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Self-Directed IRA – Learn How It Can Help You Secure a Happy Retirement

Self-Directed IRA - Happy RetirementIf you want to retire happy, what’s your number one financial goal? Stability, of course. You want to know that your wealth isn’t only well taken care of, but that it’s steadily growing so that you can have it to count on in the future as well. The problem? Not everyone knows how to achieve this kind of stable wealth. They want to diversify their portfolio, but they don’t know the best strategies for doing that. Well, we have a suggestion for you: a Self-Directed IRA.

A Self-Directed IRA is simple: it’s a retirement account that you guide yourself. And because you guide it yourself, you’re free to choose from a whole range of retirement options, from gold and silver to real estate to tax liens.

But if you’re still unsure about how these types of investments—and indeed, this type of retirement account—can help you secure a happy retirement, keep reading.

Building a Portfolio You Can Believe in With Self-Directed IRA

We’re not against the stock market. We think you’ll find few investors who really are, at the heart of it. The stock market is full of fantastic companies working hard to increase their value. And they do, over time. In fact, on the long term scale, the stock market is one of the most stable investments you can make. And it’s possible to diversify your investments within the stock market, too, which means buying different types of stocks, different sizes of companies, and different industries.

But that’s not all there is to investing.

Investing is also about leveraging your own skills and experience to identify value when you see it and get in early. Investing also includes private companies, precious metals, real estate, tax liens, private loans, and more. And if you want your retirement portfolio to look a little more diversified than the traditional retirement portfolio, you’re going to have to use a retirement account that you can guide yourself so you can make these investments.

That’s where the Self-Directed IRA comes in. Guiding your own destiny within an IRA (which includes everything from a Solo 401(k) to a Roth IRA) means being able to pick your winners based on your experience and your skills. It helps you better get a hold of where your money is and where it will be come retirement time.

Defining Your Goals for a “Happy Retirement”

If you want to define happiness, you’ll have to go elsewhere. But if you want to define a happy retirement, you have to know what your financial goals are. What’s most important to you? Then you’ll have to take a look at some of the strategies you can use to achieve these important milestones.

Your priorities are what’s important here. So ask yourself the following questions:

  • What is more important to you: rapid growth or the confidence that your money will be there when you reach retirement?
  • Do you want more options or are you happy with sticking to the stock market, bonds, and funds?
  • Do you believe that diversification lends itself to other investment vehicles, not simply diversifying within one investment vehicle (the stock market)?

Understanding what you want is important, as it will help you define the strategies you need to get there. If you want to cut through the clutter of noise about retirement, continue reading our posts here at AmericanIRA.com or simply give us a call at 1-866-7500-IRA(472) to learn more about how to utilize a Self-Directed IRA. We can help you with learning how to fund these investment accounts to get started on the next step of your retirement journey.

 

 

 

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Self Directed IRA – KKR Report – Now’s The Time to Diversify

Kohlberg, Kravis & Roberts, is venerable global investment firm that focuses on assets popular among Self Directed IRA investors: Real estate, infrastructure, private equity, energy, credit strategies and hedge funds.

Recently, KKR’s head of their global Macro and Asset Allocation Team, Henry H. McVey, penned the firm’s 2016 outlook, in which he characterized the markets for 2016 as “Adult Swim Only.” That’s not exactly great news for most folks. But our clients and those who use Self Directed IRA strategies in general to diversify their personal investment portfolios should feel very gratified. As we saw over the last few weeks, large cap U.S. stocks can be very unforgiving to investors at times. We always recommend investors diversify into many different asset classes.

The short version: The current economic expansion is getting pretty old. 79 months and counting, by KKR’s analysts’ count.

Some highlights from the KKR study follow:

The edge in credit markets will go to non-traditional, non-bank lenders to “leverage the market’s illiquidity premium to earn compelling risk-adjusted returns. “ That bodes well to our clients who use their IRAs to do private lending. As banks pull in their horns, investors will pay that much more to nontraditional lenders in order to borrow money.

KKR sees opportunities for private lending/financing in real estate, infrastructure, corporate takeovers and equipment leasing as particularly attractive, relative to risks.

The company’s analysts believe that global GDP will actually be much lower than the consensus estimate. That’s trouble for people in traditional stock market funds, which many see as close to fully valued. Or at least they were until last week’s bear attack! Fully-valued markets do not handle disappointing news well. KKR has been reducing its risk budget accordingly, and raising cash.

The U.S. Fed is tightening as other countries are loosening their monetary policies, which is a bullish sign for the dollar vs. other currencies, though it’s tough on U.S. exporters.

Volatility is increasing, while returns are falling. “The efficient frontier has flattened out; there is now less return per incremental unit of risk taken,” asserts McVey. He projects volatility to increase, while absolute returns in many asset classes will fall.

“After the sell-off, credit looks more attractive than equities.” Meanwhile, traditional conservative debt options like government bonds are likely to lose money in 2016, says McVey. That favors Self Directed IRA owners who engage in hard money lending, micro-lending, private placement debt and debentures, mortgage lending, tax liens and certificates and the like. KKR is increasing their exposure to asset-based lending. That is, their portfolio will become better collateralized as we head into 2016.

Equities are expensive relative to the risk. Again, that’s a prompt to our Self Directed IRA clients and anyone sitting on the fence: If you’re sitting on a conventional Wall Street IRA portfolio, chock full of the usual 60/40 mix of large cap stocks and conservative bonds, like risk-adverse financial advisors have been pushing for years, now’s a great time to give us a call and begin the process of diversifying your portfolio.

Serious investors looking for some insights on how to diversify their Self Directed IRAs would be well advised to read the whole thing, here. It’s long, but don’t worry. There are lots of charts!

Then give us a call. We work with investors all over the country who have successfully diversified their retirement accounts into non-traditional assets of all types. Now’s the time to take steps to trim sails and weather the rougher seas ahead. Visit or website at www.americanira.com, or call us at 866-7500-IRA(472).

We look forward to working with you.

 

Self Directed IRA – Five Popular Questions About Opening One

If you’re here because it’s the first time you’ve thought about opening a Self Directed IRA, it’s important to realize that you’re not alone.

There are a lot of people out there who’ve never even heard of a Self Directed IRA, let alone are aware of the fact that they have lots of different retirement investment options available to them like private companies, real estate, and even precious metals. Too often, people are sold the traditional method of retirement—which works well for some people, but isn’t always the most prudent option for others.

So it makes sense that you might have a few questions about Self Directed IRAs and what they can do for you. Let’s answer some of the basic ones so you can get a more solid grasp on what these accounts are and how they can help you build a stable retirement portfolio.

Question #1: What can I invest in with a Self Directed IRA?

It’s probably more interesting to ask what you can’t invest in, which includes items like art and wine. There are so many options with investing in a Self Directed IRA that you really won’t feel very constricted. You can invest in real estate, in private companies, in precious metals, private IRA lending, tax liens, and more. As long as you know the rules for these investments—for example, you can’t live in the real estate you invest in through a Self Directed IRA—you are afforded a lot of freedoms.

Question #2: What can’t I invest in with a Self Directed IRA?

We touched on this in the last question, so it only makes sense if you’re curious. You can’t invest in life insurance, collectibles like works of art, gems/jewelry, coins (except for U.S.-minted coins), alcoholic beverages like wine, and tangible personal property. You’re free to invest in these on your own, outside of the purview of a Self Directed IRA, but they can’t be held as part of your retirement account. This isn’t to say that they’re bad investments; they’re simply prohibited.

Question #3: What kinds of accounts are available for Self Directed IRAs?

The same as all IRAs. Roth IRAs, traditional IRAs, 401(k)s, Solo 401(k)s, SEP-IRAs, and the like. The same rules apply here: the difference is that you’re taking charge of your financial destiny. It’s important that you do know your limits, as explained in the question above, and that you understand how these accounts work. But a “Self Directed IRA” is not its own category of different, separate kinds of retirement accounts, and that’s the important distinction to make. The IRA accounts available to you are the same types of accounts that have always been available to you.

Question #4: How do I fund this kind of retirement account?

Contributions, conversions, rollovers, and transfers. Each comes with its own definition and set of rules—we’ll refer you to our How it Works section so you can better understand the nitty-gritty of opening a Self Directed IRA.

Question #5: How do I get started with a Self Directed IRA?

You’ve already started! Now that you’re reading about these, you’re free to continue browsing our site, call us at 1-866-7500-IRA(472) to get more information, or download one of our free Self Directed IRA guides to learn more. After all, there are few things more important in life than establishing a foundation upon which you can raise a family and expect to enjoy your retirement with financial security. Taking hold of the reins might seem scary at first, but you can be sure that there are many investments out there that can suit your individual style.

Self Directed IRA – Invest in Commercial Real Estate

It’s no secret by now: Real estate – an asset class near and dear to the hearts of thousands of Self Directed IRA owners – has substantially outperformed the S&P 500 index of large-cap U.S. stocks over the past 15 years.

Yes, real estate took a hit in 2007-2009 but not enough to knock below the return on U.S. stocks. Indeed, between 2000 and 2013, the FTSE NAREIT All REITS Index, with dividends reinvested, outperformed the S&P 500, 334 percent to 32 percent. Many Self Directed IRA investors not only held tight to their real estate holdings but also bought more at steep discounts during the 2007-2009 period.

Stocks have rebounded some over the past couple of years, but the track record at this point is clear: If you are looking for reliable and substantial income with potential for capital appreciation, you should consider at least some exposure to real estate. And commercial real estate is offering some terrific opportunities in select markets – especially in the rapidly expanding Southeast, from Texas to North and South Carolina and Georgia.

Owning Commercial Property in a Self Directed IRA

And you can own a direct interest in commercial real estate: Office buildings, strip malls, retail developments, and individual commercial buildings like restaurants, mechanic/auto shops, and anything else you can imagine, within your retirement account.

Because the overall return on investment in commercial real estate relies so heavily on rental income, which is normally taxed at ordinary income rates, direct ownership commercial real estate is particularly well suited to IRAs, Roth IRAs and other tax-advantaged investment vehicles.

Taxation of Commercial Self Directed IRAs

In an IRA, you don’t pay the tax on rental income each year. Instead, all gains not attributable to leverage grow and compound tax deferred until such time as you actually take the money out. This is a small advantage in stocks and most investment grade bonds, with dividend yields in the low single digits. It’s an enormous advantage in commercial real estate, where rental income as a percentage of the amount invested is frequently between 10 and 14 percent, depending on your market and the individual property.

Furthermore, commercial properties offer some advantages over other forms of real estate exposure:

Leases tend to be much longer in commercial rather than residential properties. Where residential properties usually command 1 year leases, a commercial lease can run five to ten years and even longer, when it comes to things like prominent anchor stores in shopping malls.

You also normally don’t have the same obligations to commercial tenants to upkeep the property, or worry about criminal elements like you do with ownership of apartment/multi-family residential properties.

Some tips for investing success:

  • Stay diversified. If you already own a home and other assets in your home town, consider buying an interest in a property in another part of the state or the country. That way you get some geographic diversification at little or no cost.
  • Do your due diligence.
  • Ensure you keep substantial landlord liability and umbrella liability insurance coverage in place at all times.
  • Use entities to insulate your commercial property from other assets within your IRA. Otherwise, if someone sues your IRA as the owner of a property, they could claim all the assets in your IRA. By using a separate corporation or LLC for each property, even within the IRA. Otherwise the courts may consider your entire IRA as one entity for the purpose of satisfying the claims of creditors of your IRA.

Are you interested in increasing your possible returns while maximizing diversification and boosting recurring income? American IRA is among the country’s leading experts in helping successful investors across the country do just that, via a Self Directed IRA.

For more information, call us at 828-257-4949, or visit us online at www.americanira.com.

 

 

Self Directed IRA -How to Learn True Diversification

Ask any old investor what diversification is and you’ll probably get some sort of variation of a single answer: “It’s about the different types of stocks you have.” After all, picking stocks is hard, so if you want a portfolio that reflects the value of the stock market over time, you’ll buy lots of different stocks and funds. But what if you didn’t just mean diversification within the stock market, but diversification as an investor as a whole? What if you wanted to achieve true diversification with a Self Directed IRA?

“You don’t need a Self Directed IRA,” many people will likely tell you. “Putting your money in stocks is safe so long as you’re diversified.”

Tell that to all of the soon-to-be-retirees who were so worried about their stocks back in ’08 that they pulled lots of their money out of the market.

If you want real financial security—not just fake financial security that relies on the stock market system already in place—then it’s time to think about using a Self Directed IRA. Here’s what a Self Directed IRA can teach you about what real diversification means:

A Self Directed IRA Helps You Diversify Asset Classes

It’s not enough to buy small-cap and mid-cap version so the same exact type of investment (stocks, I this case). If you really want true portfolio diversification, that means buying different types of investments. A truly diversified portfolio will include stocks, funds, precious metals, stakes in private companies, real estate, and maybe even more. That’s what helps you achieve real peace of mind: knowing that your investments aren’t tied to the performance of one particular market.

If you want to do that with the protection of a retirement account, then you’re going to have to learn what the Self Directed IRA is all about. As it turns out, the IRS actually gives you a tremendous amount of leeway when it comes to investing in assets via retirement accounts: you can use a retirement account to invest in the aforementioned assets, including precious metals and real estate.

A Self Directed IRA Encourages Self-Reliance and Portfolio Participation

What is portfolio participation? It’s the idea that you’re not only going to rely on some “expert” to do the picking for all of your investments, but that you’re going to actually take a direct role in selecting the makeup of your retirement portfolio.

It doesn’t mean that you have to constantly check up on your portfolio, or even work that hard at it; it just means that you’re going to take a more ambitious role in your financial destiny than merely hoping for the best.

By investing in assets like real estate, you can then use your own investing skills to identify the best investments; if you don’t believe you have those skills, you can focus on a different area of assets with which you’re more comfortable, such as precious metals or private company holdings. The truth is, there’s enough freedom out there that you can use retirement account protections on a number of different investments.

Along the way, you’ll learn that it’s not just the stock market that determines your financial success; it’s the quality and strength of a whole range of investments. You can even keep a large chunk or a majority of your investment portfolio in stocks and bonds! Diversification is all about spreading it around and not picking one market as a winner over another.

If you want to learn more about what the Self Directed IRA is and what it can do for you, keep reading our articles here at AmericanIRA.com or call us at 1-866-7500-IRA(472).

Self Directed IRA – Five Mistakes that Lead People to Avoiding Them

If you’re interested in a Self Directed IRA, you’re not alone. A lot of people out there are turning to this kind of retirement account in order to secure a solid financial future for themselves.

But an even greater majority are avoiding a Self Directed IRA entirely, instead relying on the same old tired advice on how to grow an adequate retirement account for the future.

And while there’s no problem with having a traditional IRA, there are plenty of mistakes people make that don’t help them make the right decisions. You’d be surprised just how little attention and scrutiny on one’s own portfolio is paid by the average investor. Luckily, you’re here: and that means that you’re not going to make those same mistakes. In fact, if you’ll keep reading, you can learn how to avoid them altogether:

Mistake #1: Never hearing of a Self Directed IRA. Okay, we’ll grant you that this one isn’t really your fault. After all, you can’t really control of what you hear of—or can you? It depends. If you’re doing your own research and thoroughly investigating the retirement options you have available to you, then you probably will hear of a Self Directed IRA. It’s your job as an investor to make sure no stone is unturned in investigating the options you have available to you. Don’t leave this stone unturned, either.

Mistake #2: Assuming the beaten path is always the right one. Now, we aren’t here to contest the idea that having a traditional IRA with a traditional company with a traditional strategy is going to result in your financial ruin. As with many things, if you take decisive action and have a plan, you’re probably already outpacing the rest of the pack. But that doesn’t mean the beaten path is the optimal strategy for your individual retirement needs, either.

Mistake #3: Not trusting yourself. If you’re investing your money, you want to make sure that it’s in the right hands—that’s something that any investor would tell you. But why aren’t your hands the right hands? If you don’t trust yourself with your money, then why do you trust yourself to make the right decision as to who to trust with your investments? Maybe it’s time for you to take a more proactive role in your financial obligations.

Mistake #4: Trusting only in the stock market. The stock market is a great investment—or, more accurately, it can be. But that doesn’t mean it will work 100% of the time for 100% of the people. Individual stocks are hard to pick. The market overall has its ups and downs. If you really want to feel secure about your financial future, you should think about options outside the stock market, including real estate and precious metals. Trust only in the stock market means isolating your investments to one single source.

Mistake #5: Making decisions before you have all the facts. If you don’t like the idea of a Self Directed IRA at the outset, then don’t let that rash judgment decide your financial fate. Give your decision some time to breathe. After all, you can always change where your money is if you don’t like your current decisions. So don’t make a decision, ignore all the facts, and trust only in your gut. Your gut can’t make great decisions if you aren’t filling your head with the right information.

And when it comes to that right information, we’re here to help. Call us at 1-866-7500-IRA(472) to learn more about the Self Directed IRA or continue reading the valuable information you’ll find right here at AmericanIRA.com.

Self-Directed IRA Owners, Don’t Make This One Retirement Mistake!

It doesn’t much matter whether you’re a hard-core Self Directed IRA aficionado, or you’re just doing your best with your Fidelity, Vanguard or Schwab account in a conventional IRA or other retirement plan, the temptation to pull money out early is powerful.

But for the vast majority of Self Directed IRA investors, it’s a bad move. The tax penalties and opportunity costs arising from foregone preferential tax treatment in future years is severe. According to a recent survey of experienced investors from E-Trade, prematurely pulling money out of retirement accounts prior to retirement age is among the biggest mistakes people make in their retirement planning.

According to the E-Trade survey, younger investors were particularly prone to this mistake: 34 percent of millennials responding reported that they had made retirement withdrawals. Women were somewhat more likely to make early withdrawals than men – 27 percent to 22 percent.

Women are also leading the league in regret: 59 percent of the women who reported taking an early withdrawal report that they regretted it, compared to 53 percent of the men.

This indicates that whatever these people are doing with the money they are taking out of their retirement accounts, it’s not working out too well for them.

Tax Penalties for Early Withdrawals From Self Directed IRAs and Other Retirement Accounts

Withdrawals from retirement accounts can cost you big time: Except for specific hardship provisions defined by law, any withdrawals from a traditional IRA, SEP IRA, SIMPLE IRA or 401(k) plan prior to age 59½ will generate a 10 percent excise tax penalty right off the top. With SIMPLE IRAs, that penalty could amount to as much as 25 percent if you make the withdrawal within the first three years. However, if you’ve separated from service from your employer, and you’re over age 55 that penalty will not apply.

The penalty, of course, will be stacked on top of income tax at your highest marginal rate. Assets you pull out of IRAs and other retirement accounts don’t qualify for lower long-term capital gains rates. You will have to pay full-boat ordinary income tax on those amounts. You’ll also be responsible for state income taxes as well, if your state taxes retirement account income. Here in North Carolina, that could mean an additional 5.8 percent, on top of every thing else.

The Hidden Cost of Tapping Your Self Directed IRA Too Soon

But the real damage comes with opportunity cost. Here’s why:

Let’s say you are 40 years old and you decide you want to pull $10,000 out of your retirement account to spend on some priority or other. Even if you qualify for a hardship withdrawal, you give up whatever that $10,000 would have generated if left to compound until retirement age.

If you assume an average annual return of 7 percent – fairly conservative by most standards today, and many of our clients are generating much more than that each year – that amount would grow to some $76,000 by the time you reach age 70.

Furthermore, when it comes to IRAs, it’s very difficult to undo the damage you do to your retirement savings potential when you make a withdrawal. Even if you have a great year next year and you want to invest quite a bit, your contributions are limited. For IRAs, including Roth IRAs (which compound tax free), you are limited to an annual contribution of $5,500 for any given calendar year. Once you turn age 50 you can contribute an additional $1,000. Your ability to deduct your contribution to traditional IRAs is limited by your income, as is your ability to contribute to a Roth IRA.

So even if you have lots of money in the following year, you can never get that year back – and you cannot make up the compounding you lost in the meantime, except in the most theoretical sense by taking on much more risk.

Self Directed IRA Investors Should Take the Long View

Long term, the best approach is almost always to refrain from tapping retirement accounts until the 10 percent penalty provision no longer applies. If you need to retire early, try to take advantage of the IRS’s early retirement exemption to the penalty under Section 72(t) of the Internal Revenue Code, which allows for the annuitization of your IRA penalty free provided you do so using a series of substantially equal periodic payments over your life expectancy or the joint life expectancy of you and your spouse.

American IRA, LLC is among the country’s leading providers of third party administration services to owners of self-directed retirement accounts. Join us online at www.americanira.com, or call us for a free consultation at 828-257-4949.

We look forward to hearing from you.

 

 

 

 

Jim Hitt, CEO of American IRA-A National Self-Directed IRA Provider, Answers A Frequently Asked Question…Is Retiring Through Rental Real Estate Wise?

Jim Hitt, CEO of American IRA-A National Self-Directed IRA Provider, Answers A Frequently Asked Question…Is Retiring Through Rental Real Estate Wise? Jim Hitt has over 29 years experience investing in real estate and is expertly qualified to field this important question.

Jim Hitt says “Retiring Through Rental Real Estate can be a wise decision if you are careful about your investments. There are some very important things you must do to ensure your success:

  • Do your ‘due diligence’ before you make your purchase
  • Always consult with professionals when putting together a deal
  • Use the real numbers (sometimes people are tempted to use numbers based on the profit they ‘think’ they can make instead of looking at the actual profit the investment is already making)
  • Know your market (many investors make the mistake of buying a property that is listed at a great price only to find out the price they paid is much more than the property is worth in that location).
  • Remember not to cut it too close (A common mistake investors often make is not keeping enough cash in reserve. You have got to keep cash on hand for repairs, months where you have a vacancy, taxes, insurance, and other expenses that may arise.)”

One thing people should keep in mind is that ‘retiring’ through rental real estate may or may not be fully retiring. People need to decide the level of involvement they would like to have in their retirement years with these rental properties. In this light, they can decide to be hands on landlords during their retirement years or they can decide to employ a property manager if they prefer to have a more passive role.

The other thing that people should keep in mind is that there are tremendous benefits to using a self-directed IRA or self-directed 401(k) as the funding source for rental real estate properties. The most significant benefit is tax-free or tax-deferred income streaming into their retirement account.

Jim Hitt concludes “There are far too many benefits and scenarios to include in this press release. Having said that, we are currently offering free 1-on-1 consultations and free educational videos to anyone who would like to learn more about the benefits of investing in rental real estate with self-directed IRAs and self-directed 401(k)s.”

Real Estate IRA Investing Series: Real Estate Investing Using IRAs and Other Techniques

Location:

American IRA Training Center
100 Glendalough Ct.
Suite D-2
Tyrone, GA 30290

Click here to register today!

This series will be offered on the second Tuesday of each month. You can attend one, a few, or all of these meetings and walk away with valuable investment knowledge.

November 13, 2012December 11, 2012January 8, 2013
February 12, 2013March 12, 2013April 9, 2013
May 14, 2013June 11, 2013July 9, 2013
August 13, 2013September 10, 2013October 8, 2013

Time: 6:30PM to 8:00PM

Details:

Do you know you can use your self-directed IRA as a source of funds for investing?
Are you tired of the ever tightening regulations when trying to obtain a bank loan?
Right at this moment successful investors are making profits with their self-directed IRA investments-want to join them?
Each investor has their own area of expertise in which they do best-is your IRA a potential source of funds for you?

‘DARE’ to succeed by maximizing your real estate investment funds through utilization of self-directed IRAs. Join us for this information-packed series in which we discuss:

  1. Promissory Notes, Trust Deeds, and Mortgages
  2. Marketing
  3. Getting started: How to Find Investors
  4. Hard Money Lending
  5. Beginner, Intermediate, Advanced, and Creative Transactions
  6. And much more…

You will hear actual case studies of how to invest in real estate. The instructor is Jim Hitt, CEO of America IRA, LLC and Past President of CREIA. Jim has been investing in real estate for over 40 years. Join us as Jim shares his valuable knowledge and experience in this highly information packed investment series.

Cost: $20 per person at the door, FREE if registered in advance!

Click here to register today!

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