The week's best financial advice

Three top pieces of financial advice — from helping scammed parents to avoiding the extended warranty rip-off

Don't buy into it.
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Here are three of the week's top pieces of financial advice, gathered from around the web:

Markets punish worrywarts

Are you a panicky investor? "Then your behavior is probably costing you a fortune," said Gail MarksJarvis at the Chicago Tribune. A study by financial research firm Dalbar found that the average investor with stock mutual funds ended up gaining 4.67 percent annually over the past two decades. The stock market, however, posted an annual gain of 8.19 percent. Why didn't investors beat or at least match the market? According to Dalbar, it's because they got spooked. Dalbar found that 44 percent of the difference between what individual investors earned and the stock market's stronger performance came from panicked selling during losses. Another 15 percent came from those who missed the ensuing rebound by holding on to cash.

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The extended warranty rip-off

Paying for an extended warranty is almost always "a waste of your cash," said Sharon Epperson and Katie Young at CNBC. Pricey service plans are a profit machine for retailers and commission-earning salespeople. But for many consumers, they're redundant. Manufacturers' warranties usually cover purchases for the first 90 days, "if not longer." If you're buying a big-ticket item with your credit card, you may be getting extra protection without knowing it. Most major credit cards offer free warranty protection of some kind, often doubling the manufacturer's warranty. Just be sure to retain all the paperwork from your purchase for any claims. Another idea: Take the money you would have spent on a warranty and put it into an emergency savings fund.

How to help scammed parents

"When elderly parents become victims of a financial scam, it's often their adult children who are left to pick up the pieces," said Veronica Dagher at The Wall Street Journal. The first step is to show empathy for the victim, who may be embarrassed and unwilling to accept help at first. It's important to report fraud to the parent's local police department immediately. Even if the scammer isn't caught, "documenting the fraud can be helpful when disputing any account charges." Children should also help parents alert credit-card companies, banks, and other financial institutions to the fraud, as well as review the victim's credit reports, bank accounts, and investments for suspicious activity. Finally, they should discuss getting power of attorney, which confers the right to act on a parent's behalf in his or her financial affairs.

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