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Fed warns of questionable loan solicitations

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WASHINGTON (11/5/08)--The Federal Reserve Board alerted the public Tuesday to instances of questionable solicitations aimed at consumers that promise access to personal loans through a nonexistent Federal Reserve lending program. The scam tells individuals they can work through a broker to access a Federal Reserve program that extends sizable secured loans to consumers. It encourages them to deposit large sums of money into an account, under the guise of a security deposit, to receive the purported loan. The Federal Reserve advised consumers that it is not involved with the solicitations and does not directly sponsor consumer lending programs. The Fed urged consumers to verify the legitimacy of potential service providers before entering into a business transaction. Individuals seeking personal finance options should do business only with reputable lenders, and shop around for the most favorable loan terms, the Fed said. For more information, use the link or call the Federal Reserve Board Help Center at 1-888-851-1920.

Financial tips for turbulent times

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McLEAN, Va. (11/5/08)--Whether you’re an older worker with seemingly few options to recoup significant investment losses, or a younger worker with minimal or no investment savings at all, don’t let the financial crisis scare you into not taking any action at all. Now is the time to take stock of your situation, learn from others’ mistakes and formulate a plan to tough out turbulent times (USA TODAY Oct. 31). Heavy investment losses are disproportionately affecting baby boomers, the oldest of whom turn 62 this year. Although there’s less time for you to recoup losses, that’s not a reason to pull all your money out of the stock market (Moneycentral.msn.com Oct. 17). Even if you’re already in your sixties, to have enough cash to fund 25 years to 35 years of retirement requires a long-term plan. Most important, don’t panic. Regardless of your age, start with the basics and vow to stick with your plan:
* Rebalance your portfolio. Do your investment choices reflect your risk tolerance and investment strategy? * Keep some liquidity. Consider stashing some cash--three to six months’ of living expenses--in a money market account at the credit union, which is insured to at least $250,000 by the National Credit Union Administration at credit unions having federal share insurance. * Increase your contributions. Most stock prices are at low, bargain-basement levels. If possible, bump up your contribution. * Diversify. Don’t put all your investment eggs in one basket. Spread your wealth among a variety of investments: domestic, international, financial services, technology, health care, and so on. * Use dollar-cost averaging. By having, say, $50 each paycheck automatically directed to a mutual fund, your contributions will purchase more shares when the price is low, and fewer shares when the price is high. * Pay down debt. Reduce the choke-hold that credit cards have on your budget. Pay off the highest interest-rate card first, and then apply that payment to the next-highest interest-rate card. Stop charging. * Spend less. Identify needs versus wants, and then set priorities. You’ll be surprised how many needs that you’ve identified are actually wants in disguise. * Work longer. If you’re close to retirement, consider hanging on to your current job longer than planned, if you can. Or, secure part-time work after retirement. This reduces the number of years you’ll dip into savings, and helps build additional savings.
For more information, read “Key to Investing in Recession: Stay Calm” in Plan It: Retire Ready Toolkit.