6 ways to take control of your investments and financial future

You may be powerless over the high unemployment rate or low interest rates on savings accounts, but even in a stubbornly tough economy there is a great deal you can control when it comes to your financial life.

Here are six ways to exert control in times like these:

1. Investments turned sour? Evaluate what went wrong.

If you're like many Americans and have suffered a loss in the last few years, take a step back and view the situation objectively to evaluate what happened, advises money expert Saly Glassman in her new book, "It's About More Than the Money: Investment Wisdom for Building a Better Life" (FT Press: 2010) Glassman, ranked the nation's No. 1 woman financial advisor by Barron's, says blaming everyone else leaves you powerless. Maybe it wasn't all your fault, but there may be some things you did that contributed to the loss. Perhaps you had unrealistic expectations, or were overextended. Once you have a good reading on the situation, you can plan how to avoid those same mistakes.

2. Figure out how much you need for retirement

A troubling number of people have no idea how much money they'll need in retirement. A survey conducted in May for Allianz Life Insurance Co. of North America, asked people whether they'd be more likely to guess how much they'd have or need in retirement or how many gum balls were in a jar at the local county fair. Only 53 percent felt more certain about their ability to estimate retirement needs.

Most experts say you need 70 percent to 90 percent of your pre-retirement income to maintain your standard of living. Contact the Social Security Administration and request a Personal Earnings and Benefit Estimate Statement to project how much Social Security income you'll get. Add in other sources of income, such as pensions. Then calculate how much of a nest egg you'll need to make up the difference between Social Security and pension income and the amount you'll need to live each year for the rest of your life.

3. Play catchup with retirement investments

Government tax provisions let you save an extra $5,500 in a 401(k), on top of the $16,500 you're already allowed to contribute if you're 50 or older. For a traditional IRA or Roth, you can pitch in another $1,000 on top of the $5,000 limit, and for a SIMPLE IRA, you can add in another $2,500 in addition to the $11,500 limit if you're at least 50.

4. Redo your budget to set aside more for savings accounts

It's a good idea to review your budget periodically. Perhaps your pay has been cut, or you'd like to beef up your emergency savings fund. If so, see where you can cut back and set up an automatic savings plan by having money diverted from a checking to a savings account every month.

5. Pay down credit card debt

New rules under the CARD Act, signed into law in May 2009, provide protection against interest rate hikes on existing balances and and other unfair practices by issuers. Still, credit card interest is wildly expensive, especially if you carry a big balance from month to month. Create a plan to pay off your cards and keep credit card debt from dragging you down.

6. Shop around for best interest rates

Yes, interest rates on CDs, money market accounts and savings accounts are abysmal when compared to rates offered during the years before the recession hit. So do what you can to get the best rates possible today. Shop online to compare rates in addition to checking with your local banks.

These aren't the only ways to take control of your financial life. Look for others to improve your bottom line, both now and for the future.

Investments that are too good to be true

Claims of high-yield investment programs touted on websites and social media like Twitter and Facebook understandably get your attention, particularly in light of stock market volatility and today's low interest rates on CDs, money market accounts and savings accounts.

After all, who wouldn't want to earn a 20 or 30 percent return in as little as a day?

Sound unbelievable? It is, but a surprising number of people fall for the sales pitch.

Federal authorities recently charged Nicholas A. Smirnov of the Philippines with 10 fraud-related counts for allegedly running an international Ponzi scheme through a website called Pathway to Prosperity, which promised investors annual returns of 500 percent and more but made very few investments. The scheme resulted in losses of $70 million by 40,000 people in 120 countries, including the United States, according to the U.S. Department of Justice.

The Financial Industry Regulatory Authority Inc. recently released an investor alert warning consumers against these schemes.

Beware of unregistered investments

High-yield investment programs are unregistered investments created and touted by people who aren't licensed to sell securities. They promise high returns through vague trading strategies, FINRA says, and many are Ponzi schemes.

The number of new federal investigations into these programs ballooned 105 percent in fiscal year 2009 over fiscal year 2008, the Federal Bureau of Investigation recently reported.

Operators use websites and social media to promote the programs and create a buzz. Some sites create forums for trading tips or even caution investors against high-yield investment programs to appear as if theirs was not in the same category.

"But the reality is virtually every HYIP we have seen bears hallmarks of fraud," FINRA said in its alert.

FINRA describes HYIP sites as a "bizarre substratum of the Internet" where sites rank the latest programs, blog and chat about how to win at HYIPs and rely on online payment systems, some of which have been tied to crimes like identity theft.

Protecting your investments

Here are tips from FINRA about how to spot scams and protect yourself:

• High, unsustainable yields and unclear investing strategy

These programs promise incredible returns but give little clue as to the operation will get them for you. Be skeptical, and remember rankings and testimonials can be faked.

• Little information about the program operator

Don't invest in anything that doesn't spell out who invests the money, where the program is headquartered and who and where you call to get information. Off-shore operations raise a red flag, too. Sites outside the United States are usually not licensed to sell securities anywhere, especially here. Verify who you're dealing with and make sure they're licensed to do business with you, FINRA advises.

• Use of e-currency sites

Although there is no federal regulation of e-currency sites, many states require them to register with a banking regulator. An unlicensed e-currency site is a bad sign.

• Incentives to recruit others

Beware of programs that offer big rewards for getting others to come on board.

Finally, if you've already invested in a high-yield investment program, don't send more money, try to get in and out before the house of cards falls or refer other investors to make bonuses.

Low bank rates, and the general sluggishness of the economy are frustrating for savers, but you're better off investing in a certificate of deposit or money market account than throwing your money away on scoundrels. Get the best interest rates you can by comparing CDs, money market and savings accounts online.

Investments of Life Insurance Proceeds

When a loved one with life insurance dies and you're named a beneficiary on the policy, the insurer typically places the money for you in something called a retained asset account, which comes with drafts -- similar to checks -- which you can use to draw cash from the account.

These accounts have been around for a couple of decades, but recently regulators and consumer advocates have raised questions about whether insurers, who make hundreds of millions of dollars from investment gains on the accounts, provide consumers with enough information about their options. Here are four considerations for retained asset accounts.

1. Take your time to mull investments

Life insurers say they provide retained asset accounts to give you a place to hold your money, a safer option than just mailing a big check at a time when you're dealing with the loss of a loved one. Having the account from the outset means you don't have to rush into opening new accounts or make immediate investment decisions.

2. Not covered by FDIC insurance like money market accounts, CDs and savings accounts.

A retained asset account isn't protected by FDIC insurance if it's held by an insurer. FDIC insurance covers only deposits held by depositories, with a cap of $250,000 per person per financial institution. Retained asset accounts are covered, however, by state life and health guaranty associations, which provide coverage for policies when insurance companies go under. Most state guaranty associations cover up to $300,000 in life insurance death benefits, which would extend to retained asset accounts, according to recent testimony by the National Organization of Life and Health Insurance Guaranty Associations President Peter Gallanis at a meeting of state insurance commissioners. Coverage caps vary by state, so check with your state's guaranty association to learn what the limits are.

Keep the book of drafts you get with the account in a safe place. News reports have pointed out instances when beneficiaries fell victim to fraud because acquaintances stole and forged drafts. In rare instances these consumers were caught in a tough conflicts between the insurer and the bank that processed the drafts.

3. Interest rates

Your money earns interest in a retained asset account. Find out how much, and compare that with other options, such as CDs and money market accounts. In a recent consumer alert, the National Association of Insurance Commissioners advised you to ask how the interest rate is determined and how it will be credited to your account. Insurance companies say their accounts' rates are competitive. Prudential Financial, for instance, says interest it paid on retained asset accounts beat prevailing rates for checking, savings and many money market accounts in the last five years. Do some comparisons on your own.

4. Payout options

State insurance commissioners say to be sure to read and understand all the information the insurer sends you and take your time deciding the right payout option. A variety of options are available, such as taking the money in one lump sum, in installments or receiving interest only and passing the proceeds onto your beneficiaries after you die.

Consider your financial needs and tax status as you mull options, and take your time to decide. You should never feel pressured to act quickly, the National Association of Insurance Commissioners says. If you need help, go to a financial or tax advisor you already know and trust.

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Disclaimer:This content is not provided or commissioned by American Express. Opinions expressed here are author's alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through American Express Affiliate Program.

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