Trading My 401k for a Questionable Insurance Policy

I was 29 and rolled my 401k from Virginia Tech to an “investment guy” at my bank. He was the star football player in high school and had no actual qualifications for investments. I rolled my $40,000 into the bank investment account. In less than 90 days it was down to $18,000 in value.

I had them sell everything and rolled it back out to another firm. When I complained the investment guy said “you are only 29 and you will make it back.” Yeah, but it took me 5 years to build up that $40,000 and he destroyed more than half that in 3 months.

I had set aside some money to invest into stocks. So opened an account with Internaxx bank and took out a cheap subscription under a special offer with the Porter Stansberry tipping sheet.

It was around 2010 and I did remarkably well, quickly building up a nice little portfolio and collecting dividends and watching as the values increased. What could go wrong? I had a phone call from some broker in the UK who specialised in pre IPO stocks and floatations so listened and the guy explained how using CFD’s you could leverage up your position and take control of a much bigger slice of the action and make a huge amount of money…….. I think some rich guy like Warren Buffet once said if you do not fully understand what you are investing in just give it a miss. So a new account was opened and I started off making my fortune.

Well no, I ended up with a black hole which had these things called margin calls which gobbled up cash like there was no tomorrow. I quickly realised that this was not working and bailed out pretty quickly but then got into leveraged trading on gold……… It was an interesting 6 months and taught me that I was not really understanding what was going on and I would never cut it as a trader so there was something positive at least.

I had just met with some folks who had recently moved in-state from the East Coast. They were referred to me because they were unhappy with the advisor that they’d been with. The advisor had worked for one of those big insurance companies that also have their own proprietary mutual funds.

The advisor had always made the claim to them that he could use any type of investment that he wanted. What I found funny about that statement was when you actually looked at their account holdings, over 80% of all their investments were with that company’s mutual funds; their own proprietary product.

What was even more a bunch of crap, was the actual funds themselves were horrible.

Their track records were bad, their fees were high, and their performance resembled that of a 16-year-old trying to make it in the NFL; it just wasn’t cutting it. Lesson learned: If you’re using an advisor who works for a big company, be on the lookout if they always recommend their own company’s funds.