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Posts Tagged ‘Investing’

The Securities and Exchange Commission went on the offensive in a big way Monday – cracking down on several shady investment dealers and warning the public about numerous financial scams nationwide.

In a series of announcements, the SEC:

-  charged a Chicago area family with insider trading in a million-dollar scheme
http://www.sec.gov/news/press/2010/2010-178.htm

- revealed that it won a fraud trial in which two Miami companies and and three owners were accused of stealing investor money via inflated mutual fund commissions and fees

http://www.sec.gov/news/press/2010/2010-180.htm

- charged an internationally syndicated radio show host and two others in California with misappropriating $2.5 million in money raised through the fraudulent sale of real estate investment funds
http://www.sec.gov/news/press/2010/2010-186.htm

- accused a Chicago area company and it’s owner with conducting a Ponzi scheme based on a supposed successful real estate business
http://www.sec.gov/news/press/2010/2010-185.htm

- halted a web-based scam that defrauded investors who are deaf
http://www.sec.gov/news/press/2010/2010-184.htm

- charged penny stock promoted with receiving a series of illegal kickbacks to manipulate stock prices
http://www.sec.gov/news/press/2010/2010-187.htm

- charged two Florida-based hedge fund managers and their firms with illegally funneling more than $1 billion of investor funds into a Ponzi scheme operated by Minnesota businessman Thomas Petters.
http://www.sec.gov/news/press/2010/2010-195.htm

- warned individuals and small business about potential investment frauds targeting those receiving lump sum payouts from BP due to the Gulf oil spill
http://www.sec.gov/news/press/2010/2010-193.htm

Taken together, all these actions show that the SEC continues to turn up the heat against financial swindlers who are trying to rob people of their hard-earned money.

Kudos to the SEC … and keep at it!

Related articles

• UPDATE 1-U.S. SEC charges 2 more in Petters Ponzi scheme (reuters.com)
• Richard Dalton Ponzi Scheme Allegations: SEC Freezes Account Of Golden-Resident (huffingtonpost.com)

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The price of gold closed at $1,259 an ounce last week, setting a new record. So does that mean it’s time to cash in on that gold laying around your house that you don’t want, need or use?

Not so fast.

Be careful about sending your gold in the mail or offering old family jewelry up for sale when you’re in a financial pinch.

Consumer advocates and attorneys say a lot of these places offering “top dollar” for your gold are guilty of unfair and deceptive business practices, such as stealing people’s gold.

That’s why Cash4Gold was hit with a class action lawsuit.

So how can you cash in on the gold craze? And is it worth it to buy gold as an investment? Some experts say that since gold prices have gone up so much over the past two years, if you haven’t already bought gold, you’ve already missed out on the party on Wall Street.

But one area said to be ripe for investing is vintage gold coins (i.e. those made before the Great Depression in the 1930s).

As with anything, though, do your homework before investing. And remember that old saying: all that glitters isn’t necessarily gold.

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• Gold Glitters As Safety Play (forbes.com)
• Will a Rising Dollar Hammer Down Gold? (dailyfinance.com)

Q:  I’m 61 and Plan to Retire at Age 62, Though I Would Work Until 65 If needed. I would Like to Pay off a Few Credit Cards Using My 401(k). Is This a Wise Choice? I Have About $10,000 in Credit Card Debt.

A: I usually don’t like to see people use their 401(k) assets to pay off credit card debt because doing so shrinks a person’s retirement nest egg and most people face serious tax consequences by making early withdrawals from their retirement plans. In your case, however, you are already a year or two away from retirement, so it makes sense to aggressively pay down that credit card debt so that it’s not hanging over your head while you are working. Read on for more financial reasons why this is a smart strategy for you.

Tax Free Withdrawals

Also, only individuals who are under 59 ½ years of age have to pay tax on the amount withdrawn, plus a 10% penalty for making an early withdrawal from their 401(k) plans. In your case, however, since you are already 61 years old, you would not be subject to that 10% penalty, making the prospect of paying off your credit card debt an even more financially sound decision. In fact, there is an exception in the law that allows penalty-free distributions from your 401(k) provided you are 55 or older when you leave your job.

A Good Rate of Return

Lastly, paying down your credit card bills will generate an effective return rate that’s not likely to be matched by your retirement investing plan. In other words, you may be paying 15% or so interest rates on those credit cards. Therefore, that’s the return you’re essentially getting by paying off that consumer debt. Chances are your 401(k) is not earning 15% a year. So go ahead, feel comfortable in your choice to tap that 401(k) money and clear away that credit card debt. It’s a wise decision. Just be sure to manage you credit wisely in the future and avoid running up those credit card debts again during your Golden Years.

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Q: I am a 53-Year-Old Single Woman Who is Medically Retired. Between Disability and Retirement Income, I’m Living on About $24,000 a Year. I Have a Little Over $90,000 in Retirement Accounts. This is My Only Savings. I Have a Balance on a Business Credit Card of Close to $14,000. The Business Has Been Dissolved and I Want to Clear Up the Debt and Close the Account. My Only Way of Doing This is Selling Some Investments. Do You Recommend Doing This?

A: No, I don’t recommend taking $14,000 from your retirement accounts in order to pay off that business credit card. I would be wary of doing so for three reasons. First, you are medically retired, so you will not likely have any source of earned income for the rest of your life. Frankly, $90,000 is not a lot of retirement income to live on until death. You could live another 30 or 40 years. Also, if you sell some of those retirement assets, you’ll have to be capital gains taxes on them. Sure that’s just 15% (and possibly as low as 5% for people in the two lowest income tax brackets). But I want you to realize that your money will be taxed, meaning you may have to give over to Uncle Sam as much as $2,100 of the $14,000 you’re considering cashing in. Lastly, I’m not convinced that you can’t pay off this debt over time by making some adjustments to your budget. I know that $24,000 a year is not a lot to live on. But have you considered if you can cut any of your existing expenses (namely any luxuries you may be spending money on) and using that money instead to knock out the business credit card debt? I just don’t want you to tap into an already modest retirement nest egg and later regret not having that money to fall back on if times get even tougher or if you need the money for other purposes later in your retirement.

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