Newsletter For September 15, 2024: Beware Of Scams

This newsletter is brought to you by Policygenius, my favorite place to shop for affordable term life insurance. A recent event I'm about to share reminded me the world can be cruel and unforgiving. Protect yourself and your family because anything can happen.

Recently, I think I was scammed, and I didn’t even realize it at the time. I had a feeling something was off, but everything happened so quickly that it was hard to process.

I was at a three-way intersection, second in line. The car in front of me accelerated hard, then out of nowhere the driver slammed on the brakes for no reason—she had the right of way at the intersection. Thankfully, I was barely moving, just inching forward at 3 mph toward the stop sign, before slamming on my brakes and lightly bumping into her car.

We pulled over, and I asked her why she slammed on the brakes. She couldn’t speak English, but conveniently, there was a man on the empty road who spoke Spanish and offered to translate. When I asked to exchange IDs and insurance information, she refused. The translator told me she didn’t have any.

Luckily, her car seemed fine, and at first glance, mine appeared okay too. But later, I noticed a crack in the lower part of my bumper. Bummer. A parts dealer quoted me $2,700 plus labor to fix it. I decided to hold off for now.

After sharing my story, a Financial Samurai reader emailed me, saying she’d had a similar accident—at the same intersection, with a man who also spoke Spanish and translated for them! Coincidence or setup?

You decide in my new post: Car Insurance Fraud as a Side Hustle Is Not Worth the Money

Be Careful of Other Scams

My recent car accident reminded me of other scams that have happened to me or my family.

1) The “Hey! You Hit My Car” Scam

This one usually happens in parking lots. Scammers wait until you come out of a store, then approach you, claiming you hit their car while parking or sideswiped them as you drove in. They might even show you “scratch marks” on both vehicles as proof. They’ll often suggest settling on the spot, offering to take a few hundred dollars in cash so your insurance rates won’t go up.

It’s designed to create doubt and confusion, pressuring you to act quickly without thinking. It’s a con job. Don’t fall for it! Stay calm and call the police instead. Or you can just tell them to screw off, like I did. Confident people who stand their ground scare scammers.

2) The “Home Theater Equipment” Scam

This one often plays out in parking lots too. Someone will approach you, offering high-end home theater equipment. They’ll claim they have an extra set from a recent installation and are willing to sell it to you at a fraction of the price—say $1,000 for equipment that supposedly costs $10,000. They can't return it for some reason.

Everything looks legitimate, complete with fake receipts, and the boxes look pristine. Your desire for a bargain takes over. But once you take it home and plug it in, you realize you’ve bought junk that barely works, if at all.

3) The “Can I Use Your Bathroom?” Scam

Sadly, this happened to my mother-in-law in a quiet suburb. A group of kids—one teen and two younger children—rang her doorbell and asked to use her bathroom. Being kind-hearted, she let them in despite her instincts feeling like something was off.

After she led one child to the bathroom, the others ran into the house and split up while she was distracted. Sadly, they managed to steal her phone and purse before they all left..

If you do good, some people will try and take advantage of you. I despise scammers, especially those who prey on the elderly. It makes me wonder why their parents didn’t raise them better.

Protect Yourself From A Wild And Cruel World

When you’re out in public, you’re most vulnerable to physical scams. Learn self-defense, know what to look for, and always be on high alert. It’s also a good idea to have a pre-mortem checklist in case something goes wrong. Because when something does go wrong, we often go into a panic and lose ourselves.

Getting scammed out of money is bad enough. But getting scammed and then physically harmed, especially when you have children with you, is next-level concerning.

Make sure you’re covered with comprehensive auto insurance, renters/homeowners insurance, an umbrella policy, and life insurance. It’s not worth being without, especially if you have dependents, given how crazy the world can be.

The Arbitrage Opportunity In AI

According to The New York Times, CNBC, and other sources, OpenAI is now in talks to raise about $6.5 billion at a valuation of around $150 billion. Just a week or two ago, the talks were centered on raising $1 billion at a $100 billion valuation. For reference, OpenAI raised funds earlier this year at a valuation of about $80 billion.

If this round comes together, OpenAI will have increased its valuation by 25% to 87% in just six short months. Other companies, like Anduril, recently raised $1.5 billion at a $14 billion valuation, while Vanta secured $150 million from Sequoia at a $2.45 billion valuation.

In other words, the top private companies are securing significant funding, while the public markets are beginning to rebound after a rough start to the month.

As a savvy retail investor, your goal should be to seek out an open-ended venture capital fund that holds promising private companies poised for higher valuations. By investing before the next funding round, you'll have the chance to capture the upside in net asset value (NAV).

Take a look at Fundrise's venture product if you're looking to diversify into private growth companies. Personally, I’ve invested $143,000 into this offering to gain more exposure to private AI companies. Fundrise is also a long-time sponsor of Financial Samurai.

Finally, Rate Cuts

The next FOMC meeting is this Tuesday and Wednesday, September 17-18. Will we see the first rate cut in four years? The market seems to think so, with expectations of either a 25 or 50 basis point cut. Since this move is widely anticipated, it’s unclear how positively the market will react.

Investing in real estate at the beginning of a Fed interest rate cut cycle

What we do know is that the 10-year bond yield has dropped even further, now sitting at 3.65%. This means you can secure a 15-year fixed-rate mortgage at 4.5% or a 30-year fixed-rate mortgage at around 5.625% if you have good credit—certainly not bad at all.

Homeowners should start considering when to refinance. Given that over 80% of mortgage holders have rates below 5%, the refinance boom hasn't arrived yet. But we’re getting close, especially for those with expiring adjustable-rate mortgages (ARMs) who may want to lock in a longer-term rate.

If the 10-year yield drops to 3%, and 30-year fixed mortgage rates fall below 5%, we’ll likely see a surge in refinancing. With more monthly cash flow for millions of homeowners, consumer spending should continue to stay strong.

Check out my new post: Maximizing Real Estate Returns in a Multi-Year Rate Cut Environment

To Your Financial Independence,

Sam

Again, this newsletter is brought to you by Policygenius, my favorite place to shop for affordable term life insurance. Protect your love ones from harm's way.

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