Risking It When Investing

Sometimes one partner is a risk taker and wants to invest in things that aren’t really iniStock_000034071002_Medium the other’s comfort zone. Some generally consider it better to invest where returns are higher, but that also means a higher risk! Is there some sort of middle ground?

It’s a good idea to think (and talk) this through. Many couples face the same question, and while the simplest solution might be to split your funds down the middle and invest as you each see fit, that’s not likely to bring peace or wealth into the relationship. In a marriage, for one thing, whether accounts are titled separately or jointly, they are considered marital assets (even 401Ks). And a healthy relationship depends on working jointly toward financial goals, not going it alone.

One of the most difficult issues for couples to resolve is how much risk they’re willing to take with their investments. According to Fidelity’s 2015 Couples Retirement Study, 47 percent of couples disagree about how much money they’ll need to maintain their lifestyle in their later years. Even more troubling, a Harris survey found that 33 percent of couples weren’t saving anything for their retirement years. And, of those who were, one in five said they were clueless about how much their partner was contributing to their accounts.

Some tips if you’re starting down the investment road together:

  • As in so many areas of a relationship, communication is key. Let your spouse or partner know you’re willing to research options together and come up with a plan. Erica Coogan, partner at Moss Adams Wealth Advisors in Seattle, recommends that each partner complete a risk assessment questionnaire and then compare answers. “It makes a subjective conversation a little more objective,” she says.
  • Remember that planning needs to cover both spouses, not just a breadwinner. Experts advise couples to be mindful of the “It’s my money because I worked for it” syndrome. Couples need to work together on a plan for investing (and spending) their money, no matter who earns it. Apart from any resentment, an uneven divide in the ownership of assets can make a mess of cash flow, estate planning and taxes.
  • Consider transparency. Wherever you stand on risk, consider selecting some investments that are, by nature, transparent. This includes individual stocks, bonds and exchange-traded funds. You can also reduce risk by diversifying your portfolio across asset classes. Ask a financial advisor at your credit union for help in untangling the strands of modern-day investing.
  • Think about your time horizon. Allowing an investment to compound leads to much better returns. So, if you’re the more risk-averse half of a couple, and you’ll need your money within 10 years, say with confidence to your partner: Slow down. Remember that it doesn’t make intuitive sense (but is nevertheless true) that your money doubles in seven years if you earn a compounded annual return of 10%. Don’t let a little fumbled math lead to a rash or risky decision.
  • Keep the goalposts in sight. Your mutual goals will determine how, and how much, the two of you should invest. For instance, when do you want to retire? Do you plan to pay for your kid’s college expenses? Purchase a home (or a second home)? Start a business?

Finances are one of the leading causes of separation. The more ownership and open communication a couple has over this potentially rocky topic, the less likely it is that they’ll panic when there’s a ripple in their plans or something happens in the markets.

Your Turn: Do you and your spouse or partner disagree about investments? Let us know how you’ve smoothed that potentially rocky road and headed for a secure sunset.

SOURCES:
https://blog.wealthfront.com/couples-investing-risk-assessmentwww.gofffinancial.com/investing-for-couples
http://money.usnews.com/investing/articles/2016-09-21/5-common-investment-mistakes-that-couples-make
http://www.bankrate.com/finance/investing/5-steps-effective-investing-as-couple.aspx#slide=2

Beware The Boom: Diversify Your Portfolio To Protect From The Bust

There’s always a “next big thing” in investing. In the early 2000s, it was Enron. In 2008, it was real estate. Seeing outlandish returns from high-performing sectors can lead investors to chase the herd and pour most of their capital into a narrow segment of the economy. It hasn’t worked out well in the past.
The most important protection you can provide for your portfolio is a diverse range of assets. While this seems straightforward, it can be difficult to put into practice. Let’s look at four ways you can diversify your holdings that may not be so obvious.
1.) A whole-market fund
Among the most popular investments is the whole-market exchange traded fund. These securities represent, roughly, a share of the entirety of a particular index. Rather than picking individual securities, you invest in a mutual fund that balances its holdings to capture the performance of an entire listing, like the S&P 500 or the Dow Jones Industrial Index.
These funds tend to be insulated from the gains and losses of specific companies. After all, if one company in a sector goes down, there’s more market share left over for its competitors. While that insulation doesn’t allow investors to reap all the rewards of an outlier security that’s performing well, it also protects investors from catastrophic loss of value. Think of it this way: The kind of economic disaster it would take to wipe out the 500 largest companies in the world would have much broader ramifications than your retirement portfolio, and even cash stuffed in your mattress would likely be worthless at that point.
Whole-market funds do well, historically, averaging around 6% growth a year. Some years will be up, and others down. However, over time, the trend line points upward. Whole-market funds are an easy way to diversify a portfolio.
2.) Diversify kinds of holdings
While a whole-market fund is a fairly diverse investment strategy, there are ways to balance the volatility of the stock market. Investing in a blend of asset classes, including bonds, provides security against the tumultuous nature of the stock market. Generally speaking, bonds are safer than stocks but offer less opportunity for growth. When stocks suffer, bonds tend to increase in value. So, holding a percentage of your assets in bonds will help protect you against the bumps in the stock market road.
What percentage of your assets should be in bonds is a difficult question to answer. It depends upon, among other factors, your age, how close you are to retirement, and your individual tolerance for risks. As a rough guideline, 100 minus your age is a good starting point. Your exact ratio will vary based upon your income and your estimated retirement age.
Like with stocks, it’s safer to invest in funds that buy lots of little pieces of bonds than to buy individual bonds yourself. Individual bonds can lose value because investors doubt the ability of the investor to pay it off. Diversifying your bond holdings provides a maximum of security.
3.) Diversify your income
If you lost your job, how would it impact your retirement plans? Most lIkely, you’d have to postpone retirement for a few years, depending upon how quickly you could find new work in your industry. What if you lost your job because of an industry-wide contraction, though? It might hurt more than your present income.
This doesn’t mean you should get a second job in an unrelated industry. Rather, be careful not to rely too much on stock in your employer’s company. If your company experiences tough times, it might have to reduce staff AND its stock price would fall. If you’re holding most of your assets in company stock, that could put you in a difficult position.
By all means, take advantage of matching funds and employee purchase plans. Be cautious when doing so, though, and be sure to keep your overall portfolio in line with your individual risk tolerance. You may like your employer, but that’s no reason to trust a single company with everything.
4.) Diversify your accounts
Even the perfect blend of stocks and bonds is still very susceptible to the ups and downs of the market. Suppose you have a sudden need for the money you’re saving for retirement. Perhaps you’ve experienced an emergency medical expense or other personal catastrophe. If all of your holdings are in an investment account, you might be forced to sell at a loss.
That’s why saving in a variety of places is important. Invest in your retirement account, but don’t neglect certificate accounts for mid- to long-term savings, and your share account for a rainy day fund. When your money is spread over a number of places, you can always have access to at least a portion of it when you need it.
Think of your savings like a garden. If you plant just one kind of seed, you’re out of luck if it doesn’t take. When you plant many different kinds of seeds, you have better chances to harvest fresh vegetables. The same is true of your investments. Putting your money in only one place is a risky strategy. Try to ensure all your bases are covered.
YOUR TURN: How do you protect your assets from the bumps and bruises of the economy? What diversification strategies do you use to keep yourself safe?

Steps You Can Take For Filling Your Pension Gaps


After a lifetime of hard work, many people expect to retire in some comfort and enjoy their remaining years. In some lines of work, especially public service professions like police and firefighting, the retirement package is a big part of the recruitment process. Yes, the hours are long and the work is dangerous, but the community values the services these individuals provide and the professionals appreciate the assurances that they will be taken care of after their working years have ended.

However, with states facing increasingly harsh economic times, many in government have been rethinking this arrangement. More people are living longer, which would otherwise be good news. In this context, though, the additional payouts are part of what’s creating a budget crunch. Many states, notably Illinois and Michigan, have been embroiled in efforts to cut benefits to retired workers.
According to economist Andrew Biggs, these difficulties stem from a chronic underfunding of benefits programs by state and local governments over the past decade. Faced with losses in tax revenue caused by recession, states and localities saved money for the present by not paying for the future. After years of this conduct, these programs are now running out of money.
Private sector pensions aren’t safe either. Several large, multi-employer firms have been attempting to renegotiate their benefits structure. It’s a move, according to Central States Pension Plan, designed to prevent them from running out of money. Labor unions, faced with decreasing employment and stagnant wages, are simply running out of money to pay existing beneficiaries. They may see even greater struggles as the pool of retirees expands.
The good news is that attempts to decrease current pension benefits have consistently met with resistance. This week, the Treasury Department rejected Central States’ petition to reduce benefits in a ruling that is consistent with other attempts to reduce existing benefits. If you’re currently on a pension, you may see a reduction in cost of living adjustments (COLA), but your benefits will likely continue as-is. If you’re counting on a pension to cover some or all of your retirement needs, though, you may be in trouble. Whether or not the reforms go through, pension-providing agencies are facing a funding problem that’s in need of resolution.
If you’re fairly new in your career, you’ve got plenty of time to adjust. You’ll need to re-evaluate your retirement planning strategies, but there’s still time to ensure you can retire safely and comfortably. If you’re closer to retirement, you’ll need to take action sooner to address this shortfall. Either way, try these steps:
1.) Re-evaluate risk
If you have private retirement funds, you may have been investing them fairly aggressively. You could afford to lose that money since your retirement income was guaranteed. Pursuing higher returns offered by a slightly riskier strategy makes sense in that instance.  
Without a safety net, though, those private retirement funds have got to last. Switching to a more conservative investment strategy will help you protect your nest egg in the event that your pension program falls through. You’ll see smaller returns, which may mean staying at work a little longer to fill the retirement bucket, but you’ll protect the retirement funds you do have.
2.) Cut your expenses
If you can’t increase your retirement income, the next best bet is to reduce your retirement expenses. For some of these, like utilities and other necessities, there’s little you can do. Many other expenses, though, are well within your means.
If you were planning to “downsize” when you retire, it might make sense to do so sooner than planned. If you can sell your house and move to a smaller location, doing so a little early might give you more investment capital. It’ll also lower your month-to-month expenses now, enabling you to put more money away for retirement. If you have adult children who are still living at home, it may make sense to help them get into a rental of their own. The increased cost of paying their rent may be offset by the decreased monthly expenses of a smaller home.
Another expense you can control is taxes. If you’re over 55, you can make “catchup” contributions of $6,500 to a Roth IRA, which will provide you with tax-free growth. Similar additional deposits in a 401(k) plan can also help make up for a lack of investment earlier. You can also make a conversion of funds from a traditional 401(k) or IRA to a Roth account, provided you pay taxes on them when you make the withdrawal. It might make sense to absorb these taxes now while you have the income to cover them rather than to wait until you’re depending on your assets for all your income.
Yet another way to minimize your tax burden is to contribute to a Health Savings Account (HSA). These plans allow for tax-deferred deposits and tax-free withdrawals to pay for medical expenses. You’re almost certainly going to have medical expenses in your golden years, so making the most out of these accounts while you’re working can be a big help.
3.) Save As Much As You Can

While you are working, sock away as much as you can into a Roth IRA, 401K or any other way you can, to supplement any pension plan offered by your employer.  Roth IRAs provide withdrawals that are tax-free at retirement, since they are after-tax retirement plans.  Ask Destinations Credit Union about opening your Roth IRA.

4.) Adjust your plans
It’s easy to catastrophize the decline of pension benefits. The immediate response might be despair and hopelessness. While it’s justifiable, it’s not a useful response. This bit of information requires you to change your plans. That’s all.
If you were planning to quit work as soon as you turn 65, you may have to change that plan and work a little longer. These are your peak income years, so it won’t be as much time as you think, especially with an intentional savings plan that’s designed to get you to your goal as soon as possible. Staying on a few more years is frustrating, but survivable.
You might also have to change what retirement looks like. It might mean getting a part-time or freelance job for the first few years to keep from cutting too much into savings. It might mean more limited opportunities to travel. Perhaps retirement involves a side hobby like furniture restoration or automotive repair that can generate a little income. These plan changes don’t mean you’re not going to retire, only that retirement means something slightly different now.
Your turn: What are your plans to close the gap between your retirement dreams and your work reality? Any tips to share with your fellow savers?
SOURCES:

http://www.forbes.com/sites/andrewbiggs/2016/05/06/are-state-and-local-governments-really-underfunding-their-pensions-yes-really/#521fa63865c3

Investing In New Media


It sounds like free money:  Everywhere you look, people are glued to their mobile phones, whether they’re in line at the post office, watching TV in their living rooms or cutting you off during the morning commute. All you have to do is throw some money at the stock offerings for Facebook or Twitter and wait for the cash to start rolling in, right? But, if you’ve checked recently, Twitter’s stock has plummeted, they’re laying off workers and investors are panicking. Facebook had the same growing pains, and anyone old enough to remember Y2K also knows the names etched on the gravestones in the social media graveyard: Friendster, Myspace, Google Buzz, etc.

How can you protect yourself from disaster without missing out on what appears to be the wave of the future? You don’t want to end up kicking yourself because you missed out, just like you don’t want to kick yourself for buying too much. Below are some tips for investing in emerging technologies without losing your shirt. 

1. Understand the product.  You’d never buy Coca-Cola stock if you didn’t know what a soft drink is, so don’t buy stock in social media unless you understand their business. Social media sites are in the business of selling data to advertisers.They make their money by developing sophisticated algorithms that claim to understand you very well, so advertisers don’t have to spend big money to broadly distribute their message. What this means is that users are the product and advertisers are the customers. 

Facebook and Twitter have very different ways of displaying content to users, and therefore have different pitches when they talk to advertisers. The best example of the difference between the social media giants is from summer 2014: Facebook was filled with Ice Bucket Challenge videos while Twitter was full of unrest in Ferguson, Missouri. At the time, this was seen as an indictment 

of Facebook: Its vaunted algorithm was weighted too heavily to favor users’ immediate network and content that utilized Facebook add-ons like its video player.  Twitter was correctly identified as the better medium for serious news. In retrospect, the seriousness of Twitter is its problem – users go to Twitter for news, revealing less of themselves and making themselves less easy to target for ads. 
2. Understand the market.  Facebook is preferred by Baby Boomers, while Twitter is preferred by millennials, mostly because Boomers (their parents) are on Facebook. As of right now, Boomers are a more lucrative market because they have higher incomes and net worth. However, over the next five years, Millennials are expected to comprise more than half of all workers in the country and have an even larger share of personal spending. Boomers will be retiring as millennials are buying houses, minivans, golf clubs and all of those markers of suburban middle age. They can’t just buy coffee, cellphones and tattoos forever.
If you’re buying Twitter stock, you’re planning on holding it until the millennials come of age, and therefore you’re betting on Twitter figuring it out over the long term. If you’re buying Facebook, you’re planning on selling sometime before the Boomers disappear from the workforce. Remember, all of those headlines about Boomers spending more in retirement are looking at Boomers at the beginning of retirement – when time seems ample, energy seems infinite, and all of those hobbies put off for decades need new supplies.  Even America’s most mercurial and surprising generation will eventually succumb to the comforts of retirement. 
3.  Understand the risk.  There’s never been a guaranteed safe play in the history of tech stocks. It’s doubly so for social media. Bear in mind that Facebook and Twitter compete directly with Google, Microsoft and increasingly with Apple for generating data to sell to advertisers. Of those companies, Google has always been tethered to the massive losses from YouTube, Microsoft took a major hit with its antitrust suit, and Apple nearly went belly up during Steve Jobs’ absence. It’s easy to read that last sentence as a list of great businesses beating the odds and overcoming adversity, but it ignores all of the companies that failed to do so.  Buying Facebook or Twitter is going to be risky.
There are lots of ways to combine those three ideas to better protect yourself. If you want to offset risk, there isn’t much of a better investment than the savings products we have at Destinations Credit Union. Take a look at the Kasasa Saver account you can pair with Kasasa Cash Rewards Checking! By stocking up on our certificates or a High Yield Account, you can use low-risk investments to protect yourself, while still getting a higher return than one of those corporate banks can offer. Check out our rates.

If you’re worried about the time involved in your investment, our savings products can help there, too. If you’re buying Twitter now, you’re making a deal with yourself that you won’t sell it too soon and miss out on profits. But what if you need the money soon? Our Kasasa and High Yield accounts have no penalty for withdrawing your cash if you need it, helping put your mind at ease.

Whatever your plan for investing, we can help you fill out your portfolio to help you reach your goals. Just give us a call and let us know what you want to do. We’ll sort out the rest.
Sources:

http://www.americanpressinstitute.org/publications/reports/survey-research/millennials-social-media/ 

The Financial Lessons Of James Bond


Everybody’s favorite spy is back in theaters with the release of “Spectre.” To mark the occasion, we decided to take a look at his 50-plus year history to see what lessons we could learn about life and money from the greatest secret agent in film history. 

Develop your revenue streams. The Bond movies regularly earn more than $100 million in product placement, ensuring the profitability of his missions long before you or I pony up $7.50 for a ticket. For instance, in the Ian Fleming novels, James Bond wears a Rolex Oyster Perpetual. It’s a signature accessory, and in one scene early in the series, he drops the watch onto his fist to use it as a knuckle duster when punching a bad guy in the face.  The scene is beloved by many fans of the novel, which is why it was recreated during a scene during the Daniel Craig era. But it’s surprising when Craig’s Bond makes the move and he’s wearing an Omega watch.  Of course, the most famous Bond-worn watch is Sean Connery’s Rolex Submariner, but he’s also worn a digital Seiko and a Tag Heuer.

Bond has also forsaken his Aston Martin in favor of BMWs and Jaguars, while appearing in commercials for Heineken – a beer that should not be shaken or stirred. He’s indulged in Red Stripe and Coke Zero, flown Pan Am, used L’Oreal, and if you want to dress the part, you need look no further than Tom Ford, the luxury menswear designer responsible for providing the suits and evening wear for the Daniel Craig era. 

Do you have enough revenue streams?  Could you find other ways to make money?  There’s never been a better time to develop additional income.  With the prime interest rate so low, you can lock in an amazing fixed rate on a home equity loan to pursue your business idea or side project for building your fortune during the weekends. You can distribute your product, cultivate a customer base and conduct all of your transactions online, leaving a much larger chunk of your capital to produce a high-quality product or service. 

Keep cool.  In “Goldfinger,” or any of the Connery-era Bond films, the climax tended to revolve around an impending countdown to doomsday, stopped at the last moment by Bond.  He’s fought enough odd-looking henchmen to fill a small stadium, dispatching each with a quip that mixed fantastic timing with unflappable calm.  He’s flown airplanes sideways through hangars and driven tanks through Moscow’s rush hour.  Through it all, James Bond stays cool.  The man can scuba dive up to the bad guy’s island hideout, unzip his wet suit and immediately have on a perfectly pressed tuxedo.  Cool.

Are you cool?  Not in terms of driving the carpool and earning the grudging respect of the tweens in the back seat, but in terms of the ability to drop a one-liner in the face of worldwide annihilation. To put it another way, how rattled are you by the rough year the stock market has had? Don’t let a hiccup on Wall Street ruin your retirement. Instead, buoy your investments with our fantastic savings products. You can reduce your exposure to risk, making it easier to take a deep breath, while having easier access to your money in times of stress. 

Keep your house in good order.  The film plot of “Skyfall” was two hours of “The Dark Knight” followed by half an hour of “Home Alone.” The climax of the film involves a return to Bond’s childhood home, which he manages to turn into a fortress with an afternoon’s work. 

If your house isn’t ready to repel invaders, don’t worry.  Home improvement is easy with a home equity lineof credit.  You get all of the spending flexibility of a credit card, so you can use the money you need when you need to on a revolving line of credit, paying it back in chunks when you can afford to do so, but you can do it at a much lower rate than a credit card because you secure the loan with the equity you already have in your house.  And the interest you pay may be tax deductible (consult your tax advisor on this one). 

Don’t be fooled by the luxuries James Bond enjoys.  It might not seem like a path to financial security, but what if you bought all of the luxuries that James Bond buys? In the films, we’ve seen him drive incredibly expensive vehicles in wonderfully exotic locations while wearing fabulously expensive clothes. We’ve also never seen him buy any of them. He’s received them from MI6, which is why it’s so easy for him to blow them all up.

Are you trying to live the James Bond lifestyle?  James Bond doesn’t even live the James Bond lifestyle. He lets the taxpayers foot the bill while he gets by on a public servant’s wage. You’ll be much happier living within your means and finding the luxuries when you can.

Sources:

Nightmare On Your Street – Finances And Horror Movies



As Halloween gets closer and you want to avoid the chilly darkness of October evenings, grab a blanket and stream a marathon of scary movies. Horror flicks are classic fun, whether they’re good enough to keep you up all night when you’re home alone or bad enough to laugh at while with a group of friends because we all know what’s going to happen next. The classics follow a simple formula, but it works. 

The same is true when it comes to your finances. Spend less than you earn, pay off debt and invest your money with trustworthy people.  Still, we have trouble getting all of the complex parts of our financial lives sorted out.  Let’s try applying the scary movie formula to your finances so you’ll never have that heart-racing moment of panic when you check your balances again. 

The scary cat.  In the first 15 minutes of all the classic horror movies, our protagonist gets startled by a cat. It’s a silly little trope that keeps coming up, but screenwriters use it because viewers tend to get bored without a scare in the first few minutes. Bringing out the monster too early can kill the suspense, so it’s an easy-to-insert moment to keep viewers on edge.  Watching scary movies in my household, I can tell you that it works: That stupid cat has caused my heart to race faster than any workout I’ve done.

Are you jumping from the cat?  Does every market hiccup cause you to change strategies?  Are you yanking money out of savings to throw at the stock market (or vice versa) every year?  It’s time to get past that initial scare.  The market isn’t going to kill you overnight, just like it won’t make you rich overnight (Black Tuesday 1929 and Google’s record-breaking July 15th notwithstanding). 

If you want to develop a plan with which you can feel safe during the scary cat moments, give us a call at 410-663-2500. If you want to do it yourself, we can get you into a safe plan for saving with a high yield account or certificate in just a few minutes, which can help balance the risk of your other investments.  If you’re trying to build a safer safety net for retirement or college savings, we’ve probably got more savings options than you’ve ever heard of, many of which have major tax benefits. We can walk you through a few plans, help you pick the one that’s right for you, and in many cases, we can even set it up with automatic deposits so you don’t have to think about it again.

The victim who runs upstairs when she should run out the door. Why?  Why?  Why are you running upstairs, you silly soon-to-be victim?  Of all the silly horror movie clichés, this is the one that drives me bonkers.  We always get a few establishing shots of the house early in the movie, which shows us that this house is enormous enough for a final-reel chase scene with the killer.  No one needs this much house. It’s usually a teenage girl with a single parent (who is not at home) in a house big enough to hold the entire football team of her late boyfriend.

Do you have too much house?  Are you cleaning extra bedrooms you don’t use? Do you have a home gym, office, or library that you never visit?  Maybe it’s time to simplify.  You can sell that house and move into something a little sleeker, and use your windfall to put in all of the custom features you’ve ever wanted on that new house.  Which would you rather pay for:  the storage room that’s basically a walk-in junk drawer or a dressing room with a walk-in closet?  Give us a call to find out how we can help you. 

The killer who just won’t die.  In every great horror movie, there’s a killer with an uncanny ability to survive anything the protagonists throw his or her way.  In your finances, sometimes large debts can feel that way.  No matter how fast you run, they just keep coming, like Michael Myers chasing Jamie Lee Curtis through two decades of Halloween movies.  You throw cash at the balance every month, but nothing happens.  What can you do?

If you want to kill a scary movie monster, you can’t do anything that the protagonist does in a scary movie.  After all, the scary movie wants to make a sequel, but that’s the last thing you want out of your debt. Instead, let’s adapt a strategy from the Terminator:  Even an unkillable robot from the future can’t stand up to a vat of molten steel. You need to submerge your debts in one large vat that can consume them all: Turn all of your high-interest, variable-rate, hidden-fee credit card debts into one simple, low-interest, fixed-rate homeequity or debt consolidation loan with all of the transparency and confidence you’ve come to expect from Destinations Credit Union.  The first step is calling a Loan Officer to discuss your goals. Through our partnership with Accel, you can also get free unlimited financial counseling to develop a plan. 

Hopefully, your finances aren’t a horror movie.  Horror movies play on our fears for entertainment, but it’s not as fun in real life.  If they are, though, it’s better to call in some help than it is to split up and try to explore the woods alone. That’s why we’re here.  With a little help, your money can look more like a swords-and-sorcery epic:  Everyone’s a hero and everyone gets a happy ending.

High Yield Investment Fraud


Whenever the stock market takes a hit, unscrupulous individuals will try to find a way to use the misfortune of worried investors to make a quick profit.  In light of this year’s problems on Wall Street, it’s no surprise that old scams are coming back, and like all of the classic scams, this one is based on the oldest premise there is:  make a lot of money, really fast, with no work.

High yield investment fraud is most commonly found on the Internet, where it’s much easier to put together a website that appears trustworthy and professional than it is to create the same appearance in person.  Such sites claim to provide amazing returns, sometimes as much as 40 or 50% per month, and are supported by dubious charts and testimonials from people who may not actually exist. Between a quality website, impressive charts, and some meaningless investment buzzwords describing a “magic pill” of an investing philosophy, unwary consumers can be easily fooled into forking over a chunk of their savings to an investment broker who is not licensed by the SEC and makes claims the SEC would call illegal.

The clearest warning signs of these scams are easy to remember, just like avoiding them should be simple to do: don’t trust anyone who offers to-good-to-be-true returns, dismiss cutting-edge investment opportunities if they come from anyone but an investment professional with whom you’ve worked before, and ignore any evidence of success that can’t be verified by an outside party.
Big returns are appealing.  You want to retire someday, send your kids to college, or start a business to get away from the morning commute, and the more money your investments make, the quicker you can do so.  But it’s important to trust the process.  Return on investment is tied to the risk involved in spending money on that investment.  The stock market offers better returns than treasury notes because it’s far riskier to bet on United Airlines than on the United States.  High-yield investment scams are successful because we want to believe that someone can beat the market so well and that we can have returns that are better than the stock market with risks that are lower than treasury bonds.  It just doesn’t happen that way.
At Destinations Credit Union, we believe we’ve created a nice sweet spot with our savings products. No matter what your preferences are, we can fit into your investment portfolio. In times that the market does well, the money you have with us will keep you moving towards retirement, but when the market slows down, you don’t have to worry about losing your financial security because the money your entrust us with is safe.
To put it another way, the U.S. economy has traditionally done three things very well:  lower prices, create jobs, and price risk.  The last recession was caused by doing a poor job of pricing risk, and that hurt our ability to do the other two.  But that’s exactly the point.  As an economy, we are so good at pricing risk that when we screw it up, it’s an enormous, world-altering event.  If you find someone who can price risk so much differently than every other investment professional in the world, you need to also be ready to bet that the economy is going to take a radical shift in an entirely new direction, because that’s what happens when we do a bad job pricing risk.
Finally, if you want to avoid all kinds of investment scams – and the SEC, FTC, and USA.gov all have many pages listing the variety and creativity of these scams – the best thing to do is remember why you bank with us.  We’re part of your community, not a giant multinational corporation.  We share our revenue with our members, not shareholders who may not even be connected to our local community. Our kids go to school with your kids and you can always come in to talk to us for helpful advice. 

Sources: 
http://investor.gov/investing-basics/avoiding-fraud/types-fraud/high-yield-investment-programs
http://www.investopedia.com/terms/h/high-yield-investment-program.asp\\
http://www.ncpw.gov/blog/dont-get-scammed-investment-fraud-internet

http://www.dfr.vermont.gov/securities/top-ten-investor-scams