Churned and burned
Some time in the past, a “financial advisor” convinced me that I could make a lot of money trading commodities. Wrong! I figured out he was just “churning” me (putting me into and out of too many positions, just to earn the commission), and I closed the account, buy not until he lost 80% of my money in less than a year!
Related Horror Stories
The Financial Planner Who Missed the Tax Benefits of Donating Appreciated Stock
A financial services guy told a lunch group that it made no difference whether people donated appreciated stock directly to a charity or sold it and donated the proceeds to charity. He claimed that, either way, “you still got the charitable deduction. ”While this is true, he completely ignored the capital gains tax that would be triggered when the person (rather than the charity) sold the appreciated stock. He could not comprehend that a direct donation of the appreciated stock to charity could save the donor from having to pay tax on that capital gain.
He was totally obsessed with the relatively minor charitable deduction on their tax return. I thought this was horrible advice and a disservice to anyone who followed his financial advice.
Dodged a Bullet: I Fired My Adviser Who Wanted Me to Mortgage My Home for a Risky Annuity
My former adviser recommended that I, on the eve of retirement, take out a mortgage on my fully paid-for home to buy a variable annuity from her. I would have gone from having zero layers of humans between me and a valuable asset (100% equity in my home) to three layers of humans between me and my asset.
First layer was her (collecting the fat commission on that annuity). Second layer was the insurance company selling that notoriously questionable product, and lastly the fund managers of the mutual funds into which the insurance company would invest my annuity dollars. Everybody would be taking their cut, and I would be last in line for value. How did I fix the problem? You'll notice I began by describing that person as my former adviser.
Deceived for Commission
When I was new and wanted to buy mutual funds, they sold me ULIP in the name of Mutual Funds, which they were not dealing even, but for getting some commision, they found me a good prey.
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