Interesting Little Tidbit Of The Day

I had no idea, until a few weeks ago, that money laundering can occur in retirement planning. This is not something that usually comes up in conversations, but when I found out about it I was shocked. The process involves turning the dirty money into clean money. "How does this happen?" you may ask yourself.

Well sneaky money launderers or those acting on behalf of them will come into the Financial Advisor's office, or just go to the company website of choice, and sign up to withdraw, transfer, or buy into an investment. Now think back to a previous posting about the 60-90 window of retraction. Well the launderers pay in the money in a lump sum, let it sit, and then make a retraction request. The mechanics behind it are so simple yet so unbelievable. Well, now the fund company or brokerage firm has to distribute the money back to the investor from their own money. This makes the money "clean money" and untraceable by the government.

That is why Financial Advisors are so picky and selective about some of their clients. Noone wants to go to jail for aiding in the money laundering process. So just be weary when someone wants to invest a very large lump sum of money all at once like that, without it being a company sponsored retirement plan.

Now that I am thinking about it, I did receive a random call once from a guy claiming to have won the lottery somewhere and wanted to put it in an investment for safe keeping. The red flag went up immediately because of the way he worded his requests. Not wanting to get into an arguement over the phone, I did what I do best and just transferred the call to another department. Yes, I really did do that and still do that with calls that I do not want to deal with at the moment. Ha ha.

Moral of the story? Crime only pays when someone pulls the wool over your eyes.

Thinking You Should Sell And Actually Needing To Sell Are Two Different Things

With todays economy and market fluctuations, investors are always quick to jump to conclusions or jump on the band wagon. They will listen and respond to anything that they hear on the news or radio, causing them to make some radical decisions. Then they call and want to close the entire account or move it somewhere else, aka another brokerage firm who puts stars in their eyes. Take the lady from today for example. She calls and says that she needs to close out her account because it has only been losing money. So I go and pull up her account only to discover that she has over $500 in gains.

Seriously? What was she thinking? When investors get their statements, either annual or quarterly, they do not depict what the current value is as of TODAY. So yeah, maybe they had a bad quarter but she is still $500+ in gains in the past two years of opening the account. This happens very frequently with investors. Instead of just going by your statement, try going to the company's website and registering with them for up to date values and information. You can even pick up the phone and call your advisor to ask them what the current value of the investment is and then measure how it compares with your statement.

As with any investment, market fluctuations are going to happen. That does not mean to go ahead and close it now so that you can reinvest when the market changes in the direction you are wanting. What happens when you do this, and try and reinvest at a later date, is that you may not get as high of an interest rate as you had before or if you are in bonds or stocks you may have to buy back in at a more escalated price that before.

Moral of the story? When in doubt, don't freak out. Just ride it out and you will see that nothing lasts forever.


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Rumor Concerning The Future

So what I was told a couple of weeks ago was that the government was going to make some changes regarding inheritance benefits. Usually when dealing with investments the beneficiary will receive inheritance distributions based on the original account owner's tax association. This is usually measured in basis points, which directly effects how an investment is perceived on the market and how it is regulated and taxed. So the rumor is that next year the basis point will go up. What does this mean for the average Joe? Well consider all of the capital gains that the deceased has earned on the investment now taxable income. So that big chunk of money, the deceased earned over the lifetime of their investment, is now based on the value at death not inception. Yes this sucks big time for everyone who has loved one's leaving them alot of money in the future. The moral of the story? It does not pay to die. So live long and prosper.