Wednesday, September 30, 2015

The Grandparent Scam

Imagine receiving this phone call…….

“Mr. Smith, the is Constable McGarrett from the Royal Canadian Mounted Police. Your grandson Jacob was picked up trying to return to the U.S. with some marijuana in his pocket. His classmates from Grand Castle University are waiting on the other side of the border hoping he gets released.”

How does a scammer know you have a grandson Jacob who attends Grand Castle University? Probably Facebook. Or the newspaper announcement of your anniversary party. 

“Mr. Smith, Jacob cannot contact his parents. We would prefer not to hold him for prosecution, this is small stuff,  but to let him go we need a bond of $2500.  Jacob is hoping you can Western Union the money so he can go back to school. We can give you a routing number.”

If you ask to speak with your grandchild that will of course be impossible.

Could this scam really work? Almost every day.

A scammer can make a couple hundred of these calls a day. Most people slam the phone down, but if one or two a day bite on this scam, it is a $5000 profit.

Never send money anywhere to anyone without confirming the details. Do not let someone panic you.

The odds of recovering your money? 0%

Friday, September 18, 2015

Your financial adviser probably represents ...... your financial adviser

There is a multitude of types of financial advisers, working in a multitude of companies (banks, brokerages, insurance agencies, financial planning companies, etc.) using various combinations of commissions and fees.

Many are competent, many are honest, and many are fair. Many are not.

Most are not fiduciaries. 

Fiduciaries are held to the highest standards for dealing with your money. Most financial advisers are held to a lower standard, essentially a "suitability" standard.

There is plenty of bad advice to be had, and plenty of dishonest sales recommendations.

A case in point, high cost / mediocre return mutual funds, which are often not good quality but which provide higher commissions for advisers (this also hurts some 401(k) accounts).

The Obama administration is proposing regulations through the Department of Labor to create a higher standard in a retirement plans, a significant change. Problem is, the regulations may go too far, creating more problems than solutions.

We may go from too lax to too harsh, raising the costs of investment advice.

As always, buyer beware. Especially on 401(k) rollovers.


Saturday, September 5, 2015

Where NOT to buy a house

For many of us our house is the biggest asset and also our biggest risk.

Some really good advice we heard on real estate is this:

When you buy a house think about the resale possibilities first.

So, where should you never buy a house?

Floodplain or ocean front (unless you can bear the financial risk)

High forest fire risk (this one has been ignored a lot lately in the west)

Fronting a busy four lane, or a two lane likely to become a four lane

Anywhere near an airport

Anywhere near an industrial area, or the truck route to such an area

Close to a college, or close to an apartment complex for college students

On a street where school buses run to load or unload

Backing up to an interstate or busy four lane

Downwind from a “factory farm”  (this is getting tougher in some areas)

In most areas there are still plenty of places to live, but you should be careful about the site selection. Your house is an investment!