According to Federal Reserve data compiled by MagnifyMoney, Americans paid $104 billion in interest on credit card purchases over the twelve months ending March 2018. That's not outstanding credit card balances, which are near $1.04 trillion as of May 2018 – that's just interest charges on the outstanding amount.
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الأربعاء، 8 أغسطس 2018
How to Effectively Market Your Small Business on Social Media
Social media marketing is no longer optional for small businesses in 2018.
I see this problem all too often when I’m consulting small business owners. They have this mentality that social media won’t benefit their companies.
“Our customers know who we are, and they know where to find us.”
Does this sound familiar to you? Don’t get me wrong: it’s great that you have established a steady customer base. But using social media to market your small business will help you get more money from your existing customers in addition to acquiring new ones.
Failure to have an effective social media strategy can be detrimental to your small business.
While you may not think your lack of a social media presence is having an impact on you today, it will eventually catch up with you down the road. So don’t wait until it’s too late to get started.
You’ve got to keep up with the latest social media trends and apply them to your small business.
If you’re a small business owner not quite convinced you need to use social media to improve your business, you’ll benefit tremendously from reading this guide.
If you are currently using social media to market your small business but not seeing the results you hoped for, I’ll steer you toward the path to success.
Follow the marketing tips and strategies I’ve outlined in this guide, and you’ll set yourself up for sustainable growth today and in the future.
Create profiles on multiple platforms
“We’re on Facebook.”
I hear this all the time when I’m talking with small business owners about their social media strategies.
If you have a Facebook page for your business, that’s great. You’re headed in the right direction.
But Facebook alone won’t be enough to maximize your reach. You need to establish a presence on as many social platforms as possible.
Here’s a look at the social media channels that small businesses use the most:
As you can see, Facebook leads the way for small businesses.
Less than half of small businesses use Instagram, YouTube, and Twitter to market their brands. Furthermore, less than one-third of owners are taking advantage of LinkedIn and Snapchat.
Before you rush to create a profile on all the channels listed above, it’s important you understand your target market.
For example, LinkedIn is more beneficial to B2B companies. That’s because 80% of leads generated by B2B brands come from LinkedIn.
Let’s say your small business is targeting Generation Z as your primary audience. Well, 71% of Gen Z uses Snapchat at least six times each day. More than half of this generation uses Snapchat over 11 times daily.
But if your small business is trying to generate leads from Baby Boomers, it wouldn’t make sense to prioritize Snapchat.
For the most part, starting with a Facebook profile is a safe bet. With nearly 1.5 billion daily active users, you can assume your target audience has a presence there.
Believe it or not, after all these years, Facebook is still the fastest growing social network. So it’s not going anywhere in the near future.
After you create a Facebook page, you need to determine which other channels are suitable for your brand and marketing strategy. I’d recommend creating a YouTube channel.
The video content you upload to YouTube will be easy to repurpose for your other marketing channels. These videos will give you an excuse to post content on other platforms when you’re running low on ideas, but we’ll talk about that in greater detail shortly.
Define your marketing goals
You can’t just blindly start posting content on social media without some sort of rhyme or reason. Before you do anything else, you need to identify your marketing goals.
These are some of the top goals that small businesses are trying to accomplish with their social media strategies:
While lead generation, brand awareness, and customer engagement are all good reasons to use social media, it doesn’t mean these should be yours.
You may be using social media to provide better customer service or directly drive sales.
Whatever your reasons, make sure they are clearly defined. Think of it as you would of any other marketing strategy for your company.
You wouldn’t run an ad on the radio or a print advertisement without establishing a goal first, so you need to treat your social media strategy the same way.
Once you decide the purpose of your social media campaigns, it will be much easier for you to come up with content to post. As we’ll discuss soon, it can be tough to think of ideas for new posts.
But if you can establish what you want to accomplish with your content, you’ll know what to post to achieve those goals.
Post content on a daily basis
Now that you have a social media profile on multiple platforms, you’ve got to make sure those accounts are active.
If someone stumbles upon one of your pages and the most recent post was from three weeks ago, they aren’t going to follow you. What’s the point of following a brand that doesn’t post content?
Furthermore, think about all the people already following your business page.
These people won’t just navigate to that page on their own to see what you’re up to. You need to post new content that will appear on their homepages and timelines.
Let’s take a look at how frequently small businesses are posting on social media:
As you can see from this graph, just over half of small businesses post on a daily basis.
This is your opportunity to stand out from your competitors. If your competition is only posting once a week or just a handful of times per month, it will be easier for you to make a lasting impression on your followers by posting daily.
Each time you post new content, you remind your followers that your brand exists.
When they need or want whatever you’re offering, they’ll think of your company as opposed to another small business in the area.
One of the reasons why small businesses aren’t posting content daily is because they simply don’t know what to post. If you fall into this category, refer back to your marketing goals.
For example, if your goal is to promote new products for sale on your ecommerce site, then post a promotional offer for those products.
Repurpose previously published content. I briefly mentioned this earlier when we discussed why you should create a YouTube channel.
Let’s say you have an instructional guide or tutorial on how to use a product that you published to your YouTube page. You can post that same video or snippets of that video to your other distribution channels.
Share new content from your website. Post links to your most recently published posts.
In addition to posting content daily, it’s also important for you to respond to your customers. I’m referring to direct messages as well as comments.
48% of consumers say that when a company is responsive on social media, it will prompt them to make a purchase.
Give consumers a reason to follow you
In order to have a successful social media marketing strategy for your small business, you need to have lots of followers. Otherwise, nobody is going to see your content.
Once you’re able to grow your social following, it will be easier for you to convert your followers into customers.
That’s because consumers are more likely to buy from brands they follow on social media.
Here are some of the top reasons why people would be interested in following your small business on social media:
- they’re curious about your products or services
- you offer exclusive promotions
- your content is entertaining
- they need to reach a customer service representative
- you offered an incentive
- their friends or family follow your brand
So make sure your content is worth following. As you’ve seen, getting more followers will ultimately increase your chances of driving more sales.
Run a contest. Promote flash sales and discounts.
Just don’t post too many promotions, or it will cause people to unfollow you. In fact, 46% of consumers say they’ll unfollow brands that post too much promotional content.
There is a difference between posting daily and spamming your followers.
People don’t just want to see posts from your brand. If you’re posting several times per day, these posts will flood the timelines and homepages of your followers. Nobody wants to see that.
If you want to post content multiple times per day, consider sharing ephemeral content, which we’ll discuss in greater detail shortly.
Form relationships with social influencers
What if I told you there was a way for you to increase your social media presence without posting any content to your page?
Well, as I’m sure you were able to guess, this is definitely a possibility.
When people think of social influencers, they think of celebrities and athletes. But partnering with a celebrity probably won’t fit within the marketing budget of a small business.
However, influencer marketing is the fastest growing method for customer acquisition in the digital world.
Furthermore, 67% of brands are planning to increase their influencer marketing budget within the next year.
So how can a small business afford to implement a strategy like this? You can find social influencers who are much more cost-efficient than a celebrity.
Try partnering with micro influencers to increase your product credibility.
This type of influencer may not have millions of followers, but you can get them to post content about your brand for a few hundred dollars. You may even be able to get away with offering just offering them free products in exchange for a post about your brand.
This strategy is effective because micro influencers have stronger engagement metrics with their followers. That’s because they are just regular people.
An average citizen can’t relate to the lives of Kanye West and the Kardashians. But they can definitely relate to someone who has a regular job.
Consider searching for social influencers who live within the area or region of your small business. It’s more likely that their followers will be interested in supporting your brand.
Implement automation tools
I know what you’re thinking. Everything that we discussed so far sounds extremely time-consuming.
As a small business owner, you need to wear multiple hats throughout the day. Depending on the size of your business, you might be handling the majority of the company’s responsibilities.
Becoming a social media content manager wasn’t something you planned for, and it might feel as if there aren’t enough hours in the day for you to handle this.
Plus, hiring someone to take on these tasks can be expensive. That may not be something that your business can afford right now.
Fortunately, automation resources will solve this problem for you. Check out my favorite time saving social media marketing tools.
Using an automation platform will allow you to schedule your posts in advance. You can take time once at the beginning of your week to set the dates and times for your posts in the future.
Another benefit of using an automation tool is the ability to respond to messages in a timely fashion.
Rather than having to check each social platform individually for these messages, you can find software that sends all messages to one inbox. Then you can reply directly from the software.
I highly recommend these tools for small business owners who feel they don’t have enough time to effectively manage their social media profiles.
Don’t let that impair your marketing strategy.
Encourage user-generated content
This connects to my discussion about the type of content you should be posting.
You can’t go wrong by sharing content that encourages UGC.
As you can see from these numbers, user-generated content has a direct correlation with the consumer buying decision.
UGC will also help you build brand awareness. Here’s why.
Let’s say you run a contest on Instagram where participants have to post pictures featuring them using one of your products.
Your small business just got exposed to a wider audience. Anyone who follows people who enter the contest will see your brand being promoted, even if those people don’t follow you.
A whopping 92% of consumers say they trust a referral if it comes from someone they know.
UGC is a great way for you to get more followers and ultimately turn those new followers into buyers.
Take advantage of ephemeral content
Ephemeral content is different from a regular post. This type of content is only displayed for a short period of time, such as 24 hours.
The most common places where you’ll find ephemeral content for social media is on Instagram and Snapchat. Both of these platforms have a “story” feature.
I highly recommend using an Instagram story to promote your business.
I briefly mentioned this earlier when discussing how frequently you should post content.
If you want to post several times per day, do it on your story. This won’t spam the timelines of your followers.
If you haven’t used ephemeral content just yet, give it a try in your next promotion to see how it goes.
Broadcast live video streams
Small businesses can also benefit from broadcasting live video content on social media platforms.
Facebook, YouTube, and Instagram all have options to do this.
Just take a look at some of these statistics about Facebook Live:
Basically, your live stream will boost your engagement metrics. It will also give you a more authentic interaction with your audience.
You can use your live broadcast in many different ways. But one of my favorites for small businesses is a behind the scenes look.
Show your followers what happens behind closed doors at your business. Give them a tour of your production facility, office, and introduce them to your staff.
This will make them feel as if they are seeing something that’s exclusive and ultimately bring them closer to your brand.
Live video is also a great distribution method for product demonstrations, events, or Q&A sessions.
Your live audience will be able to comment on your stream in real time. Make sure you acknowledge those comments and respond to your followers.
Conclusion
Your small business needs to use social media to stay relevant in today’s day and age.
Just having a Facebook profile alone is no longer acceptable if you want to maximize your social media marketing proficiency.
Create profiles on multiple platforms as long as your target audience is active on those channels.
You need to post content on a regular basis. Just make sure your posts are all related to your clearly established marketing goals.
Your profiles need to be appealing to consumers. Run campaigns designed to get more followers.
To further extend your reach, find social influencers to promote your business. Encourage user-generated content.
Add ephemeral content and live broadcasts to your social media marketing strategy.
If you don’t have time to manage all your social media pages, consider using automation tools to make your life easier.
Follow the advice I’ve outlined in this guide, and it will bring the social media marketing strategy of your small business to the next level.
How is your small business leveraging social media to increase brand awareness and drive sales?
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Revisiting the Last Little Bit in the Container
Tubes of toothpaste. Bottles of shampoo. Soap dispensers. All of these things are easy to use at first when they’re full, but eventually they empty out, leaving just a bit of the soap or paste inside.
This isn’t just in our imaginations, either. Most packaged liquids and pastes tend to leave a little behind in the bottle or the tube:
In order to determine how much product does not come out, Consumer Reports conducted tests. A total of 22 products were tested, including glass cleaners, lotions, liquid detergents, and toothpaste. The tests found out that lotions were the hardest to empty, and pump bottles leave 20 percent of the lotion behind. Glass cleaners delivered most of the product. Plastic squeeze tubes can trap 10 percent of the toothpaste.
Last fall, Consumer Reports conducted similar tests on skin lotions, liquid detergents, condiments, and toothpaste. Testers emptied a product “in the usual way,” and waited a couple of days for the remains to settle. Then they “pumped, poured, squeezed, shook, and tapped as much as any frugal but rational consumer might.” Lastly, the testers weighed what was left inside. The results revealed that skin lotions left the most product, about one-fifth of their total contents. Toothpaste left one to 13 percent behind. Colgate and Crest brands were used in the tests.
Everyone seems to have a strategy for getting the last little bit out of the container.
For toothpaste tubes, for example, I’ve seen people roll the tube up carefully from the end, pressing down with every turn. There are even “keys” – little metal devices that help with this process by “turning” over the tube as you use it up. I’ve run toothpaste tubes over the edge of a countertop in order to get a few more uses out of the tube.
With things like shampoo, it’s a common strategy to add a little water to the bottle. Shaking it around with the water in there can produce enough “shampoo” to get another wash or two before the bottle is officially empty. I’ve seen bottles turned upside down (with the lid on) in order to cause all of the remaining shampoo or conditioner or body wash to drip down to the part of the container where the cap is, just to get one or two more washings out of the bottle.
My favorite trick? I take the cap off of the old shampoo bottle and tip it up so that it dumps into the capless top of the new shampoo bottle for 24 hours or so, until my next shower when I discard the old fully empty bottle.
Are these tactics really worth our time? It can be useful to squeeze another use out of these items when you forgot to pick up more at the store, but is it actually much of a money-saving tactic for the time invested?
Years ago, I concluded that it’s only worthwhile to do this if it’s trivially easy and takes no extra time or effort. If you’re spending 30 seconds getting just one more use out of that tube of toothpaste, you’re probably only gaining a few cents for that time and effort, and that’s not worth it. However, if it’s something trivially simple, like sitting your shampoo bottle upside down, then it’s worthwhile to use that tactic to get another use out of the bottle.
Over the years, I’ve discovered a few additional tactics that help solve this problem.
First, focus on using the actual recommended amount of whatever it is you’re using and the last little bit becomes a little less relevant. With toothpaste, you’re generally supposed to just use a pea-sized amount, but the commercials show huge amounts being used and that’s often the pattern we follow in our own use. Similarly, things like dishwashing detergent and shampoo and body wash flow so freely that it’s easy to use far more than you should.
My solution is to use a dispenser that dispenses the right amount easily. Whenever I come across a good pump dispenser, I put it to use for things like shampoo and dish soap. I use wide mouth dollar store dispensers for both of those things. Whenever I buy a new bottle of shampoo from the store (for example), I turn it upside down on the dispenser, leaving it sit upside down on top of the container to get every last bit out. Then, with a pump container, I don’t run the risk of using far too much shampoo or dish soap. I just get a single pump and use it and then only get a second if the first doesn’t provide enough. This causes me to get far more out of the package.
If using the right amount of a particular item rather than too much of a particular item means that you cut the amount you use in half each time, then you’re cutting your costs related to that item by 50%. Let’s say, for example, that you buy a tube of toothpaste for $4 every other month, adding up to $24 a year. Cutting your toothpaste use per brushing in half means that a tube now lasts four months, meaning your cost adds up to only $12 per year. If you can do the same for shampoo, conditioner, hand soap, bath soap, dish soap, laundry soap, window cleaner, and so on, the savings add up to a pretty serious amount of money.
Second, I cut open toothpaste tubes with some tough scissors I keep in the bathroom. I have some really hefty scissors that stay in the bathroom by default and when a toothpaste tube gets low, I just cut off both ends with a single snip, then cut down the side with about two snips, which takes me maybe five seconds. I then just rub my brush around on the inside of the tube and the end of the tube to get the last bits of toothpaste out. I don’t even bother to roll up the tube as I go or anything – I just cut it open when it starts getting tough and from there I’ll get about ten or fifteen more brushes out of the contents for about five seconds of effort. My guesstimate is that this adds about 10% to the life of that tube, so if a tube costs me $4, that five seconds of effort saves about 40 cents. If I do that by default with every tube we use – and my wife and I go through about six or so tubes a year – that adds up to an hourly rate of about $288.
A quick principle here: things that take very little time and save a few cents are almost always worth making into part of a routine. If you can do something that saves a few cents in five or ten seconds or less, it’s almost always worthwhile to do it. Something that saves five cents for five seconds of effort adds up to a $36 an hour rate after taxes. To me, that’s always worth it.
Finally, you can turn the containers of thicker liquids and pastes into a mini-“jar”. Hand lotion is a perfect example of this.
All you have to do is use the product until it’s beginning to get difficult to squeeze out more of the contents. Then, cut the mostly empty tube in half the short way and scoop out the stuff remaining in the smaller end of the tube. Put the content you scoop out of the smaller end into the other end, then use the smaller end as a “cap” over the top of the other end to keep it from drying out. After that, you just use it like a jar – store it vertically and, when you need to use the contents, pull the smaller end off of the other end and scoop out what you need with your fingers. If there’s a pump in there, just cut off the pump’s straw as you won’t be needing it any more. This whole process takes about 30 seconds to set up and enables you to get quite a few more uses out of the tube’s content.
This is a great tactic to use if you have an expensive hand cream or something where you spent a healthy amount per use and don’t want the 15% or 20% still stuck in that tube to go to waste. This lets you use virtually everything that’s left in the tube or bottle with ease.
My general rule is this: if I can’t conveniently get at what’s left in the container by destroying/modifying the container or turning it upside down, then it’s not worth the time and effort. Those two tactics are so quick and slick that I don’t bother with anything else.
However, the real secret is to use the actual recommended amount. Just doing that will save you far more than just getting the last little bit out of the container.
Good luck.
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Freelancers: What You Should Consider Before You Set Up An LLC
Which is how I found myself across the table from a local CPA, hesitantly showing her my color-coded income spreadsheets. Honestly, I couldn’t believe I was in an accountant’s office in the first place – talk about adulting. And now, she was suggesting another mysterious challenge: moving my fledgling freelance business to the LLC level.
Calculated risks had always proven to help my business in the past, and this one was sanctioned by someone who knew a whole lot more than I did. So I followed the precedent I’d set in all other aspects of my freelance career: I dove in head first and figured it out as I went along.
Should You Take Your Freelance Business to the LLC Level?
What’s the benefit of upgrading your freelance business to an LLC in the first place?
For one thing, it protects your personal assets in the event you run into any legal trouble. That’s why it’s called a “limited liability company;” you’re only liable for the assets you’ve put specifically toward the business.
Especially as a freelance writer, that can be an important consideration. I’m meticulous about fact-checking my work, but I liked the security of knowing I’d be able to distance myself (and my belongings) in case I were ever, for example, charged with libel.
There are lots of other benefits to incorporating, too, some of which we’ve covered here before — as well as how to get going.
But the main reason I took the dive was purely monetary. By moving to an LLC and taking the S-corporation option, I’d avoid paying self-employment tax on a significant portion of my income.
Instead, I’d hire myself through the business as an employee and pay regular income taxes. (Yes, this is perfectly legal and fairly common, often referred to as a “pass-through” taxation structure – and yes, it means I got to file a W-2 as both hiree and employer, which was pretty weird.)
All told, I’m glad I made the decision. Not only is it helping me save money, but it also – arbitrarily, I admit – makes me feel like a more legitimate entrepreneur.
But there are a few things I wish I’d known before I’d started filling out the paperwork.
Red tape is a real thing – and it is, in fact, pretty annoying.
The magical line of demarcation between freelancer and business owner is formed by a pile of paperwork – and I’m not talking about filing the business name. That’s the fun part.
Once I’d secured the LLC itself, I still had to get legitimate with the city.
To make myself legitimate, I’d need to obtain a business license; to obtain a business license, I’d need to visit zoning; to appease zoning, I’d need to assert that my workspace (i.e. home office) was appropriate and that my business wouldn’t be disruptive to my neighbors. And to do all of this I’d need to take myself, in person, to the courthouse.
It wasn’t that big of a deal, and most of it was only a one-time hassle. But anyone who’s ever waited through an interminable DMV line knows that government offices can be … frustrating.
What I thought would be a straightforward afternoon trip ended up with me ping-ponging between a variety of different buildings to hit all the requisite departments, each of whom wanted at least a little bit of my money. (They were all deductible expenses, but still.)
And in fact, I got off pretty easy; it could have been a lot hairier if I’d lived in the historical downtown part of my city, which requires a second, more stringent license – or if my business model necessitated in-person client meetings, which may have caused my residentially zoned home office space to be denied.
Your experience with this part of the process will vary depending on your specific business type and location, but just be prepared to spend an annoying amount of time and money to get a little piece of paper that says your work is legal – even if it’s the exact same work you’ve already been doing for a while.
It makes the money tree more complicated.
Part of the point of going LLC is separating your assets, but doing so can complicate your personal finances. In order to get the tax benefits of the S-corporation selection, I have to put all my earnings into a business account, from which I pay myself payroll – which, by the way, costs money to process. That is, I have to pay to get paid.
It also means I’m back to waiting for a paycheck, which I thought I’d left behind with my office days. And since freelance income is notoriously fickle and payroll is timely, there have been some instances where I’ve had to transfer money from my personal savings into my business account to make it work. (On the plus side, it is a nice change to know exactly how much money I’ll have my hands on, and when, throughout the month.)
In short, the LLC structure can definitely save you money … but it might limit or complicate your access to it in the short term. These days, my finances feel a bit more like a set of Russian nesting dolls than a simple flow chart.
Timing is everything.
My accountant had first suggested making the LLC move back in the summer of 2017, when I’d only been freelancing for a few months. I didn’t feel ready to add another set of obstacles to my business, so I put it on my 2018 to-do list.
Of course, once the new year rolled around, other goals had my attention. I didn’t end up incorporating officially until Jan. 23 … which means I still had to pay regular estimated quarterly taxes, including self-employment tax, on three weeks’ worth of income this year.
Furthermore, the business licenses in my county run Sept. 30 – Oct. 1, and although it was pretty darn cheap in my case – less than $30 – it’s not prorated. So I won’t get a full year of licensing for what I paid. Moral of the story: Things would have been a little smoother if I’d done a bit more planning.
Is an LLC Right for Your Business?
Despite the minor headaches outlined above, I’m glad I took my accountant’s advice – and not just because it feels super snazzy and official when I put business expenses on my company credit card. (It is true I expense things more often now, though that’s in part because I’m doing more expense-able things like going to conferences; I was too busy flailing to do so during year one.)
Even with the additional expense of payroll and the minor gaffs I made with timing, the math plays out. My various business taxes and the income taxes on my wages add up to a total about 10% smaller than what I’d been paying as an individual.
In the end, whether moving to an LLC or taking the S-selection works for your business depends on personal circumstances, and should probably be a decision you make with the help of a qualified accountant.
But no matter what you decide, one thing’s for sure: It feels pretty awesome to have – that is, be – the kind of boss who lets you work from home in your pajamas.
Jamie Cattanach (@jamiecattanach) is a writer based in St. Augustine, Florida. She’s written for Yahoo, SELF, The Establishment, Ms. Magazine, Roads & Kingdoms and other outlets.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
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Are You Checking Your Credit Reports Often Enough?
Trying to earn and maintain healthy credit without checking your credit reports is like trying to lose weight without ever stepping on the scale.
Your odds of success are much better if you’ll take the time to check your credit reports on a regular basis, not just when you’re about to apply for a loan or you hear about the latest data breach on the news. It’s quick and free, so there’s really no reason you shouldn’t do it as soon as you get done reading this.
Your Free Annual Credit Reports
As an American citizen, you have the right to a free copy of all of your credit reports once every 12 months. You’ve had this right since 2003, when the Fair Credit Reporting Act was amended by an act called “FACTA.”
Although this federally mandated right to free annual credit reports has been around for about 15 years, a staggering number of consumers continue to ignore this option. Several years ago, a representative of the credit industry’s trade association told me, off the record, that only about 4% of free reports are claimed every year through their website, annualcreditreport.com. That means 96% go unclaimed, and they don’t roll over like cell phone minutes. Claim your free credit reports each year, or lose them.
Annual Credit Checks Are Only the Beginning
Your credit reports will change almost constantly over the course of a year. So while checking your three reports once is a year is a great place to start, there’s still a lot of room for surprises.
As a credit savvy consumer, you’re going to want to develop the habit of checking your credit reports every month, hopefully around the same time that you’re combing through your credit card and bank statements. Monthly credit checks will not necessarily protect your credit reports from problems, but they can certainly empower you to act quickly when and if problems arise.
Here are some of the key areas you should review during your monthly credit checks.
Incorrect credit reporting: It’s true that credit reporting errors can and do happen. Unfortunately, mistakes on your credit reports can potentially be a problem where your credit scores are concerned. You should check your credit reports carefully each month for any incorrect information. If you discover a problem, you can contact the creditor that’s reporting the error and/or dispute the mistake directly with the credit bureaus themselves.
Unauthorized inquiries: One of the first signs that you may be a victim of identity theft is a record of someone applying for credit in your name. Thankfully, your credit reports feature a way to track any time your credit has been accessed. Whenever a lender pulls a copy of your credit report(s), a record of that access, known as a hard inquiry, is added to your report(s). If you discover an unauthorized hard inquiry on your reports, you can take action with disputes, add a fraud alert to your reports, or freeze your credit reports if you’re worried that someone has stolen your personal information.
Fraudulent Accounts: Another indication that your identity may have been stolen is the appearance of unrecognized accounts on your credit reports. According to the Fair Credit Reporting Act (FCRA), you have the right to dispute any incorrect information on your credit reports, including accounts that don’t belong to you. If you’ve been the victim of true-name credit fraud you can file an official Identity Theft Report at IdentityTheft.gov or at your local police department. You can then send that report into the credit bureaus along with your dispute. The FCRA requires that any fraudulent accounts that are properly disputed be blocked from your reports within four business days.
Related Articles:
- Problems That Can Haunt Your Credit Forever
- What’s a Good Credit Score?
- Which Bills Affect Your Credit Score, and Which Don’t?
John Ulzheimer is an expert on credit reporting, credit scoring, and identity theft. He has written four books on the topic and has been interviewed and quoted thousands of times over the past 10 years. With time spent at Equifax and FICO, Ulzheimer is the only credit expert who actually comes from the credit industry. He has been an expert witness in over 230 credit related lawsuits and has been qualified to testify in both federal and state courts on the topic of consumer credit.
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Fund Briefing: how to invest in strategic bonds
Billions of pounds have been invested in strategic bond funds over the past year, this enthusiasm ensuring it was the best-selling sector in 2017 – and in seven of the past 12 months.
There is now £52.6 billion invested in strategic bond funds – compared to £39.5 billion a year ago, according to statistics compiled by trade body the Investment Association (IA) – and industry observers expect this figure to rise due to ongoing global uncertainty.
There is certainly a lot to like about these funds. Their flexibility to invest in a wide variety of government bonds, investment-grade corporate bonds (bonds with a relatively low risk of default) and high-yield bonds makes them attractive for anyone wanting diversified exposure to fixed income.
Allowing managers of these funds to focus on any part of the bond market they view as attractive enables them to maximise the opportunities, regardless of the backdrop, points out Adrian Lowcock, investment director at multi-manager Architas.
“This makes them particularly useful for individual investors who don’t necessarily have the time or expertise to make informed decisions on how to navigate bonds,” he explains. “The manager of a strategic bond fund will do that for them.”
Given the volatile and uncertain economic, political and stock market outlook, it’s unsurprising that these funds, which can be found in the IA Strategic Bond sector, have grown in popularity over the years. As a result, there is no shortage of choice.
Mr Lowcock suggests the best managers operating in this area will be fairly active and aware of the prevailing environment, with a very flexible mandate that enables them to benefit if there is an increase in either interest rates or company defaults.
“Given the volatile outlook, these funds have grown in popularity”
“They need to combine technical bond knowledge with being able to maintain good stock-picking skills and excellent macro knowledge in order to change portfolios to reflect the changing economic climate and outlook,” he adds.
Stephen Penfold, senior investment manager at Seven Investment Management, believes strategic bond funds could be useful over the next couple of years, with fixed income expected to face challenges on the back of interest rate rises.
“They can act as a safe haven and while we are underweight [in this area of the market], the exposure we do have is spread between US treasuries, European and Japanese government bonds, and emerging markets,” he explains.
He suggests investors focus on quality and look at bonds with a combination of the highest grade fixed income exposure, good diversification, and the lowest equity correlation – even though he accepts this may be easier said than done.
Quick guide: Is this approach right for me?
Consider investing in strategic bonds if…
- You want the fund to invest in all types of fixed income
- You want the manager to have flexibility to decide where to invest
- You expect ongoing global uncertainty
“Remember there’s no such thing as a free lunch, especially since some of these funds may hold a considerable amount in high-yield bonds that carry a certain amount of equity market risk,” he adds. “The higher the potential returns, the higher the potential risk.”
Gavin Haynes, managing director at investment management firm Whitechurch Securities, agrees that strategic bond funds have a role in a well-diversified portfolio, but emphasises they needed to be carefully selected.
“While the environment for bond investing will be more challenging and returns will most likely be more muted, bonds still have a part to play to generate yield and add diversification to a portfolio,” he says.
Mr Haynes adds that the most successful strategic bond fund managers will have to take a flexible approach to continue to find value and manage risk across global markets. He cites Ariel Bezalel, manager of the Jupiter Strategic Bond fund*, as a favoured name.
“His current focus is on a barbell approach (investing in long and short duration bonds) with a core exposure defensively positioned to preserve capital with key positions in US government bonds,” he says. “This is complemented by selective yield plays in bank debt, high yield and emerging market debt.”
There is a lot of choice within the strategic bond fund universe, so investors must do their research to understand the approach the manager is taking, according to Patrick Connolly, a certified financial planner at financial adviser Chase de Vere.
“They can vary considerably in terms of the amount of freedom given to the fund manager, the types of bonds they invest in, where they invest geographically, the number of holdings they have and the term remaining on individual holdings,” he explains.
In theory, strategic bond managers have the best opportunity to succeed when fixed interest in general is performing well, and to protect investors’ money when it’s performing poorly. However, this relies on fund managers making the right calls.
“History shows time and again that many won’t make the right decisions,” he says. “This makes it really important for investors to select the right managers and investment teams and to understand the risks those teams are likely to take.”
Mr Connolly therefore, doesn’t believe having just one such product makes sense. “It’s sensible for investors to hold more than one strategic bond fund and to blend together different manager styles so they don’t have too many eggs in the same basket,” he adds.
* Denotes a Moneywise First 50 fund for beginner investors; see the list at: Moneywise.co.uk/first-50-funds.
Fund: Janus Henderson Strategic Bond fund
Value of £100 invested in the fund over five years
| Year | 2013 | 2014 | 2015 | 2016 | 2017 |
|---|---|---|---|---|---|
| Fund percentage movement in year (%) | 3.92 | 6.02 | 1.53 | 3.68 | 5.24 |
| Value of £100 * (£) | 103.92 | 110.18 | 111.86 | 115.97 | 122.05 |
*£100 invested on 1 January 2013. Source: Moneywise.co.uk.
| Manager | John Pattullo, Jenna Barnard |
| Launch date | 11-Oct-86 |
| Total fund size | 2.09 billion |
| Minimum initial investment | Lump sum: £1,000 Subsequent: £100 |
| Max intitial charge | 4% |
| Ongoing charge | 1.4% (inc annual mgmt charge) |
| Performance fee | None |
| Contact details for retail investors | Janushenderson.com/ukpi/howtoinvest |
Fund to watch: Janus Henderson Strategic Bond fund
The aim of the fund is to provide a return by investing in higher-yielding assets, including high-yield bonds, investment-grade bonds, government bonds, preference shares (where dividends are paid to investors before common stock dividends) and other bonds. It may also invest in equities (company stocks).
The fund, which is designed to be used as one component in a diversified investment portfolio, takes strategic asset allocation calls between countries, asset classes, sectors and credit ratings.
It has 28.9% invested in government bonds, 19.4% in investment-grade non-financial corporate bonds, 18.3% in high-yield non-financial corporate bonds and 13.5% in investment-grade financial corporate bonds, according to the most recent fund factsheet.
As far as its credit rating breakdown is concerned, there is 23.7% in AAA, 22.6% in BBB and 21.3% in BB. The other areas, including AA, A and B each account for less than 10% of assets under management.
Its approach is favoured by Gavin Haynes. “The managers take a dynamic approach,” he says. “They have very robust risk management and this has proved to be a good defensive fund.”
The fund’s managers, John Pattullo and Jenna Barnard, are also co-heads of strategic fixed income. Mr Pattullo joined Henderson in 1997 after four years as a chartered accountant, while Ms Barnard worked as a credit analyst before becoming a portfolio manager in 2004.
Rob Griffin writes for the Independent, Sunday Telegraph and Daily Express
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