There are some serious problems going on in the brokerage world these days. Full commissioned stockbrokers get massive amounts of money to recommend specific mutual funds. That wouldn’t be a bad thing if these funds weren’t complete trash. Even worse, the Feds don’t require any kind of disclosure about these funds from brokerages. A lawsuit sprung up recently in California because of the lack of disclosure, but it was just dropped. So, if you go to a stockbroker for the purpose of opening an account and making money, Clark wants you to be warned. The brokerage may be working entirely for themselves. Now, you may feel uncomfortable buying your own funds, and you’d prefer someone to do it for you. That’s fine. But if you choose to hire a brokerage, you want one that is commission free. How do you find out? Your first step is to read the online courses at latimes.com. Start with Investing 101.
Did you know that 100 percent of Circuit City’s annual profits come from the sale of extended warranties? How about Best Buy? Forty percent comes from extended warranties. That’s why salespeople are all over you like a cheap suit when you go to Circuit City or Best Buy. Clark just read a Consumer Reports article on extended warranties that confirmed how useless they are. The only product CR says is worth it is a high end treadmill. The smartest thing you can do is to buy an item on a credit card because some of them automatically double a manufacturer’s warranty. That’s like getting a free warranty. Business Week got more in detail with extended warranties. The magazine found that if you were to buy a $1,000 RCA digital TV, Circuit City charges $100 for the warranty. Best Buy charges $62. But WalMart charges just $29 for the same warranty. So, it’s a huge mark-up. Salespeople receive a huge amount of pressure to sell these things, and you pretty much never should buy one. Appliances, electronics and computers rapidly decrease in value as soon as you take them out of the box. Why would you want to insure that? Plus, the average cost of a warranty is as much as a repair. So stay away from extended warranties at all costs.
Have you heard of "World Marketing Direct Selling, Inc?" It’s a bogus company that was convincing people to invest a minimum of $26,000 in its scheme. The outfit claimed that people would get back 10 percent of their money right away. Then, every month for their rest of their lives, people would get $300 a month. People were so excited about the opportunity that they signed up in droves. One couple in Connecticut invested their life savings of more than $600,000 into the ploy. It turned out to be a total pyramid scheme. The company claimed to offer nutritional and dietary supplements. But organizers were really just paying original “investors” who then convinced others to join. And, as pyramids do, it quickly collapses. The money is nowhere to be found and the SEC hasn’t been able to figure it out. A legitimate multi-level marketing company actually sells a product. It’s not just a way to recruit new people. And, seriously, how legitimate does a company sound that guarantees you $300 for the rest of your life?
Clark has just updated and relaunched his 529 plan guide and he’d like you to check it out. So, what’s a 529 plan? It’s a state-sponsored investment plan that allows people to sock away money for their child’s college tuition and expenses. You can put your money in any plan, but you have to be careful because some of the plans are either high-commission or completely corrupt. Clark has researched all of the plans and has listed the best plans with the three best at the top. Utah, New York and Iowa get top honors in Clark’s chart. The other 20 are part of his “Honor Roll.” If your state is on the list, open that plan. If you go into a state sponsored plan, you get a break on your taxes. You can put your money in any state plan, but you receive an added bonus if you invest in you state’s plan. If your state doesn’t offer a plan, pick one from Clark’s top 3 choices. Keep in mind that some states lent their sponsorship to several different plans, and some of those are high-commissioned, risky plans. So, be sure to choose the plan Clark recommends on his site. It is listed here. Also, if a state offers a “direct sold” option, you always want to choose that plan. 529 plans should never be opened through a commissioned salesperson.
The latest hot export item is discount coffins. Apparently China makes very high-quality coffins and they cost a fraction of American prices. Funeral homes charge even more for coffins because they know you sometimes need one in a hurry and are vulnerable already. Right now, there are a series of lawsuit against the funeral industry for selling overpriced coffins and “price-fixing.” The average American is now paying $6,500 for funeral expenses and that is before the cost of the coffin. The best thing you can do is join a memorial society, which offers reasonable funeral expenses because of group buying power. And consider buying a coffin on your own, instead of saddling your loved ones with it in the event of your death. Look at the Chinese-made coffins, or consider checking out the supply at Costco Wholesale. The company now sells coffins at a huge discount.
Most car purchases are used, not new. When people shop for used cars, we feel relieved when we see a sign that says “certified.” So what does that mean? Well, certified used cars sometimes are good deals, but most of the time means absolutely nothing. Car dealers have learned that people are willing to pay more for certified used cars, so they started adding thousands of dollars to the car cost. But there is no legal definition of the word “certified” when it comes to used cars. And even if the car is certified, you should still get it inspected by an independent mechanic. The only legitimate certified cars are those that are certified by the manufacturer. This means that in return for your money, you have a meaningful extension on the warranty that comes with the vehicle. The idea came about from luxury automakers who wanted more cache for their used cars. Lexus, for example, certifies the car is not above a certain age and the mileage is not past a certain limit. Jaguar is known for having the best program. So, does the manufacturer actually certify the vehicle? No, it's an agreement between the manufacturer and the dealership that the car has been overhauled and inspected. So, it's hard to know if the work has really been done. Yet another reason why you should always have a car checked by an outside mechanic before your purchase it.
