Chinese Investments in U.S. Real Estate – Challenges, Opportunities and Policy Recommendations

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As the world’s second largest economy, China’s influence on the global economy is expanding at a furious pace, thanks in part to the surge in outward foreign investment. In the United States, China is now a major source of foreign investment with capital flowing into virtually every industry and market. For many Chinese firms and individuals, the United States is a prime destination for their investments because the prospects for stable returns are high.

Policy makers, business leaders, and the general public in the United States still do not have a comprehensive understanding of the patterns and implications of Chinese investment in the United States. While foreign investment has been a critical piece of this country’s economic success, the recent boom of Chinese capital flowing into the United States has stoked fears of job loss and disruptions to local and regional economies and markets, and even threats to national security.

Chinese investment into U.S. real estate, in both the commercial and residential sectors, stirs up these misgivings and sparks debate about the domestic costs of these investments. Concerns range from anxieties over the potential inflationary effects of deep-pocketed firms and investors in the residential real estate market to more pronounced anxieties over property acquisitions that can endanger national security. The reality, as this landmark study makes clear, is much more complex.

Chinese investment around the world surged in the past decade, expanding from an early focus on natural resource extraction and energy in developing countries to broader industries and advanced products and services in developed markets. In 2014, Chinese outward FDI flows totaled $116 billion, and approximately $18.1 billion flowed into the United States. In 2015, Chinese outward FDI flows totaled $118 billion, and Chinese foreign direct investment flows into the United States increased to $22.3 billion. Still, China accounts for less than 10% of all foreign direct investment in the United States.

Chinese direct investment in U.S. real estate was negligible until 2010 but has since grown dramatically and visibly. In 2015, China ranked third in U.S. commercial real estate acquisition volume, trailing only Canada and Singapore and tied with Norway. Chinese developers are building multi-billion-dollar projects in several major cities. A Chinese insurance firm bought the prized Waldorf Astoria hotel in New York City in 2015 and struck a $6.5 billion deal for Strategic Hotels & Resorts in early 2016. Chinese investors dominate an immigrant investor program known as EB-5, and in 2015, China overtook Canada as the biggest foreign buyer of U.S. homes.

This anecdotal portrait reveals the rapid and widespread entry of Chinese investors, both firms and individuals, into the U.S. real estate market, but it also underscores how real estate differs from other investment sectors. It defies the traditional definition of foreign direct investment – ownership of at least a 10% stake in a U.S. company – with a broad range of entry points. Buying a home, for example, does not have an analogue in the technology industry but is critical in painting a full picture of Chinese capital flows into the U.S. real estate market. Furthermore, in addition to the unique channels of real estate development and EB-5 capital, Chinese investors are also increasing investment in portfolios of U.S. assets through real estate investment trusts and private equity funds.

These real estate investments come on top of China’s position as the biggest holder of mortgage-backed securities issued by U.S. government-sponsored enterprises such as Fannie Mae and Freddie Mac. Like U.S. Treasuries, these bonds are important investments for Chinese government finances, because they allow for recirculation of dollars gained by the trade imbalance, and for the U.S. housing market, because they help ensure liquidity and mortgage rate stability. Chinese banks have also become major sources of debt capital in the U.S. real estate market, primarily for U.S. firms. To fully understand the role of Chinese capital in the U.S. real estate market, it is vital to look beyond direct investment. More than any foreign investor other than Canada, China stands out for the breadth, depth, and speed of its participation in the U.S. real estate market.

Our findings are that from a modest base in 2010, China was the source in aggregate of at least $350 billion in U.S. real estate holdings and investments by the end of 2015. This figure includes the direct purchase of real property and indirect investment through the purchase of agency mortgage backed securities and provision of debt financing, among other channels. In addition, we estimate that Chinese entities managing U.S. real estate operations and individual investment through vehicles including the EB-5 program may have created or sustained 200,000 jobs. For commercial and residential real estate, China has been an important source of capital as the U.S. economy recovered from the recent financial crisis and Great Recession.

Chinese investment in U.S. real estate is a recent development with considerable growth potential. While it is not as politically sensitive and does not directly impact national security as does Chinese investment in U.S. technology or telecommunications, real estate affects more people and communities and involves policy makers at multiple levels.

This report aims to objectively present the following:

  • Sources of Chinese capital flowing into U.S. real estate;
  • Motivations and drivers for various Chinese investors;
  • Benefits and impediments posed by this wave of investment;
  • Analysis and projections of the sustainability of Chinese investment in commercial and residential property;
  • Recommendations for U.S. and Chinese investors, policy makers, and stakeholders to keep investment channels open.

Combining information from public records, reports, and trade groups – based in part on gathering of data and interviews with industry sources – this report assembles a unique information set, providing the first comprehensive analysis and understanding of Chinese inbound investment into all facets of U.S. real estate.

This reported investment data are not perfect, a result of the combination of the particulars of real estate investment avenues and the ability of government and third-party sources to accurately measure capital flows. Furthermore, a significant portion of investment from offshore locations, including China, comes in the form of minority interests in projects sponsored by U.S. entities and is not directly traceable to the capital country of origin.

Our study is focused on investment from mainland China, but the flow of capital through intermediary destinations sometimes necessitates the inclusion of capital from Hong Kong, Macau, or Taiwan. Moreover, the task is complicated by the multiple channels for investment, ranging from purchases of homes and apartments to business investment in commercial assets to development and construction, as well as through provision of debt to both residential and commercial property investors. The myriad ways in which to record real estate ownership can also obscure the true country of origin of the buyer. With this in mind, this report presents the data as minimum investment volumes. While acknowledging these data limitations, we have made every effort to compile data and insight that provide a more complete reflection of actual Chinese investment activity across the entire spectrum of the U.S. real estate market than previously published. This includes enhancing investment volumes reported publicly as well as confirming the reported data via industry participants.

The investment flow has come into the United States through several channels:

  • Residential property: Between 2010 and 2015, Chinese buyers spent at least $93 billion on homes, including condominiums, for occupancy and investment. Spending rose at an annual rate of 20% and provided important demand in many local markets hit hard by the housing crisis. Chinese buyers paid substantially more, on average, per home than other international buyers because of their concentration in prime neighborhoods in California and New York.
  • Commercial property: Between 2010 and 2015, Chinese investors acquired at least $17.1 billion of existing office towers, hotels, and other commercial buildings, representing an annual growth rate of 70%. Half of that investment came in 2015 alone. The buyers were mainly large Chinese companies, including real estate firms and institutional investors.
  • Development: By the end of 2015, Chinese-funded projects under construction or planned totaled at least $15 billion. These range from multi-billion-dollar mixed-use projects in Los Angeles and the San Francisco Bay Area to smaller-scale developments in secondary markets. These investors include Chinese developers, builders, and construction companies, some of which have set up U.S. offices, creating local jobs for ongoing operations beyond the construction phase.
  • EB-5 visa program: Since 2010, Chinese nationals have been the most numerous investors in the EB-5 U.S. visa program. The program enables a foreign national who invests at least $500,000 in projects that create a minimum of 10 jobs to receive a U.S. visa and, on completion of the project, a green card for permanent residency status. Detailed data on these investments and the actual number of jobs created are not generally available. But based on the minimum investment and job creation requirements, and assuming all investments are successful, Rosen Consulting Group estimates that since 2010, nearly 20,000 Chinese EB-5 investors have generated at least $9.5 billion of investment capital and contributed to the creation of 200,000 jobs.
  • Residential mortgage-backed securities (RMBS): Chinese government entities began purchasing U.S. government agency-backed RMBS in the early 2000s to diversify beyond U.S. Treasuries. As of June 30, 2015, China held $207.9 billion in agency-backed mortgage bonds, more than any other country, according to preliminary U.S. Department of the Treasury data. These holdings contribute to enhanced liquidity in the U.S. housing finance market.
  • Real estate loans: In recent years, Chinese banks increased activity in lending for real estate acquisitions, recapitalizations, and construction and development. The banks have amassed at least $8 billion in loans and have become a major source of funding for large commercial real estate projects. This loan portfolio extends beyond Chinese investors and projects with Chinese partners, as leading Chinese banks are active competitors with U.S. and international banks and private sources of capital in the commercial property market. Residential mortgage lending by Chinese banks in the United States is more limited, but growing.

OUTLOOK

We believe China’s economic turbulence will create a short-term speed bump for real estate investment overseas, including in the United States. In the near term, a 6- to 24-month temporary period of increased capital controls is likely – either formally via policy announcements or informally through administrative processing – until the Chinese currency can be re-aligned with that of global partners. However, this does not mean investment will cease during this period. Furthermore, the long-term investment drivers remain: strong U.S. demand for capital; a widening and deepening pool of Chinese investors, many of whom have not ventured into U.S. real estate; increasing global appetite by Chinese developers and construction companies; a $1.6-trillion insurance industry that has become active overseas but invested just a fraction of funds available for real estate projects; and new Chinese investment vehicles, such as private equity funds, which have only recently become a factor in the U.S. market.

We project that Chinese direct investment across existing U.S. commercial real estate assets and residential purchases, excluding new development projects, could total at least $218 billion, cumulatively, from 2016 through 2020. In the short term, capital controls will likely slow individual purchases of U.S. homes, the biggest component of Chinese real estate investment, and slow the growth rate of commercial property acquisitions. Chinese-backed development projects are likely to remain a substantial component of the commercial real estate market even as the economic cycle in the United States slows the overall pace of new development announcements. Beyond 2020, Chinese investment in U.S. real estate could accelerate further.

RECOMMENDATIONS

These large capital flows, accelerating substantially in a short period of time, do not come without challenges in both countries.

In the United States, several policy areas will need attention in the next several years:

  1. Rationalization of taxes affecting foreign investment: The Foreign Investment in Real Property Tax Act (FIRPTA), while perhaps well intentioned at inception, is an onerous structure that creates an impediment to international investors in real estate. Every effort should be made so that there is a level field for taxes on foreign investors regardless of their domicile.
  2. Continuation of the EB-5 program: While the program was extended through the summer of 2016, renewal is by no means a certainty. It has been a successful bridge builder, bringing capital into the marketplace, growing or retaining jobs in the United States, and allowing Chinese citizens and families access to visas and residency. The EB-5 program will likely undergo reform, but it should not be altered so dramatically as to cut off access to international capital and immigration, including those from China.
  3. Continued implementation of existing security policy: Offshore investors are understandably screened for security risks and legitimacy of capital sources. So far, such concerns have not been an impediment to investment in U.S. property, as it has been in technology platforms, manufacturing firms, or natural resources extraction and processing. Any proposal to restrict U.S. government occupancy, including those of certain government contractors, in foreign-owned buildings – as is being discussed in congressional circles – should be carefully monitored.

On the Chinese side, the issues that deserve attention include the following:

  1. Continued development of legal and financial rules to encourage private sector investment in overseas property: Chinese companies and individuals can benefit themselves and the Chinese economy by diversifying assets globally. It is critical that China develop a robust domestic legal framework for foreign investment, as many countries expect reciprocal treatment of foreign investors. Likewise, reforms that reduce bureaucratic bottlenecks and expedite outward investment should continue.
  2. Enhanced transparency in capital ownership: The United States and other global financial centers are increasingly monitoring the identities of foreign investors and business operations. While China is not the only country that raises concerns, Chinese businesses historically have been less open regarding origination of capital and ties to government or military officials. Continuing progress toward the transparency required by international agencies – many of which are welcoming China as a significant participant – will be an important step.
  3. Avoidance of capital controls: China’s economic growth rate has slowed, and its currency is re-aligning with that of other major economies. Chinese concern over capital outflows is understandable, but a hard capital-control regime could negatively impact the financial institutions the government nurtured over the past two decades.

China is a powerhouse the US cannot discount. Prosperity and free flow of capital between the 2 nations is the only way to go.

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Turning around the US Economy:- My Top Recommendations for President elect Trump

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The people have finally spoken. Donald J. Trump has won and will be our next President for the next four years … and if things are done right, maybe the next eight too.

It is not going to be easy given the mess he inherited from President Obama which basically sums up as below.

  1. Total US debt, including private and business debt, is today $67 trillion, or just under 400% of GDP.
  2. We have 95 million people not in the labor force; 15 million of them not employed. That’s twice the number officially unemployed.
  3. We have almost 2 million prison inmates, 43 million people living in poverty, 43 million receiving food stamps, 57 million Medicare enrollees, 73 million Medicaid recipients and 31 million still without health insurance.
  4. The US federal government debt will be slightly north of $20 trillion before Obama leaves office in January. Local and state debt is another $3 trillion. That is a total of more than $23 trillion of government debt and a debt-to-GDP ratio of somewhat over 121%. That debt has risen roughly $10 trillion under Obama, in just eight years. This US debt total does not even take into account the over $100 trillion of unfunded liabilities at local, state, and federal levels that are going to have to be paid for at some point.

Bottom Line:  We are still witnessing a disaster in the making. The more we increase our debt, the more difficult it is going to be to grow our way out of our problem with the debt.

Something like $5.5 trillion is “intergovernmental debt.” And even if we did dismiss this internal debt, the government’s debt-to-GDP ratio would still be almost 100% when you include state and local debt….And after eight years of the slowest economic recovery in history, we are growing our debt dramatically faster than we are growing our country—even when we include inflation. Go figure.

My recommendations for President elect Trump

Cutting corporate and individual taxes, effecting significant regulatory rollback and fixing the Affordable Care Act may help stimulate growth but will not be a sufficient condition to stimulate growth. Significant regulatory rollback will help. It is also necessary but not sufficient.

Some more serious actions should include but not limited to:

  1. Reinstituting first and foremost the Glass-Steagall Act because Wall Street cannot be trusted to manage their risk properly. This would separate true banking activities from the high risk gambling that brought the economic system to its knees. Privatizing the profits and socializing the losses is unacceptable.
  2. Appointing the right next four people out of the seven governors to the Board of Governors of the Federal Reserve. People coming from the business world; neither economists nor academics please. Also having a Federal Reserve that is more neutral in its policy making and that realizes that the role of the Fed should be to provide liquidity in times of major crisis not to fine tune the economy, will do much to balance out the future.
  3. Putting the value of the dollar relative to the currencies of other countries under the purview of the Treasury Department, not the Fed. Too much power to the Fed already.
  4. Having the currency of the US backed by hard assets. A basket of gold, silver, platinum, uranium, and some other limited hard commodities would back the USD. If politicians attempted to spend too much, the price of this basket would reflect their inflationary schemes immediately.
  5. Directing to have the FASB to make all banks and financial corporations value their assets at their true market value. An orderly bankruptcy of all insolvent financial firms involving the sell-off of their legitimate assets to well-run risk adverse banks that didn’t screw up should ensue. Bondholders and stockholders would realize their losses for awful investment decisions. The economic system would be purged of its bad debt.
  6. Having the Social Security System completely overhauled. Anyone 50 or older would get exactly what they were promised. The age for collecting Social Security would be gradually raised to 72 over the next 15 years. Those between 25 and 50 would be given the option to opt out of Social Security. They would be given their contributions to invest as they see fit if they opt out. Anyone entering the workforce today would not pay in or receive any benefits. The wage limit for Social Security would be eliminated and the tax rate would be reduced from 6.2% to 3%.
  7. Dismantling Obamacare in its entirety and converting it from a government program to a private market based program. The Federal mandates, rules and regulations would be eliminated. Senior citizens would be given healthcare vouchers which they would be free to use with any insurance company or doctor based on price and quality. Insurance companies would compete for business on a national basis. Doctors would compete for business. The GAO would have their budget doubled and they would audit Medicare fraud & Medicaid fraud and prosecute the criminals without impunity.
  8. Repealing the healthcare bill. Insurance companies would be allowed to compete with each other on a national basis. Tort reform would be implemented so that doctors could do their jobs without fear of being destroyed by slimy personal injury lawyers. Doctors would need to post their costs for various procedures. Here again, price and quality would drive the healthcare market.
  9. Dismantling completely the entitlement state.  The criteria for collecting welfare, SSDI, food stamps and unemployment benefits would be made much stricter. Unemployed people collecting government payments would be required to clean up parks, volunteer at community charity organizations, pick up trash along highways, fix and paint houses in their neighborhoods and generally keep busy in a productive manner for society.
  10. We must make a serious effort to have a balanced budget and to fund healthcare and Social Security. I would propose some form of a value-added tax (VAT) that would specifically pay for Social Security and healthcare. I would also propose that we eliminate Social Security funding from both the individual and business side of the equation and take those costs from the VAT.
  11. We also need to get rid of the shackles on growth and get the incentive structure right with the proper tax mix. Then American entrepreneurs can probably get us out of the hole we’re in without it getting too much deeper. With the amazing new technologies that are coming along, we can probably get to a point where we can in fact grow our way out of our debt problem over the next 10 to 15 years.
  12. It is one thing to talk about unfair trade agreements—and we have certainly signed a few. But we also need to recognize that some 11.5 million jobs in the US are dependent upon exports (about 40% of which are services). If we drop our corporate tax to 15% and work on reducing the regulatory burden, I think we will be pleasantly surprised by how many jobs are created just by those steps alone.

As a conclusion, let me be very clear. If we don’t get the debt and deficit under control—and by that I mean that at a minimum we bring the annual increase in the national debt to below the level of nominal GDP growth—we will simply postpone an inevitable crisis. We have $100 trillion of unfunded liabilities that are going to come due in the next few decades. We have to get the entitlement problem figured out and we must do it without blowing out the debt. If we don’t, I am afraid we will have a financial crisis that will rival the Great Depression and maybe worse.

We’re in a world where most major economies are also in trouble. If the US starts printing again money merely to service its debt because people don’t buy its debt, then I foresee total global debt in the $500 trillion range and global GDP topping $100 trillion. A total global economic disaster.

I have tremendous faith in President elect Trump and his team and just hope all those prescriptions will not go unheeded although they certainly go far, long-term, in fixing a system which is quite dysfunctional and broken.

“Draining the swamp” of our present economic morass will certainly require drastic action tantamount to a real revolution in both thought and practice.

The Old Order has gotten us into this mess, and cannot, or is unwilling, to get us out. It is past time for them to go.

Nothing much in a positive, productive sense can be accomplished under our government, as presently constituted, as it has devolved into a Fascistic, crony-corporatist construct.

Until those who govern are forced to experience outcomes consistent with those experienced by the governed, I am afraid the Republic will drift ever further away from the establishment principles envisioned by those rebellious Founding Fathers, who were intoxicated upon the fumes of liberty, fraternity, and equality of opportunity.

God bless our new President elect Trump and the United States of America…. Time to roll up our sleeves and start making America great again.

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To all those wide-eyed millennials looking for a break

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It breaks my heart to see millions of millennials still chasing rainbows and hoping that the US government or a cartoon character such as Berne Sanders or crooked Hillary Clinton were ever going to change their lives.

Maybe it is time to grow up folks and grow some too and realize that no one is going to take care of you other than yourself if you want to build anything meaningful in your life….whether nailing a big corporate job or creating your own empire. NO ONE. So get used to it, life is not fair and this will never change.

Ever since the paleolithic era we’ve been fighting over scarce resources. Whether this was food, shelter or trendy sabretooth skirts.

Times have changed – but the essence remains the same; it’s resources we’re after.

Money mainly.

In the old days, we used to have a trading system where hunters would trade their catch with fishers for example. This is an equal exchange of value of differently skilled people.

The same concept still applies today. Money simply has made trading your entire life easier.

This system allows us to tap into the expertise of others. The more difficult the task, the more money they get.

Being able to do what others cannot is what makes you “valuable”.

Anyone can sell shoes, anyone can run behind a dumpster truck, anyone can sell fast-food. But not everyone knows how to build a house, lay electrical wiring or perform an open-heart-surgery. The more difficult and in-demand your skills are – the higher your value will rise.

If you want more income – You have to deserve it first.

How?

By building up difficult skills that are high in demand based on your strengths….Nothing else will do it

This means that the barrier of entry for competitors will be high (less competition) and you work in a field where your skills are highly valued.

Additionally, building on strength gives you an “edge” on others….Sounds sweet right?

So what are strengths? Have you ever asked yourselves this question?

Strengths are the things we naturally excel at – the things that come “naturally” to us.

How Do I Find My Strengths?

You find strength through self-analysis

The best way I’ve found to do this is by keeping a journal of my life in which I’m able to spot different trends. Over time you’ll be able to hone down on what you’re really good at.

Here are three ways to discover your strengths:

1. Self-Assessment

Here are some questions you should ask yourself when looking for your personal strengths:

  • In what did I grow up around? Competence can arise from early practice, what types of activities were you involved in as a child?
  • What do strangers compliment me on? You/your direct surroundings often notice your natural strengths faster than you do. Just ask around.
  • What did I want to become as a child? What were the underlying trends?
  • What have I been doing the last 10 years? Competence comes from doing a certain thing for a long period of time.
  • What can I effortlessly talk about without losing drive? An interesting topic is most likely something you’re highly skilled at or highly interested in.
  • What are the things I effortlessly excel at? What activities come easy for you?
  • In what areas do I learn quickly? Some skills are perfectly suited to our temperament and therefore we’re able to pick these up much faster than others.
  • Who do I envy/admire? Jealousy is a nasty but beautiful emotion as it shows us what we truly want. The same goes for admiration.

2. Reading

Furthermore, a great book that will help you find more strengths is Managing Oneself by Peter F. Drucker

Read the summary and define for yourself:

  • Am I a reader or a listener?
  • How do I learn best?
  • Do I work well with others or do I perform better alone?
  • Do I produce results as decision maker or as an adviser?
  • Do I perform well under stress or do I need a structured environment?

Alright – what’s next?

3. Personality Tests

A great way to explore further is by doing some personality tests (although they are often too general – it’s quite likely that they’ll give you some more career-indicators)

Here are the ones I recommend:

  • MBTI-test
  • DISC-assessment
  • Enneagram

Learn more about each type by simply Googling the results you’ve gotten.

Put all of these answers in a separate word-sheet and try to determine for yourself the answer to this question;

How can I combine my skills (based on strength) and my interests to solve a need for other people?

Going Deeper

In our current information society it might be not enough to be simply highly skilled in only one particular field. The combination of different, highly valued skills is also often what elevates your value.

Here’s some other tips to prepare for the future:

Enjoy the power and beauty of your youth. Oh, never mind. You will not understand the power and beauty of your youth until they’ve faded. But trust me, in 20 years, you’ll look back at photos of yourself and recall in a way you can’t grasp now how much possibility lay before you and how fabulous you really looked.

Don’t worry about the future. Or worry, but know that worrying is as effective as trying to solve an algebra equation by chewing bubble gum. The real troubles in your life are apt to be things that never crossed your worried mind, the kind that blindside you at 4 p.m. on some idle Tuesday.

Be Impeccable With Your Word. Speak with integrity. Say only what you mean. Avoid using the word to speak against yourself or to gossip about others. Use the power of your word in the direction of truth and love.

Don’t Take Anything Personally. Nothing others do is because of you. What others say and do is a projection of their own reality, their own dream. When you are immune to the opinions and actions of others, you won’t be the victim of needless suffering.

Don’t Make Assumptions. Find the courage to ask questions and to express what you really want. Communicate with others as clearly as you can to avoid misunderstandings, sadness and drama. With just this one agreement, you can completely transform your life.

Always Do Your Best. Your best is going to change from moment to moment; it will be different when you are healthy as opposed to sick. Under any circumstance, simply do your best, and you will avoid self-judgment, self-abuse and regret.

Keep track of global trends. Where is the world going and how can I prepare for this? Especially the technological boom is very prominent – stay ahead of the robots!

Work for yourself. Everyone will need to become an entrepreneur in the future

The world is your oyster …. Just because the past didn’t turn out like you wanted it to, doesn’t mean the future can’t be better than you ever imagined.

Essence

The world is an inherently competitive place. You’ll need an edge to become indispensable & the only way to become indispensable is to excel at things others cannot do.

Of course competence at a skill will lead to enjoying the activity more – enjoying it more means you’ll be doing it more which in turn makes you more competent.

It’s an endless loop.

Eventually you’ll start to LOVE it and it’ll become your “passion”. So don’t go searching for something until it “feels just right” but create it by building on strengths. Don’t waste time and energy on an endless passion-chase.

Note: Strengths are solely performance indicators (not unchangeable truths). So don’t obsess about them. You can still “be whoever you want to be”, but you won’t perform optimally if you build your life on weakness. It can be stretched – just not indefinitely.

So tell me; what are your strengths?

I hope this personal analysis is timely for you. There’s so much wasted time & energy (and frustration) in fields where we just don’t have a natural advantage in. And the world is simply too much of a competitive place not to use this.

Now that you know the basics, go for the kill and never look back.

The BEST revenge is “OBSCENE WEALTH”.

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Making a Difference in Our Short Lives

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As we proceed through life, many of us struggle with endless clashes between the tactical and strategic aspects of human existence.

The tactical problems begin with food, water, shelter and education.

The strategic begin with where one wants to live and what job to take, whom to marry, how many children to have.

Most people rarely distinguish between strategic and tactical perspectives in utilizing their time and focusing their energy. Consequently, the general human life process is to move forward one step at a time, adjusting, if at all, as best one can going along. That is frequently accompanied by the often mistaken instinct to favor the urgent over what may be more important.

What is the measure of a life well spent? How do you know whether you are wasting your life or investing it in the things that really matter?

In America we have several yardsticks by which we measure a life. One is usefulness. We are pragmatists at heart. We feel that if a person does something useful for society, whether it is a profession or a trade, he or she spends his or her life well.

Another yardstick we use is busyness or sheer activity. Our lifestyles reflect our values here—we’re all extremely busy people. Our weekly calendars are full to the brim. We have the notion that if you just sit around, you’re wasting your life.

We also gauge our lives by adventure and excitement. If we can’t get it firsthand, we pick it up vicariously on TV or at sporting events. Our heroes lead exciting lives, either through romance or life-and-death risk taking. We read magazines like People that tell us about the rich and famous, secretly wishing that our lives could be like theirs. We generally think that a person who dies rich and famous has achieved success.

Personally, I believe the more people ultimately know about their options, the more likely they are to choose and make the effort to take advantage of their lives’ vast opportunities.

I wonder how many people ever have a five-year plan, much less a 20-year plan. If they never think about the arc of their lives, they inevitably forego opportunities to bend that arc to seek their dreams.

How many people make pros and cons lists as they encounter crossroads in their lives? When they get to the fork in the road, they simply take it.

Some people spend two weeks researching prices and customer satisfaction and performance data about a possible new car. But rarely, or never, do people spend even a minute thinking about what their neighbors might say about their life when they are gone, because they have been taught to believe it is nobody’s business.

There is indeed a growing base of research out there which shows that choosing to spend time engaging in activities that facilitate a strong sense of purpose; that provide opportunities to contribute to the well-being of future generations (especially outside our own families); and that allow you to feel like you really matter have a profoundly beneficial impact on your mental and physical health….BUT although we tend to be more drawn to jobs, volunteering, or care giving opportunities that benefit future generations as we get older, we can and should consider how we are living our lives NOW, and how we matter to others well before we reach old age or experience a life-threatening condition.

I offer you one – How will you spend your years, however many are left, mattering to others?

I chose the path of empowering millions of people financially through the Financial Policy Council and the dozens of other charities I have embraced throughout my life.

Money and Education for me are not only about “freedom” but are also the “glue” cementing all if used properly.

What have you chosen to do?

Share your thoughts

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Investors Can Boost Their Cybersecurity: Back to the Basics

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Security Essential for Financial Transactions Online

Now that the Cyberworld is upon us, most of us do most, if not all, of our financial transactions online. Long gone is the day when most of us paid our bills by check or delivered a check to our brokers to invest for us. Now we pay our bills online, either on the biller’s Website, or on our bank’s Website. We don’t write checks – we transfer funds. We rely on the security of the Web site with which we are dealing to protect the security of the transaction. Most of us make sure that the “HTTPS” designation is at the beginning of the address for every Website on which we conduct transactions or share sensitive information. We maintain security and privacy settings on Facebook, LinkedIn, Twitter, and other social Websites where we publish. We have firewalls for our computer systems, our personal computers, and our home networks. We have anti-virus software and run it rigorously. We have our Outlook set for appropriate levels of security and use spam settings to segregate anything that looks like spam, knowing that in the spam box we can see the REAL addresses behind the links in emails. We know enough not to click on any link in any email, instead copying and pasting the address into our browsers. We have our browsers set for appropriate levels of security and privacy, and use a secure browser like Firefox or Tor. We have our networks set for security against invaders. We understand that the weakest link is usually the employee sitting at his keyboard, and have established suitable policies, procedures and penalties regarding cybersecurity for our employees. We use, and require our employees to use, “strong passwords” and change them often.

Really? Surveys by security analysts show that most people, even tech-savvy people, use passwords they can remember easily, and seldom, if ever, change them. We are our own weakest link. We rely too heavily on all of these measures, but are lazy in our own computer habits. We open Firefox, but forget to go to “New Private Window” for each jump. We click on links in emails that come from friends and trusted associates. Our own lapses can only be remedied by imposing discipline on ourselves. A new report on ways the government can mitigate persistent cybersecurity challenges contains a crowdsourced list of best practices. According to the report, “Much of what is required, expected, or even possible in cybersecurity management is known to cybersecurity professionals, but not fully or properly implemented across the government.” The same is true of industry, even the financial industry.

Communist countries are famous for establishing “five year plans.” China has a five-year plan for cybersecurity targets. Security vendor CrowdStrike has produced a report on China’s next fire-year plan. “They’re focusing on getting Western technology out – they don’t trust it,” said Adam Meyers, vice president of intelligence at CrowdStrike. “They want to use their own technology.” Chinese hackers appear to be looking for information to use in restructuring China’s healthcare sector. This may have contributed to the spike in healthcare breaches in 2015. “Targeting the western healthcare sector may be as much about logistics and know-how for running national level health insurance schemes as it is about siphoning data,” said the CrowdStrike report. The data they took, however, could also be used to build profiles of federal employees for intelligence purposes and spear-phishing campaigns. China seems focused on collecting intelligence that supports its economic system, and not just on military and defense targets. Therefore, financial firms of all types and sizes are potential targets, as well as high-profile individual investors. Hacking investors’ personal computers could provide access to the financial systems in which they work and invest.

There are other measures that savvy investors can take to protect their financial lives and those of their firms. The purpose of this article is to look at them. After you read this, you might say, “I have heard all of that, already.” Perhaps you have, but have you implemented it all? If not, read it again and again until it becomes second nature.

Security Begins at Home: Ten Commandments

Security begins at home. Financial Executives’ home networks are often insecure and are logical targets for hackers seeking entry into financial system networks. Many executives access their office networks from home. There is nothing wrong with that, per se, but if their home network is not secure, their connection to the office is not secure. So, let’s start with the home network and home computer. Make sure that when you are not at home, no one else can gain access to your home and access your computer.

  1. Use a reasonably new Internet router. If the one you have is over a year old, destroy it and buy a new one. The security of routers is steadily increasing as the technology develops, and an old router will be full of holes hackers can exploit. Set the new router up as a “non-broadcasting network.” That means other computers cannot see it. A computer must send a signal with the appropriate router name in order to be able to see it. You can provide the key to visiting friends or family who need to use your Wi-Fi.
  2. Set the router up as a secure network requiring a complex key to access it.
  3. Consider buying a firewall router to place between the Internet router and the rest of your network.
  4. Encrypt the contents of your computer’s hard drive and any other hard drives connected to the network. Windows 10 has encryption available, but not activated by default. There are also third-party encryption programs available. Here is a site that reviews them and posts ratings for the top ten: http://encryption-software-review.toptenreviews.com/
  5. To access your office network, use a strong password with at least 8 characters that are a random mix of numbers, lower-case and upper-case letters, and symbols. Example: kyG@2bK&. If you can remember it easily, it is no good. Norton has a good password generator online: https://identitysafe.norton.com/password-generator/#. Use it, or any of the other good programs out there.
  6. Because you can’t remember your passwords, use an encrypted password keeper to keep track of them. There are several available. There are a number of methods, including software vaults you can put on your computer, and also separate devices. Some allow access only by fingerprint identification. DO NOT write the passwords down where someone other than you can access them. Here is one of the many good separate devices available: https://keepersecurity.com/
  7. In your security software, turn on the feature that flags dangerous Websites and prevents access to them. Even good websites can get hacked and then infect computers accessing them. Porn sites are notorious for this, especially the free ones that show up in free catalogs of porn sites. Beware of foreign sites, especially in Africa, the Middle East, Russia, and East Asia.
  8. Know the source of software you load, including security software. A consultant with whom I have worked values security, and has on his server an anti-virus package he considers very good and very reliable, and he recommended it to me. I googled it, and found that it came from a Chinese software firm. Given the publicity recently about Chinese hacking attempts, I would beware of using security software from China.
  9. On your computers (all of them) activate the feature that loads the screen saver after a period of inactivity and requires a password to allow access again to the computer. Use a different password for each computer, of course
  10. Do not use outside data CD/DVDs or thumb drives on your computer until they have been separately tested and scanned for spyware and viruses.

Security at the Office: Ten Commandments

  1. Retain an outside cybersecurity expert to advise your IT department. Explain to your IT department that it is not that you don’t trust them, but a second opinion is always better than a first opinion alone. Before hiring the consultant, run a background check. Some real hackers work as cybersecurity experts, and could leave backdoors for themselves.
  2. Make sure your facility is physically secure. Most successful “hacks” consist of a “hacker” walking into someone’s office when he or she is out, sitting down at that person’s desk, and using his or her computer to access the network to extract intelligence, install spy software, or open a back door.
  3. Make sure your IT department has a robust policy for protecting and policing the network.
  4. Retain an outside consultant to attempt penetration of the network. There are “honest hackers” who specialize in this service. Many IT security firms provide that as a service. If you know where the back doors are, you can close them and lock them. If you know where the open windows are, you can do the same with them.
  5. Ask your IT department to set up a computer to test flash/thumb drives and data disks brought in from outside the office before they are inserted into any computer. It should be a stand-alone computer with strong anti-virus software. Do not allow any thumb/flash drives or outside CDs or DVDs to be used on an office computer until they have been scanned.
  6. Make sure your office network is isolated from the Internet with a secure firewall appliance. If you allow employees to bring into the office their own devices capable of connecting to the system, make sure they are screened first by your IT department and equipped with the necessary security software. If they come in and connect, your system firewall has just been bypassed. Establish a robust BYOD (Bring Your Own Device) policy
  7. Make sure every server, file server and computer workstation is protected with robust firewall, anti-virus, anti-spyware and anti-malware software. Windows 10 has a good suite built in. Use it. Make sure that every computer is running Windows 7 or 10, and make sure that any operating system older than Windows 7 is banished from the office. Yes, I really like Windows XP, but it is no longer secure.
  8. If you are an Apple or Linux person, don’t relax. Apple and Linux computers and devices are also subject to viruses, spyware, and other malware, as well as to hack attacks. Make sure your Apple devices are protected by robust firewall, anti-software, anti-spyware and anti-malware software.
  9. Make sure your CIO and IT departments keep up to date with the latest information and technology on cybersecurity. Send them to conferences and continuing education on the subject, and make sure they are on mailing lists for the appropriate newsletters. Equally important, make sure they actually read the material and implement best practices.
  10. UPDATE. Make sure all software on your system and in your computers is updated with regularity. For operating systems and software like Microsoft Office, make sure auto-update is implemented. For an office system, have the IT department download all updates and install them on all computers, if you don’t implement auto-update.

OK, Now What?

Now, go practice safe surfing, but warily and carefully at all times. “Come into my parlor, said the spider to the fly.” Her parlor is the Web. You are the fly. Whether you are online or offline, if your computer does something unexpected and irritating, power it down immediately using the power switch. Start it up using a start-up CD/DVD with an anti-virus program on it, and use it to scan the computer.

An attack will generally come when you are relaxed or sleeping. Many will come online when your computer freezes on a website for no apparent reason. Often, that is because the website has been contaminated. Vigilance is the key to security. BE YOUR OWN BEST WATCHDOG! (Sorry, I didn’t mean to shout).

References:

Php secure login

Sophos is one of the best providers of computer security software for computers and networks. Their blog is worth reading.

Sophos whitepaper

Naked security You can read their newsfeed online, or subscribe to their newsletter.

“Industry Ideas for Boosting Government Cybersecurity: Go Back to the Basics”, www.NextGov.com (01/20/16) Moore, Jack.

“China’s Next Five-Year Plan Offers Preview of Cybersecurity Targets”, CIO, (02/03/16) Korolov, Maria.

NextGov Link

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