Business News : Stern Advice: The top 10 money stories of 2011

WASHINGTON (Business News) - Remember way back in January, when Washington was arguing about taxes, homeowners were having trouble getting refinanced and investors were dumping gold? Hmmm...that makes it seem like 2011 was an uneventful year.

But 2011 forever changed the way you'll manage your money. Here's an overview of the big financial stories of the past year, and their implications for your wallet.

-- Volatility achieved permanence. There were a record number of consecutive 400 point swings in the Dow Jones Industrial average. Daily index changes approaching 2 percent became the norm, and the U.S. stock market often reversed course or went dramatically in one direction or another in the final hour of trading. Call it bipolarism or computer trading, it's not going away soon. Until the euro crisis, the jobs crisis, the housing crisis, the federal debt crisis, all other crises and the 2012 election all resolve, that can be expected to continue.

That means that investors should plan for volatility. Long term investors can make money in volatile times by choosing a plain vanilla index fund and buying more shares on bad days, or by simply dollar cost averaging and investing the same amount of dollars on the same date each month. You can protect your portfolio by staying very diversified, putting stop loss orders on your stocks, or using hedging strategies.

-- Your wallet got Durbinized. Just as the Dodd-Frank financial reform bill was being passed in 2010, Senate Democrat Dick Durbin added an amendment ordering the Federal Reserve to cap the fee that merchants pay issuers for debit card transactions. That went into effect October 1, 2011, and a flurry of activity and rhetoric ensued. Banks started raising fees on other services, to make up what they were losing. Rewards for debit cards disappeared. Some merchants started planning separate prices for credit and debit card customers, but few actually implemented that.

The bottom line for shoppers? Debit cards never delivered a great advantage before, so leave them in the drawer and use a rewards credit card that you pay off every month. Watch for differential pricing that might make it worth your while to start using the debit card again.

-- Annuity sales hit record highs. New sales of variable annuities were at record highs, and fixed annuities were close to their tops. That's despite the fact that low interest rates have made the payouts on those fixed annuities historically low. Insurance salespeople are having a field day with the fear of the common investor, and pre-retirees and new-retirees rushed to lock in any kind of guarantee they could get.

There's a bonus there for investors: New, improved and less-expensive annuities keep coming to market. Annuity shoppers should compare multiple products, and consider the advice of an expert who isn't paid to sell annuities.

-- Washington got serious about disclosures. The new Consumer Financial Protection Board started floating new disclosure forms for mortgages, student loans and credit cards. And it laid plans to go public with a consumer complaint web site that will eventually name banks and other complaint subjects publicly. At the same time, rules requiring employers to disclose 401(k) fees advanced. Financial services customers should read everything. The flip side of disclosure is that you are responsible for making informed decisions.

-- The weather got really ugly. You can call it global warming, punishment for bad behavior or simple strangeness. But 2011 was a banner year for hurricanes, floods, tornadoes, landslides, high winds and blizzards. There was even a Halloween snowstorm. Already in 2011, the federal government has declared 98 major disasters, 29 emergencies and 114 fires requiring federal assistance. That's compared to the previous year's 81, 9 and 18 respectively, and the disasters and fires are records, according to the Federal Emergency Management Administration.

There are financial lessons to take from that: (1) Make sure your insurance policies are up to date, and that you have flood insurance if you live anywhere near water. (2) If you donate to victims funds, go for the organizations that are experienced and have people on the ground when they are needed. (3) Back up your important financial data and paperwork offsite.

-- European debt problems dominated markets on both sides of the pond. Despite the solution forged by eurozone powerhouses in recent weeks, some analysts still expect the entire cooperative and its currency to fall apart. Now, there are almost as many theories about whether eurostocks and bonds are overpriced or underpriced as there are countries using the euro. Small investors have stepped back and activist traders and hedgers have taken a bigger role in the market.

In May, it took $ 1.48 to buy one euro. Now it takes $ 1.30. All of that may signify deals for investors and travelers, but tread carefully.

-- Munibonds outyielded Treasuries. That happened days after Standard & Poor's cut its rating on long-term Treasuries, and after star analyst Meredith Whitney predicted lots of municipal defaults. Yields of both 10 and 30 year Treasury bonds fell to record lows. What does that mean? That investors may not be all that impressed with the ratings companies -- or Whitney, after the muni bloodbath failed to materialize. And that there's no safe place to make good money these days. You have to choose yield or security.

-- Occupy Wall Street solidified anger at banks. Not everyone understands all that this movement stands for, but it can be credited with reversing Bank of America's planned $ 5 a month debit card charge. And it will make income inequality a part of the Presidential debate in 2012. Not as many people actually switched from big banks to community institutions and credit unions as originally thought, but there's still some serious consumer power here.

-- Financial companies tried new marketing approaches. A slew of intermediaries that look like banks but actually aren't have appeared on the web and on mobile devices. They have names like SmartyPig and PerkStreet. Their aim? To win customers for small banks via intermediary marketing efforts. And to mine the shopping data bank customers create. Banks are doing the same thing, with aggregating software that shows you all of your accounts in neat little pie charts on your phone. Your next bank may not be a bank, and your next branch may be in your pocket. Falling in love with the mobile app or bill pay plan of a bank (or bank front) makes you stick around. But there may be advantages to continually comparing your financial services companies and what you're getting from them. Not aggregating everything at your bank makes it easier to switch.

-- Washington failed. The payroll tax cut is in ICU, the debt ceiling negotiators punted with a super committee that was anything but. If you're expecting big changes out of Congress, this year, don't. The smart money is on a stalemate-till-after-the-election scenario.