Guru Goddess

Q: I recently received a call from an unfamiliar stock brokerage. The guy was offering some unbelievable interest rates I would earn if I were to investment some money there. He wasn’t representing one of the nationally known brokerage firms I’d ever heard of. I told him I’d have to think about it.

Then he said, “Why waste time? Invest your money now so you can start earning immediately!” I was still a little leery and politely declined again, stating I’d call him back in a day or two.

He then said, “You have to act now. The deal won’t be available after today. You’ve got to do it right now.” I eventually had to hang up on the guy because he just wouldn’t quit.

Do you think I missed a golden opportunity to earn big money? Did I make the wrong decision?

A: You did the right thing by declining to give the caller any cash.
I suspect you didn’t miss any “golden opportunity to earn big money.”

Although we don’t know for sure if it was a scam, all the signs are there. You didn’t know the person who called. He made a “cold call,” probably out of the phone book or off of some phone list he obtained.

The caller used high pressure tactics to try to coax you to invest your money. And he promised interest rates that were too good to be true. Then, when you declined more than once, he made one more last ditch effort to pressure you to invest by telling you the deal was now or never.

To avoid financial scams, it’s important to know the person who’s offering you an investment opportunity. Check out his credentials.

It’s wise to go with a well-known investment firm. These firms usually hire educated and experienced financial professionals.

Avoid investing any money with anyone who calls your home or knocks on your door without an invitation from you.

Plus, if someone’s pressuring you to put your money into an investment, that’s another clue it could be a scam. And if the deal sounds too good to be true, it probably is.

Finally, although there are some legitimate investments that are time-limited, if that’s the case in conjunction with these others signs, it’s best to decline the offer. It’s wise to be cautious when considering investments in today’s financial environment to avoid scams.

April is Tax time, and with it, a great opportunity to think more about your finances, and in particular, your financial goals and investment portfolio.

Here is an example that might help you with planning your own portfolio:

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Michael and Janice are a couple in their early thirties. They don’t have any children, nor do they plan on having any. While they’ve started saving and investing for retirement, they haven’t made a lot of progress to date. They currently invest 3% each in their respective 401(k)s. Their employers match contributions at 50 cents on the dollar, up to 6%. The Stuarts also have a few thousand dollars in savings bonds that Michael got from his grandmother. They make over $150,000 a year combined and have minimal debt.

They do, however, have a rather extravagant lifestyle. Janice is a major shopper, and while Michael doesn’t buy things frequently, he likes his expensive toys.

Clearly their priorities are not conducive to having a prosperous retirement. Their 401(k)s offer a great opportunity to amass a lot of wealth over the long haul, but they aren’t taking full advantage of it.

Everyone should make every effort to get the full match from his or her employer. It’s free money; no one in their right mind should leave free money on the table. You might think you are barely able to make it from paycheck to paycheck, but if it is tax free and taken out before you ever get your hands on your money, then you will hardly miss what you never saw, but it can add up to big dividends long term.

While savings bonds are better than nothing, they are a very poor choice for someone with a long-term time frame. This couple would be much better served with more growth-aggressive investments.

Appropriate stocks and some bonds for diversification would be more in line with their goals.

Their combined income is quite high, but it is largely being wasted on non-essentials and luxury items, as it often is when people are young and have no real financial goals yet.

Considering they don’t have children and minimal debt, saving 15+% of every paycheck should be easy for this couple. They would be well served to examine their spending and eliminate the excess.

This couple still has time before they retire; they certainly have every opportunity to turn things around to provide for a wonderful retirement and any other goals they might have, especially if they do not have any children.