How to be Rich, Happy and Free from Scams

by Laura Rowley An exclusive analysis conducted for Yahoo! Finance shows one in 10 financial advisers in the U.S. have been involved in at least one customer dispute. Such disputes typically involve alleged unsuitable recommendations, misrepresentation of a product or transaction, or unauthorized activity, such as making trades in an account without a client's approval. Granted, these transgressions may not constitute fraud, but they can surely cost investors their hard-earned money. The question is: How do you know your adviser is not among this group? BrightScope, a firm that rates corporate 401(k) plans, this week launched BrightScope Advisor Pages in an effort to facilitate comparison among registered investment advisers (RIAs) and broker-dealers. The service aims to give consumers free, in-depth profiles of 450,000 financial advisers, with more to be added in the coming months. The site aggregates public information from the Securities and Exchange Commission (SEC) and the pri...

by Jonathan Burton The 7% solution: Let money and time work for you, no matter your age. The millionaire next door could be you. All it takes is money and time; it always does. But what this really means is you have to save money over time, and that's where so many of us struggle. Reaching age 65 with $1 million saved requires strong discipline and sustained effort. You need to recognize the importance of starting early and putting money away regularly. But even if you don't have as much time, you still have options other than a last-ditch Hail Mary pass. It can be done -- even if you start with just $10,000. "Whether you're 25 or 45 or even 55, you've got to start somewhere," said Nathan Dungan, founder of financial education firm Share Save Spend. Call it a 7% solution. Assume a 7% inflation-adjusted return from a portfolio of U.S. and international stocks, bonds and cash -- not overly aggressive, but an expected return that requires taking some risk -- and ...

Kicking yourself for missing the boat on silver, but still hungry for something to sink your teeth into? Well, at least one adviser has entered the hallowed halls of Breakout to make the case for corn. That's right. The Reformed Broker Josh Brown says if the planets align correctly and a few other variables kick in, then the amazing beast that is corn could deliver another 60% upside. Now you're all ears, aren't you? He says to forget the fact that corn has already doubled in the past year and is currently trading at record highs north of $7.60 per bushel. Instead, he suggests you look at a weather map showing a soggy middle America that's home to a lean inventories and a small, wet and delayed crop. Then spin the globe around, find China, and jot down the words "net importer" -- and therein lies your formula for Brown's prediction that corn could rally to $12. To be sure, the futures pits of Chicago are not for everyone, but Brown offers several more gent...

by Andrea Coombes Count your 'human capital' as an asset; watch your net worth skyrocket You may be a lot wealthier than you think. Most people look at their 401(k) or other retirement plan, add in the value of other assets — their home, other investments, savings, etc. — then subtract their debt to get their net worth. After the housing-market bust and the bear-market rout of recent years, that number may look painfully small. But what's the value of you? That is, how much are your future paychecks worth? That number is your "human capital" — and some experts say it should be a key part of your overall financial planning. Human capital "is anything that's going to generate a cash flow that isn't your investments," said Moshe Milevsky, a professor of finance at York University in Toronto. "It's your ability to work, your ability to get a bonus, to get overtime. It's a gold mine and an oil well, but you're producing the gold and t...

Emily Brandon Many Americans with a net worth of over several million dollars don't consider themselves wealthy. A recent survey of 457 individuals with liquid assets of $3 million or more found that 40 percent don't perceive themselves to be wealthy. Among those who do feel wealthy, here's what convinced them that they are affluent. Stop looking at price tags. Just over half (56 percent) of the millionaires surveyed came to consider themselves wealthy when they realized they could buy anything without money concerns, the Phoenix Marketing International survey commissioned by U.S. Trust found. The survey respondents typically have between $3 million and $5 million in investable assets (63 percent), approximately $5 to $10 million (27 percent), or more than $10 million (10 percent). Hit a certain number. Some people have a specific number in mind that makes a person wealthy. Just over a third (36 percent) of millionaires say they became affluent when they accumulated a certa...

by Paul J. Lim and George Mannes Remember that old Steve Martin joke about the secret formula for becoming a millionaire? "First, get a million dollars ..." Okay, getting the odometer on your investment portfolio to click over into seven digits isn't quite that easy. Only 7% of American households ever manage it, according to research firm Spectrem Group -- though it's certainly not for lack of desire. While $1 million may not be worth what it was back when Martin was a wild and crazy guy in the late '70s, achieving that iconic number still has profound allure. It means that you're ahead of the game. You're assured a baseline retirement security. You've arrived. Martin may have oversimplified, but the reality is that getting your portfolio to the $1 million mark is not nearly as difficult as you may think, even if you've managed to put away only a fraction of that amount so far. You just have to understand how to operate the three basic levers of w...

by Joe Mont Even those who have been diligently preparing for retirement can be in for a rude awakening if it arrives too soon. Let's say you plan to retire at 70 and have based your saving and investing on that. Then an illness or layoff pushes you to leave the work force up to a decade sooner. Too old to easily get another job and too young to hit your desired numbers for a 20-to-30 year retirement, it can be a rough time indeed. Don't panic The first bit of advice from financial advisers is to keep your emotions in check. It is advice intended not just to keep you sane, but to prevent rash, counterproductive moves. Fear can lead some to rashly react more to immediate obligations than with rationally with future needs. They may, for example, commit what many see as the one of the great sins of retirement planning — liquidating a 401(k) and just eating the added taxes, withdrawal penalty and lost funds from future compounding returns. "It is the worst decision you can mak...

Jennifer Waters Want to be a millionaire? Don't overspend and use debt wisely. We all may not be millionaires but there are plenty of financial and life-planning secrets we can learn from the well-heeled. Most people know that wealth in the U.S. is in the hands of a small percentage of the total population. And, today, most of those folks with a net worth of $1 million or more have earned it themselves. They're mostly entrepreneurs who create everything from high-speed networks to garbage haulers. They dig ditches and build houses and grow corn and make jewelry. They deal stamps or coins or artwork and control pests and cut lawns. They also cure people and give them new teeth. Others will defend their neighbors or even feed them. And they're not big spenders. In fact, most of those with big bucks live well under their means -- think about Warren Buffett still living in that modest Omaha home -- and they put their money instead toward investments that help them stockpile mor...

by Chris Farrell Mention the word "retirement," and most people shudder. The term seems synonymous these days with the phrase, "you can't afford it." More than half of workers in the 2011 Retirement Confidence Survey by the Employee Benefits Research Institute say the total value of their household's savings and investments, excluding the value of their home and any defined benefit plans, is less than $25,000. Housing wealth has vaporized for many households. More than 27 percent of all residential properties with a mortgage — 13.4 million homeowners — had negative-equity or near-negative-equity mortgages at the end of 2010, according to CoreLogic, an information and analytics firm. Times remain tough even though the stock market is up 97 percent from its March 2009 low and the economy is gathering steam. The government's broadest measure of unemployment, and underemployment, is at 15.7 percent, and household budgets are being squeezed by rising food and...

We all know people who have recently lost their jobs. Maybe you're lucky enough to still have a paycheck, but for how long? Fortunately there are several simple things you can do to make yourself unfireable. Be the First to Arrive and the Last to Leave Showing up to work first and leaving last shows your boss that you are dedicated to your job. Make sure to leave your office door open so your boss can see you putting in the long hours. Cut the Company's Costs Take a look at where your company is spending its money. Then see if there are ways to reduce those costs. Your boss won't fire someone who is improving the company's bottom line. Make the Company More Money Even better, figure out ways to increase revenue. Find a new client or develop new products and services for your company to sell. (See also: How to Make an Extra Income.) Just Say No to Drama Be sure to avoid drama whenever possible. If someone starts gossiping to you, simply excuse yourself by saying "I...

by Robert Powell Many advisers, despite the advent of new technology, new products and new thinking, use some fairly old-fashion strategies to create a retirement-income portfolio. They tend to use the same or slightly modified portfolio they did when devising a saving-for-retirement portfolio, and simply draw down 4% per year. Or they use what's called a bucket approach, the principles of which are based somewhat on the asset-liability matching techniques used by pension plans. Much has been written about the 4% withdrawal strategy (and its shortcomings), less about the bucket strategy. In my case, the bucket strategy has become the topic du jour for a few reasons. In 2009, UBS became one of a growing number of large brokerage firms to unveil a bucket strategy. In its version, the first risk bucket contains funds required to fulfill the liquidity needs for an individual over some predefined time horizon. The second or core bucket contains the bulk of an individual's assets and...

Blake Ellis With less than two weeks to go before Tax Day, scammers are hard at work coming up with ways to score every last penny. That means stealing identities, filing fake tax forms, hiding income offshore and exaggerating charitable donations. On Thursday, the IRS released its "dirty dozen" tax scams, detailing the most common ways taxpayers try to cheat the system. "Don't fall prey to these tax scams," IRS Commissioner Doug Shulman said in a statement on Thursday. "They may look tempting, but these fraudulent deals end up hurting people who participate in them." The people who do choose to participate in them risk facing hefty fines and imprisonment, the IRS said. Here are the 12: Hiding your money offshore: If you have an offshore bank account, brokerage account, credit card or even an offshore insurance plan, the IRS urges you to come forward voluntarily in order to limit the possibility of criminal prosecution. As part of its ongoing crackdown...

by Jeff Reeves Commentary: Foreign investments to consider now ROCKVILLE, Md. (MarketWatch) — To hear some investors tell it, the boom days of China are a thing of the past. The 2002 to 2007 surge was great — but as the saying goes, what has China done for you lately? The benchmark indexes have left many investors flat. The SPDR S&P China ETF (NYSE: GXC - News) has underperformed the major indexes slightly over the last 12 months, up about 10% compared with 13% for the S&P 500 (NYSE: ^GSPC - News). More recently, in the last six months the China SPDR is up a mere 5% vs. 15% for the S&P 500 since October. Then there are the iShares FTSE/Xinhua China 25 Index ETF (NYSE: FXI - News) and the Claymore/AlphaShares China Small Cap ETF (NYSE: HAO - News). Both are up less than 6% in the last 12 months, about half the performance of the broader market. Similar arguments can be made against other emerging markets – the landmark iShares MSCI Brazil Index ETF (NYSE: EWZ - News), with n...