How To Be Safe When Wiring Money

We're going to talk about wiring money, and some of you have never actually wired money. Here's the deal, right? There's lots of ways to send money from one place to another. For example, you can write a check. You hand somebody a check, and they go take it to their bank and they cash it. And then the money sits there for a little while while it clears, and then eventually it's in their account instead of your account. Well, you can do it a little bit faster doing an ACH transfer. This is essentially an electronic check. But once it gets to their bank account, again, the bank's not 100% sure it's there. It takes a few days for it to clear. Well, if you don't want that to happen, the way you move the money instantly to their bank account, and everyone believes the money is actually there is by wiring it. And so for lots of big purchases, like when you buy a house, for instance, you need to wire the down payment, or the lender needs to wire the funds to the seller of the house. Or if you're making a big investment, like if you're putting $100,000 into a private real estate fund, you'll almost surely want to wire that money. And so you need to get used to wiring funds. It's one of those financial chores you need to learn how to do, and you can do it by going into the bank. For many years, that was what you had to do. You had to go into the bank and you talk to the teller and you show them some ID and they ask you some questions, and you're in there for 20 minutes or 30 minutes, and eventually that wire is sent out. Sometimes the bank charges you a fee, might be 20 bucks or 30 bucks to send it. Sometimes it's included in your benefits for having a bank account there. It's probably more likely at a credit union than it is at a bank account, but I've had both of them charge fees for me. Before you can wire money out of your brokerage account, you can wire money from Vanguard, for instance. The nice thing about Vanguard is at least at a certain level of assets, they stop charging you for wires. And so you can do free wires out of there. I noticed I mistakenly sent one out of a bank account instead of out of my Vanguard account, and I had to pay 29 bucks for it. And so I should have just wired it straight out of the Vanguard account. Instead, I transferred it from Vanguard to the bank and then wired out of there, which not only took longer, but cost more money. However, when you call somebody up like Vanguard, or when you walk into the bank, they will ask you how you verified the wiring instructions. And the wrong answer is by email. Email can be hacked. Assume that nothing you ever send by email is private, because it can all be hacked. You know, one of the worst scams out there are people that start intercepting emails and pretending they're the person on the other side of your emails, and they eventually get you to give them your bank account information. This happened to a white coat investor a few years ago. They were investing into a real estate investment, and they ended up emailing mistakenly with a scammer, and they wired their investment money into the scammer's bank account. And the problem with the wire, right. This isn't like a check. You can't go back and cancel the check. This isn't a credit card transaction where you've got some recourse with the credit card company. The money's now in their bank account. They pull it out, they close the account, they disappear, the money's gone. So you got to be real sure that you're wiring it to the right place. So email doesn't cut it. It's okay if they email you the instructions, but you need to call them up and verify on the phone using a number that you looked up elsewhere, not that was emailed to you. Verify on the phone the wiring instructions. And Vanguard and most other reputable places will ask and actually demand that you confirm those wiring instructions in person or by phone. Or they won't send the wire. It's one of the requirements. I've gotten halfway through the wiring process before, and they asked, how do you verify this? And you say by email. And they won't send it. So you got to get off the phone, go verify the instructions, come back, call them up, go through the whole process again. So don't do that. The information you'll need to know, of course, is the routing number. Basically every bank in the country has one of those and the account number you're wiring into. Everything else is kind of superfluous. The name on the account's nice to know, for the benefit of which is usually you. It's nice to know that sometimes it's good to have the address of the bank, those sorts of things. But the main things are the routing number and the account number. Sometimes they want to know what kind of an account it is. Checking or savings. It's almost always going to be a checking account you're wiring into or out of, but it could be a savings account. So you need to know that as well. But for the most part it's pretty straightforward process. You prove who you are, you have the information you need to wire, you make sure you didn't get it from email only and then you send the money. And usually you know that same day it's transferred from your account to their account or vice versa. So get used to wiring money. It's one of those financial chores you'll need to know how to do. For me, it's been an increasing number of times in my life. There are many times where I only send one wire in two or three or four years. Now I feel like I'm doing it a half dozen times a year or more. So you better get used to it.

The hosts of the White Coat Investor are not licensed accountants, attorneys or financial advisors. This podcast is for your entertainment and information only. It should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific advice relating to your situation.