From gyrating markets to anemic interest rates, it's been a stressful year for your personal finances. Here's how to prosper in the future. By Michael DeSenne, Executive Editor December 1, 2011 From Occupy Wall Street to market madness to insanely low mortgage rates, 2011 has been an eventful year for your personal finances. Here's a look back at the eight biggest stories that affected your pocketbook this year, along with practical advice for protecting your assets going forward. After all, while past performance is no guarantee of future results, you can always learn valuable lessons from the news.SEE ALSO: Kiplinger's Economic Outlooks Stock Market Volatility The Story: A roller coaster ride doesn't even begin to describe the gyrating stock market in 2011. A major culprit was concern over the debt crisis in Europe, which helped Standard & Poor's 500-stock index experience intraday swings of at least 2% on 64 trading days through November, according to Bespoke Investment Group. One of those days was November 30, when the index gained 4.3% in a single trading session. The VIX, an indicator of stock market volatility, ranged as high as 48, a level unseen since the heart of the U.S. financial crisis in late 2008 and early 2009. Advertisement Our Advice: Stick with stocks. As Knight Kiplinger recently pointed out, despite the ups and downs of equities, they remain the single best investment over long periods of time. Use dollar-cost averaging to smooth price swings, resist panic selling and attempts at market timing, and lean on dividend-paying stocks during difficult stretches. Kiplinger forecasts a return of 8% to 9% for the S&P 500 in 2012. Big-Bank Backlash The Story: The ultimate goal of the Occupy movement might be ill-defined, but one of the most prominent targets of its ire is the financial services industry. Many consumers agree, dealing a blow to big banks in 2011 with the wholesale rejection of a $5 monthly fee on debit cards. Beleaguered bankers quickly backpedaled for fear that outraged customers would take their business elsewhere. Our Advice: Tired of being nickeled-and-dimed by your big bank? Check out a credit union instead, as big-bank customers were urged to do in October on International Credit Union Day. These nonprofit financial institutions often offer lower fees and better interest on accounts compared with big banks. Advertisement Dawn of the Tablet Wars The Story: The same year that saw the death of Steve Jobs also saw the birth of competition among tablet makers. Jobs fired the opening salvo in 2010 with the debut of Apple's iPad, but the war for tablet supremacy began in earnest as everyone from Samsung and Sony to Research in Motion and HTC entered the fray in 2011. Apple, which rolled out its upgraded iPad 2 to defend its position as tablet leader, faces perhaps its biggest threat yet from Amazon's Kindle Fire, released just ahead of the holiday shopping season. Our Advice: The clear victor in this scuffle won't be either Apple or Amazon; it will be the consumer. If you have a spare $499, by all means invest in the iPad 2. Apple's newest tablet is best in class. But if you can get by with fewer bells and whistles, the Kindle Fire at $199 is an economical alternative. More tempting for late-adopters might be to put off a tablet purchase until 2012, when prices will almost certainly come down. Meantime, make do with your smartphone and a Kindle Touch e-reader (starting at $99). Payroll Tax Holiday Advertisement The Story: Overshadowed but significant in 2011 was the payroll tax holiday that allowed most workers to keep an extra 2% of their paychecks. That translated into real money that made real purchases, paid real bills and funded real retirement accounts. Someone earning $50,000 a year, for example, reaped an extra $1,000 in 2011 thanks to the payroll tax holiday. Our Advice: Keep your fingers crossed that the payroll tax holiday gets renewed for 2012. Absent an extension, the U.S. economy could see a 0.5% reduction in gross domestic product next year, estimates JP Morgan Chase. If it turns out that you need help replacing that lost take-home pay, try one (or more) of our 11 ways to get extra cash fast, from selling your stuff on consignment to participating in clinical trials. Anemic Returns on Savings The Story: It was a lousy year to be a saver. Short-term rates on certificates of deposit and money markets were mired below 1%, making it all but impossible to generate meaningful income from cash holdings. Even the yield on ten-year Treasuries, which began 2011 above 3%, drifted below 2% by late summer, despite Standard & Poor's downgrade of U.S. debt in August. (Typically, a downgrade makes a bond less appealing to investors, which in turn drives up yield.) Advertisement Our Advice: Don't give up on income investing just yet. While rates on CDs and money markets probably won't improve in the near term, and Treasuries remain unattractive at current inflated price levels, certain bond categories are performing well. Municipal bonds, despite high-profile hiccups with munis in Jefferson County, Ala., and Harrisburg, Pa., offer perhaps the best income opportunity going into 2012. A close second, according to Kiplinger income guru Jeffrey Kosnett, are Ginnie Mae mortgage securities. Page 2 of 2 Rock-Bottom Mortgages The Story: Rates on 30-year fixed mortgages slid below 4% in 2011, making it an awfully tempting time to purchase a home, especially for first-time buyers who weren't saddled with property to sell. That's assuming, of course, you still have a job, you are able to come up with 20% in cash for a down payment, and you can actually qualify for the lowest advertised mortgage rates. Conversely, 2011 was an awful year to be a seller due to a glut of homes on the market, including cheap foreclosures and short sales, and lowball appraisals that sabotaged deals at the last minute. Our Advice: If you're paying north of 5% on your home loan and you plan to stay put for three to five years, look into refinancing your mortgage. The very same low yields on Treasury bonds that are hurting savers are helping refinancers because the ten-year Treasury influences long-term mortgage rates. Consider this: The difference between a $200,000 mortgage over 30 years at 5.5% versus 4.5% is about $44,000 in interest; the difference between a 30-year, $200,000 mortgage at 5.5% versus a 15-year mortgage at 3.5% is 15 years and more than $150,000 in interest. Soaring Tuition Costs The Story: The cost of a college education continues to go through the roof. According to the College Board, an in-state student who enrolled in a public four-year college in the fall of 2011 faced a sticker price for the academic year of $17,131, including tuition, fees, room and board. That's up 6% from 2010. The annual bill for a private four-year college adds up to $38,589, a 4.4% increase from 2010. In October, President Obama announced a plan aimed at helping alleviate graduates' student-loan debt starting in 2012. Our Advice: Focus on the total value of a college education, not just the sticker price. When shopping for a school, factor in how much need- and nonneed-based financial aid is offered to the typical student. Also look for colleges whose alumni leave with the lowest amount of student debt at graduation. Finally, be realistic about the earning potential of your chosen career path and align your education costs accordingly. High future salaries make some advanced degrees worth the debt that you'll rack up to earn them. Making Green From Gold The Story: Bucking widespread fears of a bubble, the price of gold continued its run-up in 2011, peaking at more than $1,900 an ounce in September. Ten years earlier, gold went for less than $300 an ounce. SPDR Gold Shares (GLD), an exchange-traded fund, gained 23% in 2011 (through November 30). Standard & Poor's 500-stock index fell 2% over the same period. Our Advice: Invest in the precious metal sparingly. The gold bugs have been right in recent years, but prices have also languished for long stretches, notably throughout the 1990s. In general, gold should make up no more than 5% of your portfolio. The gold story goes beyond investing, though. The “cash for gold” phenomenon has consumers jumping at the chance to unload old jewelry. Feel free to join in. Just be sure to brush up on smart ways to sell your gold, including how to determine value and vet buyers, before you do. Happy Holidays, and Happy New Year.