Goliath and Your Retirement

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Assassination, first responder, state of emergency, attack, homeland security, shots fired, pipe bomb, dirty bomb, sex bomb…OK so we made the last one up. But those are some of the words that will trigger alarms at America’s internet snooping spy agencies. And now those words are in your inbox. Uh oh.

You are now being watched by the government.

As an aside, if any of you NSA snoopers reading this are looking for retirement advice, click here. You’ll find out how to set up tens of thousands of dollars of hassle free cash flow each year for you to collect in your golden years. Because if you took a look at the American government’s balance sheet, you’ll worry whether your pension will be there when you need it. Better do something about it…

You might decide to give up your pension altogether and become a whistleblower like Edward Snowden. He’s trying to retire to one of the three Retirement Havens identified in a free report that goes with a subscription to the Money for Life Letter.

Now back to the intended reader, if you don’t mind…

If you think you have nothing to hide from the snoopers reading this, think again. A poor fellow who had his dog shot by police in America this week had nothing to hide either. He was filming the police and was falsely arrested for his efforts. His trusty dog came to his rescue and a sniffle at the officer’s hand was enough to send a volley of bullets into the dog for its trouble. It wobbled around for a few seconds like a headless chicken while onlookers wailed and screamed. It also had nothing to hide…and now it’s dead.  

You probably won’t be shot by police for sniffling at their hands. But you will have to deal with all powerful institutions who won’t hesitate to metaphorically do the same thing to your finances as the police did to the dog. In fact, that’s probably the one biggest lesson we’ve learned since leaving academia and setting foot in the ‘real world’.

Investing carefully is all well and good, but risks that have nothing to do with tipping the right stock can matter far more. And yet most investors don’t even know those risks exist. Worst of all, they discover that the supposed remedies they thought they had are completely useless.

But what are these risks?

Well you probably feel like financial institutions owe you a fiduciary duty-they’re supposed to have your interests at heart. But they don’t feel the same. Sure, some good eggs in the industry might feel that they should do what’s right. But they’re not always permitted to act like it by the institution they work for. Instead, those institutions use their power to encourage dodgy dealings and then cover up any consequences. When they get caught, they use their power to stonewall the victims.

Just how common this is makes you realise how big a danger your wealth faces.

The recent scandal of the CBA financial advisor is a great example. Hundreds of people received poor advice, had their signatures forged, savings misplaced and everything else you can imagine. But what’s worse is the cover up. And the pathetic efforts of regulators to help victims.

In The Money for Life Letter, we covered a loan scandal of incredible proportions. Thousands of Australians were given unaffordable loans by bankers and mortgage brokers who simply altered legal documents to get loans past lending standards. Luckily, Australian courts sided with borrowers and cancelled many of those loans, leaving people owning a home and debt free!

But banks have been playing dumb ever since. Money for Life Letter subscribers have been trying to get access to their documentation to see if the same alterations were made that could get their loan cancelled. A few have discovered exactly the changes that got loans cancelled in court cases and ombudsman hearings across Australia. But most readers complained the bank isn’t giving them the information they’re entitled to. Many simply gave up at this point, despite the potential opportunity to cancel their mortgage.

Then there are all the corporate frauds and incompetent management teams which have run savings and investment institutions into the ground. Banksia is one example where people were mislead about how safely their savings would be invested.

Worst of all is the Reserve Bank, which suppresses interest rates on all those who rely on interest income. Let’s not get started on the Australian Tax Office.

If you think about it, all these institutions could ruin your retirement plans. By mistake, deliberate policy, or just a rogue employee. And your chances of finding out what happened are not always high, given how often management teams attempt to cover up scandals. If you do find some dodgy goings on, your chances of fighting back successfully are pretty much nonexistent without a wealthy financial backer behind you – that’s how the mortgage scandal was first exposed.

To put it plainly, these large organisations control your wealth and you do not have much of a chance to win a fight with them if they get it wrong. In fact, many times it’s just not worth the time and expense to even try. It’s better to cut your losses and run. That’s part of their strategy.

Some operators in the industry have realised this. There’s an entire legal industry making a living defending people from legal challenges simply by doing one thing; playing dumb. Playing dumb runs up so many legal expenses on the other side that they quickly give in. For example, simply asking lawyers to clarify any ambiguous sections of their letters can add hundreds of dollars to your adversary’s legal bills.

This even works against the government by the way. If you’re a drug dealer, there are certain lawyers who are so well known to have perfected the art of delay tactics that prosecutors dump cases as soon as that lawyer appears as the defence. Prosecutors have a budget too, and there’s no sense wasting all your allocated cash on one case. Especially if that case would also involve a load of unnecessary monotonous work…

The solution to all this is simplicity. You have to avoid anything complex that you can’t monitor, control and understand. Understanding what you own, under what terms and with who’s involvement is crucial if you want to avoid being scammed, duped and then ignored. If you are, it’s often too late to do much about it.

This is probably the biggest argument there is to managing your own wealth. But what do you invest it in?

Well, you can’t avoid the complex and dangerous world of finance completely. But you can place some of your wealth outside its reach. There aren’t many assets that are ‘counterparty free’ – that means you’re not relying on anyone else to do their job properly. Owning shares relies on management and directors acting appropriately, for example. And your broker has to be doing what he says too.

The investments you can own to opt out of these difficulties are precious metals, property and other tangible assets. With gold at its cheapest for years, now is a good time to load up. You’ll feel less worried that your financial advisor is about to head for the Caribbean with your hard earned, and you’ll have wealth to protect yourself if he does.

Until next week,

Nickolai Hubble+
The Daily Reckoning Weekend Edition

From the Archives…

Gold Market Rhyming
03-07-2013

The Great Empty Buildings of China
02-07-2013 Greg Canavan

The Tentacles of the US economy
01-07-2013 Greg Canavan

Bernanke Fumbles, the Market Tumbles, The Daily Reckoning Grumbles
29-06-2013 Nick Hubble

How The Power of Tweets Saved Tesla Motors
28-06-2013 Sam Volkering

Nick Hubble
Nick Hubble is a feature editor of The Daily Reckoning and editor of The Money for Life Letter. Having gained degrees in Finance, Economics and Law from the prestigious Bond University, Nick completed an internship at probably the most famous investment bank in the world, where he discovered what the financial world was really like. He then brought his youthful enthusiasm and energy to Port Phillip Publishing, where, instead of telling everyone about The Daily Reckoning, he started writing for it. To follow Nick's financial world view more closely you can you can subscribe to The Daily Reckoning for free here. If you’re already a Daily Reckoning subscriber, then we recommend you also join him on Google+. It's where he shares investment research, commentary and ideas that he can't always fit into his regular Daily Reckoning emails.
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17 Comments on "Goliath and Your Retirement"

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BP
Guest

OMG… Ain’t it awful? And I heard about a mob of shysters flogging small mining caps, precious metals and uranium, who have cost punters a fortune… and those poor b@st@rds haven’t even got a roof over their heads!~ :D

shortchanged
Guest

What a cynic you are BP, mind you, Nick is right you know, so, buy gold coins, and hope that nice Mr Rudd or whomever, dosen’t invoke section 41 of the Banking Act, removal of gold out of Australia, or Part 1v of the same act, confiscation thereof. Or you could take a trip to the UK, buy a big box of coins, with no hassals, then,,,do what you have to. I hide mine, well you can’t put it in the bank can you?, they’l nick it.

BP
Guest

The image of you hiding your gold, probably in a nearby allotment, is priceless, SC. ;)

shortchanged
Guest

In the dead of night, BP, lantern swinging, furtive looks round and about,,, sounds a bit Burke and Hare, doesn’t it? When in fact they are in plain sight, well, almost.

Had a chuckle at your post, but.

BP
Guest

Well, the stones might have painted it black, SC!~

Cash-under-the-mattress and hidden bullion were never a turn-on for us. There are just two many methed-up opportunistas torturing old folk like us, to get their hands on rumoured hidden tangibles. Property is not only producing fortnightly dividends, it’s a little more difficult to wrest from owners.

Please be careful not to even hint at buried assets.

shortchanged
Guest

Wise words BP, but have to do something to keep my pennies away from daughter’s no hoper bloke, now theres a waste of space. Trying to find ways of spending it before I pop my clogs, but must see the little woman right of course. Then theres all the other hangers on, grand children, great grand children, theres a whole ruddy tribe of ’em, never thought I would worry about that. Ever read ‘Martin Chuzzlewit’, don’t have his money, sure have his worrys.

BP
Guest
Bill has just posted an excellent piece on this dilemma, SC. One of his key points is that while passing it all on to your heirs has its problems, donating it to governments to throw at far less-deserving recipients is far worse. He uses an excellent example in his recount of Buffett’s progression from theory-to-practice, culminating in his appointment of his son to succeed him. The neurosurgeon’s motto is also a nice analogy… . Yes, I agree with your comment ‘…must see the little woman right of course…”. The manuals (with photos) I’m writing on how things operate (windmills, pumps,… Read more »
shortchanged
Guest
Wish I had a business to hand on, BP, but being a longtime (sometimes despied) public servant, in the justice system, I do not. However, being frugal and saving modestly, we have a ‘bit put by’ as they say. We now live in a village, one of several owned by a family, called in days gone by as Landed Gentry. An Ideal and peacefull setting off the beaten track. You speak of your good lady’s financial acumen and I am sure she will do well. Mine is/was an accountant, and manages all our finances and I would be lost without… Read more »
BP
Guest
Well, we have no ‘business’ as such, SC; just a lot of property/ies. While I’ve been buying and selling for around 45 years, mainly as a hobby, it’s really only during the last 35 _we’ve_ got serious about it, with the goal of financial independence in retirement. My wife’s grandfather was a broker of great standing in two western provinces of Canada. He was an oilman in his earlier days (probably the only one to ever have an oil rig stolen, while he was visiting Edmonton). He started two major listed companies, is credited with a role in the creation… Read more »
shortchanged
Guest
Forgive me BP, I did have a chuckle at your grandfathers misfortune, but it seems events turned out right in the end. My own grandfather, mothers side, was a factory owner, and estate manager., on dads side were coal miners, a more humble occupation. Partners side, Farmers in europe, with a judge or two scattered about later on. Partner as said earlier an accountant.I am self taught, not always a good thing I understand, but there you are. I seem to have inherited an interest in matters financial, probably from my grandfather and dabbled in penny shares in the 80’s… Read more »
BP
Guest
Hope you’re writing a family history, SC. I’m attempting two; one chronological… and the other a compilation of vignettes, each one page anecdote, one page photo. I figure few of my descendants will read the chronological version, but the second will be something they can pick up and put down, without losing the thread. I buried a time capsule over twenty years ago, with a map showing the location of a second capsule, below a windmill. The mill itself will have rusted and disappeared with time, but its concrete footings should still remain… Buried treasure? Hardly, but the family trees… Read more »
shortchanged
Guest
Have started researching the Family Tree BP, got as far as 1740 with the census records. Now have to write to the parish church,s to find out more. Fortunately there are a few clergymen and even a Right Reverand (a bishop) scattered about. I’m a bit dubious about the Right Rev. though, seeing as I turned out an atheist, doesn’t sort of gel does it. All this will be for my own amusement as none of my family are interested, except maybe Sharone, the one I mentioned above. I don’t know about a time capsule, but the thought of a… Read more »
BP
Guest
I was present when a capsule buried by John Forrest, WA State Premier, was unearthed 100 years after its entombment, SC. Much of the contents, though sealed in a water-tight lead box, were water-damaged (probably condensation)… a pity, because some of the postage stamps were probably priceless. The most fascinating inclusions (for one who still experiences ‘treasure dreams’ while asleep) were two brilliant-lustred gold sovereigns. Although every other item in that box was rusted, tattered (silverfish eggs, maybe) or damaged in one way or another, the two gold coins were as perfect as the day they were struck. The press… Read more »
shortchanged
Guest

Although you were misquoted BP., not unusual with the press, both statements were true, at least to my mind., there must be a moral somewhere in that story., everything else turns to dust, gold lives forever. Yeah., thats it. Have a nice weekend and enjoy the cricket, promises to be good.

Another scorcher today,…. getting a bit monotonous.

BP
Guest

I’m off to Singapore for a few weeks, SC.

As for the weather, I figure heat’s better than sleet. We really mistimed our last visit to the UK!

shortchanged
Guest

Bon voyage BP, give my love to those pretty girls over there, lucky devil.

BP
Guest

Thanks, SC. Have to be careful about the pretty gals, as my missus is flying in from Canada. Anyway, only one of the dominant cultures give me a second glance. It’s the beard, I guess! :D

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