From: Rich Carreiro 
Newsgroups: misc.invest.financial-plan
Subject: Re: Model ETF/Mutual fund portfolio for wealth preservation?
Date: Mon, 10 Apr 2006 15:41:23 -0500
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"raylopez99"  writes:

> I would add to ignoramus20015 (DC!, makes sense) the legal reasons that
> the person is a privacy freak.  He fears the DC gov't (Fed) will close
> borders to those with money (though nowadays $1mil is not that much
> money; from the net: 'In the year 2002, there were 17.1 million
> Millionaires in the US By 2013, the number of millionaires will triple
> due to inheritance.')

If things get to the point that the govt actually does that, what
makes him think the govt won't also require financial institutions
to report account balances to the govt?  So unless this person
is going to stick his $1mil in his mattress (in which case why
ask about investments at all), he's not going to be able to hide
it from some hypothetical future don't-let-the-millionaires-escape
government.  And like I and others have already said:
(1) Non-muni bond funds will report to the IRS every year.
(2) Muni bond funds won't (aside from reporting realized 
  capital gains from fund turnover), but if your friend
  isn't cheating he'll have to report the exempt income
  on line 8b of his 1040.
(3) Non-muni zeros report OID to the IRS every year.
(4) Muni zeros don't, but the taypayer must report the
    muni OID in 1040 line 8b.
(5) Most equity mutual funds have at least the occasional
    distribution, and on top of that, your friend doesn't
    want much in equities in the first place.

So, absent the mattress approach, he's not going to be able
to hide much of anything from the IRS year-to-year (unless
he cheats, of course).  And if the "don't let the millionaires
out of the country" outcome he worries about happens, you can
be sure any such law will require financial institutions to
report account balances to the govt, since such a law would
be unenforceable without such a provision.  So given that his
"not have a paper trail" asperations are hopeless if he wants
to (a) invest the money but (b) not put it all into non-dividend
paying equities, he'd probably be best served, even in the
context of his privacy paranoia, of investing it wisely without
regard to "paper trail" considerations.  And if the "paper
trail" stuff is really that important to him, perhaps he shouldn't
investing the money in financial instruments in the first place.

-- 
Rich Carreiro                            rlcarr@animato.arlington.ma.us