Are people really this stupid? Sadly, apparently so. Some promoter of investments in Texas promised investors a return of 20% per year over two years. In addition, this Texas promoter promised that each investor would potentially receive another $15,000 to $18,000 over five years, plus even more crazy incentives.
I am not sure how many stupid fools invested with this guy, but the Texas State Securities Board's Enforcement Division stepped in and put a stop to it. Or, at least they thought so. The brazen nature of this promoter is unbelievable. While the promoter met with the Enforcement Division, after promising to stop his sham, he was still promoting it to investors on that very same day!
My book, Meet Wall Street. The Reason You're Stupid, 2nd Edition is on sale right now for $0.99 as an eBook at https://books.apple.com/us/book/meet-wally-street-the-reason-youre-stupid/id816020421?mt=11&app=itunes. The subtitle is very apropos for anyone fool enough to invest with this promoter. Hopefully the Texas State Securities Board stopped him before he stole too much money from investors. You can read the press release from the Texas State Securities Board here: https://www.ssb.texas.gov/news-publications/commissioner-enters-order-against-georgetown-promoter-fraudulent-medical.
If you had read my book, then you would not have fallen for an investment promoter like this guy. Let's have a little class on this, shall we? Your first clue to this being a sham was the 20% per year return promised over two years. He was only asking for $50,000 from each investor. That was your second clue. Your third clue was the additional return promised of another $15,000 to $18,000 over five years. Add these clues up and you have a sham investment of a 76% return on your money in five years. How can these guys even say this crap with a straight face? I would report a guy like this so fast they would not know what hit them. I majored in Criminal Justice and I believe in law and order. Besides, I am out here doing the right thing by people and these investment promoter types are ruining it for honest advisers like me.
Readers of my eBook will know that this type of investment violated my rules of investing. One of my rules is to "Keep it Public." By keeping it public, I mean that you should only invest in publicly traded investments listed on a stock exchange. My other rule is to "Keep it Liquid." This investment was certainly not liquid. Once you gave this promoter your money, then that would likely be the last time you saw it. How are you going to comply with my two rules? This sham investment was not publicly traded and it was not liquid where you can get your money in as little as two business days. Therefore, as readers of my eBook know, this was a big, red flag and they would have never fallen for this investment promoter.
Oh by the way, did these investors check this guy's background? That's what I thought. Another egregious failure. Did they check to see if this was a securities offering registered in the State of Texas or granted an exemption from registration from the State of Texas? Of course, they did not. They just blindly hand their money over to investment promoters like this all the time. You can check an advisor's background at https://www.investor.gov/crs.
Ninety-nine cents will provide you the information to protect you from investment promoters like this guy. Now do you see why the subtitle of my book is "The Reason You're Stupid"? Unfortunately, you are very, very stupid if you invest with someone like this.
You need me in your corner. I am telling you.
https://www.marianfs.com
Tuesday, July 28, 2020
Wednesday, July 22, 2020
Direct Indexing
There is a new change coming in the area of investing called Direct Indexing. What is Direct Indexing? This is where you invest in a pool of stocks that follows a particular index such as the S&P 500® or the Dow Jones Industrial Average for example. Right now, financial advisors use ETF's that invest in a multitude of different indexes. Generally, most index fund charge fees for managing the funds. Recent competitive pressures have forced a lot of these management fees to come down significantly. These management fees can range from 0.50% down to as low as 0.03%. There are some funds with management fees higher than 0.50%, but for the most part, most of the well known fund sponsors with index funds charge less than 0.50%. If you are investing in one of these ETF's, then this is the fee that you pay the fund sponsor to manage the pool of money.
Direct Indexing is going to change the investing world significantly. Suppose your financial advisor has you invested in a portfolio of ETF's. The total management fee is based on your financial advisor's fund selections. Let's assume that your total management fee is 0.50% per year. With Direct Indexing and free trading commissions your financial advisor will be able eliminate this 0.50% fee altogether. Now, this is not something that is going to happen immediately, but it will happen. The key to this is two fold. One is zero trading costs and the other big one is the ability to buy fractional shares.
You long had the ability to buy Mutual Funds in fractional shares, but you could not buy fractional shares of ETF's. ETF's trade like a stock. You cannot buy 0.3478 shares of a stock...unless you have a brokerage firm that has the software capability to allow it. The major players like Schwab, Fidelity, TD Ameritrade, E*TRADE and others will soon be allowing you to buy fractional shares in your account, if they are not already. This fractional share issue is the key to Direct Indexing. You may have seen an ad on television for Schwab Stock Slices. This is a form of Direct Indexing, but not the full freedom that financial advisors like me prefer. We want complete freedom to choose as many stocks as we want in each client account. This is when Direct Indexing will really take off.
For taxable accounts, Individual, Joint or Trust accounts, there is a tax advantage utilizing Direct Indexing. Stocks by themselves are tax deferred. After you buy a stock and hold it, you only pay taxes if you sell it. Of course, the amount of taxes that you pay depends on the time period that you held the stock (i.e., short-term capital gain or long-term capital gain) and whether you have a profit or a loss. You can still do Direct Indexing in your IRA and Roth type accounts. There just will not be any tax advantage in doing it. However, you will save in management fees from a formerly all ETF portfolio.
In the very near future, probably in 2021, your financial advisor may come to you to discuss Direct Indexing with you. Direct Indexing will allow you to hold a portfolio of, for example, 500 stocks in fractional shares in your Individual account without having to pay an ETF management fee. This will save you somewhere between 0.03% and 0.50% or higher in fees each and every year. Your financial advisor will be fairly compensated by their normal assets-under-management fee or annual flat fee that they charge. The reason this is true is because, they have to research the 500 fractional share stocks to put into your account! This takes a lot of time and their time is valuable.
I am working on a new relationship with a firm that will be able to offer this sometime late this year or perhaps early next year. It is something that I am personally really excited about. More to come.
Let me know you I can help you today. Visit https://www.marianfs.com give me a call and/or request a Zoom Meeting via email.
Direct Indexing is going to change the investing world significantly. Suppose your financial advisor has you invested in a portfolio of ETF's. The total management fee is based on your financial advisor's fund selections. Let's assume that your total management fee is 0.50% per year. With Direct Indexing and free trading commissions your financial advisor will be able eliminate this 0.50% fee altogether. Now, this is not something that is going to happen immediately, but it will happen. The key to this is two fold. One is zero trading costs and the other big one is the ability to buy fractional shares.
You long had the ability to buy Mutual Funds in fractional shares, but you could not buy fractional shares of ETF's. ETF's trade like a stock. You cannot buy 0.3478 shares of a stock...unless you have a brokerage firm that has the software capability to allow it. The major players like Schwab, Fidelity, TD Ameritrade, E*TRADE and others will soon be allowing you to buy fractional shares in your account, if they are not already. This fractional share issue is the key to Direct Indexing. You may have seen an ad on television for Schwab Stock Slices. This is a form of Direct Indexing, but not the full freedom that financial advisors like me prefer. We want complete freedom to choose as many stocks as we want in each client account. This is when Direct Indexing will really take off.
For taxable accounts, Individual, Joint or Trust accounts, there is a tax advantage utilizing Direct Indexing. Stocks by themselves are tax deferred. After you buy a stock and hold it, you only pay taxes if you sell it. Of course, the amount of taxes that you pay depends on the time period that you held the stock (i.e., short-term capital gain or long-term capital gain) and whether you have a profit or a loss. You can still do Direct Indexing in your IRA and Roth type accounts. There just will not be any tax advantage in doing it. However, you will save in management fees from a formerly all ETF portfolio.
In the very near future, probably in 2021, your financial advisor may come to you to discuss Direct Indexing with you. Direct Indexing will allow you to hold a portfolio of, for example, 500 stocks in fractional shares in your Individual account without having to pay an ETF management fee. This will save you somewhere between 0.03% and 0.50% or higher in fees each and every year. Your financial advisor will be fairly compensated by their normal assets-under-management fee or annual flat fee that they charge. The reason this is true is because, they have to research the 500 fractional share stocks to put into your account! This takes a lot of time and their time is valuable.
I am working on a new relationship with a firm that will be able to offer this sometime late this year or perhaps early next year. It is something that I am personally really excited about. More to come.
Let me know you I can help you today. Visit https://www.marianfs.com give me a call and/or request a Zoom Meeting via email.
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