G&G Associates Tax & Financial Consulting
The Ultimate Way to Protect Your Money in This Market
Hotep G&G Readers,
A new client recently showed me a statement from her IRA account. The money was in a fixed-income program with a major insurance company's asset-management division. The account had been churned ad nauseam, with a constant stream of buy and sell transactions generating fees. Partly due to the churn, my client earned less in interest than she paid in fees.
She's getting out of the account. Since she's 72 years old and only wants to preserve her principal, her plan was to put the money in a CD at a nearby bank. That way, she'll never again pay more in fees than she's getting in income and dividends.
Now, I'm against most regulation of financial markets and products. The rules never work as advertised and generally make the situation worse than before the rule was enacted.
For example, when you try to protect someone from risk, they respond by engaging in riskier behavior. When you expose them to the full brunt of risk, however, they behave the most responsibly. "Protecting" investors actually works against them.
With situations like the one my client found herself in recently, where she paid more in fees than she earned in dividends, it's no wonder so many people throw up their hands and say, "There ought to be a law against this." But there are plenty of laws against fraud. And churn isn't easy to establish when you've given a financial advisor or broker permission to trade as he/she sees fit.
There are also plenty of securities laws requiring lengthy disclosures to investors. Trouble is, most investors just glaze over the required disclosures without studying the information carefully.
You can't legislate good investor behavior. You can't legislate the knowledge of what businesses are worth. You can't legislate diligence, judgment, and experience. You can't legislate skill. And you can't legislate investment profits. Investing is an art, not a science. That makes it tougher to regulate.
Think of all the laws already in existence that didn't prevent Bernie Madoff from perpetrating the biggest Ponzi scheme in history – one the SEC was alerted to numerous times over several years without doing anything about it.
Why would anyone conclude we need more laws to prevent such an event from recurring? Madoff was in violation of securities laws for years before his scheme fell apart. A simple audit would have found him out relatively early on. He would have been caught almost a decade earlier – saving investors billions of dollars – had the SEC listened to Harry Markopolos, the forensic accountant who figured out Madoff was a fraud within five minutes of looking at his accounts.
Investing is work. There is absolutely, positively, no way around it. And in the end, you are on your own as an investor.
You see, everyone you encounter in the financial industry is working for himself, not you: your bank, your broker, your newsletter advisor, your mutual fund manager, your 401(k) administrator, everyone. "They're not working for me; they're working for themselves," should be your default position when managing your finances. Even honest people can work against you, simply by rationally pursuing their own interests. You need to pursue your own interests, too.
*** You need to watch out for your own money***
Do you have a Home-Based Business (HBB)? If not, Why? This is your quickest, safest and most assured way to get a GUARANTEED 25-35% ror on your investment. Remember, with a HBB you get to deduct over 422 business expenses. Without a business you get about 7-10 business deductions. Look at it this way…if you are in the 30% tax bracket (25% Fed & 5% state); for every dollar you deduct 30 cents goes to you. For every dollar you do not deduct 30 cents goes to Uncle Sam.
Somehow I think you can use the money more than your Uncle.
Give me a call and I’ll show you how to implement this strategy and keep 30 cents on every dollar by doing so as well. This is what you call SMART planning and investing.
Excessive fees, account churning, and guys like Bernie Madoff are way too common in this world. You can't walk around with blinders on, like most people do. You need to watch out for them.
Most of the time, though, you won't be a victim of outright fraud. You'll be the victim of a short-sighted, greedy financial-service provider who is trying to make a living. The industry thrives on fees. You need to know every step of the way how these people get paid and how much.
When you sit down with your asset manager, question every fee… every transaction. Is he getting you into unnecessary, high-cost products? Question your broker's motives. Does his firm receive banking fees from the companies it recommends to its clients? If you're getting a loan, any type of loan, ask to have every penny of every fee explained to you until you're satisfied.
Question your investment advisory publisher. Does it receive "marketing fees" from the companies it recommends? Question the company you own stock in. Do the board and management forgo paying cash dividends and buying back shares only to fritter away the company's money on excessive perks, self-dealing, and value-destroying acquisitions?
If the answer to any of these questions is "yes," you might be getting screwed. And it's not up to the government to fix it. It's not up to the government to protect your money.
“It's up to you”
With the falling dollar and the explosion in gold, silver, oil and other natural resource prices, you need to stay on top of your game and manage your “OWN Finances.”
Become a GGIS subscriber now and you’ll be sure that we make sure you stay on top of your Tax and Financial Future to make sure your BUSINESS … AT HOME is protected. Remember…most people look after their bosses business, but fail to look after their own Business At home.
Take advantage of our 2010 discount lifetime subscription offer if you are not yet a member of the GGIS paid newsletter service and you’ll be on your way to knowing how to protect your portfolio...at least what’s left of it. I’ll keep you informed on the “REAL DEAL” in our economy so you can protect your wealth. So....Sign up today!!!
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Until the next time!
Ankh Uja Snb (Life, Health, Strength),
Tax & Financial Consultant, RFC
866-361-3872 toll free fax
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LEGAL NOTICE: This work is based on SEC filings, current events, interviews, corporate press releases and what I've learned as a financial consultant. Nothing herein should be considered personalized investment advice. It may contain errors and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility.