Providing tax return clients with unsolicited advice on investing: I was apprehensive at first about the response that might result, but finally decided to try it.
While I'm not an investment advisor, the details provided on a client's 1099-B brokerage account statements had caused me to bring some things to his attention.
This was the short term summary: about $250,000 cost basis, $243,000 in proceeds. So he had a $7,000 loss in 2021. This was a year when the S&P 500 gained 27%. You guessed it, the investments were in popular meme stocks and other fad-WallStreetBets type of stuff. I couldn't hold back and decided to tell him about something called index funds, and how much he could have gained.
Turns out that he had only invested about $10,000, and had made tens of trades with the same money, while accumulating losses. The aggregate cost basis was about $250,000 , which was really just the same $10,000 being reinvested many times.
He had never heard about index funds, and was very happy to hear about a lower risk and lower stress way of investing. I recommended some books for him to read. True, the S&P is down about 10% in 2022, but he would have still remained with a 17% gain.
I-Bonds were also news to him, with the guaranteed 7% return, as of now.
As someone who is not a professional investment adviser, I can't charge for this advice, and make it clear to clients that I'm not an expert in this, just trying to help them as any friend would.
A tax accountant can really make a difference in someone's life with some non-professional advice on investments, just to bring things to their attention.
This is one of the differences between what a taxpayer may get by going to the cheapest shop on the block, or an accountant who really cares about their financial well-being.
Looking forward to steering more people in the right direction!
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