It’s hard somedays not to sound just so negative about what some people post about. I mean, I feel like they had good intentions, regardless of how misguided they are. The debate rages on about redemption centers. By the very name of it, it should make sense but let me go over what I believe one is. A redemption center is a bank. A brick and mortar establishment that can verify and credit the funds for your currency, ON SITE. Without having to send it anywhere, without having to let it leave your site, and without a waiting period for the currency to be verified and credited to your account. With that said, do I believe these places will offer you a better rate? No, not in that manner. Think about it, a bank has to send, say 10 million dinar out to get verified. And let’s say it’s valued at $1 per, that’s a 10 million dollar load of currency in that truck that they are responsible for it getting stolen en route to be verified. Now they may can say your currency isn’t valid, but if they signed for 10 million dinar, they are responsible for getting you 10 million back. So there will be security and probably other fees associated with the transfer and verification at another branch. Think about it, they will have to sign a statement accepting your currency, so they are responsible for the amount taken in. So you will save those fees if you go to a bank that can verify and redeem your currency on site. Hence, the name redemption center, at least from my perspective. No, I don’t think there is, nor would I visit some random business center set up to look like a bank in a shopping center somewhere. I need to know I’m going to an established bank with credentials, security and an account with my name on it, and I want to see my currency transferred into my account there. Not some account they set up for me out of the blue.
The second argument over the years is receipts. Banks don’t care about your receipts, unless you had so much currency that they wanted to prove ownership, but even then I don’t see it happening. Receipts would be strictly for tax purposes. With the constant changing of tax laws you must be prepared with your investments. The difference could be as much as 20% based on your tax bracket and length of ownership. Could you afford to lose an ADDITIONAL 20% of your earnings? If you can find them, or already have them, you are at least covered in the event of a taxable event.
So I’ve asked you before, what’s your plan? I was asked what my plan is… I’m more than happy to lay it out. I have a certain amount (10% of my total) set aside to redeem immediately, basically no matter the rate. This will pay any debts off I have, as well as my kids. I’ll be pretty specific. I also have a certain amount designated for my kids that will be paid out over a monthly amount until the amount is exhausted. This also should cover my lifetime so there isn’t any “dad, can I borrow 10 grand?” questions. The misconceptions is you can only give someone 14,500 or so as a gift. But, what most don’t realize is that for a family member it’s a little different. This means that you can give up to $13.61 million in gifts throughout your life without ever having to pay gift tax on it. For married couples, both spouses get the $13.61 million exemption. This means that if you are married, you and your spouse could give away a total of $27.22 million before paying the gift tax. However, several provisions of the Tax Cut and Jobs Act of 2017 are expected to sunset at the end of 2025, lowering the lifetime exemption to around $6 million by 2026. https://smartasset.com/retirement/lifetime-gift-tax-exemption#heading-0
So you can plan accordingly if you read the rules. Of course, you probably shouldn’t be planning this on your own. You should consult and create a team that includes an accountant, an attorney (legal and tax specialties), an investment banker/wealth advisor and a personal member you trust to be your accountability partner. This is a starting point and should not be people you are paying outside the services they render on your behalf.
Back to the my plan. Depending on your needs, I’ve hoped to have a six figure retirement income, you need approximately 3.4 million dollars to live off the interest. This is key for me. I’m not trying to just live off the total amount, I’m hoping to build generational wealth, so that after I’m gone my kids can use the interest that I was receiving to supplement their lives and have something to leave their kids as well. All this, never touching the initial principal.
So what’s good for you? Only you can determine that. Maybe you’re older and just want to have something to leave your kids or others to donate, maybe you’re younger and want to build a businesses or investments, or maybe you have no one to leave it to and want to plan how the monies get distributed during and after your lifetime. Whatever your needs are, you need a plan. You can’t just run to the bank and see what happens. You MUST know what the consequences are of each action you choose. Don’t be afraid to ask for help from those that can help you!