Investment Needed To Avoid Massive Oil Price Spike Says OPEC

Oil Money

OPEC says that $10 trillion worth of investment will need to flow into oil and gas through 2040 in order to meet the world’s energy needs.

The OPEC published its World Oil Outlook 2015 (WOO) in late December, which struck a much more pessimistic note on the state of oil markets than in the past. On the one hand, OPEC does not see oil prices returning to triple-digit territory within the next 25 years, a strikingly bearish conclusion.

The group expects oil prices to rise by an average of about $5 per year over the course of this decade, only reaching $80 per barrel in 2020. From there, it sees oil prices rising slowly, hitting $95 per barrel in 2040.

Long-term projections are notoriously inaccurate, and oil prices are impossible to predict only a few years out, let alone a few decades from now.

Priced modeling involves an array of variables, and slight alterations in certain assumptions – such as global GDP or the pace of population growth – can lead to dramatically different conclusions. So the estimates should be taken only as a reference case rather than a serious attempt at predicting crude prices in 25 years. Nevertheless, the conclusion suggests that OPEC believes there will be adequate supply for quite a long time, enough to prevent a return the price spikes seen in recent years.

Part of that has to do with what OPEC sees as a gradual shift towards efficiency and alternatives to oil. The report issued estimates for demand growth five years at a time, with demand decelerating gradually. For example, the world will consume an extra 6.1 million barrels of oil per day between now and 2020. But demand growth slows thereafter: 3.5 mb/d between 2020 and 2025, 3.3 mb/d for 2025 to 2030; 3 mb/d for 2030 to 2035; and finally, 2.5 mb/d for 2035 to 2040. The reasons for this are multiple: slowing economic growth, declining population rates, and crucially, efficiency and climate change efforts to slow consumption. In fact, since last year’s 2014 WOO, OPEC lowered its 2040 oil demand projection by 1.3 mb/d because it sees much more serious climate mitigation policies coming down the pike than it did last year.

Of course, some might argue that even that estimate – that the world will be consuming 110 mb/d in 2040 – could be overly optimistic. Coming from a collection of oil-exporting countries, that should be expected.

Energy transitions are hard to predict ahead of time, but when they come, they tend to produce rapid changes. Any shot at achieving the world’s stated climate change targets will require a much more ambitious effort.

While governments have dithered for years, efforts appear to be getting more serious. More to the point, the cost of electric vehicles will only decline in real dollar terms over time, and adoption should continue to rise in a non-linear fashion. That presents a significant threat to long-term oil sales.

At the same time, OPEC also issued a word of caution in its report. While oil markets experience oversupply in the short- to medium-term, massive investments in exploration and production are still needed to meet demand over the long-term. OPEC believes $10 trillion will be necessary over the next 25 years to ensure adequate oil supplies. “If the right signals are not forthcoming, there is the possibility that the market could

find that there is not enough new capacity and infrastructure in place to meet future rising demand levels, and this would obviously have a knock-on impact for prices,” OPEC concluded. About $250 billion each year will have to come from non-OPEC countries.

In a similar but more disconcerting conclusion, the Oslo-based Rystad Energy recently concluded that the current state of oversupply could be “turned upside down over the next few years.” That is because the drastic spending cuts today will result in a shortage within a few years. To put things in perspective, Rystad says that the oil industry “needs to replace 34 billion barrels of crude every year – equal to current consumption.” But as a result of the collapse in prices, the industry has slashed spending across the board and “investment decisions for only 8 billion barrels were made in 2015.

This amount is less than 25% of what the market requires long-term,” Rystad Energy concluded. The industry cut upstream investment by $250 billion in 2015, and another $70 billion could be cut in 2016. The latter figure did not take into account the recent decision by OPEC to abandon its production target, which sent oil prices falling further.

So what are we to make of this? There could be plenty of oil supplies in the future, but as it stands, the industry is massively underinvesting? This illustrates a troubling tension within the oil industry.

Oil prices will be set by the marginal cost of production, and recent efficiency gains notwithstanding, marginal costs have generally increased over time. Low-cost production depletes, and the industry becomes more reliant on deep-water, shale, or Arctic oil, all of which require higher levels of spending. In many cases, these sorts of projects are not profitable at today’s prices.

The price spikes seen in 2011-2014 sowed the seeds of the current bust, but the pullback today could create the conditions of another spike in the future. OPEC could be a bit too sanguine with its call for $95 oil in 2040.

At the same time, future price spikes set up the possibility of much greater demand destruction, especially if alternatives become more viable. This is the difficult balancing act that the industry must pull off over the next few decades.

Investment in technology key to CAMS growth: CEO

N.K. Prasad, Group CEO, CAMS

CAMS manages vast data for mutual funds, private equity, banks, NBFC, insurance companies and even brokerages. As mutual fund investments are long-term in nature, technology platforms business processes and controls are designed to protect the interest of investors.

This includes special processes for managing dormant investor accounts, minor accounts and transmission of investments. N .K. Prasad, Group CEO, CAMS Group, spoke to The Hindu on managing investor data confidentiality and processing risks.

What is CAMS role in the BFSI ecosystem?

CAMS, registered by SEBI as a registrar evolved over years as a technology enabled financial infrastructure provider. Several technology solutions and service innovations have helped improve investor trust, confidence in the new category of mutual funds, increased participation through expanded reach and facilitated cost efficient delivery of uniform investor service standards across the country. Consolidated account statement across various mutual funds, an original innovation of CAMS in 2008 has now become a securities market practice. CAMS’ initiatives in cost-efficient servicing of small ticket monthly systematic investments over the years have helped our clients grow this category to over 60 lakhs. This is significant because net inflows into equity mutual funds lend stability to capital markets.

Currently, CAMS provides unique combination of B2C and B2B services to asset management companies, venture capital firms, life insurance companies, general insurance companies, select banks and non-banking financial institutions.

Does your delivery meet the brand promise of each fund?

CAMS is an entity neutral service solutions partner to the mutual fund (MF) industry having no conflict with competing asset management companies (AMC) and competing intermediaries. Our company’s mission is to pursue growth of our clients, which in turn drives our growth.

As outsourcing partner we have aligned vision and purpose with each AMC and co-create service delivery model and customizations for each AMC.

Our management processes, governance systems are aligned to deliver brand promise of each client and protect strategic, reputational, operational risks associated with outsourcing. The real proof of this is long lasting relationships CAMS has with its clients over two decades who have started their MF business and grown manifold.

What are the benefits of investing in mutual funds?

MFs are a versatile financial investment option for retail investors as it brings the benefits of diversification for meeting individual investment goals, tax benefits, professional fund management, risk adjusted returns, instant liquidity and at no explicit costs to investors. It is a well-regulated product.

MFs have proven to be the route for long term wealth creation. There is a strong correlation of course between longevity of investment and return maximization.

Data shows schemes have returned an average 25 times to investors who have stayed invested for 15 – 20 years. Systematic Investment Plan (SIP) is particularly suitable for retail investors as a savings vehicle, bringing the benefits mentioned earlier even for a commitment of Rs.1,000 a month.

How does CAMS help in transitioning the mutual fund schemes?

CAMS has carried out many scheme mergers and has a mature processes supporting pre/post-merger communication, non-deduction of load during window period, non-applicability of relevant load/STT/TDS during mergers, printing of modified statements, administering brokerage post mergers, computation of capital gains, tax obligations.

Such mergers are done over week-end / non business days.

Can you comment on how MF investors comply with new tax norms?

CAMS has implemented online updation facility to submit the new requirements under FATCA and supplementary KYC.

Forms are also available at our service centers or can be downloaded from CAMS website or from AMC sites.

We have created a central database for FATCA compliance to facilitate one time submission of forms.

This immensely benefits the investor as he /she does not have to repeat the process while investing into a new fund.

What makes CAMS an attractive investment proposition?

CAMS is proud to have National Stock Exchange Strategic Investment Corporation Ltd (NSESIC) as a shareholder in its growth journey. NSE, India’s leading stock exchange, has brought about unparalleled transparency, speed and efficiency, safety and market integrity. CAMS has held market leadership in serving the Indian MF investors.

NSE’s stature would strengthen the Institutional character of our institution. CAMS and NSE have complementary capabilities for serving the securities market. Our market offers tremendous potential in channelling household savings in to productive investments to help grow the economy and helping investors achieve their financial goals.

Can you name some of the new technologies you deployed over the years?

Technology forms the backbone for our excellence in high volume transaction processing and services delivery. Our applications and infrastructure are all developed and maintained in-house. This gives us the flexibility, technology, domain capability and demonstrated scalability to handle any explosive growth in mutual funds volumes like what we witnessed in 2007-08. While the IT application suite has matured into a mini-ERP (Enterprise Resource Planning) like ecosystem, the infrastructure landscape has evolved rapidly from rudimentary storage systems to SAN (Storage Area Network) based and now we have large scale enterprise servers and storage. We are early adopters of SSD (Solid-State-Device) technology and our applications have evolved to address today’s needs on social, mobile and analytics.

What has been the response to myCAMS mobile app?

Mutual fund investors are taking up to digital channels pretty actively in the last couple of years. Investor’s appreciation of the digital convenience is evident in the 50 per cent increase of online transactions and 400 per cent increase in mobile transactions.

CAMS powers the websites, portals and apps of mutual funds to enable real time transaction acceptance. CAMS digital initiatives, such as myCAMS platform available as mobile app and online version has nearly 200,000 registered users with a high engagement index. GoCORP is our online portal for institutional investors, with features that meet corporate investor needs.

What has your experience been handling mergers?

CAMS has extensive experience and track record in managing merger of MFs, merger of schemes. CAMS managed many such mergers including a complex acquisition of a twenty-year-old MF by one of our AMC client, couple of years ago. This complex merger was accomplished over a week end, assuring data integrity, assuring business continuity for AMC and access to funds by the investors.

How do you manage costs in a challenging environment?

All our major cost elements – people, infrastructure and technology are inflation prone. CAMS focuses on technology based automation, process innovations and productivity improvements to manage the cost pressure. CAMS deploys about 4,500 people across 3 delivery centres and has a pan-India network of 272 service centres.

Technology and continuous improvement has helped us deliver end-to-end investor services at a fraction of the cost of that of other investment accounts. For example, we manage the entire life cycle of the investor including access and reach, transaction acceptance and execution, records maintenance, reconciliation / movement of funds, dividends processing, account statement issuance and confirmations, on a platform originated and owned by us. MF RTA (Registrar & Transfer Agent) performs this holistic while in case of secondary market the same is executed by multiple agencies viz stock exchange, depository, depository participant (DP), broker, clearing house and RTA resulting in a high cost account maintenance compared to MF.

Is it possible to throw some light on innovative technology enablers?

CAMS has believed in investing ahead of business needs with the premise that availability and access will lead to category growth. RTAs have been the face of MF industry in most of the towns in India. While a typically large AMC might have presence in 80 to 100 locations, we have presence in about 272 locations. In parallel, CAMS pioneered an electronic platform called FundsNet for IFAs.

In 2014, CAMS launched a suite of digital solutions “Anytime Anywhere Mutual Funds” for 2G/3G enabled devices that can be used by mutual fund sales persons, myCAMS for individual investors and GoCORP for institutional investors. Our app for distributors will be launched soon.

Planning to make a realty investment in 2016? Best options for you

realty L

Buying a home is in everyone’s wishlist and this investment involves financial planning and strategy. If you are planning to buy a property in the year 2016 ensure that that you make a smart choice and not a hurried one.

Indian real estate sector has been sluggish for a few years but is expected to make a turnaround in 2016. Experts believe that the sector is expected to record increase in sales and a reduction in unsold inventories. They believe the government initiatives announced this year will give a push to the sector and reinstate investor confidence.

Sanjay Dutt, managing director, Cushman & Wakefield said,” Overall, the next few years would see forging of some strategic partnerships with select developers, private equity investors also looking at liquidating assets. Consolidation through joint development activities would unlock development potential in major cities, going ahead.”

Real estate experts believe that government’s promotion of 100 Smart Cities, AMRUT (Atal Mission for Rejuvenation and Urban Transformation), Housing for All by 2022 and infrastructure development are some of the government steps that would not only benefit the economy, but would also create a sector-wise
positive impact.

“The government’s easing of FDI policy, the probable implementation of the Real Estate Bill and Smart Cities, and the introduction of REITs(real estate investment
trust) would bring in the much-required transparency into the sector and enhance investor confidence in the coming years. The year 2016 is likely to begin on a
cheerful note on the back of reforms and increased investor confidence,” Dutt added.

The RBI has cut rates by 125 basis points in 2015 and both the developers and buyers expect to see the transmission of these lower rates to consumers in 2016.

If you are planning to invest in real estate in the new year then the buyer should keep in mind certain points as the market has multiple choices to offer.

“It is important for a buyer to get a detailed information on the shortlisted projects including the builder type, locality, to name a few. As a buyer you must not get
lured by freebies and discounts that are being offered all around and rather check all the legal documents thoroughly and carefully. Buyers must get all the documents thoroughly verified by a professional,” CommonFloor Groups, co-founder and head Vikas Malpani said.

5 Stocks That Have Lost More Than Half Their Value in 2015

wall street sign in new york

I recently wrote about some surprising stocks that have more than doubled so far this year, but now it’s time to check out some of the more unfortunate investments. Let’s go over some of the stocks that have lost at least half of their value in 2015 as of the Oct. 25 market close.

Lumber Liquidators (LL) — Down 78 percent

Things seemed to be humming along for the country’s largest stand-alone hardwood flooring retailer until a “60 Minutes” report called out the potentially hazardous nature of some of its laminate flooring. The scathing segment tested Lumber Liquidators’ China-sourced laminates, finding many of them to contain dangerous levels of formaldehyde.

Lumber Liquidators initially denied the claims, but ultimately decided to stop selling the flooring altogether. By then the damage was done. Sales took a dive, and they have yet to recover. This isn’t the first time that Lumber Liquidators has courted controversy, but it’s the first time that the implications have had health concerns. That’s hard to bounce back from in the near term.

Keurig Green Mountain (GMCR) — Down 60 percent

The company that revolutionized the way that we consume premium coffee at home with the original Keurig single-cup brewer has been quite decaffeinated in 2015. The downfall may have started in 2012 when the patents for its K-Cup portion packs expired, but things got really bad last year when it rolled out Keurig 2.0.

Armed with a label scanner, the new brewers only work with new K-Cups. Sure, clever java junkies have circumvented the process by slapping a new label on old, reusable or third-party portion packs, but the brand has taken a hit all the same. Year-over-year sales fell for the first time in its latest quarter, and the new Keurig Kold machine that makes chilled carbonated beverages isn’t garnering rave reviews since last month’s launch.

Yelp (YELP) — Down 55 percent

The site that many foodies turn to for crowdsourced reviews has been giving investors indigestion this year. Yelp has been dogging allegations from disgruntled merchants for years that the site buries negative reviews for local businesses that pay to advertise on Yelp. It’s been a different story on the consumer end, with folks relying on the site for peer reviews of restaurants, shops, spas, and other businesses.

The rub here is that mobile growth is slowing, and desktop usage is actually declining. There are also fears that Yelp relies too heavily on Google (GOOG,GOOGL) searches for traffic, something that could prove to be a sticking point if the leading search engine decides to promote its own ratings platform.

GoPro (GPRO) — Down 54 percent

One of last year’s hottest IPOs has wiped out this year. GoPro made wearable cameras cool, but decelerating growth can’t seem to justify the lofty valuation the company had after last year’s frenzied surge. GoPro’s HERO cameras continue to sell well, but analysts see sales slowing considerably this holiday season.

Fossil (FOSL) — Down 53 percent

Folks have been predicting the death of the designer watch for years. Who needs a wrist-hugging timepiece when there’s a smartphone in the pocket? Now the death knell is all about smartwatches.

Fossil was able to defy gravity in recent years, but that hasn’t been the case in 2015. Sales have started to decline, and profitability is taking an even bigger hit. Fossil is finally starting to live up to its name.

Give Your Investment Portfolio a Stress Test

Senior Couple Talking To Financial Advisor At Home
When John Navin, a certified financial planner based in Nashville, Tennessee, meets a new client, the first thing he does is run his or her portfolio through a series of stress tests.

“We test the portfolio against 60 different circumstances that could happen in the economy,” says Navin, who owns John Navin & Associates. “It can tell us exactly what the portfolio will do.”

Navin and his team aren’t alone. Financial advisers have software to provide detailed analyses about how a portfolio will react as different scenarios unfold in the world. Will China’s slowdown turn into a recession or worse? Will the Federal Reserve raise rates half a point? Will the market turn down by 10 percent? Twenty percent? It’s important to know how your portfolio will react to these scenarios.

As stocks have ridden an almost seven-year bull market, there hasn’t been too much reason to know about potential disruptions to your returns. Even as Europe, particularly Greece, has struggled, the U.S. market has barely hiccuped.

But all good things do come to an end. And with slowdowns in the Chinese economy, the Fed considering interest rate hikes, weak oil prices and baby boomers leaving the workforce, there are concerns that the market could soon hit a speed bump. If it does, you should know how your retirement savings would move.

A stress test sets expectations. Testing your portfolio against a fall — or rise — based on real-world scenarios uncovers and highlights your risk if the worst happens. “Most people are taking on significant more downside risk than they think they are,” says Michael Reese, a certified financial planner and owner of Centennial Wealth, an advisory firm based in Austin, Texas.

While most of us think we’re comfortable with risk, it’s often not true. Many investors pulled out altogether when the markets fell into turmoil in 2008. This proved to be the worst decision possible, because investors left the market as it hit bottom. Within three to four years, they would have regained their losses, but they weren’t around to participate in the rally since the fall scared them off.

Stress testing shows what a 10 percent drop in the market will do to short-term gains, allowing you to understand what the loss may mean, Reese says. “If you see where you’re at, and it’s not a position you’re comfortable with, then you need to revise the portfolio to take the risk off the table.”

This is another reason why advisers run these scenarios. If clients see the market drop, their initial call will be to their money manager wondering what they should do. If advisers prepared them for such a scenario, then the drop is not as likely to draw that gut urge to react.

Test your whole portfolio, then test individual buckets. You want to test your whole portfolio because an event could affect parts of your portfolio differently. While a drop in energy prices could hurt the energy companies in your portfolio, it can also help many sectors that benefit from lower energy costs, for example. Yet, you would still want energy company exposure if prices rise again. You won’t see the overall impact, unless you test it all at once.

Navin begins by testing a portfolio as one cohesive unit. Then he breaks it down, examining areas that his customers typically have money in, including cash and income-generating devices such as annuities, equities and bonds. By testing each individual bucket, he can discover the impact of fees.

This fee analysis can “factor in the management fees, cost of turnover and impact of taxes,” Navin says. “You can really come back with a clear number.”

It’s important because over the long term, fees destroy a portfolio better than nearly any other factor, including short-term tumbles in the market.

Be careful how you react. Stress testing can serve many benefits, including providing data about your risk tolerance and setting clear expectations for your returns. But if you react wrongly to what you discover, then it could cause damage to your portfolio that you may never recover from.

For instance, someone in his or her 30s or early 40s probably still has one goal: Save as much as possible. Movements in the market shouldn’t have any impact on this person’s long-term strategy. “If you’re well in your savings mode, then stress testing your portfolio is a fun exercise,” Reese says. “But it’s better to put your blinders on, [place] your money into an allocation, then letting it go.”

On the other hand, if you’re within 10 years or less of retirement, stress testing can dramatically change your strategy. Those thinking they wanted to retire shortly before the 2008 downturn hit had their plans cut short. The recession delayed retirement for many older Americans, and the number of 62- to 64-year-olds in the workforce actually increased during this period.

“When something happens that close to retirement, it can mess with your plans,” Reese says. For near-retirees, stress testing can help this planning.

Don’t test too often. Most financial advisers use two models to test their clients’ portfolios. They judge them against historical numbers – like what would happen if another dot-com crash occurred – and they measure against hypothetical scenarios. Test both.

To get a comprehensive analysis, it’s best to go through your adviser. But HiddenLevers also offers software that many advisers use to run the scenarios. There’s a free account on its website, which will allow you to test different situations based on your portfolio allocation.

In terms of how often, Navin runs scenarios for clients once a year. Anything more, and you might be looking for a reason to make a change when there isn’t any. Unfortunately, there’s no scenario to test that mistake.

12 Top Scams Affecting Your Pocketbook

USA, New Jersey, Jersey City, Close-up view of pulling one dollar note from walletIt seems like there’s always a new scam making the rounds, and even those who are savvy can fall for them. Here are 12 of the latest scams that you should watch out for — including phone scams, online scams, investment scams and others — and how you can protect yourself.

1. Identity Theft Scam

Hui-chin Chen, a financial planner at Pavlov Financial Planning in Arlington, Virginia, told a harrowing tale of a colleague’s client who had his email account hacked. The hacker contacted the financial planner and requested an emergency withdrawal into a new bank account. Fortunately, since it was a new bank account, the adviser called the client and found out that he never made the request. The advisory firm’s internal controls stopped the adviser from transferring the funds to the thief.

To protect yourself from this type of identity theft, always make sure you have a secondary verification when a financial adviser or second party has access to your money.

2. Internet Scam

Online scams come in a variety of forms, and they’re not always detected until it’s too late. “I would talk to at least a couple of consumers every day who were defrauded through various online scams. The most common were online purchases, lottery, inheritance and online romance scams,” said Thomas Nitzsche, media relations manager for ClearPoint Credit Counseling Solutions, who previously worked in the international department of a major money transfer company.

Just remember, if you get an email promising a prize after you pay, hit the spam button. If it sounds too good to be true, run away. No one is going to give you free money. You’re not going to win the lottery or inherit money from a long lost relative you’ve never met before.

3. The Penny Scam

With the penny scam, thieves hack into your bank account and withdraw a penny, according to Melissa Thomas, founder and CEO of Melissa the Coach — Financial Coaching. Since the amount is so small, no one reports it, or in many cases even notices the loss. The scammers repeat this fraud with thousands of accounts, quietly skimming real money from unsuspecting consumers.

To avoid falling prey to this clever trick, report even a small loss to your bank, and inform them of the penny scam. Furthermore, don’t be afraid to report a scam to the police — even a tiny scam.

4. Natural Disaster Scam

After a flood, tsunami, hurricane or tornado, watch out for scammers offering quick fixes for your disaster-related problems. If you’re not sure who you’re dealing with, you could be at risk for unscrupulous business people to take your money, promising to repair your roof or plumbing and run, leaving you without repairs and an empty pocketbook.

Keep your guard up, even during stressful times. Just because you’ve suffered a disaster doesn’t mean that all offers to help are legitimate. Request a reference list, proof of insurance and check all potential contractors with the Better Business Bureau.

5. Online Help Scam

Sherrian Crumbley of KNS Financial recounted how an elderly friend was having difficulty with her computer and tried to call Google. After calling the listed phone number, the “representative” asked for proprietary information in order to gain remote access to her computer. Fortunately, the woman was smart enough not to be fooled by this common scam.

Be very careful before turning over access to your computer. This should be done only when you are 100 percent certain of the site’s and repair person’s authenticity. Once a fraudster claims your computer, they can steal valuable personal information.

6. Send Me the Money Scam

Beware of a request for guaranteed funds from a cashier’s check or money order, advised Eric Rosenberg of PersonalProfitability.com. There are legitimate uses for these types of fund transfers: to pay rent, buy a home or car. Yet, it’s unlikely that a legitimate business will ask for this type of confirmed payment by mail.

In general, ask yourself why someone would ask for payment to be mailed with a cashier’s check or money order in lieu of a personal check. Keep your antennae up whenever someone you don’t know is requesting a guaranteed form of payment.

7. Financial Adviser Scam

Avoid any money manager who insists that you do not use a legitimate third-party custodian — like Schwab or Fidelity — for your managed funds, said financial planner Roger Wohlner. In fact, that’s how Bernie Madoff scammed so many smart, wealthy people.

That means if your investment dollars aren’t held outside of the financial planner’s office in a well-known financial custodian’s account, pull your money out. Legitimate financial advisers use regulated investment management firms as back-end regulated overseers of your investments.

8. Real Estate Rental Scam

Casey Fleming, author of “The Loan Guide: How to Get the Best Possible Mortgage” and long-time mortgage lending professional, shared a stunning rental rip-off story. These scammers scoped out vacant, bank-owned homes, broke in and changed the locks. Next, they rented the homes out, collecting the first and last month’s rent. Then the scam artists vanished, likely on to the next property. When legitimate real estate agents came to list the home, they found the unfortunate fraud victims living in the home.

When renting a home, watch out for signals that something isn’t quite right. One red flag might be a rental listed a tad below market rent to get it rented quickly. When renting a house, ask yourself if the rental application appears complete and legitimate. Finally, most bank-owned homes are poorly maintained. Don’t rent out a property in disrepair, no matter how tempting the rental price.

9. Money Scam

Job-seekers, don’t fall for the scam that asks you to pay money to receive job information, said Jason Butler of The Butler Journal. Legitimate companies have information on the internet, and job listings are posted for free. Butler saw one such scheme targeting college students and a similar money scam on Craigslist as well.

If you’re desperate for a job, seek out all of the free online job listing services. Don’t forget to check out LinkedIn and company websites for job listings. If a company is charging you for a job, don’t pay.

10. Senior Scams

Seniors are ripe targets, with a lifetime of savings and big hearts, said Louis DeNicola of Cheapism.com. Senior scams come in all sorts of varieties. The “You’ve Won” scam notifies the unsuspecting senior that they won a prize, lottery or some sort of large claim. Before the winner can claim their prize, they must pay money for taxes, fees or other charges.

Be aware that if you’ve won, then you don’t owe. Report a scam to the local authorities, the police, your state attorney general, and the Better Business Bureau. If a deal seems too good to be true, it is.

11. Affinity Scam

Many of us belong to a church group, Rotary Club or other “affinity group.” We’re more likely to trust other members of the group and let our guard down when offered an investment by “one of our own.”
“Affinity fraud bypasses the natural distrust we have for schemes promoted by strangers,” said Todd Tresidder, former hedge fund manager and owner ofFinancial Mentor. For example, a church bigwig might buy a certain investment and unwittingly promote that investment to other members.

Don’t forgo your normal due diligence just because someone you know and trust recommends an investment. If you receive an offer or investment, check the qualifications of the provider, and do your own research before buying in.

12. Investment Scams

Believe it or not, there are insurance and investment sales people operating without a license or credentials. These unlicensed scam artists use the promise of high commissions to lure independent insurance agents, financial advisers, accountants and financial representatives to peddle fraudulent investments, said Tresidder.

“Be wary if your agent offers high returns with little or no risk on viatical contracts, brokered CDs, equipment leases, factoring, promissory notes or other unconventional investments,” he said. In fact, some of the purveyors of bad investments might have been swindled themselves and not have any idea how these products actually work.

Always ask an investment sales representative about their license, credentials and how they are paid. Just because your insurance agent knows insurance doesn’t mean she’s qualified to sell you an investment product. If a sales representative is paid an above-average commission, find out why. If that individual can’t explain the product in an easy-to-grasp fashion, don’t buy it.

When it comes to keeping yourself safe from a scam artist — ask questions, seek references, view insurance and licenses, and wait to give out money or information. Set a waiting period so you can perform your due diligence and thoughtfully consider the offer. Remember the classic economic advice from Milton Friedman: “There’s no such thing as a free lunch.”

6 Things to Consider Before Paying Off a Mortgage Early

Mortgage calculator. House, noney and document. 3dLiving debt-free sounds great, and depending on where you are in life it may actually be attainable. But even if you can pay off your mortgage early, should you?

Although it may be tempting, first consider the opportunity cost of paying off your mortgage early at the expense of other goals or investment options, as well as the impact to your tax situation.

Opportunity cost. By paying off your mortgage early, you’ll save on the additional interest expense that would have been incurred in your regular payments. This savings can be significant, and will increase with the prepayment amount. However, by directing excess cash towards paying down a mortgage, those funds are no longer available for investment. The lower your interest rate, the less you stand to benefit through early retirement of debt.

How can you decide whether it is best to invest excess cash or pay off your mortgage early? Consider the following example:

Suppose the stated interest rate on your mortgage is 4 percent and you are in the 28 percent federal income tax bracket. Your after-tax mortgage rate is roughly 2.9 percent, perhaps lower if you can also deduct the mortgage interest on your state income tax return. For many investors, investment portfolios are constructed using a risk tolerance that carries a much higher annualized expected investment return than 2.9 percent.

For some, the “guaranteed” 2.9 percent savings is more attractive than a higher expected market return, subject to greater volatility and risk. For those with a much higher after-tax mortgage rate, paying off a mortgage early likely becomes a more attractive option.

Here are some other considerations:

Taxes. For many, the ability to deduct mortgage interest is a key component to their tax strategy. Consider whether you will still be able to itemize deductions without mortgage interest.

Investing. Realistically consider whether you’ll invest the cash that would have been directed towards paying down your mortgage or spend it. Consider direct deposits into your brokerage account or increasing your monthly 401(k) contribution in an effort to “set it and forget it.”

Other needs. Aside from the ability to invest excess cash, are there any other more pressing goals on the horizon? Look at your whole financial situation including student loans, credit card debt and whether you have adequate emergency reserves.

Life stage. The decision to pay down a mortgage will vary depending on yourlife stage, risk tolerance and time horizon. If you’re nearing retirement you may have a more conservative asset allocation, and investing the excess cash in the market may mean taking on unnecessary risk. Being debt-free may also become more important later in life.

Time horizon. If you are planning to stay in your home for the long term, it makes more sense to consider overpaying your mortgage than if you don’t anticipate ever paying off the note.

As you weigh the options, set realistic expectations and ensure the proper plan is in place to achieve your objectives. Discuss the decision with your financial adviser and tax professional before committing to a strategy. As with all financial goals, it pays to be flexible. If you’re still unsure which direction is best or whether you have adequate reserves, think about opening a dedicated savings account for your excess cash flows and revisit the decision in three to six months. By separating the funds, you will be less likely to spend it on daily expenses while you consider the options.