Increasing Your Return on Life.®

Frank Talk - 2nd Quarter Newsletter (2019)

Published: 07/31/2019

Table of Contents

Editorial

Written by: Frank Fantozzi

Happy Summer, Clients and Friends!

I hope you and your family are finding ways to keep cool this summer while making memories at a favorite vacation spot, or simply enjoying the company of family and friends. This summer has already solidified its position as one for the record books, with record-high temperatures recorded throughout much of the U.S., and the Dow Jones Industrial Average (DJII) reaching new, all-time highs. Our Market & Economic Update below provides our thoughts on this market milestone, as well as our outlook for the months ahead.

In June, we were happy to once again welcome many of you to our 11th Annual Cleveland Economic Summit. I hope you’ll take a minute to read about this successful event below, along with all the latest news from your team at Planned Financial Services.

This fall, we look forward to celebrating our 25th Anniversary as a firm at a very special event we will be hosting on Thursday, October 24, 2019 at Sapphire Creek Winery & Gardens. Details about the event are included below, under Upcoming Events. Please be sure to mark your calendars now and watch for your formal invitation to arrive in the mail soon! We look forward to celebrating with you.

While Planned Financial Services has experienced significant growth over the past 25 years, welcoming new clients and expanding our team resources and advisory programs, our commitment to helping families and businesses like yours pursue your desired Return on Life® has never wavered. Your happiness is our first priority and the reason so many of you continue to refer family, friends, colleagues and business associates to our experienced team. We are deeply grateful for your continued trust in your dedicated team at Planned Financial Services and look forward to helping you and your family work toward enjoying life on your terms for the next 25 years!  

What’s in It for You?

At-a-glance guide to your 2nd Quarter 2019 Frank Talk newsletter:

  • News & Events
    • Frank Fantozzi named “Northeast Ohio Smart 50 Honoree”
    • Cynthia Yang earns CAIA® designation
    • Smart Women’s Breakfast and Awards
    • 11th Annual Cleveland Economic Summit
  • Upcoming Events
    • Smart Business Family Business & Business Longevity Conference
    • PFS 25th Anniversary Event
  • Market & Economic Update


News & Events

Frank Fantozzi Named “Northeast Ohio Smart 50 Honoree”

Frank was named among Northeast Ohio’s top executives for 2019. Since 2014, the Corporate College Smart 50 Awards, presented by Smart Business recognizes SB 50the top executives of the 50 smartest companies in the region for their ability to effectively build and lead successful organizations. Out of 90 nominations received; 50 awards were granted.

Frank was recognized for his leadership as a business owner and entrepreneur, as well as his long history of service to the greater-Cleveland community.

The award program considers how organizations develop and bring to market new products, services and solutions; how these services, products and solutions benefit clients, the organization, its employees, investors and other constituents; and how the combination of innovation and impact lead to a sustainable, scalable business that develops and fosters community.

All 50 winners were honored at a special celebration, on June 27, 2019, at Executive Caterers at Landerhaven, and in a special editorial report in the June edition of Smart Business Cleveland. Additionally, all guests were treated to a keynote address on what it takes to lead a successful “smart” company. The Smart 50 Awards currently takes place in the cities of ClevelandColumbus and Pittsburgh. Eligible Smart 50 nominees must be a top executive of an organization with a physical office in their award region.


Cynthia Yang Earns CAIA® Designation

We’re proud to announce that Wealth Advisor, Cynthia Yang, CFA®, CIPM, CAIA®, earned the Chartered Alternative Investment Analyst (CAIA®) designation, the globally-recognized credential for professionals managing, analyzing, distributing, or regulating alternative investments. Cynthia’s ongoing commitment to advancing her knowledge in highly technical and specialized areas of wealth planning embodies the firm’s philosophy and belief that a multi-disciplinary team approach is critical for helping clients pursue the Return on Life® they seek for themselves, their businesses and their families.

The CAIA Association established the designation as the benchmark for alternative investment education worldwide, to promote professional development through continuing education, innovative research, and thought leadership, to advocate for the highest standards of professional ethics, and to provide a network for industry professionals to connect globally. Congratulations, Cynthia!


2019 Smart Business: Smart Women Breakfast and Awards Program

SB Smart WomenFor the third consecutive year, Planned Financial Services participated as a program sponsor for the Northeast Ohio Smart Business magazine’s Smart Women Breakfast. The annual event addresses issues facing women in the workplace and recognizes the achievements of leading businesswomen, inspiring male advocates, and effective women’s programs through the Smart Women Awards. This year’s program took place at the Westin Cleveland Downtown, on April 16, 2019. Click here to learn more about this year’s honorees.


11th Annual Cleveland Economic Summit

We hosted our 11th Annual Cleveland Economic Summit on June 12, 2019, at the world-renowned Cleveland Botanical Garden. The 2019 Summit featured two distinguished speakers:

John Lynch Head Shot

John Lynch
Executive Vice President and
Chief Investment Strategist
at LPL Financial

Mr. Lynch shared his midyear outlook for the economy, financial markets, business climate and political landscape. Key points included:*

  • For now, the odds of a near-term recession appear to remain low. U.S. stocks may endure periodic volatility as the bull market ages, but we encourage investors to focus on long-term trends instead of short-term noise.
  • Even though the economic environment has become more challenging, the pillars of fundamental investing—policy, economy, fixed income, and equities—still appear sound to us. We will continue to monitor the impact of trade developments on the indicators we watch.
  • Historical patterns forecast more strength through the end of the year. The S&P 500’s 13% gain in the first quarter was a rare event: The index has risen 10% or more in the first quarter just 10 times since 1950. Stocks’ strong start to a year usually has boded well for the rest of the year, as the index has historically risen an additional 6% over the rest of the year after a first-quarter gain of 10% or more.

Mr. Lynch reminded investors that volatility is the blessing—and curse—of long-term investing. During volatile periods, it can be tempting to make emotional, short-term decisions that could conflict with long-term goals. But we could also view bouts of volatility as opportunities, when suitable, to rebalance portfolios toward long-term allocations. By focusing on the fundamentals, we believe we all can make more prudent and effective decisions about how to achieve our long-term goals.

JoeMarinucci_photo

Joe Marinucci
President and CEO
Downtown Cleveland Alliance

Mr. Marinucci provided insight on the local Cleveland economy, including real estate development, the city’s future growth initiatives, and what he believes Cleveland must do to remain a relevant, competitive and vibrant force among the nation’s top cities. Below are highlights of some of the exciting growth opportunities taking place in Cleveland, including ways the DCA is partnering with organizations to nurture growth and development.

  • Downtown Cleveland is home to 17,500, with residential market rate occupancy operating at 92% and is the largest jobs hub in Ohio with 105,000 workers.
  • Three notable companies, Electronic Merchant Systems, NRP Group, and Millennia Companies relocated their corporate headquarters to Downtown Cleveland, making Northeast Ohio the 2nd largest concentration of corporate headquarter jobs in the U.S. ​
  • 1,544 residential units were under construction by the end of 2018, and 30 new shops and restaurants were added to the retail market.
  • In collaboration with Philadelphia-based Urban Partners, DCA identified housing priorities to meet the demand and fill an additional 3,800 housing units, with a goal of growing downtown’s population to 30,000 by 2030.
  • The efforts of the DCA and our neighborhood based partners to advocate for the creation of Healthline, the Euclid Historic District, the Ohio Historic Preservation Tax Credit Program, the E-Line Trolley, and the inclusion of brick sidewalk and crosswalk pavers to enhance the pedestrian experience serve as a model for future development in Downtown Cleveland. 


Upcoming Events

Smart Business Family Business & Business Longevity Conference

SB_FamilyBusiness2019PFS is proud to participate as a program sponsor for the Smart Business: Family Business Conference and Family Business & Business Longevity Conference, which will take place on Thursday, September 19, 2019, from 7:30 a.m. – 10:30 a.m., at the Westin Cleveland Downtown. Presented by Cuyahoga Community College, the program will feature a dynamic line-up of keynote speakers and panelists, including Frank Fantozzi.

PFS has actively supported the Family Business Conference & Family Business Achievement Awards in various capacities since its introduction in 2012, including being repeat program sponsors, panelists, and attendees. Beginning with the 2019 event, Smart Business will combine its Business Longevity Awards with this conference to also recognize non-family organizations who have reached at least 50 years in business.

Attendees will hear from a dynamic line up of panelists as they share real life examples of what separates success stories from failures. This networking breakfast and interactive workshop will offer perspectives from both industry experts and business owners, addressing issues facing both family-owned and non-family businesses every day. Click here to learn more about the program or register to attend.


Save the Date!

PFS 25th Anniversary Celebration

You and your guest are invited to join us on for an evening cocktail reception on October 24th at Sapphire Creek Winery & Garden as we celebrate 25 years of helping families and businesses pursue their desired Return on Life®

SapphireCreek_Logo
Date:
 Thursday, October 24, 2019
Time:  5:00 p.m. – 8:00 pm
Location: Sapphire Creek Winery & Gardens
16965 Park Circle Drive
Chagrin Falls, Ohio 44023

Watch for more details and an invitation to this event in your mail and email in the coming weeks. Visit Sapphire Creek Winery & Gardens for directions, or to learn more about the winery and gardens.


Market & Economic Update

U.S. economic growth lately has rested squarely on consumers’ shoulders

*Consumer spending likely added about 2.8% to second quarter gross domestic product (GDP), according to the Federal Reserve (Fed) Bank of Atlanta’s GDP forecasting model. At that rate, the consumer’s contribution to GDP would be the highest for any quarter since the end of 2014. Still, when the GDP report is released July 26, we may see that overall growth last quarter was 1.6%, the slowest since the beginning of 2016. Consumer activity has meaningfully lifted growth, but projections show other parts of the economy withered. The makeup of growth has been unusual year to date, a product of trade uncertainty that has plagued the global economy for more than a year now.

Consumer activity rebounded strongly in the second quarter

Recent data has hinted toward a rebound in consumer activity. Our best view of consumer spending’s contribution to economic growth is through control group retail sales, a kind of core reading that excludes some categories. Control group sales have risen for four straight months, the longest streak since the end of 2017. Month-over-month growth in control group sales averaged 0.6% in the second quarter, one of the highest quarterly averages in this economic cycle.

Consumer spending has been primarily supported by a strong U.S. labor market. U.S. companies have added jobs for 105 straight months, by far the longest streak on record. Claims for unemployment benefits have been contained, wages have grown at a healthy 3% clip, and the unemployment rate remains near a cycle low. Fiscal stimulus enacted in 2018 provided an extra boost of income for the consumer through lower tax rates and added tax credits.

Other short-term catalysts have propelled consumer activity as well. Oil prices are historically low after a steep sell-off late last year, allowing consumers to allocate more income from gas purchases to discretionary spending. Consumer activity was also weak in the first quarter (thanks to trade tensions and a record-long government shutdown), so we expected to see a rebound in the second quarter solely from pent-up demand.

The detractors

The U.S. consumer provided a solid base for GDP growth in the second quarter, but it did not get much help from other sectors in the economy. Business investment, housing, government spending, trade, and inventories are collectively expected to drag down GDP by about 1.2%, according to Atlanta Fed projections. Output from trade and inventories alone likely stripped around 1.5% from GDP, almost negating their 1.7% boost to growth in the first quarter.

Most importantly, U.S. businesses need to step up at this point in the cycle. We’ve been watching for a pickup in capital expenditures (capex) growth, especially after fiscal stimulus’ implementation. Year-over-year growth in nonresidential fixed investment has averaged 3.9% in this cycle, the second-lowest rate among all expansions since 1970. We saw a healthy pickup in business spending in the first half of 2018, but that momentum fizzled as U.S. companies sidelined expansion plans in the face of increasing trade and political uncertainty.

Business investment is especially crucial for growth prospects as the personal income boost from fiscal stimulus wanes over the next few years. Higher capex leads to higher productivity, which directly feeds into higher economic output. Productivity also promotes healthy inflation as it keeps employer costs in check.

All the fundamental pieces are in place for a resurgence in capex, but the chilling effect of uncertainty remains. We think some trade uncertainty will dissolve with meaningful progress in U.S.-China trade talks, but only if the policy outlook also stabilizes and businesses believe it’s safe to plan long-term projects. Once there is more clarity on trade, we expect capex to pick up again as companies take advantage of fiscal incentives, record cash piles, and low borrowing costs.

We’re maintaining our GDP forecast of 2.25–2.5% growth in 2019, which implies some moderation from the 3% pace we saw in the first quarter. Even if growth trends lower than our forecast this year, it’s important to remember that annual GDP growth has averaged only 2.3% in this expansion. Average growth is satisfactory at this point in this cycle, but the underlying details show the economy has yet to reach its full potential.

We’re encouraged by strength in consumer spending, especially in the face of global headwinds. Still, we believe capital expenditures will need to rebound as the cycle matures to extend the expansion. A U.S.-China trade deal would be an important first step.


Closing Remarks

Twenty-five years ago, I founded Planned Financial Services on the belief that wealth is only one determinant of success in life. Happiness and fulfillment are dependent on many variables that must come together to achieve each individual’s definition of success—or what we like to call, Return on Life®. Many of you have heard me say this before, but it bears repeating. The amount of money you have means little if your wealth and your goals are not properly aligned to support what matters most to you. Misalignment creates self-doubt, frustration and a mindset that you’ve got to stay on the treadmill, constantly creating more…just in case. As a result, people—and business owners in particular—sacrifice valuable time with family and friends, and the life experiences that bring them true joy and fulfillment. While your personal life experiences are the very things you’re working toward, it can be difficult to get off the treadmill and live the life you desire if you do not know how much is enough. That’s where we provide our greatest value, working through all the financial and nonfinancial issues to create clarity, confidence and the direction needed to help you experience and enjoy what matters most to you. 

We look forward to another 25 years serving your family by simplifying the complexities of wealth. As always, please don’t hesitate to reach out to your experienced team of wealth advisors at 440.740.0130 if you or someone you know has questions or concerns about your personal or business finances. We are always honored to help our clients’ friends and business associates take greater control of their future with guidance from the PFS team. We welcome and are grateful for the many introductions our clients continue to provide.

Real People. Real Answers. 

Health, Happiness, and Good Fortune,

Frank Fantozzi
CPA, MST, PFS, CDFA, AIF®
President & Founder

Frank@PlannedFinancial.com


To review our privacy policy, ADV Part A and ADV Part B, please visit our website at https://plannedfinancial.com/contact-us/

 

IMPORTANT DISCLOSURES

*Research sources provided by LPL Financial, July 2019.

*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 investment(s) may be appropriate for you, consult your financial advisor prior to investing.

All performance referenced is historical and is no guarantee of future results. The economic forecasts set forth in this material may not develop as predicted. Investing involves risk including loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments. All information is believed to be from reliable sources; however, Planned Financial Services and LPL Financial makes no representation as to its completeness or accuracy.

John Lynch, LPL Financial; Joe Marinucci, Downtown Cleveland Alliance; Smart Business; the CAIA Association; and Planned Financial Services are all separate, unaffiliated entities.


Planning for a Tax-Efficient Retirement

Written by: Dan Goldfarb

Today’s longer life expectancies mean that your retirement savings may have to stretch for more years than you anticipated. One strategy for making these dollars last longer is effective tax planning.

Review your income sources

The first step is to estimate your cash needs in retirement and evaluate your various income sources. Most people have a combination of taxable assets (mutual funds, brokerage accounts), tax-deferred assets (IRAs, 401k plans) and nontaxable assets (Roth IRAs, Roth 401k plans). It’s also important to consider Social Security and pensions. Generally, you can begin receiving Social Security benefits at any time from age 62 to age 70. The longer you wait, the larger the benefits, although the ideal time to pull the trigger depends on a variety of factors, including your retirement plans, life expectancy, other income sources and marital status.

You’ll want to coordinate Social Security benefits with other income sources because the higher your income, the more likely you are to be taxed on those benefits. For example, if you’re married filing jointly, and you and your spouse have combined income of over $44,000, up to 85% of your Social Security benefits are taxable. Combined income is generally made up of your adjusted gross income (AGI), plus any tax-exempt bond interest, plus half of your Social Security benefits.

Remember RMDs

Another important factor is required minimum distributions (RMDs). When you reach age 70½, you’re required to begin taking distributions from traditional (but not Roth) IRAs and employer-sponsored retirement plans, regardless of whether you need the money. It’s possible to delay RMDs from an employer-sponsored plan, however, if you continue to work and meet certain other requirements.

Generally, the amount of your RMD is the account balance as of the end of the preceding year divided by your life expectancy, or, if your spouse is more than 10 years younger, your joint and survivor life expectancy. Note: You may be able to minimize the impact of RMDs by making qualified charitable distributions from your IRA. (See “The gift that gives back.”)

Planning before age 70

Once you hit your 70s, you’ll have to start taking RMDs, as well as Social Security. This can trigger substantial taxes. But you can soften the blow with some planning during the early years of your retirement (assuming you retire before age 70).

Many people avoid taking distributions from traditional IRAs and employer-sponsored plans until they have to because leaving assets in the accounts maximizes tax-deferred growth. But this strategy also increases the size of your RMDs, which can create tax issues down the road. Plus, in the early years of retirement, you’ll likely be in a lower tax bracket, so it might make sense to accept some taxable distributions at that time.

One option is to take advantage of your lower tax bracket by converting a traditional IRA to a Roth IRA, either all at once or gradually over several years. You’ll owe taxes on the amount converted, but you’ll then enjoy tax-free growth and tax-free withdrawals from the Roth account, which will lower your taxes down the road.

Bucket challenge

Most retirees have their retirement savings allocated among three “buckets” of assets: taxable, tax-deferred and nontaxable. You should develop a plan for withdrawing these funds during retirement in the most tax-efficient manner.

Suppose, for example, that you’re married filing jointly and your retirement savings are held in a traditional IRA, a Roth IRA and a brokerage account. Each year, you might withdraw funds from your traditional IRA until your taxable income reaches $78,950, the top of the 12% bracket (in 2019 for married filing jointly). Income above that level is taxed at 22% or more. This approach keeps current taxes low while reducing the amount of RMDs in the future.

Next, you might draw from your brokerage account, which will likely trigger long-term capital gains taxes at a 15% rate (assuming your modified adjusted gross income doesn’t exceed certain thresholds, where the additional 3.8% net investment income tax, or the higher 20% capital gains rate, kicks in). You’ll want to leave the Roth IRA untouched for as long as possible, to maximize tax-free growth.

Start now

It takes time to coordinate various income sources and map out an effective strategy for withdrawing retirement savings. To ensure that your plan is tax efficient, start working with your advisors as early as possible.

 

Sidebar: The gift that gives back

If you plan to make charitable gifts during retirement and are at least age 70½, qualified charitable distributions (QCDs) from a traditional IRA may be the most tax-efficient strategy. A QCD allows you to transfer up to $100,000 per year tax-free directly from an IRA to a qualified public charity and to apply it toward your RMDs.

A QCD bypasses your income, enabling you to reduce your taxes even if you don’t itemize deductions. And because it’s excluded from your adjusted gross income, it won’t increase taxes on your Social Security benefits. Far fewer taxpayers itemize deductions under current law, so this strategy is gaining in popularity. © 2019


Investment vs. Speculation: The critical difference

Written by: Cynthia Yang

Last year, the Harris Poll conducted a survey about investing for the American Institute of Certified Public Accountants (AICPA) — with sobering results. Almost half of the survey’s respondents (48%) said they believed that “a volatile market gives them an easy opportunity to make a profit.” In addition, 28% who said they’re involved in household investment decisions perform no investment research, and the majority (63%) of those who perform research do it quarterly or less frequently.

These findings suggest that many Americans could use a refresher course in the difference between investing and speculating. A warning about the threat that the latter poses to an investor’s wealth is also needed.

No promises

Benjamin Graham, known as the “father of value investing,” described the difference between investing and speculating this way:

An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory return. Operations not meeting these requirements are speculative.

No investment truly promises safety of principal. There’s always some risk involved. But investing strategies — including diversification, proper asset allocation and thorough research on specific companies, securities and sectors — advocated by Graham and other investing experts historically have been effective in reducing risk. It’s also important to consider your risk tolerance and time horizon in determining the aggressiveness of your investments. A longer-term view substantially mitigates risk, even for more volatile investments such as stocks.

Speculation, on the other hand, often is based on market timing, hunches, tips and other strategies (including luck). Proponents attempt to earn significant profits based on short-term price swings. But the risk of loss is so high that speculation generally doesn’t have a place in a financial plan focused on long-term wealth creation. There’s substantial evidence that even professional investors, such as fund managers, generally lose money when they try to speculate.

Not necessarily bad

Speculation isn’t always a bad idea. So long as most of your wealth is invested prudently, dedicating a small portion of funds to speculative activities may be acceptable. But you should understand the risk and be prepared for the possibility that you could lose some or all of your investment. In other words, don’t speculate with money you need. Talk to your advisor about the most appropriate investments given your situation. © 2019


Parental Priorities: How to choose a guardian for your child

Written by: Amy Valentine

If you’re a parent, naming a guardian for your minor children in the event something happens to you and your spouse isn’t optional. You may know instantly whom you want to choose, or you may need to think about it. The important thing, if you haven’t yet made this decision, is to formalize your choice as soon as possible with the help of an attorney.

Don’t let the court decide

If you fail to name a guardian in your will, a court will appoint one should it become necessary. The court will base its decision on its assessment of the best interest of your child. But that assessment may be different from your own, and its selection may not be your first choice. So it’s important to name your candidate. This is typically handled through a will, though procedures can vary from state to state.

When it comes to choosing the best candidate, you probably already have a short list consisting of members of your immediate family. This is an excellent start, but don’t forget about extended family members and trusted friends.

Values and practicality

There are many issues you’ll need to consider in making your decision. For example, your parents as guardians may seem a natural choice, but keep in mind that older parents may not be up to the task of raising a young child. Also remember to be practical. You may consider your sister an ideal surrogate parent, but what if she lives across the country and isn’t in a position to move? Relocating could further traumatize your child.

Perhaps the most important issue to consider is whether you and your guardian choice share similar values, such as parenting philosophy, religious and moral beliefs, and educational values. Usually, a family member or friend who shares your values likely is a good candidate. But even if your brother, for example, doesn’t share your religious beliefs, it doesn’t mean you should cross him off your list. You likely won’t find a person who shares all your values.

Separate guardians

If you have more than one child, it’s probably best to name the same guardian for each to ensure that they’ll remain together. However, there can be circumstances when you might name separate guardians. For example, if you have a blended family, you may want to consider one guardian for your children with your ex-spouse and another for your children with your current spouse.

In other cases, it may make sense to name one guardian for your children’s care and another for their assets. The person best suited to raise your children may not have the financial acumen to manage investments — or may simply have a different philosophy about money. Consider placing your financial assets in a trust for your children’s benefit, so that a trustee will have responsibility for managing their financial affairs.

Making the decision

After giving it some hard thought, it’s time to make a final decision. In addition to your first choice, select one or two alternatives. If your first choice decides he or she isn’t up to the responsibility, you can turn to others. When asking the person to be your child’s guardian, ensure he or she clearly understands your expectations and a guardian’s responsibilities. Also, give the prospective guardian time to consider your proposal. It isn’t a responsibility to be taken lightly.

Most parents select a guardian during the process of making a will or estate planning. Ensuring adequate financial support, including money for college, is just as important as naming a guardian. You may need to work with multiple advisors, including an attorney, financial expert and insurance agent. © 2019


8 Tips for Protecting Your Money From Cyberattacks

Written by: Frank Fantozzi

More and more banking and financial transactions are conducted online, which means that cyberattacks pose a significant threat to the wealth of many Americans. How can you mitigate this risk? Consider these eight tips.

  1. Use strong, unique passwords. This may seem obvious, but according to a recent survey, the most common password is “123456.” “Password” is in the top 10. Creating strong passwords for your online accounts — particularly banking, brokerage and email accounts — should be your first line of defense against hacking and other cybersecurity risks. It’s also important to use different passwords for each account or website and to change passwords periodically. Consider using a password manager — such as 1Password or Dashlane — to make the process easier.

  2. Employ dual-factor authentication. Many banking and other sites that contain sensitive information offer dual-factor (or “two-factor”) authentication. This process requires you to enter a one-time verification code, typically sent via text message, in addition to your username and password. It’s one of the most powerful protections available, because a hacker would not only need to obtain your login credentials but also access to your mobile phone.

  3. Beware of phishing. Phishing involves emails designed to appear as though they’re from a legitimate financial institution, but are, in fact, sent by criminals. Phishing emails attempt to steal your account numbers, login credentials, Social Security number or other sensitive information, or to take over your computer. Never click on links or open attachments in emails unless you’re confident the messages are authentic. And keep in mind that banks, legitimate businesses and the IRS never ask for financial or personal information via email.

  4. Be careful with wire transfers. It’s common for sophisticated hackers to intercept legitimate wire transfer instructions and replace them with fraudulent directions to wire funds to an account they control. Always call the financial institution involved in a transfer — at a number you trust, not one listed in the email — and verify instructions over the phone.

  5. Use a dedicated device for financial accounts. You might want to use a separate computer, tablet or other device solely for logging into financial accounts and conducting financial transactions. By refraining from using this device for other purposes — such as email, social media, Web surfing and shopping — you’ll minimize the risk that it will be compromised by malware or other hacking tools.

  6. Avoid unsecure Wi-Fi networks. If you log into accounts or send or receive email on unsecure networks — for example, at a coffee shop or airport — there’s a risk that your login credentials or other information will be intercepted by hackers. If you have no other choice, use virtual private network (VPN) software to establish an encrypted network connection. Make sure your home Wi-Fi network is protected by firewalls and up-to-date security software, and install antivirus and antimalware software on your computers.

  7. Freeze or lock your credit. Placing a freeze or lock on your credit helps prevent hackers from opening new credit card accounts, applying for a loan or conducting other fraudulent transactions in your name. The three major credit reporting bureaus make it relatively easy to freeze or lock your credit information on their websites or via a mobile app. The bureaus also enable you to temporarily unfreeze or unlock credit for legitimate transactions.

  8. Set up alerts for your financial activities. Set up text or email alerts with your credit and debit cards, bank accounts, and other financial accounts. These alerts notify you of transactions above a specified threshold or if your balance falls below a certain level, enabling you to identify and address potentially fraudulent activity quickly.

In today’s digital world, it’s difficult, if not impossible, to avoid conducting financial transactions online. However, by taking precautions, you can minimize cyber risks. © 2019

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