An expert guide to protecting your money

Protect your money and personal information with this security guide from Bruce Sellery.

How do you keep your money safe?

You protect against the two biggest risks:

  • Investment risk: That your investments are going to crash.
  • Fraud risk: Someone stealing your credit card number, or stealing your entire identity.
  • One you don’t have to worry about anymore? Bank risk. There was a time when you had to worry about a “run on the bank” – when everyone tried to withdraw their money at the same time. But isn’t an issue anymore because of federal deposit insurance.

Let’s start with investment risk. 

  • If you invest your money in a stock, bond or mutual fund, there is a risk that it will decline. Remember the financial crisis in 2008? If you had all your money in the stock market and wanted to pull it out to buy a house, you were in big trouble.
  • Investing involves taking risk. That is how you get a reward.
  • I can tell you how to avoid EVER being in a car accident: Don’t leave your house. But that’s limiting.So, invest so that your money can grow by doing these two things:

• First – diversify. Don’t have “all your eggs in one basket”. Some money in the stock market, some in bonds. Some in domestic investments, some international.

• Second – understand your time horizon. I didn’t lose a penny of my retirement savings in 2008. Why? Because I didn’t need the money, so I just let it sit there. Money you need in the next 3 years shouldn’t be in the stock market. As you get closer to retirement you reduce the risk in your portfolio.

How do you protect yourself from fraud?

  • If it’s Wednesday, there must be a headline about another security breach. “Oh, 140 Million accounts hacked?” Yawn. Do you want waffles for breakfast?
  • You can’t worry about those massive hacks. There is nothing you can do to prevent them. But what you CAN do is to protect your passwords.
  • You can store them on your phone:
    • Apple has the iCloud keychain.
    • Google has a function for Android phones. You can set it up so that it auto-fills the password, so you’re not typing it in each time.
    • Which is way easier than just storing the password in the “contacts” app on your phone. Don’t do that.
    • But you MUST put a password on your phone. (I found a phone on a roadside and there was no password on it, so I ordered myself a dining room set on Amazon. It’s stunning).

4. What about password managers?

  • Even better. There are a number of options – Lastpass, Password Boss, Sticky password. Think of it like an online post-it note. They are very simple to use. And when you visit a website it prompts you to see if you want to add it to your vault. You can download the app on your phone so everything is synchronized.
  • A lot of people use the same password for almost everything, because we’re trying to remember them. A password manager means we don’t have to remember them. At least 8 characters, use letters, numbers and symbols.
  • Sure, there is a risk that the password managers will get hacked. I just don’t have enough pessimism in my soul to ponder that scenario.
  • Another thing you must do to keep yourself safe is to monitor your accounts. Go through your credit card statement line by line, same with your bank statement.
  • And get your free credit report. How you do that depends on where you live, but it can be an interesting read. You’ll see at the accounts that you have, and where credit inquiries have been made.

5. What do you do if you find something funny?

  • If it is on your credit card, call them first. They are pretty good at handling simple fraud and refunding you the money. You might also need to set up a fraud alert with the credit bureaus too.
  • It is also worth brushing up the Ryan Seacrest Top 40 “scams”.
    • Romance scams: “I love you, send me $5,000 by wire transfer.”
    • Grandparent scams: “Your grandchild is in prison, send $5K”.
    • Tech support scams: “I’ll fix that virus, just give me access to your hard drive”.

And finally – my homework for you:

  • Put a password on your phone.
  • Shred the post-it note, or manila folder.
  • Sign up for a password manager.
  • Get your free credit report.