#95: "Wire Transfers Demystified: What You Need to Know Before Sending Money"

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Transcript

Introduction to Fiscal Physical Podcast

Speaker 1 0:01

Welcome to the Fiscal Physical Podcast. Join us each week as we sit down with the founder of Alchemy Wealth Management and author of your Fiscal Physical, Ryan Nelson. Tune in to gain valuable insights and practical tips as we simplify complex financial concepts into digestible lessons. From budgeting to retirement planning, this podcast is your go-to resource for mastering financial literacy.

Aaron Hoisington 0:33

Welcome everybody to this week's episode of the Fiscal Physical Podcast. My name is Aaron. I am here with the founder of Alchemy Wealth Management, ryan Nelson. Ryan, what's new with you, man? What's going on?

Ryan Nelson 0:47

Same old, same old for me. What's going on with you? Anything exciting?

Aaron Hoisington 0:50

You know, at the time of recording not a lot. You know we're just we're keeping on at this point, so maybe when this podcast drops, it's always funny to think about, because you know we do these and you know you think about in the future as well too.

Wire Transfers: What They Are

Aaron Hoisington 1:04

as, as far as looking back on the topics and the thing you talked about, and like maybe you're like oh man, I was an idiot when I when I did that, or so far, I was kind of looking back on them and I'm like I feel like everything that we've talked about, we're staying pretty current and relevant. So I'm pretty, pretty happy about where we're sitting at here. So, absolutely, um, so far we've uh, there's a let's the blind squirrel's gotten a few acorns, if you will here. But today, speaking of nothing to do with acorns, we're going to talk about wire transfers. So I'd love for you to demystify what a wire transfer is, ryan. I mean, the super sexy topic I would say here really grabs the attention. But one of those ones that I've mentioned it before, I'm like, oh yeah, yeah, wire transfer, totally, totally understand what that is. And then I like somebody asked me like hey, what is it?

Aaron Hoisington 1:49

and I'm like, okay, like I doesn't actually involve a wire, I don't think like but, um, anyway, I'd like to like to see what you kind of say here, ryan, and kind of kind of talk about like why it's important and what they are and everything that kind of goes into it, if you wouldn't mind yeah, absolutely, let's do it.

Ryan Nelson 2:08

Um, yeah, I wonder, at some point in time it must have um used a wire, that's. Yeah, I think these things are old. I think they started. I should look this up. I think they started like the first wire transfers used like telegraph, telegraph tele telegraph wires back in the like 18, late 1800s.

Ryan Nelson 2:30

So yeah, I mean there must have been a wire there at some point. But yeah, now I don't know if that's where the name originated from or not, but either way, what a wire transfer is is a method of electronically sending money from one bank to another. So even as we talk about this, I guess the definition has changed too, because at one point it couldn't have necessarily just been electronic, but so it is. In today's day and age it's a method of electronically sending money from one bank to another. Usually you're going to see it used for either large dollar amounts or somebody who needs to transfer money really fast. So that's kind of the shtick with wire transfers it's going to be fast, and again it can be done for large transfers, and again it's going to be sent directly from one financial institution to another.

Pros and Cons of Wire Transfers

Ryan Nelson 3:16

So where might you see these or who might use these? The most common I see is real estate transactions. So if I'm wiring funds for a client, typically they're wanting me to wire funds to an escrow account, so they need to make a down payment for a house, where wiring the down payment from their account directly into the escrow account, um, so real estate is going to have it a lot. Um, sometimes sending like funds to friends or family internationally could be a great use case for a wire or just moving large amounts of money If the other type of common transfers there's going to be wire transfers.

Ryan Nelson 3:52

The other type, a common type, is ACH, automatic clearinghouse transfers, and if you were to ACH money to you know a large sum of money to a bank, it's possible your bank you've probably seen this where they put a hold on your funds. So you ACH $100,000 and then your bank puts a hold on it and so you can't use the money for sometimes 10 days or something right which you're like man, I moved this money because I needed it right, and so typically with wires you can sort of forego that process.

Ryan Nelson 4:23

The money will be available to you immediately, which is nice. So again, timing is the big thing here with wires. So the pros of a wire transfer are going to be they're fast and they're secure. Usually domestically here in the United States it's going to be same day.

Speaker 1 4:39

So if you do it before.

Ryan Nelson 4:40

There's certain hours at which you have to do this, right, like business hours, of course, and so if you do this early enough in the day, it'll be a same-day transfer. Internationally, it could be as fast as one or two business days. And then there's no the technical term is called like there's no hold or float period. That's kind of what I was talking about before. When you deposit a check and they take a period of time to wait for the funds to settle before they let you spend them, it eliminates that hold or float period and it can be done online or in person. So they're pretty versatile there.

Ryan Nelson 5:15

Yeah, so the cons of wire transfers Always got to have some cons. Absolutely Typically, there's a fee, so usually you can do an ACH transfer for free. So if you're like, hey, you know I need 20 grand, but I don't need it for like three or four more weeks, oh yeah, just do an ACH transfer, it's going to come over free. It might take a few days for it to get there and a few more days for it to settle, and your and your bank might hold it for a few days. But you're like, yeah, I got plenty of time.

Aaron Hoisington 5:39

Yeah.

Ryan Nelson 5:39

It's free but again, there's going to be a fee for these wire transfers. So most financial institutions they're going to charge you somewhere between $15 and $50. So if you're thinking, hey, I'm making $100,000 down payment to my house, you might say, oh, a $15 wire fee, I'm moving $100,000. You might say no big deal. But if you're moving $300 in to help cover your mortgage, you might say I don't want to pay $300 or a $15 fee on $300,

Aaron Hoisington 6:07

right. So I guess you're just paying for more, like the speed then at that point, right, I guess? Yeah, I don't know exactly why the fee exists.

Ryan Nelson 6:17

I mean probably partly because they can. Sure, right, yeah, they can. To be transparent, not all financial institutions charge a wire fee. I mean I'm assuming there's more processing required, so they're sort of compensating themselves for that processing. But I know some financial institutions will do this for free or if you have a certain level of relationship with them. So maybe some banks don't do it for free for everybody but we'll do it for free for some clients, depending on your relationship with that financial institution.

Aaron Hoisington 6:45

So, yeah, because I think about just something that I use quite a bit. I use Venmo quite a bit.

Aaron Hoisington 6:52

Yeah, yeah, and I know that when I'm taking money out of Venmo a lot more rare than sending stuff but if I'm taking money out of Venmo, there's like a couple of options like hey, you can get it like same day for an additional fee, or you can like get it within like two to three business days for free, and I normally I have never done the same day one because, honestly, shout out Venmo, it almost always is like next day, like they're very quick about like doing something like that. So I'm wondering like it it seems like it's almost just like hey, you're kind of paying for like the convenience of getting it right then Um, but I don't know, I don't know. I haven't done any research on it as far as like what.

Ryan Nelson 7:28

Yeah, yeah, and I don't know if it's interesting yeah. I don't know off the top of my head, but if we were to dig into Venmo that might be the ACH transfer, so kind of matched up with.

Aaron Hoisington 7:38

We're making a big assumption here, so don't, don't, don't quote this and take this as fact or anything. But I'd be, uh, I'd be curious. I'll look into that later. Yeah, yeah, maybe I don't know, Um.

Ryan Nelson 7:47

But another big con of wire transfers is they're irreversible. So you send a hundred thousand dollars off. You look at your, you know that. You look and you say, oh shoot, I did the wrong account number or I accidentally transposed these two numbers, that money's gone. So what you'll see a lot is scams often try to get you to wire some funds to them. Once that wire goes through, it's gone, it's irreversible, so that's a risk. So again, you're at much higher risk for fraud. People will try to hack emails and request wire instructions, things like that. And then I did stress that the benefit of these things is timing right. Yeah, but do realize there are cutoff times, there's bank processing windows, there's holidays where wire funds won't go through. So it's not like you can just wire funds. You can't just say, oh, at eight o'clock at night I need to wire funds to my buddy. Let me do it Like there are certain requirements. It's still going to be the fastest way to get the money there, but it might not be same day in all those instances.

Aaron Hoisington 8:52

Those are all good things to think about. As far as pros versus cons weigh, what kind of works best for you there? And yeah, that's a good breakdown for sure.

Common Mistakes and Best Practices

Ryan Nelson 9:00

Yep, so some common mistakes, I see. Oh love some common mistakes. Well, I don't know that I've actually personally, luckily, seen any of these, but you hear about it.

Ryan Nelson 9:07

It's like the rumor mill, so to speak, but sending it to the wrong account number or recipient. Again, you don't want to do that Falling for phishing emails or wire fraud scheme. I've heard, I heard somebody, um, they were buying a house so somebody had hacked this person's email. Um, the person was going through a financial uh or going through a real estate transaction, so they were buying a house, um, so, um, the person like hacking them uh, I guess could like monitor their emails basically sat patiently waiting for it to get to the point to wire transfers and then jumped in at that moment and sent different wiring instructions via email.

Ryan Nelson 9:48

So, as a financial advisor, my clients probably, maybe sometimes get frustrated, right, every time they send an email to me saying can you send this money? Here, they get a physical phone call from me confirming the instructions, right, and that's to make sure that, like email is not a secure form of communication. So we're wanting to verify that and make sure, hey, this is you, this is the account, right, um, and so it can be a little cumbersome sometimes, but it's for you get sort of your own best interest, right, um, but uh, yeah, there's some crazy stories out there. So, um, just be aware that make sure you don't fall for any of these phishing emails or frauds.

Aaron Hoisington 10:23

It, uh. It reminds me of the old Russian proverb uh, trust but verify.

Ryan Nelson 10:27

Oh, sure, yeah.

Aaron Hoisington 10:28

Glad we came full circle on that one. Yeah, Measure twice measure twice cut once Exactly.

Ryan Nelson 10:34

So not double checking wire instructions is a big issue. Um, and then another issue I when they don't need to. So somebody might ask me hey, can you wire me over this $50,000? We'll say, yeah, not a problem. When do you need the funds by? And they're like, oh, next month. It's like, oh, okay, is there a particular reason why you're doing the wire transfer and there might be more cost-effective ways that we could get you your funds right?

Aaron Hoisington 11:00

Spoken like a true fiduciary. Exactly.

Ryan Nelson 11:02

Exactly so. Some best practices always verify wire instructions by phone, right, what I mentioned before Avoid sending sensitive info over email. Again, it's not a secure form of communication. Confirm the bank's wire cutoff times. If you're needing to do it same day, figure out what that bank's wire cutoff time is. Make sure you get this processed earlier in the morning before that cutoff. From a scam standpoint, always be cautious if someone's pressuring you to wire money quickly. We talked months ago about some financial scams. Some of the key red flags to look for is this pressure, this urgency Exactly so. That's going to apply here. If somebody is pressuring you to do something quickly and it involves wiring, that's going to apply here. If somebody is pressuring you to do something quickly and it involves wiring, I'd be very cautious. Again, remember they're irreversible. And then again, I think ACH is typically going to be your go-to method and wires are just going to be used in sort of these one-off use cases if you need to transfer very large sums of money or the timing is more sensitive.

Aaron Hoisington 12:07

Sure, no, that's a great breakdown and I'm glad that we were able to cover kind of like the different options. As far as that goes to like oh cool, Like maybe it might be in your best, you know, because in my mind, yeah, I'm like, oh, yeah, let's do a wire transfer, but you know, if I could save, you know, 40, 50 bucks on something like that, like yeah, I'm cool with waiting and maybe do it for free when it comes to that. So awesome, Ryan, that's good stuff. Anything else on the old wire transfers here no, that about covers it.

Aaron Hoisington 12:38

Yeah, and I think that you really called out the scam piece of it no-transcript and an eight like the person who was there?

Aaron Hoisington 13:15

and I was like, oh and so he read it back. I was like, no, that's not right like so we and we went back and forth like three times on this and I was like, hey man, like look at like three, eight, not eight three's, like oh my gosh, I'm so sorry, but like it is a good thing to make sure you're doing it right, like at that point, because you're sending over you know 60 grand to this Absolutely. You're like I'm guessing that would probably go to a different account.

Ryan Nelson 13:40

Right.

Aaron Hoisington 13:40

And then that's poof, gone, gone and it's gone.

Ryan Nelson 13:44

Yeah, exactly.

Aaron Hoisington 13:46

Awesome, ryan. Well, I appreciate you breaking that down for me. I know I feel a bit more financially literate when it comes to wire transfers and I hope you all do out there as well, and everybody hang tight with us. We'll be right back with some personal fun stuff.

Speaker 1 14:04

And now to put the personal in personal finance.

Aaron Hoisington 14:06

Welcome back everybody to this side of the Fiscal Physical Podcast. We are at the personal side here. Ryan, we haven't done trivia in a while, we haven't. I'm excited I've got a few for you here. I think I have three questions overall, so we'll see if listeners are out there. We'll take a pause here. How many of you guys think that Ryan's going to get right here? I've kind of undersold you on these before.

Aaron Hoisington 14:30

If I remember, I was like oh, I don't think I'll get any of these. And then you're like yeah, I know that, and I was like cool. So all right, we'll start with some US state trivia. So there's two states in the United States that have more cows than human for their population. There's two states that have more cows than people is the best way to put it. Can you name? There's two of them.

Ryan Nelson 14:56

Can you name one of those states? I'm going to say Wyoming.

Aaron Hoisington 15:01

That is one of those states. Can you get the second one, montana? That is exactly right, dude.

Ryan Nelson 15:07

Excellent job, excellent job. Nice, that's funny states. Can you get the second one, montana? That is exactly right, dude. Excellent job, excellent job nice, that's.

Aaron Hoisington 15:10

That's funny. I uh, I, I would. The only reason this triggered me is I uh, I went. We went to this like meat cooler sale at this um uh place here it's called sierra meats they do a. They call it a cooler sale, but you just get discounted. They just do all these awesome prices for stuff, and one of the places is they their cows are raised in in Wyoming, and one of their big thing is they preach more cows than people, so we treat our cows better is what their slogan is for it.

Aaron Hoisington 15:36

So I saw that I was like, is that true? And I Googled it. I was like holy smokes look at that.

Ryan Nelson 15:42

Happy cows come from Wyoming. Yeah, apparently so. Or just a lot of cows, yeah, yeah yeah, so all right, one for one, all right.

Speaker 1 15:48

Hey good start, well done, yeah.

Aaron Hoisington 15:50

Okay, this one. We'll see what percentage of US money exists in cash. So what percentage of US currency or money whatever you want to say exists in cash?

Ryan Nelson 16:06

Yeah, that's really challenging, so I'll give you a.

Aaron Hoisington 16:08

It's a percentage and I'll give you a range here.

Ryan Nelson 16:11

I'll give you within 3%, or 4%.

Aaron Hoisington 16:12

Yeah, but I'm curious.

Ryan Nelson 16:14

Oh yeah, okay, yeah, god, I think it's pretty low, I think it's shockingly low. I want to say it's close to like 10-ish percent but that sounds ridiculous to um, I'll go with 12.

Aaron Hoisington 16:32

Oh, dude, you were spot on. Originally eight to ten percent. Okay, what they it's. It's hard to get an exact amount on that, but yeah, eight to ten percent, and it's it's the same for the world too. It's like right in that right, in that kind of that area. A lot of them, as they put it, are just like figures in an in a, in a in a sheet right, yeah you will, but crazy, um yeah. So that that blew my mind right? I'm like whoa.

Aaron Hoisington 16:49

Because you think about cash and then I'm like my mind, I'm like I don't really carry cash very often.

Ryan Nelson 16:55

It's pretty rare that I do. I don't hold 8% to 10% of my net worth in cash. No, I don't even know if 8% to 10% of my life.

Aaron Hoisington 17:01

I carry cash at this point too. So that was fun there, but um, all right. Next one where does the united states rank in the world in terms of population? Oh, as far as. Uh. So where does the us rank in the world in terms of population, so the number of people I would say?

Aaron Hoisington 17:21

so rank country-wise rank country-wise well, it's definitely not one or two and even if you want to, if you want to give like one or two, is it just kind of one, two, three, four, five, uh, six, seven, eight, nine, whatever you want to do as far as these go like how do you, because I'm gonna ask a follow-up question too.

Ryan Nelson 17:38

So start thinking about other countries too so well, yeah, um, it's gonna be china and india one and two, um, I think india took it over, so I'm gonna say india one and two, um, I think India took it over. So I'm going to say India one, china two. I think us is three, um, so, yeah, I would go. I would go India one, china two, us three. Dude, you nailed it, that's exactly what it is Now.

Aaron Hoisington 17:59

here's the phone. Do you know four or five on that list?

Ryan Nelson 18:04

Yeah, it's going to be hard. Could it be like? Let me think about it. Sure, brazil, it could be four Shout out.

Aaron Hoisington 18:13

Brazil.

Ryan Nelson 18:14

My wife's from.

Aaron Hoisington 18:14

Brazil, huge, I'm going to go with Brazil four. No, brazil's not on there, sadly, sadly. But one of the other ones, indonesia, is number four. Wow, wow. And then this one I would. I would probably could have given me a hundred guesses on this one. I don't think I would have gotten it. Pakistan, oh, it's number five. So, uh, but you nailed the, you nailed the podium. One, two and three I love it.

Aaron Hoisington 18:39

It's so funny because, like you said, china and india. I was like, oh sorry, dude, it's in there. Like actually, I think ind took it over. So you nailed that, without a doubt. I love it, Dude, once again. Really, maybe I just undersell your intelligence, oh thanks, yeah so. I don't know I mean I take a deep look in the mirror at myself here, but out there. Keep in mind Ryan trivia buff if you will.

Ryan Nelson 19:02

Oh, I'm terrible at trivia. I'm terrible.

Aaron Hoisington 19:04

I mean, if you just strictly listen to this podcast, I would say you're pretty good.

Ryan Nelson 19:09

I'm decent at guessing random questions.

Aaron Hoisington 19:12

It's a good way. You could puzzle things out pretty well. So awesome, man. Well, that was fun. If you guys have any trivia questions out there or want us to cover any financial topics, send us a text, email us. Podcast at alchemywealthcom. We'd love to break them down for you. Have a little fun with it. And, ryan, as we wrap up, anything to leave the listeners with.

Ryan Nelson 19:33

As always, stay the course.

Speaker 1 19:35

Thank you for joining us for the Fiscal Physical Podcast. Until next time, happy listening and, as always, stay the course. If you have a question or topic suggestions, please email us at podcast at alchemywealthcom. If you enjoyed today's discussion, subscribe to the podcast to ensure you never miss an episode and consider leaving us a rating and review on your favorite platform. This helps other listeners like you find the show. For more resources, you can visit Alchemy Wealth Management's website at wwwalchemywealthcom or find your fiscal physical the book on Amazon. We'd be remiss if we didn't mention that personal finance is just that personal. Please don't take anything we say as advice. The preceding content is for informational and entertainment purposes only. It's not an offer or a solicitation, nor should it be construed or relied upon for tax, legal or investment advice. It doesn't consider your personal financial situation or objectives and may not be suitable for you.