It seems that the recent financial meltdown and lack of financing has invigorated hucksters and those pushing “new” financial products. I have seen a spate of posts about supposedly innovative financial products for simplistic funding needs. Fully 40% of every dollar of profit in our country was made on financial products at the height of the mania so I am rather skeptical when I see posts that claim patents and use abstruse commentary to describe their merits. The recent posts have had these common themes:
- The poster doesn’t understand the product and pounds marketing half-truths
- Monies are exchanged outside of a title company and closing. This is a BIG no-no
- Fees are charged to evaluate things instead of based on performance or success
- The schemes are generally elaborate
- Official government names are used that are really guised LLCs
One of my favorite commentators online is Dr. Jack Guttentag, The Mortgage Professor. Many of his pieces speak about his consistent amazement about people’s belief in what he calls a “Good Fairy” that will solve their financial troubles. This belief sustains the business of financial hucksters and what a business it is! Playing on people’s greed and lack of responsibility will always be profitable.
People seem to have an inherent belief that the path to success is to discover some secret product that suddenly catapults them to the height of success. While innovation and sound business models are good ingredients to success, many of the successful people I know are just good old-fashioned hard workers with above average investing skills. One of the beliefs that I have found is common for these folks is that innovative products are met with skepticism.
My advice to anyone considering one of these programs is to double your money by folding it over and putting it back in your pocket. Get some ultra-cheap 30-year debt, put some money down, and move on with life. If you want to get cheaper debt put more money down and improve the lender’s security interest. If you want to pay the mortgage off early pay more money each month. If you want to reduce interest rate risk get a fixed-rate mortgage. You get the idea. This stuff has been done forever and is tried and true. Instead of figuring out how to game the system get busy working and making money!
Photo: Alicia Nijdam