This program is made possible by a grant from the FINRA Investor Education Foundation through Smart investing@your library®, a partnership with the American Library Association.

Tough economic times have taken a toll on many Americans over the last couple of years. But making sound financial decisions and saving for the future can help you weather financial storms. The start of a new year is a great time to take stock of your finances, so the FINRA Investor Education Foundation has put together these 12 practical tips that can help keep your finances on course in 2012. Start a Rainy Day Fund. Set aside at least one month of your current salary (and work your way up to three months) in a federally insured savings account. This will give you a cushion to handle medical bills,ashortjobloss,asurprisecarrepairorotherfinancialemergency—andhelpkeepyourfinances under control. Handle Credit Cards With Care. Keep your credit card spending in check and try to pay your credit cards in full. If you have accumulated debt, pay it off as quickly as possible. If you cannot pay your whole monthly bill, at least pay more than the minimum due. Every dollar you pay above the minimum payment can reduce the amount of interest you will pay. Getting a handle on monthly bills and expenses can help keep you from overusing credit cards. To learn more, read How Your Credit Score Impacts Your Financial Future at www.SaveAndInvest.org/ControlDebt. Check Your Credit Report and Score. Good credit andfinancialfitnessgohandinhand.Startthenewyear by requesting a copy of your free credit report. Call (877) 322-8228 or visit www.AnnualCreditReport.com. Check to be sure your credit history is accurate and correct any discrepancies immediately. You can also request your score fromthesite.Therewilllikelybeafeetoobtainyourscore—but it’s an important number to know, since it’s what lenders use to help them decide not only whether you get a mortgage, a credit card or some other line of credit but also the interest rate you are charged for this credit. To learn more, read How Your Credit Score Impacts Your Financial Future at www.SaveAndInvest.org/ControlDebt. Shop Around For Financial Products. Comparison shoppingforfinancialproducts—includingcreditcards, loansandinvestments—isascrucialasshoppingaround for a television or phone plan. FINRA has resources to help you evaluate and compare credit cards, bank fees and loan rates. Saving even a percentage point or two on a loan can make a big difference to your bottom line. And when it comes to investments, be sure to visit FINRA Market Data Center, and use FINRA’s Fund Analyzer to compare fees on mutual funds and exchange traded funds. Seewww.finra.org/investorsfordetails.

Don’t Leave Money on the Table: Contribute to Your 401(k). Too many workers leave free money on the table by not contributing enough to their 401(k) to receive their full employer match. According toarecentstudy,nearly3in10workers(29.4percent)—and 43percentofworkersage20–29—failtocontributeto the full extent of their employer’s match. Here’s another wayoflookingatit—takingfulladvantageofthematch

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Camden Public Library’s

?Did You Know...?You can Check

the Background of Your

Investment Professional by

using FINRA Broker Check!

Simply visit

www.finra.org/brokercheck.

It’s very easy to use.

$CONTENTS

12 Tips for 2012 ............. 1,2

401K ............................. 4, 5

Evaluating Performance ..3,6

Net Worth Chart ............... 7

Brown Bag Lunches ........... 8

Weathering Tough Economic Times—12 Tips for 2012 Article taken in its entirety from the Financial Industry Regulatory Authority’s (FINRA) website, www.FINRA.org. ©2012 FINRA. All rights

reserved. FINRA is a registered trademark of the Financial Industry Regulatory Authority, Inc. Re-printed with permission from FINRA .

Camden Public Library’s

literally doubles your savings, even assuming no increase in the value of your investments. For more information see the FINRA Investor Alert on pages 4 and 5 of this newsletter.

Avoid Payday Loans and Other Money Drains.Duringdifficulteconomic conditions, some Americans might be more tempted to use alternative forms of borrowing, including auto title or payday loans, advances on tax refunds, pawn shops or rent-to-own plans. Steer clear, since these borrowing methods are likely to levy higher interest rates than those charged by banks, credit unions or credit card companies and can drain away your money. Don’t Overdraw Your Checking Account or Debit Card. Making ends meet during an economic downturn can put a strain on family budgets. While overdraft protection may seem like a helpful feature on a checking account or debit card, overdraft fees can add up. To avoid that expense, balance your checkbook regularly and consider opting out of programs that automatically approve ATM and debit card transactions. Do a Background Check on Your Financial Professional. Far too few investors have reported checking the background of their investment professional with a state or federal regulator. Investing a few minutes of your time to take this free and easy step could save you time, money and other trouble down the road. FINRA BrokerCheck®(www.finra.org/brokercheck)isafreetoolthatallows investors to check the professional background of brokerage firmsandindividualbrokers. Keep Your Insurance Coverage Current. The start of a new year is a good time to assess whether your insurance coverage aligns with your needs. You want to make sure that recent life changes have not left you under- or over-insured. If your children have left the home and you have paid off your house, you might need less life insurance than someone whoisfinanciallyresponsibleforothers,orhasa mortgage.

Diversify Your Investments. Volatile markets can make investing a challenge, but spreading your investments bothamongdifferentassetclasses—meaningstocks,bondsandcash—and within each asset class can reduce your risk. For more on risk and smartdiversificationstrategies,readFINRA’sManagingInvestmentRisk(www.finra.org/Investors/SmartInvesting).

Save for College Using Tax-Advantaged Accounts. If you have children, save for college using tax-advantaged savings accounts such as a 529 plan or Coverdell Education Savings Account. The FINRA Foundation’s state-by-state survey found that less than one-third(only31percent)ofrespondentswithfinanciallydependentchildren have money set aside for college. Of those who are saving for college, less than one-third reported having used a tax-advantagedsavingsaccount.Theearlieryoustart—themorefinanciallypreparedyouwillbetocovertherisingcostsofhighereducation. Compare college savings options, analyze 529 plan expenses and more at FINRA’s Smart Saving for College resource center(www.finra.org/college). Find Free, Reliable Financial Education Resources in Your Community. In communities across the country, the FINRA Foundation’s partnerships with organizations like the American Library Association and United Way Worldwide have made it easiertofindthehelpyouneedtokeepyourfinancesontrack.The Foundation’s grant-making programs have built a network of hundreds of partnerships with libraries, social service organizations, schools, universities and others to expand access to research-basedfinancialandinvestoreducationinformation.Foradditionalinformation, visit the Camden Public Library or see us online at www.librarycamden.org/personal-finance.

12 Tips for 2012 ~ continued

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3~ continued on page 6

Evaluating Performance

Choosing investments is just the beginning of your work as an investor. As time goes by, you’ll need to monitor the performance of these investments to see how they are working together in your portfolio to help you progress toward your goals. Generally speaking, progress means that your portfolio value is steadily increasing, even though one or more of your investments may have lost value.

On the other hand, if your investments are not showing any gains

or your account value is slipping, you’ll have to determine why and decide on your next move. In addition, because investment markets change all the time, you’ll want to be alert to opportunities to improve your portfolio’s performance, perhaps by diversifying into a different sector of the economy or allocating part of your portfolio to international investments. To free up money to make these new purchases, you may want to sell individual investments whose performance has been disappointing while not abandoning the asset allocation you’ve selected as appropriate.

To assess how well your investments are doing, you’ll need to consider several different ways of measuring performance. The measures you choose will depend on the exact information you’re looking for and the types of investments you own. For example, if you have a stock that you hopetosellintheshorttermataprofit,youmaybemostinterestedinwhether its market price is going up, has started to slide or seems to have reached a plateau. On the other hand, if you’re a buy-and-hold investor more concerned about the stock’s value 15 or 20 years in the future, you’re likely to be more interested in whether it has a pattern of earnings growth and seems to be well positioned for future expansion.

In contrast, if you’re a conservative investor or you’re approaching retirement, you may be primarily interested in the income your investments provide. You may want to examine the interest rate your bondsandcertificatesofdepositarepayinginrelationtocurrentmarket rates and evaluate the yield from stock and mutual funds you bought for the income they provide. Of course, if market rates are down, you may be disappointed with your reinvestment opportunities as your existing bonds mature. You might even be tempted to buy investments with a lower rating in expectation of getting a potentially higher return. In this case, you want to use a performance measure that assesses the risk you take to get the results you want.

In measuring investment performance, you want to be sure to avoid comparing apples to oranges. Finding and applying the right evaluation standards for your investments is important. If you don’t, you might end up drawing the wrong conclusions. For example, there’s little reason to compare yield from a growth mutual fund withyieldfromaTreasurybond,sincetheydon’tfulfillthesamerole in your portfolio. Instead, you want to measure performance for a growth fund by the standards of other growth investments, such as a growth mutual fund index or an appropriate market index.

1. YieldYield, which is typically expressed as a percentage, is a measure of theincomeaninvestmentpaysduringaspecificperiod,typicallya year, divided by the investment’s price. All bonds have yields, as do dividend-paying stocks, most mutual funds and bank accounts includingcertificatesofdeposit(CDs).

Yields on BondsWhen you buy a bond at issue, its yield is the same as its interest rateorcouponrate.Therateisfiguredbydividingtheyearlyinterest payments by the par value, usually $1,000. So if you’re collecting $50 in interest on a $1,000 bond, the yield is 5 percent.

Yields on Other InvestmentsIfyourassetsareinconventionalcertificatesofdeposit(CDs),figuringyouryieldiseasy.YourbankorotherfinancialservicesfirmwillprovidenotonlytheinterestratetheCDpays,butitsannual percentage yield (APY). In most cases, that rate remains fixedfortheCD’sterm.Forastock,yieldiscalculatedbydividingthe year’s dividend by the stock’s market price.

2. ReturnYour investment return is all of the money you make or lose on aninvestment.Tofindtotalreturn,generallyconsideredthemostaccurate measure of return, you add the change in value–up or down–from the time you purchased the investment to all of the income you collected from that investment in interest or dividends. Tofindpercentreturn,youdividethechangeinvalueplusincomeby the amount you invested.

Here’s the formula for that calculation:(Change in value + Income) ÷ Investment amount = Percent return

For example, suppose you invested $2,000 to buy 100 shares of a stock at $20 a share. While you own it, the price increases to $25 ashareandthecompanypaysatotalof$120individends.Tofindyour total return, you’d add the $500 increase in value to the $120 individendsandtofindpercentreturnyoudivideby$2,000,foraresult of 31 percent.

That number by itself doesn’t give you the whole picture, though.

Camden Public Library’s

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Would you turn down free money? Many employers match an employee’s 401(k) contributions up to a certain percent of salary. If you contribute less than your employer is willing to match, you may be passing up free money. According to a recent report, 29.4 percent of 401(k) participants do not contribute enough to their 401(k) to receive their fullemployermatch—withhigher rates of foregone matches seen among younger workers age 20 to 29 (43 percent) and those automatically enrolled intoanemployer-sponsoreddefinedcontribution plan (41 percent). An earlier report showed that 40 percent of employees making less than $40,000 fall short of contributing the full extent of their employer’s match. Millions of workers are leavingmoney—freemoney—onthe table. FINRA is issuing this alert to educate investors about the substantial boost to their retirement savings that can come from taking full advantage of an employer’s matching contribution. As more and more companies reinstate matches that were cut or eliminated during the economic downturn, workers whose companies offer a match should make the most of it. The Value of a Corporate Match A 401(k) or similar employer-sponsored retirement plan can be apowerfulresourceforbuildingasecureretirement—andanemployer match can add a substantial amount to an employee’s nest egg. Let’s assume you are 30 years old, make $40,000 and contribute 3 percent of your salary ($1,200) to your 401(k). And, for the sake of this example, let’s also assume you continue to make the same salary and same contribution each year until you are 65. After 35 years, you will have contributed $42,000 to your 401(k). Now let’s assume you get a match from your employer. One of the most common matches is a dollar-for-dollar match up to 3 percent of the employee’s salary. Taking full advantage of the match literally doubles your savings, even assuming no increase

in the value of your investments: Instead of having set aside $42,000 by the time you retire, you will have set aside

$84,000. That’s $42,000 in free money. Looked at another way, it’s a no-cost way for you to

increase your contributions by 100 percent. Tax Advantages In addition to offering the potential for free money through a match, employer-sponsored

retirementplanscangiveyousignificanttax advantages. With a traditional

401(k), for instance, your contributions are made with pre-taxdollars—meaningthemoney

goes into your retirement account before it gets taxed. In addition, your contributions, any match your employer provides and any earnings in the account (including interest, dividends and capital gains) are all tax-deferred. That means you don’t owe any income tax until you withdraw from your account, typically after you retire. With pre-tax contributions, every dollar you save will reduce your current taxable income by an equal amount, which means you will owe less in income taxes for the year. But your take-home pay will

go down by less than a dollar. Here’s how that works. Building on the example above,

the $1,200 you contribute to a traditional 401(k) lowers your federal income tax bill for

the year because you owe taxes on only $38,800 rather than $40,000. If you’re single, your total

federal tax bill using the 2010 IRS tax rate schedule is $5,881.25insteadof$6,181.25—ataxsavingsof$300.

And, for those in the 25 percent tax bracket, $1,200 in pre-taxdollarsequals$900inpost-taxdollars—sothe“cost”

of your contribution measured as the impact on your paycheck might be less than you expected. Matches and Roth 401(k)sA growing number of employers offer a Roth 401(k) option, whereemployeesmakecontributionswithafter-taxmoney—andneither the contributions nor any earnings they generate are taxed down the road when the money is withdrawn. While employers can match Roth-directed contributions, IRS rules require that all matched funds reside in a pre-tax account, just like employer-contributed matching funds in a traditional 401(k) account. As a consequence of this rule, the matching funds your employer contributes to your Roth 401(k) (and any earnings on those funds) will be taxed as ordinary income when you withdraw them. If you

Why Leave Money on the Table—Make the Most of Your Employer’s 401(k) Match

Article taken in its entirety from the Financial Industry Regulatory Authority’s (FINRA) website, www.FINRA.org. ©2012 FINRA. All rightsreserved. FINRA is a registered trademark of the Financial Industry Regulatory Authority, Inc. Re-printed with permission from FINRA .

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contribute to both a Roth and a traditional 401(k), the match is applied firsttothetraditional401(k)amountandthen,ifnecessary,toanyRoth-directed funds. Key Points to RememberNotallemployersprovidematches—soifyouareuncertain,askyourcompany’shumanresourcesorbenefitsdepartment.It’salsoagoodideatofindoutwhatthemaximumpercentofsalaryyourcompanywillmatch. Also be aware that even contributing at the match threshold may not be enough to fund a secure retirement. Most investment professionals recommend a savings level of 10 percent or more to generate enough replacement income during retirement to maintain your standard of living—andtostartsavingatthislevelassoonasyoubeginworking. The bottom line is that it makes no sense to pass up free money. A company match:• Worksouttoa100percentincreaseintheamountofmoney you set aside each year that is matched, without incurring any risk—andrememberyoucan,andprobablyshould,contribute more than the match threshold. • Offersthepotentialfortax-deferredcompoundingofthatlarger sumovertime—specifically,yourcontributionsplustheamount of the company’s match. • Reducestheriskoffallingshortofthesavingsnecessarytofund a secure retirement. For more information about smart strategies for saving for retirement, go towww.finra.org/smart401k.

401K Match ~ continued

Camden Public Library’s

Evaluating Performance ~ continued

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Since you hold investments for different periods of time, the better way to compare their performance is by looking at their annualized percent return. For example, you had a $620 total return on a $2,000 investment over three years. So, your total return is 31 percent. Your annualized return is 9.42 percent. This is derived by: (1+.31)(1/3) - 1 = 9.42%.

3. Capital Gains and LossesInvestments are also known as capital assets. If you make money by selling one of your capital assets for a higher price than you paid to buy it, you have a capital gain. In contrast, if you lose money on the sale, you have a capital loss. Capital gains and losses may be a major factor in your portfolio performance, especially if you are an active investor who buys and sells frequently.

In general, capital gains are taxable, unless you sell the assets in a tax-free or tax-deferred account. But the rate at which the tax is calculated depends on how long you hold the asset before selling it.

4. Tracking PerformanceOne of the most important things you can do when tracking your investments is to have realistic expectations and to compare performance against an appropriate measure. A percentage return that could be considered weak in one market or economic environment might be considered strong in another. There’s no single,unchangingstandard—forinstance,thatallstocksshouldreturnaspecificpercentageeachyear.Instead,performancestandardsaremovingtargets—andhistoricalreturnsaretypicallyaverages. That’s why it’s important to judge an investment in the context of your portfolio strategy as well as against an appropriate standard or benchmark.

Using benchmarksGenerally, when people refer to the stock market’s performance, they’re actually referring to the performance of an index or average that tracks representative stocks or bonds. The index serves as an indicator of the overall direction of the market as a whole, or of particular market segments. Investors use these indexes and averages as benchmarks, to see how particular investments or combinations of investments measure up.

Some of the more frequently cited indexes and averages are these:

• Dow Jones Industrial Average. The most widely cited measure of the market, the DJIA tracks the performance of 30 stocks of large, well-known companies. •S&P 500 Index. Standard and Poor’s index tracks 500 stocks of large U.S. companies and is the basis for several index mutual funds and exchange-traded funds. • Russell 2000. This index tracks 2,000 small-company stocks and serves as the benchmark for that component of the overall market. • Dow Jones Wilshire 5000. Tracking over 5,000 stocks, the Wilshire covers all the companies listed on the major stock markets, including companies of all sizes across all industries.

• Lipper Fund Indexes. Lipper calculates several indexes tracking different categories of mutual funds, such as Growth, Core or Value funds. • Barclays Capital Aggregate Bond Index. This is a composite index that combines several bond indexes to give a picture of the entire bond market.

5. Reading Your StatementKeeping track of your investments is important, but you might wonder how often you should check on them. Some investors look at their portfolio values daily or weekly, and if you own extremely volatile investments and have a short-term investment strategy, that can be a good idea.

6. Using ResearchAnother way to evaluate your investments’ ongoing performance isthroughanalystresearch.Analystsatbrokeragefirmsandatindependentresearchfirmslooknotonlyatcurrentperformance,but also at future potential to give you a picture of an investment’s strengths and weaknesses in the context of the wider market. Analysts also recommend actions based on performance. The actual language analysts use may vary, but in general, they recommend that you buy, hold or sell an investment. Whether you actually buy or sell based on an analyst’s recommendation is up to you. Among other things, you should decide whether buying or selling a particular investment is in line with your individual investing strategy. You should always look at analyst research in the context of your own goals and your own expectations for performance.

For the full text of this article please visit the FINRA Foundation at http://www.finrafoundation.org/resources/education/modules/

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Assets

Bank accounts $________CheckingSavingsCDsMoney market

Personal property $________HomeHome contentsAutomobileBoat/recreational vehicleCollectiblesJewelry

Investments $________StocksBondsMutual fundsETFsReal estate/REITsLife insurance (cash surrender value)College savings plansOther investments

Retirement savings $________Employer-sponsored plans [401(k), 403(b), 457, SIMPLE, Keogh (including employer contribution if vested)]IRAsDefinedbenefit(pension)planAnnuities (cash surrender value)

Other $________Money you’re owedOther assets

TOTAL ASSETS: $________

Liabilities

Credit cards $________VisaMasterCardAmerican ExpressOther credit/charge cards

Personal loans $________MortgageAdditional mortgage/home equity loanCar loanStudent loanBank loansOther personal loans

Investment loans $________Brokerage account loan401(k) loanLife insurance loanBusiness loanOther investment loans

Taxes owed $________Real estate taxesIncome taxesOther taxes

Other $________Current/unpaid billsOther debts

TOTAL LIABILITIES: $________Total Assets – Total Liabilities =

Net Worth..................$___________

Net Worth WorksheetTofigureyournetworth,addupthevalueofallyourassetsandthevalueofallyourliabilitiesseparately. Then subtract the total value of your liabilities from the total value of your assets.

A Four-Part Brown Bag Lunch Series - at Noon on Fourth Fridays

III. Putting It All Together – Mastering Your Finances - Choosing the Right Investments and an Investment Professional (Friday, March 23, 2012) - Tips to Keep Things Running Smoothly – Advanced Personal Finance Tools (Friday, April 27, 2012) - How are you Doing? – Evaluating Financial/Investment Performance (Friday, May 25, 2012)

Attend One of these Great Brown Bag Lunches and receive your own personal copy of Quicken Premier

A partnership between American Library Association and FINRA Investor Education Foundation.

The library has great resources to help you! Come visit us, and take a look at the breadth of materials we have. Check out our complete set of investor guides published by BetterInvesting, or indulge in some of our new subscriptions on hand at the library like Kiplinger’s, Morningstar, and Value Line Investment Survey! From the comfort of your own home, be sure to check out our complete online resources through the financial tips page within our website. Visit www.librarycamden.org/personal-finance.