Friday, August 14, 2020

How can you know whether to trust your advisor?


What to do if Trump really did cancel SS funding?
At his NJ golf club, Trump promised his wealthy members: “I plan to forgive these [postponed] taxes and make permanent cuts to the payroll tax,” adding “I’m going to make them all permanent.” So all his members clapped (clap signs flashed) and will vote to end SS, Medicare, income and other taxes. Later they learned he will also cut capital gains taxes so they will owe nothing on the gains in their assets. However, in January Trump tweeted “Democrats are going to destroy your Social Security.” Members of his club and the wealthy are already avoiding most of those taxes since they are not taxed on most of their wealth. However, most will vote to end ‘payroll’ taxes since it sounds better than Biden’s promise to deal with the huge deficits Trump has created with tax cuts.

How can you know whether to trust your advisor?
Does every financial advisor have a basic conflict of interest? Advisors can make money from you in many ways. Do you really know how they make money? Are they on salary or commission or fee for service? Many advisors get paid based on much money you have not on how much they earn for you. So if your account went up because the market went up, you will pay more even if they had nothing to do with it. Some advisors charge an hourly fee like a lawyer. You pay $750 for a written financial plan that shows you a high probability of reaching your goals. Some charge for a specific task. You pay $500 for a re-balancing of your whole portfolio. Some are paid a bonus if they sell certain products and not others. They receive a year-end bonus of $5,000 for selling $500,000 of the mutual funds managed by their firm. How do you know the product they recommend is the best for you? You don’t know if the funds they sold you are better than an index fund until a year after you have paid their fees. Are they working on all of these income streams? Are you given a clear explanation of why your total balance has gone down yet you paid $1,700 already? Trump ended the fiduciary duty of financial professionals on February 3, 2017—one of his first acts in office. You can avoid their conflict of interest.

Is a gold asset right for you?
In the wake of gold breaking above the $2,000 level, enthusiasm for the yellow metal has reached a fever pitch. Earlier this week, for example, MarketWatch reported that a fund manager forecasted that gold could double to to $4,000 an ounce. But gold highs are not usually a good sign for real investors. The fundamental justification for a higher gold price that is most often mentioned is inflation. But we don’t have inflation. History tells a different story. “In 1980, some were concerned about… high inflation… From January 1980 to January 1985, the real price of gold fell 65%. People owned CDs paying 12% not gold. Perhaps new gold ETFs are pushing the price higher. Gold has been a speculator’s tool in the past—“I buy because another fool will pay more when I sell.” The gambler knows it is difficult to know when to fold.

How to stay focused on your long-term goals
With all the craziness of this time—work/no work, school/no school, mask/no mask, bull market/unemployment, deficit spending/recession—it is difficult to know what to do with your future income assets. Many have lost ground with 401k matching suspensions or layoffs. Many have ignored their portfolio since it is not clear what to do now. Many more have left their account in Target-Date Funds. Others have joined the Wall Street frenzy to trade ETF. The number of these index funds has exploded—over 5,000—with only a few making money for owners. During this time it has been helpful to some to just keep in mind Warren Buffett’s advice: “The stock market is a device for transferring money from the impatient to the patient.”

Is your advisor’s move to a new firm right for you?
Unfortunately, moving all your assets to their new firm is not as simple and easy as they claim. It is the right move for them—more control, more income, more career choice. But you are going to have to deal with all the hassle—even your advisor doesn’t know the half of it—I was a firm manager. You will experience new account documents, lengthy processing delays and, frequently, significant incremental costs. Besides the paperwork and delays, you have new costs, including ticket charges, account level fees and annual maintenance fees for retirement accounts. If you were with a low-cost provider like Vanguard, Fidelity or Schwab, your 0.2% costs may become 2% a year. This increase may rob you of 63% of your total accumulation over time. You may lose asset compounding—the miracle of compounding. You are forced to make complicated decisions about how trades are made, which custodians, clearing firms, product sponsors and other institutions will be used. You will have to sign away your right to sue if they make a mistake. The benefits of one statement or greater compliance are marketing hype. Most firms are required to provide top compliance now. Plus, with larger firms, you usually have more, not less, choice of the product/service and benefits/costs balance. Some even have salaried advisors so you obtain more unbiased advice when you need it.

Is a ‘cash out’ refinance right for you?
Mortgage rates keep hitting historic lows. If you are tempted to take some of your home equity for bill payment or in anticipation of job insecurity, think hard about all the possible outcomes first before signing. We were in such a situation recently, and opted for the line of credit (home equity line of credit or HELOC) instead. We already had a lower mortgage rate on a 15-year loan so there was no need to refi for a lower rate. We used the equity to reduce our overall mortgage costs—less interest. We live in a high property-tax state so we could not reduce our monthly payments much more with a new refi. Plus we did not want to extend our mortgage payments for another 15 years. The line of credit is a way to get cash out for home remodeling and emergency without the cost and risk of a new 1st mortgage. Interest is deductible for home improvements like a new kitchen. The rate is lower than many credit cards. We did not have large credit card debt so we did not need the cash from a ‘cash out’ refi. Our only big monthly expense is the property tax bill and we are applying for a reduction now. We shopped around for a no-cost HELOC.  We avoided all the closing costs of a ‘cash out’ refinance. We avoided prolonging our mortgage payments.
 


**********ACCOUNTABILITY**************

Like 1776, this period is a test of democracy—do we really want ‘low-IQMobster?

Philly DA: we have an “authoritarian dictator."

Dictator on Harris: Make America WHITE Again

Dictator’s advisors fear “he may start a war
Dictator eliminates Congress: ‘benefits’ for all by exec order?




How Govt wastes our money: Congress gives 3.7 Trillion to the wealthy! 
Congress on vacation: failure is THE option: they leave—we are stuck w/o job or money!
20 GOP senators reluctant to spend more money: spent $3 Trillion on rich: re-election locked

permanent cuts to the payroll taxTrump handlers: he didn’t mean end Social Security tax
Trump to give wealthy another tax break: lower taxes when they trade or sell assets: “more jobs”?

SCAMS/SPINS:
Facebook takes political sides: Employee fired after collecting proofs?
NRA execs accused of stealing $ millions from dues-paying gun owners
Which foreign government will buy election: Russia for Don; China for Joe?

Despite Trump, kids are NOT immune from virus: 97,000 children positive in 2 weeks
How we are informed: 7 million lies about virus posted on Facebook: can we survive?
FL sheriff bans use of masks by his people and in office as FL cases/deaths zoom.

Jack Brewer sold shares of company he consulted for knowing the stock price would fall.
Advisors don’t get laid off: they get paid whether they make us money or not: overcharge
Pyramid schemes hit struggling workers: promises of huge profits from tiny start-up cash
Jared huddles Kanye secretly in CO: conspire to railroad Black voters


Zoom invitation may be phishing scam: hackers using virtual com tools
Packages you never ordered scam: get seller to take it back—they stole your info to use
Are alternative energy firms a scam? Get a lawyer’s read first before you sign.


Jobs
GA school kids will reignite virus shut downs: quarantine high school kids at home?
Re-opening no masks increases virus cases and deaths: 1,500 dead a DAY record!

IRS tax return center: help open paper returns: check is sitting there: You get IRS notice?  

Who owns your account now?
Our regrets: 50 account/purchases we always regret: sleep on it before you buy
Bargains in home buying: foreclosures are cheaper but not for the novice buyer

Divorce rate for older folks is rising: know your rights, plan your future

Miracle:
Dems need a “very very nasty” and “disrespectful” VP to overthrow a dictator and mob.
White religious power still favors a dictator who put children in cages; brags about sins

40% people with virus have no symptoms: do they have the cure? Virus never dies?
FL no longer requires test for restaurant workers before serve you: Virus free w/ meal!
I believe the president of the United States: everyone else is a liar or traitor

Tens of thousands acres for oil and gas drilling was to be auctioned: we stopped Trump

IAN
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