Resolve: I will learn how to help save a life during an emergency

Red Cross logoWe hope you have never been there, but so many people now wish that when at a sudden time of earnest need, they had some basic training to help sustain or save a life. You know, that time interval that seems like hours before the emergency medical team (EMT) arrives. Those few minutes can mean opportunity to save, or opportunity to lose.

Consider some scenarios when “I wish I could” is a poor second to “I knew what to do”:

  • The grand-child you are babysitting chokes on something it put in its mouth.
  • You are caring for your aged parent or grandparent who begins to have labored breathing.
  • Your spouse complains of a particular pain in the upper abdomen just prior to passing out.
  • A neighbor volunteers to help mow your lawn and collapses in your back yard.

The heroes are the ones who do something meaningful when it happens.

A critical life-threatening situation can strike at any time, any place. Have you ever thought you’d like to be able to do something more than merely dial 911? The Red Cross offers a variety of training and certification classes that may be just what you need to be prepared to act in a meaningful way. Many of the classes can be completed in just one day!

The American Red Cross Training & Certification class page:
http://www.redcross.org/take-a-class

How important is knowing CPR? How important is knowing what to do if your child goes into cardiac arrest? More people are parents and caregivers now than perhaps at any time in history. If you or someone you know is acting as a caregiver, share this site with them. Basic life-saving techniques may be just enough to save a life, and allow it to continue thriving.

Take a look at the opportunities in your area. Who knows… the life you save may be the one closest to you. Being a hero is a poor second to having your loved one with you longer.

Webcams: Security first, all other features second

Webcams security firstMaybe you think your webcam security isn’t important. We would suggest that webcam security is more important than even the pixel and color quality of the camera itself. Why? Think in terms of the risk. Take just 2 examples:

  1. Many Realtors like to install a webcam pointed at the lake and may think the security isn’t all that important. Until it gets hacked to show a photo of a dredged pond in front of a coal yard with their logo imposed on it.
  2. Some families just want to see how their pet is getting access to the ‘fridge. Until a gang saw they have 2 dogs, not just the one that barks and used that to their advantage when they knew the family wasn’t home.

The security risk of webcams is the potential for abuse of the information the video broadcast conveys. Some abuses may be trivial, others aren’t. Forbes Magazine reported some horrible person hacked a baby video monitor and screamed obscenities to wake the baby up when it was sleeping.

By the way, we’re not talking about the camera built-in to your laptop or the webcam you use for video conferencing and chatting. We’re talking about cameras you would use to monitor your home, baby monitor, real estate selling attraction, etc.

If the webcam displays things you don’t want the bad guys to see, or if the video content is important to your business, then take simple, appropriate steps to secure the webcam and its transmission.

Here are some basic steps to protect the access of this remote webcam technology:

  1. Only purchase a camera that encrypts its data feed. (Accessed via a web address that begins with https://)
  2. Make sure the camera’s internet connection is hard-wired, or if wireless is using security protocol such as WPA2. (Your wireless router should be using this protocol, too.)
  3. Make sure your administrative access and password to the camera is not the factory default. Even a dumb hacker can access the system if you use the factory default.
  4. Make sure the webcam software is up-to-date. Often the publisher will fix holes or bugs in their software. The software that comes in the box is generally not the most recent version.
  5. Protect the internal network that hosts the webcam with a firewall and up-to-date router.

There is more to it than just these simple things, particularly if more than one user will need to access the camera or if the primary way of seeing the video feed is via mobile device(s).

Peoples Bank wants you and your family to be safe. We believe that financial security is just one aspect of the needful things of life. Physical and technological safeguards must get due consideration, and webcams should absolutely merit your earnest attention.

Get more information about webcam security from the Consumer Protection Agency of the United States Federal Trade Commission. They have a nice resource to help you protect against the bad guys who would abuse your webcam called “Using IP Cameras Safely”, and another briefer post “What to know about Webcam Hackers”.

Bonds, Interest Rates, and the Impact of Inflation

Bonds, interest rates and inflationThere are two fundamental ways that you can profit from owning bonds: from the interest that bonds pay, or from any increase in the bond’s price. Many people who invest in bonds because they want a steady stream of income are surprised to learn that bond prices can fluctuate, just as they do with any security traded in the secondary market. If you sell a bond before its maturity date, you may get more than its face value; you could also receive less if you must sell when bond prices are down. The closer the bond is to its maturity date, the closer to its face value the price is likely to be.

Though the ups and downs of the bond market are not usually as dramatic as the movements of the stock market, they can still have a significant impact on your overall return. If you’re considering investing in bonds, either directly or through a mutual fund or exchange-traded fund, it’s important to understand how bonds behave and what can affect your investment in them.

The price-yield seesaw and interest rates

Just as a bond’s price can fluctuate, so can its yield—its overall percentage rate of return on your investment at any given time. A typical bond’s coupon rate–the annual interest rate it pays—is fixed. However, the yield isn’t, because the yield percentage depends not only on a bond’s coupon rate but also on changes in its price.

Both bond prices and yields go up and down, but there’s an important rule to remember about the relationship between the two: They move in opposite directions, much like a seesaw. When a bond’s price goes up, its yield goes down, even though the coupon rate hasn’t changed. The opposite is true as well: When a bond’s price drops, it’s yield goes up.

That’s true not only for individual bonds but also the bond market as a whole. When bond prices rise, yields in general fall, and vice versa.

What moves the seesaw?

In some cases, a bond’s price is affected by something that is unique to its issuer—for example, a change in the bond’s rating. However, other factors have an impact on all bonds. The twin factors that affect a bond’s price are inflation and changing interest rates. A rise in either interest rates or the inflation rate will tend to cause bond prices to drop. Inflation and interest rates behave similarly to bond yields, moving in the opposite direction from bond prices.

The inflation/interest rate cycle at a glance:

    investment cycle

  • When prices rise, bondholders worry that the interest they’ve paid won’t buy as much.
  • To control inflation, the Fed may raise interest rates to get investors to purchase bonds.
  • When interest rates go up, borrowing costs rise. Economic growth and spending tend to slow.
  • With less demand for goods and services, inflation levels off or falls. Bond investors worry less about the buying power of future interest payments. They may accept lower interest rates on bonds, and prices of older bonds with higher interest rates tend to rise.
  • Interest rates in general fall, fueling economic growth and potentially new inflation.

 

If inflation means higher prices, why do bond prices drop?

The answer has to do with the relative value of the interest that a specific bond pays. Rising prices over time reduce the purchasing power of each interest payment a bond makes. Let’s say a five-year bond pays $400 every six months. Inflation means that $400 will buy less five years from now. When investors worry that a bond’s yield won’t keep up with the rising costs of inflation, the price of the bond drops because there is less investor demand for it.

Why watch the Fed?

Inflation also affects interest rates. If you’ve heard a news commentator talk about the Federal Reserve Board raising or lowering interest rates, you may not have paid much attention unless you were about to buy a house or take out a loan. However, the Fed’rsquo;s decisions on interest rates can also have an impact on the market value of your bonds.

The Fed takes an active role in trying to prevent inflation from spiraling out of control. When the Fed gets concerned that the rate of inflation is rising, it may decide to raise interest rates. Why? To try to slow the economy by making it more expensive to borrow money. For example, when interest rates on mortgages go up, fewer people can afford to buy homes. That tends to dampen the housing market, which in turn can affect the economy.

When the Fed raises its target interest rate, other interest rates and bond yields typically rise as well. That’s because bond issuers must pay a competitive interest rate to get people to buy their bonds. New bonds paying higher interest rates mean existing bonds with lower rates are less valuable. Prices of existing bonds fall.

That’s why bond prices can drop even though the economy may be growing. An overheated economy can lead to inflation, and investors begin to worry that the Fed may have to raise interest rates, which would hurt bond prices even though yields are higher.

In addition to being affected by monetary policy and economic events, a bond is subject to the risk of potential default by the issuer.

 

Falling interest rates: good news, bad news

Just the opposite happens when interest rates are falling. When rates are dropping, bonds issued today will typically pay a lower interest rate than similar bonds issued when rates were higher. Those older bonds with higher yields become more valuable to investors, who are willing to pay a higher price to get that greater income stream. As a result, prices for existing bonds with higher interest rates tend to rise.

Example: Jane buys a newly issued 10-year corporate bond that has a 4% coupon rate–that is, its annual payments equal 4% of the bond’s principal. Three years later, she wants to sell the bond. However, interest rates have risen; corporate bonds being issued now are paying interest rates of 6%. As a result, investors won’t pay Jane as much for her bond, since they could buy a newer bond that would pay them more interest. If interest rates later begin to fall, the value of Jane’s bond would rise again–especially if interest rates fall below 4%.

When interest rates begin to drop, it’s often because the Fed believes the economy has begun to slow. That may or may not be good for bonds. The good news: Bond prices may go up. However, a slowing economy also increases the chance that some borrowers may default on their bonds. Also, when interest rates fall, some bond issuers may redeem existing debt and issue new bonds at a lower interest rate, just as you might refinance a mortgage. If you plan to reinvest any of your bond income, it may be a challenge to generate the same amount of income without adjusting your investment strategy.

All bond investments are not alike

Inflation and interest rate changes don’t affect all bonds equally. Under normal conditions, short-term interest rates may feel the effects of any Fed action almost immediately, but longer-term bonds likely will see the greatest price changes.

Also, a bond mutual fund may be affected somewhat differently than an individual bond. For example, a bond fund’s manager may be able to alter the fund’s holdings to try to minimize the impact of rate changes. Your financial professional may do something similar if you hold individual bonds. However, bond funds are subject to the same inflation, interest-rate, and credit risks as their underlying bonds, and if interest rates rise and bond prices fall, that can adversely affect a bond fund’s performance.

Focus on your goals, not on interest rates alone

Though it’s useful to understand generally how bond prices are influenced by interest rates and inflation, it probably doesn’t make sense to obsess over what the Fed’s next decision will be. Interest rate cycles tend to occur over months and even years. Also, the relationship between interest rates, inflation, and bond prices is complex, and can be affected by factors other than the ones outlined here. Remember, investments seeking to achieve higher yields also involve a higher degree of risk.

Your bond investments need to be tailored to your individual financial goals, and take into account your other investments. A financial professional may be able to help you design your portfolio to accommodate changing economic circumstances.

Contact our Peoples Investment Services, Inc. representative at 828-464-5620 or  www.raymondjames.com/PeoplesInvSvcs. 

This information, developed by an independent third party, has been obtained from sources considered to be reliable, but Raymond James Financial Services, Inc. does not guarantee that the foregoing material is accurate or complete. This information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein. Investments mentioned may not be suitable for all investors. The material is general in nature. Past performance may not be indicative of future results. Raymond James Financial Services, Inc. does not provide advice on tax, legal or mortgage issues. These matters should be discussed with the appropriate professional.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC, an independent broker/dealer, and are not insured by FDIC, NCUA or any other government agency, are not deposits or obligations of the financial institution, are not guaranteed by the financial institution, and are subject to risks, including the possible loss of principal.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2014

Borrowing only works if you can afford it. Here’s how to borrow smart.

Borrowing only works if you can afford it. Borrowing money makes sense only when you can afford it. Getting a large sum of money is often necessary to purchase a car, fund a college education, purchase a home or expand a business. But your credit history, cash management skills and other factors are used to determine if you can afford to repay that loan. So be careful to build up a history of financial responsibility. Here are some tips to keep your credit history strong, and help prove that you can afford to borrow when the time comes:

  • Pay your bills on time
  • Inform yourself about credit (how it works, what it costs)
  • Pay attention to your credit activity (credit reports, etc.)

Inform yourself about borrowing. The importance cannot be over-stated. Peoples Bank has extensive information about credit available to help you with this learning process. So does the US government. Read the “Borrow” page on MyMoney.gov. The resources at the bottom of the page are particularly good.