Wall Street and the financial world is a buzz after the recent CBS’ “60 Minutes” report alleging that the U-S stock market is rigged by high frequency traders and stock exchanges. The alarming portrayal of the market claimed high frequency traders “front run orders”—literally buying stocks out in front of you and then selling them back to you when you want to buy. I call it “electronic early skimming” and if this alarming report is accurate it should make the average investor angry and confused.
The question is what to do; throw in the towel and get out of the market until “they clean it up?” Work only with firms using this newly developed, high tech exchange created to combat abuses— IEX, which was also featured in the report? Am I cutting off my nose to spite my face by opting out? Or, do I simply “lose face” by being a sucker and staying in a rigged system?
I also wonder why this is all such a revelation to us? You might remember the 1990 film noir classic “The Grifters” featuring a similar scheme in which investors were duped into making millions by buying and selling stocks seconds ahead of the rest with “rooms full of super fast computers.” In this elaborate Hollywood story, there weren’t even any real computers, and the cunning characters played by John Cusack and Annette Benning, simply took the money and ran. Perhaps this make-believe script told a cautionary tale— or was it a prophecy or subliminal warning?
Now back to reality, if you are trading millions or billions, the real-life Wall Street stock rigging will hit you the hardest. The average stock investor may not notice it at those critical levels but should not be any less angry.
Don’t get me wrong, if this was, or is happening at your expense, you should be…”DAMN mad and not take it anymore”.
But this shouldn’t be an excuse or another reason to keep you from building your future or to justify financial stagnation. Let me give you a better reason to ignore the stock fiasco and move on because this is probably far from the biggest loss the average investor is taking in his portfolio.
Did anyone notice that income taxes just went up… again?
Oh, yes, you already knew it was coming. Down deep didn’t you repress the thought last year?
Now that you know how much more you actually have to pay it really hurts. April is upon us, and it is payday for the government. So, you sucked it up and took the blow to the gut delivered by your accountant.
Remember your accountant is only the messenger; he didn’t personally raise your taxes but the news he gave you went from bad to worse. Your quarterly estimated tax payments are also going up, so there is less spendable money to pay last years taxes and more taxes to pay.
You’re beginning to have thoughts about, “killing the messenger” but hold on, take a deep breath.
Instead turn anger into action. Take advantage of the new Insured Cash Balance Plans that your Financial Advisor tried to get you to pay attention to last year. That’s when you could have reduced last years tax bill, doubled your investment working capital, customized a personal tax deduction for yourself, and kept a chunk of your taxes working for you instead of mailing them to the IRS. Well, no time like the present.
You may not be trading in millions or billions in the stock market but your dollars should count. Instead, cash in on tax savings today that benefit you instead of paying more to the government. This can save you tens or even hundreds of thousands this year and may even reduce your estimated quarterly tax payments immediately. This will save you tens of thousands or hundreds of thousands in Income Taxes this year instead of paying them to the government. Over the life of these new retirement plans your tax savings will add up to hundreds of thousands and even millions in value.
And these plans are flexible… you can mix and match them with a number of market investments and even special insurance products (outside the market).
The cat may be out of the bag with the stock market revelations but I for one never lose faith that American ingenuity and our competitive spirit always figures out a way to fix it.
Don’t be penny wise and pound-foolish.
If you believe in history repeating itself, don’t leave for tomorrow what you can do today. Remember the old adage: “Only death and taxes are for sure”… well, take control and jump into action with innovative and smart retirement plans that may just give you relief from both.