The “Bailout Bill” and the Financial Markets: A Plain-English Guide

On October 3, 2008, Congress passed, and the President signed, the Emergency Economic Stabilization Act of 2008 (EESA). The wide-ranging legislation contains a variety of tax relief measures and other provisions. However, the cornerstone of the bill–widely referred to as the “bailout bill”–was designed as a rescue plan for the financial markets.

Why the EESA?
The “bailout” portion of the Emergency Economic Stabilization Act of 2008 was passed in response to a request by U.S. Treasury Secretary Henry Paulson, who said quick action and expanded Treasury authority were needed to address turmoil in the financial markets (see sidebar “A brief chronology of what led to the bailout bill”). The financial world has become so tightly linked that when one portion of it–subprime mortgages and securities based on them–began to experience difficulties, the problems created a ripple effect that spread across the globe.

Protect Yourself Against Identity Theft

Whether they’re snatching your purse, diving into your dumpster, stealing your mail, or hacking into your computer, they’re out to get you. Who are they? Identity thieves.

 

Identity thieves can empty your bank account, max out your credit cards, open new accounts in your name, and purchase furniture, cars, and even homes on the basis of your credit history. If they give your personal information to the police during an arrest and then don’t show up for a court date, you may be subsequently arrested and jailed.

 

All About IRAs

An individual retirement arrangement (IRA) is a personal retirement savings plan that offers specific tax benefits. In fact, IRAs are one of the most powerful retirement savings tools available to you. Even if you’re contributing to a 401(k) or other plan at work, you should also consider investing in an IRA.

 

For more information on IRAs, please see All About IRAs.

Protecting Your Loved Ones with Life Insurance

How much life insurance do you need?

Your life insurance needs will depend on a number of factors, including the size of your family, the nature of your financial obligations, your career stage, and your goals. For example, when you’re young, you may not have a great need for life insurance. However, as you take on more responsibilities and your family grows, your need for life insurance increases.

 

This article has some questions that can help you start thinking about the amount of life insurance that you need. Click here to read Protecting Your Loved Ones with Life Insurance.

Holding Equities for the Long Term

Legendary investor Warren Buffett is famous for his long-term perspective. He has said that he likes to make investments he would be comfortable holding even if the market shut down for 10 years.

 

Investing with an eye to the long term is particularly important with stocks. Historically, equities have outperformed bonds, cash, and inflation, though past performance is no guarantee of future results and those returns also have been accompanied by higher volatility.

 

It can be challenging to have Buffettlike patience during periods such as 2000-2002, when the stock market fell for 3 years in a row. Times like those can frazzle the nerves of any investor, even the pros. With stocks, it’s important to remember that having an investing strategy is only half the battle; the other half is being able to stick to it.

 

To learn more, we encourage you to read the following article – Holding Equities for the Long Term: Time Versus Timing

How Secure is Social Security?

If you’re retired or close to retiring, then you’ve probably got nothing to worry about–your Social Security benefits will likely be paid to you in the amount you’ve planned on (at least that’s what most of the politicians say). But what about the rest of us?

We thought that you would find the following article of interest. Click here to read “How Secure is Social Security“

Eleven Ways to Help Yourself Stay Sane in a Crazy Market

Keeping your cool can be hard to do when the market goes on one of its periodic roller-coaster rides. It’s useful to have strategies in place that prepare you both financially and psychologically to handle market volatility. Here are 11 ways that we have found helpful to help keep yourself from making hasty decisions that could have a long-term impact on your ability to achieve your financial goals.

To read a more detailed explanation of each of these tips, click here to read “Eleven Ways to Stay Sane in a Crazy Market“.

• Have a game plan
• Know what you own and why you own it
• Remember that everything’s relative
• Tell yourself that this too shall pass
• Be willing to learn from your mistakes
• Consider playing defense
• Stay on course by continuing to save
• Use cash to help manage your mindset
• Remember your roadmap
• Look in the rear-view mirror
• Take it easy