May 2017

Most of us do some shopping online. Some of us a lot! So how can we stay safe with using our credit card for all those purchases? Here are a few tips that go a long way toward protecting your assets while taking care of business:

Only shop at sites you know and trust. Most of the problems come from sites that are just a little off the beaten path. That “Unbeatable Deal!” might be a trick to steal your credit card info. But, large well-known sites are seldom a problem.

Credit is safer than Debit. Credit cards have some built-in protection like a limit on your liability. It can be as low as $50 or even zero-liability. Debit cards do not have this same protection.

Secure sites. A secure site encrypts your credit information so it can’t be stolen. Look in the website address for the extra “s” near the beginning. “https”. This means that the site is secure. It doesn’t mean that your 100% safe, but it helps a lot.

PayPal. Is PayPal safe? Absolutely. It may be safer than your credit card because it has powerful fraud and consumer protections in place. If you use PayPal, it’s best to link it to your credit card, not your bank account. This way you’ll also gain the extra layer of protection that your credit card provides. Double protection!

Protect your social. Never give out your social security number for a purchase. It’s never needed for an online transaction. If they ask for it or for more info than is needed for the transaction, cancel the purchase and run.

Review your transactions regularly. Small unfamiliar charges that show up on your bank statement could be a test from a hacker, and can give them the green light to larger fraudulent charges.

Stay Private. Don’t do online transactions on public computers or Wi-Fi. Your credentials could be saved or hacked. This could lead to identity theft or fraudulent credit card charges.

Spectrum continues to get many questions about investing in bonds in a rising interest rate environment.

The study below shows an updated chart illustrating every period of rising government bond rates for four or more quarters since 1982. These results show that while government bonds can have loses due to interest rate risk, high yield bonds can have gains.

The CSFB High Yield Index (CSHY) is designed to mirror the investible universe of the $US-denominated high yield debt market. *Data obtained from Bloomberg.

The primary reason for this is that interest rates generally increase when economic indicators are improving, causing government bond prices to go down. However, an improving economy reduces the risk of owning high yield bonds because they should strengthen as their credit rating improves. High yield bonds act more like stocks than bonds in a favorable economic environment. This is consistent with the Federal Reserve’s commitment to keep rates low until the economy is stronger.

We believe high yield bonds should have more room to continue to be profitable in any case.

An impending recession would provide reason to reduce high yield bond exposure due to the fact that risk of default is high. By moving to a cash position when a recession becomes likely, we will be in a position to reinvest the funds and take advantage of a purchase at much lower prices. Currently high yield bonds offer a yield of 3.6% more than government bonds.

This writing is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction, or as an offer to provide advisory or other services by Spectrum Financial, Inc. in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Spectrum Financial, Inc. expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing. For full disclosure please see disclosures page here.

Month: May 2017 Page 1 of 2

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Rising Interest Rate Risk