Smart About Money: Hard ways to make easy money …

Nick Maffeo A headline in The Wall Street Journal recently caught my eye – “Selling Gold Is Not As Easy As It Seems.”

It turns out that super-popular big-box retailer Costco is now selling gold – specifically 1-ounce gold ingots at $2000 each – online, not in its stores.

Even with limits on how many a member can buy, Costco has apparently been finding it very easy to sell around $200 million worth of gold “bars” a month. Costco classifies the gold as collectible and there are no refunds.

Bankrate says, “Naturally, Costco’s great reputation can make it easier for those on the fence about buying gold.” Some think it may be a quick way to make easy money.

But cashing out can be difficult, or complicated. In the case of collectible gold, the capital gains tax can be as high as 28%. Gold needs to be securely stored. People also often discover that precious metals dealers quote less favorable rates to sellers not in the trade.

Should you buy gold at Costco? Only you can determine that but it certainly should not be as a famous Costco “impulse buy.” There are many articles online that lay out the pros and cons. Do your research first because this might be another one of the many hard ways to make easy money.

There’s nothing wrong with the concept of wanting to make “easy money.” Occasionally in people’s lives and occupations, they learn enough about some kind of opportunity to have the experience to do the due diligence that lets them calculate whether it seems likely that they can get in and get out with a reasonable profit. That experience really matters.

Last year, The Wall Street Journal wrote about a real estate syndicator/investor in Texas who bought thousands of apartments and brought in thousands of “small investors who wanted a chance to earn a landlord’s riches without any of the work.” Apparently he promised that and “double-your-money returns” at investor conferences and on You-Tube.

Unfortunately for those small investors, there was no easy money but only losses when the syndicate went into default. Many lost everything and all they got from the syndicator was a letter suggesting they contact their tax advisor to “discuss how your investment loss can be recognized on your tax filings.” Ouch.

Many of those small investors said they felt like they had “trusted the wrong person.” They believed they were buying a sure thing. But most had no familiarity or experience with that kind of deal to help alert them to the substantial likely risks.

The due diligence of experienced, successful investors includes accepting that there are no sure things – no fail-safe, guaranteed easy ways to make “riches” without running the chance of losing your investment. Sometimes things go wrong that no one could control.

Your best bet? Say someone offers you a chance to earn “riches without any of the work.” It sounds very good but it’s something you don’t know much about. That is probably one of the hard (or impossible) ways to make easy money.

In a situation like that, you will want to do extra research – speaking with objective professionals – to be sure you understand the risks. Never put all your eggs in one basket. Never invest hard-earned money you can’t easily afford to lose.

From the “Smart About Money” Canton Citizen column published on June 13, 2024.
Nick Maffeo is the President & CEO of Canton Co-operative Bank – right next to the Post Office – in Canton.
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