point, become overpriced and will struggle in the future without significant earnings growth to support the higher prices.  

Historically speaking, small caps outperform large caps. 

This makes sense because investors need to be compensated for the increased volatility and risk in the small-cap space. 

Also, over the long term, value stocks outperform growth stocks. 

Since 1926, value investing returned 1,344,600% vs. 626,600% for growth stocks, according to Forbes Advisor. And some of the most famous investors on the planet (think Warren Buffet and Benjamin Graham) are value investors.     

But largely none of these long-term trends mattered over the last few years of this past market cycle. 

The bull market of the last decade seemed to make investing quite easy, large-cap growth dominated, and as long as you held the big-name tech stocks your portfolio, probably did well.  

This trend was exacerbated during the COVID-19 global pandemic. 

During the 2020 bear market caused by the pandemic, U.S. markets bottomed on March 23, 2020. From that bottom, the S&P Growth Index initiated a historic recovery and peaked on September 1, 2020.  

Much has been made in the media about how quickly markets recovered from the market bottom, but that outperformance was mostly a product of the “Big 5” stocks (Alphabet, Amazon, Apple, Facebook, and Microsoft).  

As of September 2, 2020, those five stocks had a year-to-date performance of 65%, the other 495 stocks in the S&P 500 had a total YTD performance of just 3%. Since the fourth quarter of 2020, the story has begun to shift to the performance of small caps and specifically small-cap value. 

At the end of the first quarter of 2021, the top two performing sectors of the S&P 500 were Energy and Financials.  

reversion to the mean

What Does it Mean?

Is the “reversion to the mean” a story of small caps over larger caps, or is it Energy & Financials over Tech and Consumer Discretionary?  

It is still early and we will continue to watch how this plays out.  The main point here is to not be married to a thesis that worked very well in 2020, because the markets may have already started to revert to the mean.  

“This time is different” is a phrase commonly heard toward the end of market cycles.  

If you hear someone tell you that “this time is different”, run! This time is not different.  

Math does not evolve over time. Corporate price/earnings ratios and other investment metrics matter just as much as they have in the past.  

Don’t chase performance.  

What happened in the past, even in the recent past, is not guaranteed to continue in the future.  

“We engage in the folly of short-term speculation and eschew the wisdom of long-term investing.  We ignore the real diamonds of simplicity, seeking instead the illusory rhinestones of complexity.”

– John C. Bogle, Enough: True Measures of Money, Business and Life

The idea of investing to achieve our goals CAN BE very straightforward.

Focus on the long-term, diversify, and do not use products with high fee structures.

The world of investing does not need to be complex and stressful. However, there are some investment firms that seem to do a pretty good job of making it seem so complex that most of us could not figure it out on our own, and this is just simply not true.

Long-term investing can and should be easy to understand.

investing vs speculating

Trading Options

I’ve had several people talk to me about trading options recently.

Perhaps because of recent congressional hearings or perhaps because now even the more conservative retail investment firms are running TV commercials talking about trading “iron condors”.

My opinion is, for the large majority of retail investors, options involve more risk than upside and should be avoided.

Ask yourself, “Who is on the other side of that trade? For me to win my bet, who has to lose?”

Then perhaps ask if you feel you have better information than the large Wall Street firms?

wall street buildings

“Wall Street investment banks are like Las Vegas casinos: They set the odds. The customer who plays zero-sum games against them may win from time to time but never systematically, and never so spectacularly that he bankrupts the casino.”

– Michael Lewis, The Big Short: Inside The Doomsday Machine

It is important to understand the difference between investing vs speculating.

Do you understand the investment you are considering, and why it is going higher or lower?

Do you have experience in the industry and know who is taking the other side?

We have numerous media outlets that now focus on short-term trading, which is fine, as long as we understand that this is speculation, not investing.

investing vs speculation

Investing should not be stressful! 

We should feel good about putting our money to work for us. And if we have a long-term approach it doesn’t take a lot of work on our part. As long as we understand our goals and match our investment strategy to meet those goals, it becomes a straightforward endeavor.

And stay away from get-rich-quick schemes and short-term speculation that is difficult to understand. Knowing the difference between investing vs speculating is empowering.

In the profound words of John C. Bogle…

“The obvious conclusion: investors win; speculators lose.”

– John C. Bogle, Enough: True Measures of Money, Business and Life

“Managing our finances can feel overwhelming, and sometimes it even feels like financial companies want to keep it that way.  The “paradox of choice” is real – way too many options, but not enough information on how we can pick the right solution.  And then we question the financial decisions we’ve made.”

– Timothy Rooney, President, Marygold & Co. Advisory Services

Welcome to Marygold & Co.!  We are building an easy-to-access community for financial assistance, for people to learn about their finances, share their experiences, and make decisions for their financial futures – all from a mobile device!

So, Why Me, Timothy Rooney of Marygold & Co.?

What makes me qualified to assist others in reaching their financial goals? Because I’ve been building new products and businesses for large financial companies for longer than I’d like to admit!  I’ve created mutual fund businesses, exchange-traded funds, and retirement plan products, to name a few.

Why Marygold & Co.?

We want to share our experience with you to help you make knowledgeable financial decisions, so you can reach your goals. We can’t wait to get the conversation started, and hopefully provide some support to a happy, healthy, and inclusive community!

At Marygold & Co., we believe that financial decisions don’t need to be overly complicated, and it typically starts by asking a few questions about what we plan to do with our money:

  • What are the goals or outcomes we hope to achieve?
  • Should I invest or pay down debt?
  • If we’re looking to invest our money, is it a short-term or long-term investment?
  • Am I saving for a vacation next year?  To buy a car in a few years?  Or to retire – hopefully at a much younger age than my parents?

Financial Assistance with Challenges

By answering some basic questions about our goals we can remove much of the “clutter” that makes financial decisions appear to be so complex.  Complexity creates paralysis, or what large firms like to describe as inertia.  Studies have shown that when faced with a complicated financial decision we have a tendency to do nothing, afraid of making the wrong decision.

We believe there is a better way.  We want to help you break down and simplify these financial challenges.  Focus on the outcomes you want to achieve.  And tune out the clutter!

Let’s learn, share, & do our finances together! I can offer you financial assistance.

You can tell whether a man is clever by his answers; You can tell whether a man is wise by his questions.

– Naguib Mahfouz, Egyptian author and Nobel laureate: Literature (1911 – 2006)

Investing does seem complicated, but it doesn’t necessarily need to be! Part of the problem is the sheer volume of information that comes at us, provided through various forms of media. Some of those forms seem designed to make us feel that everyone else understands investing better than us.

Consider the Time it Takes to Invest

Have you ever watched one of the financial channels and seen the commercials that talk about how “easy” it is to trade options? Trust me, trading options is not easy – unless your goal is to lose money. In that case, it is plenty easy. Keep in mind that television networks that focus on money & investing have many, many hours of programming to fill. And good, fundamental long-term investing is, frankly, boring. Building wealth is a long-term endeavor. Happy investors know this and use it to their advantage – investors that try to find shortcuts usually end up sad.

So what do we do? One way to approach money management and investing is to start with a few basic questions:

  • If I am looking to invest, what is the time period I plan to hold the investment?
  • Is it 1-year, 5-years, or 10+ years?
  • How much debt do I have?
  • If I do have debt, is it a student loan at 5% interest, a car loan at 8%, or am I paying down credit card balances at 17%?

Consider Your Debt

There is a difference between what some call “good” debt, like a mortgage at 3%- 4% and “bad” debt, like a credit card balance that comes with a 16% – 18% interest rate. One rule that many experts agree on is that you should not consider investing in mutual funds, Exchange Traded Funds (ETFs), or individual securities unless you have paid off your credit card debt.

Here is one example: if I am considering an investment in the stock market via ETFs, but I’m currently paying a car loan that charges 8% interest, I should ask myself if I feel very confident that I will experience a return in excess of 8% on the investment. If the answer is “I really don’t know” it may be best to consider paying down the debt. That is a good place to start.

OK, now I’ve paid down my high-interest debt and I’m ready to begin investing.  Start with a basic question. In this case, ask yourself:

  • What am I investing for?
  • Are we saving for a vacation next year?
  • Are we saving to buy a car in five years?
  • Is this likely to be retirement money 20+ years out?

Consider “Money Pools”

It is helpful to start by bucketing your investment dollars based on the expected time horizon for the investment. We can call these buckets “tranches” that allow us to focus on different defined outcomes.  Time is a significant factor when it comes to investing and these outcome-based tranches should be invested differently. When we build these investments within Marygold for our clients we call them “Money Pools.”

Investing in equity markets is generally a solid investment in the long-term, but markets tend to experience significant volatility in the short-term.  For example, the S&P 500 index lost over 4% in 2018 but gained over 31% in 2019.  And there has been nothing normal about 2020, with the S&P 500 dropping 34% from February 19th to March 23rd, and the U.S. economy falling into recession driven by the Covid-19 health crisis.

In the history of the U.S. stock market, we’ve only seen one 30% plunge that happened faster, in 1987 when the S&P 500 fell over 31% in only 14 days culminating in the “Black Monday” crash of October 19th that saw a drop of more than 20% in one day. Global and U.S. stocks have started to recover since March, but volatility is likely to remain elevated.

Consider Your Investment Strategies

If I have an investment tranch that I plan to tap into in the next year or two, I’m going to invest conservatively – think savings accounts, money markets, or other cash equivalents. For my long-term investments like my retirement account that will be invested for a decade or more, utilizing a diversified portfolio of equity and fixed income securities via ETFs is typically a sound strategy. And once we establish our long-term investment strategy we need to stay disciplined and not overreact to short term volatility.  As many experts have cautioned this year, “panic is not a strategy”.

Consider What You Invest In

Lastly, I need to distinguish between smart investing and gambling. If I had $1,000 to invest I would not be “looking for the next Tesla” as I’ve heard some say. I would probably be looking at passively-managed ETFs that are broadly diversified and come with low-expense ratios. There is another old market adage that is always appropriate – “the bull and the bear go to market, but the pig goes to slaughter”.

We can make the process of long-term savings and investment easier by asking ourselves a few basic questions. Do I currently have outstanding debt? If so, is it better to use my savings to pay it down? If I’m ready to put some money to work in the stock market, then I start by asking how long I intend to hold the investment. Time is always an important consideration when investing. If we begin by asking ourselves what we intend to do with the money or said another way, what is the outcome we hope to achieve,  it starts to make the process much more straightforward.

Investing can seem complicated, but it certainly doesn’t need to be.