Encrypted Email — Users Unknowingly Put Banking Data at Risk

PGP is one of the most common methods of protecting financial data that customers submit through banking and financial websites. PGP provides excellent data encryption, but many users leave sensitive PGP-encrypted data vulnerable without even knowing they’re doing so.

Banks, credit unions and other financial institutions use PGP to encrypt sensitive data, such as a loan application, before sending it through email. PGP makes the data is nearly impossible for anyone other than the intended recipient to decrypt. Unfortunately, after receiving the data the recipient often unknowingly creates an opportunity for thieves to steal the data.

Recipients decrypt PGP protected email messages to read the sensitive contents. Security-savvy users know to that after reading the message they need to either permanently delete the encrypted message or to save it in its original encrypted state. But a large number of users in financial institutions that we’ve worked with don’t do either. Instead they save the decrypted version of the email where thieves can easily access the information. In fact, Microsoft Outlook prompts users to save encrypted messages in a decrypted form whenever they close a decrypted message. Since neither Outlook nor PGP warns users about the danger of saving the message, most users click “Yes” and save the decrypted message.

When decrypted, the data is vulnerable to attack by viruses, malware and computer hackers. Some executives dismiss the threat by touting the protection that their firewalls and intrusion prevention systems provide. Firewalls are almost useless when PCs are infected with data harvesting viruses or malware, so relying on firewalls to protect data stored on PCs is akin to putting a lock on a screen door.

Even when firewalls do manage to keep PCs free of any viruses or malware, what happens when the bad guy is someone inside the organization?

According to the FBI, insiders – employees, contractors and business partners – commit nearly 70% of all data theft crimes. They steal data directly from the corporate network or they steal the computers & hardware that store the data. Sometimes they even “buy” the data by purchasing decommissioned computers that organizations sell to employees. A firewall will do nothing to protect decrypted data stored on the PCs that these attackers gain legitimate access to.

We’ve implemented a safer way to protect data submitted through websites. Using MemberProtect, our clients have eliminated the decrypted data theft risk. MemberProtect does not rely on email delivery and instead stores data inside a uniquely-encrypted database. Administrators control who can access the secure web-based viewer to see the data submitted through their websites. MemberProtect decrypts the data to allow viewing, but unlike Outlook, MemberProtect always re-encrypts the data when the user is done viewing it.

MemberProtect also creates an audit trail that auditors and security administrators can use to see who has viewed, modified and deleted data. It also tracks logons, attempted logons and user interactions with the protected system. MemberProtect stores this audit login a separate encrypted database to prevent log tampering by system administrators or other insiders. When integrated with intrusion detection systems, the system can perform a degree of self protection by severing connections with suspicious clients and immediately notifying administrators of suspected hack attempts.

If your budget cannot support a system like MemberProtect (approximately $3,000 to $5,000 for implementation on a bank website), then PGP is still an acceptable security option, but it’s critical that you train all users to:

Never save decrypted messages
Never share their PGP pass phrase
Always make a backup of their private key since if this key is lost, the messages cannot be decrypted

Exchange Rates – Keeping an Eye on Them

Keeping an eye on currency exchange rates is essential when traveling if staying within a budget or if just not wasting money is of concern to you at all. What does exchange rate mean? Typically, using the US dollar as a guide, other currencies would be worth more or less than a dollar for exchange of value. For instance, a Canadian dollar might be worth 85 percent of an American dollar, or 85 cents. Then when comparing a US dollar to the British pound, it a pound might be worth two US dollars. The fluctuating exchange rate means that, depending on market conditions, one day a pound might be worth two dollars, and the next day a pound might be worth two and a half dollars, and the next day worth one dollar and ninety cents.

A currency will be either free floating or pegged. A pegged currency is fixed by the government relative to the value of another currency. For example, the Hong Kong dollar in the 1980’s was fixed or pegged relative to the US dollar and always worth a set percentage of the currency it was pegged to. A free floating currency is allowed to fluctuate in value relative to all the other currencies on the foreign exchange market. When discussing currency people also refer to the nominal exchange rate, and the real exchange rate. The nominal rate is the rate at which a currency of one country can be traded for the currency of another. The real rate is the rate at which goods and services of one country can be traded for the goods and services of another. If, for example, the price of a product increases by ten percent in the US and there is a ten percent appreciation in the Canadian economy against US currency, the price of the product would remain constant for Canadians despite the US price increase. This is of course assuming that no tariffs are involved.

As a practical matter exchange rates will change from country to country and can be used to make travel and tourism more attractive in certain countries at certain times, so if there are several countries you’d like t visit and you have a flexible schedule, keep an eye on the exchange rates. If a person is a visitor in New York City it is easy to see how people in other countries follow this rule. At certain times the city of New York will be flooded with visitors from Germany, France, the UK, or Japan. The reason for this is quite simple. When the exchange rate favors the Japanese or the Europeans, then visiting America becomes much cheaper for them than at other times. If for instance, one thousand Euros, due to a favorable exchange rate, will purchase twelve hundred Euros in value, then they have a net twenty percent gain and a twenty percent cash incentive to visit the US. In recent years this exchange rate has usually worked in favor of Europeans, but in years past it worked in favor of Americans. For instance, before the Euro became the standard currency of Europe, Italy used lira, Germany the deutsche mark, Switzerland the Swiss franc, Austria the schilling, and France the French franc. In the early 1980’s the exchange rate was five French francs to the dollar, two and a half Swiss francs to the dollar, one thousand lira to the dollar, and two and a half schillings to the dollar on average. The German mark was fluctuating, anywhere from 1.7 marks to the dollar to 2.5 marks to the dollar, so when the dollar was worth 2.5 marks Americans would be ahead to trade in their dollars for marks. When the rate was 1.7 they were better off not spending German marks.

Keeping an eye on exchange rates will always benefit the traveler. Even if you are just crossing the border to visit our neighbors to the North in Canada or the South in Mexico, knowing what the normal value of the other nation’s currency is, and planning your trip for when the fluctuation is in your favor will increase spending power.

First Of All, Know Thyself

One of the most important elements of success in trading (and life in general) is knowing yourself. If you do not understand how you tick, you will never be truly prepared for the demands of trading, and likely your performance will suffer as a result.

Let me use myself as an example.

I am what might be considered project oriented. By that I mean I like to move from one thing to the next – always have something upon which to focus my attention. As my friends and colleagues can attest, once I complete a project – and sometimes even before I do – my thoughts shift to the next one. I actually get antsy if I have nothing lined-up. Predictably, this is reflected in my trading.

We can actually think of trading as a series of projects. Each position one takes on is a new project which incorporates analysis of some sort (automated or otherwise) and trade decision-making. When a position is closed out, it is like wrapping up a project. It’s over and done – time to move on to the next thing.

There’s a little problem with that, though. This kind of “project” approach, in the case of someone like me, can lead to overtrading. This isn’t the kind of overtrading which is referred to when one speaks of taking on positions which are too large, though. Rather, I am speaking of trading too frequently. In my case, when I close a trade I find myself immediately eager to open a new one. It doesn’t matter whether I made or lost money on that first trade. Because of my “need” to have a project going, my psychological pull is toward finding a new trade to make. (Note: I do not consider this in my case to be like the “fix” trading provides as an intermittent feedback mechanism, like gambling.)

This little personality trait of mine is something I figured out a while back when I realized that I am most comfortable when I have an active position in the market.. It doesn’t matter how large or small that trade is as long as I can check on it periodically and feel like I’m involved. Knowing this, I take two approaches to avoid the overtrading problem.

The first thing I do is trade longer-term. By doing so, I give myself the opportunity to take on long “projects”. I often have trades with durations of weeks or even months. These aren’t all my trades, mind you. I do trade short-term at times, but my schedule is such that longer-term position trading tends to fit best most of the year.

When trading shorter-term, I use a second approach to combat the “project” itch. Specifically, I try to step away from the market for a while following the completion of a trade. It lets me clear out the emotional residue of finishing a project and come back at it fresh. That can quite often make the difference between taking impulsive trades and being properly selective based on my analytic methods.

Of course, this is just one example of the sort of psychological hurdles which come up in trading. We all have patterns of behavior which are based in our personal lives that can quite easily carry in to trading, positively or negatively. Brett Steenbarger’s outstanding book The Psychology of Trading provides an excellent discussion of how this can happen, and ways we can overcome the problematic ones. The primary point is that we need to be able to look at ourselves like an outside observer. In that way we can get to know ourselves, and that’s at least half the battle.

Five Budget Tips to Help You Save

Saving money is much easier than earning it from scratch. But it is also much harder than it is to spend money, and as a result, most of us spend what we would rather save. In order to begin saving money, we need to have a plan, and the more automatic the plan works, the better. When we are confronted with the choice between spending money and saving it, we run the risk that we will give in to the temptation to choose instant gratification. So taking the choice out of the equation is one of the first steps to a steady savings program.

Here are five tips for budgeting and saving money, the automatic way:

1) Set up an automatic withdrawal program with your bank, so that every time you make a deposit, a percentage of the money you deposit is automatically transferred to a savings account that is harder for you to access. One way to do this is to have your bank use an automatic deposit system to put a set amount of money – for example, $100 – into your savings account each month.

2) Save your loose change and small bills. Put a piggybank in your kitchen and every time you come home, empty the change from your pockets and put it in the piggybank. Toss in a few one-dollar donations from time to time. Although it sounds juvenile, you will be surprised how much you can save with this old fashioned method. And it is so much fun to break the bank when it won’t hold another cent.

3) Write down everything – and that means no exceptions – you buy. Keep a log of every single purchase you make. Write down what you bought and how much it cost. If you left a tip, write that down too. Be diligent about keeping your log book, and if you do it well, you can just do it for a month and gather enough information to help you save even without the log book. Most people find hidden expenses, like $10 per day for coffee or $50 per month for a gym membership that is never used, and then they can easily adjust their budget to save money immediately.

4) Spend less at holidays. And entertain at home. Instead of giving expensive gifts at Christmas, give handcrafted items, poems, or pledges to do errands or barter with friends. One fellow we know agreed to shovel his friends’ sidewalks during one snow season. His friends got a great gift, and he saved some cash to spend once the snow and ice thawed. Instead of going out to eat in restaurants, cook at home or invite friends for a potluck dinner. Rent DVD’s instead of going to the movies.

5) Don’t shop hungry. Scientific studies show that people who have a strong appetite will not only eat more, but they will consume more of everything else, too. Many of us know that if we go grocery shopping while hungry, we will buy more than we need. So don’t do it. Eat first, then shop. But since studies show that it applies to all sorts of shopping, always have a satisfying snack before going to the mall, the clothing boutique, or the sports store. You’ll spend less, and save more.

Extension of Short Leases on Central London Properties

Copyright 2006 Nigel Osgood

Facts

* The shorter the remaining term of the lease, the more difficult it will be to sell the property or for potential buyers to raise the finance

* Potential lenders usually require a minimum term of lease at outset of a mortgage facility and, also, require a 30+ years left on the lease at maturity of the mortgage term

* Properties in prime areas of Central London, typically, have leases attached to them with less than 30 years remaining (some have much shorter remaining terms)

* Since the Commonhold & Leasehold Reform Act 2002, it has been easier for an owner of a short leasehold property to extend the term of the existing lease, if he/she has owned the property for two or more years

* Few lenders have identified and responded to this niche lending opportunity; those that have done so, consider the location of the property and the status of the freeholder to be important factors in the mortgage application process

* Quality estate agents and valuers, experienced solicitors and enlightened independent mortgage advisers will all have significant roles to play in this business arena Financing the Extension of a Short Lease

A freeholder will require a monetary consideration in order to extend a lease and there are, essentially, three options for making that payment:

* Pay the premium to the freeholder out of one’s own financial resources

* Apply to one’s existing lender for a ‘further advance’ in addition to the existing mortgage

* Apply to another lender for a re-mortgage to pay off one’s existing borrowing and raise the additional amount required to pay the freeholder

A lending institution will value the property on the bases of its current short lease and also the future increased lease term.

If approved, the mortgage will be based upon the revised lease term and, when the funds are released to the acting solicitor’s client account, the new lease will be executed simultaneously.

Illustration:

An applicant has a 5yrs mortgage of L350,000 on a 15yrs leasehold property valued at L500,000 and he/she can acquire a 90yrs extension to the lease by paying the freeholder a premium of L250,000. The property’s value will increase to L1,000,000 with the new 105yrs lease in place.

A L600,000 mortgage is approved and the L350,000 borrowing is redeemed and L250,000 is paid to the freeholder.

Purchasing a Short Leasehold Property

As, say, a 15yrs lease reduces so does the value of the property decline; a ‘purchase’ application, therefore, challenges a lender more than a ‘re-mortgage’ application.

It is likely that, after two years of ownership, the purchaser will apply to increase the lease as in the preceding scenario; a lender cannot include that factor when considering a mortgage application for a purchase of a short leasehold property.

Again, using an existing 15yrs leasehold property and a 5yrs mortgage as an example, it is unlikely that a borrower would opt for a ‘capital and interest’ facility, given the likely repayments. An ‘interest-only’ mortgage product is not attractive to a lender because of the fact that the reducing lease is likely to have a declining value.

The answer can be a hybrid of the two loan types i.e. a mortgage that is part ‘capital and interest’ and part ‘interest-only’ in order that a lender’s exposure re. loan/value is not impaired.

Illustration:

A lender is prepared to lend 70% of the purchase price/valuation and requires that the exposure is no more than 70% of the declining value at anytime throughout the mortgage term.

Purchase price/valuation of 15yrs leasehold = L500,000 Valuation of the property with 10yrs remaining = L350,000 Loan term is 5yrs

The lender is prepared to structure a loan on the basis that enough capital is repaid over the five years in order for the exposure to be no more than 70% of the declining value.

In this scenario, L350,000 would have been lent at outset (70% of L500,000 value) and after five years the borrowing would be reduced to L245,000 (70% of L350,000 value).

As the mortgage was for a five years term, the borrower would have to pay off the outstanding L245,000 at this time, having sold the property or from his/her own cash resources or having extended the lease and re-mortgaged.

Summary

The processes of purchasing, re-mortgaging or extending the leases of short leasehold properties require the services of knowledgeable and experienced advisers.

There is a slowly-increasing awareness of the market opportunity by a few of the more forward-thinking and flexible lending institutions.

A huge amount of prime Central London property is short leasehold, owned by highly reputable freeholders that have embraced the enfranchisement Act.

In future, those potential buyers of short leasehold properties or those wishing to extend their existing leases can do so knowing that professional and experienced support is available to them.

Don’t Be Scared By Interest Rates

Let’s look at what we have been hearing. That with rates up, homebuyers will pay thousands of additional dollars on their mortgages. For example, on a $500,000 mortgage, an extra .5% in interest rate adds another $160 a month to the payment. In thirty years, the increased rate costs $57,000 more.

It’s a bit more, but it is part of financing anything. Rates go up and down. That’s how it works. Yes, rates have been steadily rising — from RECORD LOWS. If you look at the last twenty years, you will see that mortgage rates are looking pretty good when compared to some of the highest years. You can still get a mortgage, even if rates go up.

You may not be able to afford the home you really wanted, but you can afford a home. What is the difference that half-a-point will make for you? Well, you might not be able to afford a $300,000 mortgage, but you could a $285,000 one.

The best thing that rising rates has done is emphasized the importance of making smart decisions when purchasing a home. Rule number one — only buy what you can afford. This is increasingly important right now. Many homeowners have stretched themselves to get into homes that have record high appreciation. They now can’t pay their adjustable-rate mortgages and can’t sell for what they owe.

Buying what you afford isn’t just a right now situation. When you are choosing an adjustable mortgage product, you have to look to see if you can afford the worst-case scenario of the highest possible interest rate. If you can’t, you need a new plan or a new prospective home at a lower price.

You need to thoroughly understand all of the risks associated with different types of mortgages. There is fine print that can kill you. But what is causing most of the “payment shock” we are seeing this year is not in the fine print. You know that an adjustable mortgage will increase in interest rate. What you haven’t done is sit down and see how that rate could increase your monthly payments.

You shouldn’t be scared to go out and purchase a home or take out a mortgage right now. What you should be is wise. Make the right financial decisions for your family based on your budget, what you can afford and what the interest rate is right now. Buy what you can afford at a fixed rate and you won’t have to worry about rates going up. If you find that you can’t afford what you want right now at the given fixed rates, be assured that rates will go down eventually. Sit on your money and let it build up while you wait for the right time.

If you are looking on financing a major purchase, like a home or a car, take the time to educate yourself on all of the available options. Remember that everything is your decision. You aren’t stuck with a certain rate, but you can jump into the wrong one. Interest rates will affect you and will affect your budget if you have substantial debt. You will have to make changes. But don’t let these still historically low rates scare you into not receiving all of the advantages that owning a home can bring.

Financial Readiness: How Prepared Are You?

Home is where most people feel safe and comfortable. But sometimes — say, when a hurricane, flood, tornado, wildfire, or other disaster strikes — it’s safest to pack up and go to another location.

When it comes to preparing for situations like weather emergencies, financial readiness is as important as a flashlight with fully charged batteries. Leaving your home can be stressful, but knowing that your financial documents are up-to-date, in one place, and portable can make a big difference at a tense time.

Here are some tips for financial readiness in case of an emergency:

Conduct a household inventory. Make a list of your possessions and document it with photos or a video. This could help if you are filing insurance claims. Keep one copy of your inventory in your home on a shelf in a lockable, fireproof file box; keep another in a safe deposit box or another secure location.

Buy a lockable, fireproof file box. Place important documents in the box; keep the box in a secure, accessible location on a shelf in your home so that you can “grab it and go” if the need arises. Among the contents:

– your household inventory

– a list of emergency contacts, including family members who live outside your area

– copies of current prescriptions

– health insurance cards or information

– policy numbers for auto, flood, renter’s, or homeowner’s insurance, and a list of telephone numbers of your insurance companies

– copies of other important financial and family records — or notes about where they are — including deeds, titles, wills, birth and marriage certificates, passports, and relevant employee benefit and retirement documents. Except for wills, keep originals in a safe deposit box or some other location. If you have a will, ask your attorney to keep the original document.

– a list of phone numbers or email addresses of your creditors, financial institutions, landlords, and utility companies (sewer, water, gas, electric, telephone, cable)

– a list of bank, loan, credit card, mortgage, lease, debit and ATM, and investment account numbers

Social Security cards

– backups of financial data you keep on your computer

– an extra set of keys for your house and car

– the key to your safe deposit box

– a small amount of cash or traveler’s checks. ATMs or financial institutions may be closed.

– Consider renting a safe deposit box for storage of important documents. Original documents to store in a safe deposit box might include:

– deeds, titles, and other ownership records for your home, autos, RVs, or boats

– credit, lease, and other financial and payment agreements

– birth certificates, naturalization papers, and Social Security cards

– marriage license/divorce papers and child custody papers

– passports and military papers (if you need these regularly, you could place the originals in your fireproof box and a copy in your safe deposit box)

– appraisals of expensive jewelry and heirlooms

– certificates for stocks, bonds, and other investments and retirement accounts trust agreements

– living wills, powers of attorney, and health care powers of attorney insurance policies

– home improvement records

– household inventory documentation

– a copy of your will

Choose an out-of-town contact. Ask an out-of-town friend or relative to be the point of contact for your family, and make sure everyone in your family has the information.

After some emergencies, it can be easier to make a long distance call than a local one.

Update all your information. Review the contents of your household inventory, your fireproof box, safe deposit box, and the information for your out-of-town contact at least once a year.