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.
Related Horror Stories
Dodging Disaster: The Terrible Mortgage Advice That Almost Led Me Into the 2008 Crash
Some idiot financial advisor came to my workplace circa 2006 advising everyone to take zero-downpayment, interest-only mortgages, which were widely available at the time and were what fueled the housing bubble.
Then use the proceeds to buy life insurance as an investment.
I recall asking him, what happens when the interest-only period expires and you're required to start paying principal? "Oh, don't worry, you can always refinance into another interest-only loan. "Obviously I did not follow his advice, and we all know how the real estate market ended up after the 2008 crash. (I ended up buying my house in 2012.)
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!
Identity for Profit
In 2005, I was advised by a group of real estate investors. One who says he owns 50 different properties with many partners. He advised if I do not have money for investing, I should use my identity for prospect investors to use to purchase property and I get a small share. At the time, people made lot of money and different kind of real estate financial schemes.
Definitely it is a bad advice because if the investors default the loans, you are ultimately responsible for the loans and the properties are under the water.
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