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Dear Deborah

Expert Financial Advice

Dear Deborah,

With interest rates on savings accounts and CDs so low, where do you recommend a relatively conservative person should invest?

As a conservative investor, you probably believe that the return of your money is more important than the return on your money.

If you're seeking safety for your investments and you want to make more in interest, try this:

1.    See if you can get better interest rates at your financial institution. Ask questions: What are the different rates on your liquid accounts? What are your high-rate CDs and their yields? What are your money market account rates?

2.    Shop around for better interest rates. Consider joining a credit union, which typically has better interest rates than a bank and earnings won't be eaten up with countless fees. Credit unions generally have lower fees or no fees for services. For example, our local credit union has no monthly fee for its money market accounts, including the money market checking and indexed money market account.

What is your time frame for investing? It's important to adjust for inflation risk--the risk of losing the purchasing power of your capital. After inflation and taxes, the yields can be very small. Consider diversifying your investments so you have a mix of asset classes. Check out the long-term growth of more conservative funds such as balanced funds and index funds.

Dear Deborah,

With all the hype on TV lately about identity theft, is it worth it to pay for these identity theft programs offered on TV or through some credit cards?

These programs help you guard against identity theft. They are designed to alert you to certain account activity and to restore the damage to your credit history. Javelin Strategy & Research reports that the ID theft cases jumped 22 percent to 9.9 million incidents last year. Online identity theft activity accounted for 11 percent of this crime (Money and Markets).

Stolen personal information is used in a variety of ways. IdentityTheft ShieldTM reports that "about 28% of identity theft is credit related.  Other types of identity theft include phone or utilities fraud, bank fraud, employment related fraud, government document benefits fraud, loan fraud, and other forms of identity theft."

Here are ways you can reduce your exposure to ID theft attacks:

1.    Before giving out any personal information by mail, internet or telephone, make sure you're dealing with a legitimate organization.

2.    Be wary when you get an e-mail asking for personal information of any kind. The number of scammers sending out "phishing" e-mails is growing. Financial institutions and real businesses or Web sites rarely ask for personal information via e-mail.

3.    Be careful with your mail. Mail sensitive materials from your local post office. If you're planning to be away from home, put a hold on your mail until you return.

4.    Guard your trash. Be sure you shred sensitive information like copies of credit applications or credit card offers, insurance forms, bank account information, or your social security numbers. When my daughter was in college, she was shocked to see her dorm friends toss their credit card application forms in the wastebasket. Don't make it easy to become a victim of identity theft.

5.    Pay attention to billing cycles and account statements. Examine the list of charges carefully. If your bills don't arrive on time, follow up with creditors. Most active accounts will send you bills every month.

6.    Monitor your credit report. The Fair Credit Reporting Act entitles you to a free credit report from the three reporting agencies (Equifax, Experian, and Transunion) every 12 months. To get a report, go to annualcreditreport.com or call 1-877-322-8228. To request a report by mail: Annual Credit Report Service, P.O. Box 105281, Atlanta, GA 30348-5281.

Deborah Nayrocker writes on personal money management topics, showing others how to take control of their financial future. An award-winning writer, she is a regular guest contributor to CBN.com and a finance columnist with Crosswalk.com. Deborah is the author of The Art of Debt-Free Living and Living a Balanced Financial Life. Learn more about her work at a local Christian bookstore near you or on her website  www.artofdebt-freeliving.com

If you would like to ask Deborah a financially-related question, click here or email us at info@mtlmagazine.com.