Archive for May, 2015

A Self-Directed IRA Loan or Private Equity Investment?

Thursday, May 28th, 2015

Private Placement or Loan


The great thing about self-directed IRAs is that they give you the ability to invest in many more options than a typical IRA. What this means is that sometimes you are going to want to do your due diligence to make sure that the investment that you choose is the best option for you.

Investing in a company is a great way to invest with your self-directed IRA. One thing to be aware of when investing in a company is that there are two ways to invest. You can either give the company a loan and make a certain interest on the loan. Or you can buy some equity in the company that will give you either stock or a percentage of ownership in the company.

These two ways to invest in your self-directed IRA have some different advantages. You will definitely want to make sure you are investing in a way that makes the most sense for you.


If you decide that you would rather go the loan route, and earn a certain amount of interets in a certain amount of time, there is one thing that you need to remember. You cannot loan the money to a company that is owned or controlled by a disqualified person.

One advantage of a loan is that you will typically not be subject to Unrelated Business Income Tax (UBIT). UBIT could be assessed on an equity share of an entity by an IRA.

Private Equity Investment/Stock

One way that companies receive investment capital is by offering stock or equity. Your IRA can invest in private companies and earn a percentage of their profits based on the equity percentage that you have. Your equity can be in the form of a percentage of ownership or through company stock.

One downside to equity ownership is that it could be subject to UBIT.

Should You Choose a Loan or Private Equity/Stock?

It really just depends. While both can potentially be risky options typically choosing private equity or stock is riskier than a loan. While a loan is a safer investment it also has a little more downside as far as potential earnings. Once you have set the term of the loan, you know that as long as the loan is completely paid you will earn a certain percent. With a private equity investment or stock investment, the upside is much more unknown. You could potentially get way more return than what a loan could give you. If the company never has any profits though, a loan could be a much more attractive option because they still need to pay back that loan.

The great thing about self-directed IRAs is that all of these options are open to you. Which is a better option for you depends on what your situation. Now you know the upside and downside of a loan or private equity investment/stock. Let us help you set up your self-directed IRA so that you can invest in that company.


Are You Making These Retirement Mistakes?

Wednesday, May 27th, 2015

While there are plenty of mistakes that can be made when dealing with your retirement I found a great video done by CNBC that lists some of the biggest retirement mistakes that I see. Watch the following video and let me know if you agree or disagree with the mistakes. Then continue reading to find out what I think about these 3 issues and what we can do to fix them.

Retirement Issue #1 Not Planning Ahead

This is the biggest issue I see with retirement planning. There are so many benefits to saving for retirement as early as possible. In theory, if you start saving when you are in your early 20’s it can mean saving only a hundred dollars a month. If you wait until you are in your 30’s it could require you to save hundreds of dollars. If you wait until you’re in your 40’s and 50s you may have to save thousand’s a month just to save as much as hundred dollars a month in your 20’s until you retire.

What this means is START TODAY no matter what your age and save for retirement. For help figuring out how to actually start saving for retirement check out our retirement guide.

Retirement Issue #2 Retiring Too Early

Retirement is something to enjoy and to be excited about. Many times those entering their retirement age decide to retire simply because they are in their mid 60’s and not because they are actually able and ready to retire. This issue really just stems back to issue number 1, not planning ahead for your retirement.

Once you actually have a retirement plan and are implementing that plan it is very wise to check that plan on a yearly basis. Are you still able to hit the retirement numbers you need in order to retire when you want. Sometimes when checking your numbers you may see that you need to delay your retirement a few years because market changes have affected your retirement nest egg. Whatever issue may come up, if you are checking your retirement plan yearly you will be ready for anything that comes your way. Sadly, sometimes this may mean retiring a little later than you originally planned.

Retirement Issue #3 Helping Out Children Too Much

This is a slippery slope to be on. It can be very easy to forget about yourself and especially your retirement when you have children that are having financial troubles. You must remember though that at times it is not wise to help your children out. In fact, it could make it worse. What happens if a major medical issue comes up with you or your spouse while you are in retirement and you know that this issue will put a huge strain on your retirement nest egg? In turn you could make your children more responsible for your retirement and if your children are already strapped for cash themselves what will happen?

Focus on your retirement and try your best to make sure you keep your retirement nest egg safe from helping out your children. In the long run if you do end up helping children from your retirement nest egg it could hurt them more than if you didn’t help them.

These are just a few of the issues that arise with retirement and retirement planning. The best thing to do right now is to start planning and if needed talk to a retirement specialist that can help you out.


Real Estate Outlook for Self-Directed IRA Real Estate Accounts

Thursday, May 21st, 2015

Real Estate Investments

A self-directed IRA real estate gives you all of the benefits of a regular IRA but it focuses on investing in real estate with your IRA. The great thing about this is that you are investing into something that is outside of the stock market. This gives you less dependence on the stock markets all while diversifying your retirement nest egg more effectively. 
So how is the the housing market for self-directed IRA real estate accounts? Existing home sale slowed in April vs March but we are still on the upward trend vs year over year. One thing to note is that all major regions except for the Midwest experienced these sales declines. That may be an interesting market to be aware of when looking for an investment inside your self directed IRA real estate account.
While exsisting home sales were down in April vs March existing home sales in April 2015 vs April 2014 are still up 6.1 percent. That is good news because it shows that we are still on the upward trend.
The median existing home price for all housing types in April was $219,400 which is 8.9% above April 2014. Another sign that the housing market is improving but the thing to be aware of is that you may want to look at buying sooner than later because if the trend continues it will be less of a buyers market. 
The market saw a lowering of inventory compared to a year ago. Because of the there are faster price growth and properties selling at a faster pace. It is definitely turning to a sellers market because roughly 40 percent of properties sold at or above asking price. That is the highest percent since December 2012. 
The market in April saw 24 percent of sales as cash sales which is down compared to a year ago that had 32 percent of sales as cash sales. Again, it is becoming more of a sellers market and that is more than likely why we are seeing less cash sales. Which means less investors are purchasing properties compared to a year ago.
Of homes sold in April 10 percent were foreclosures or short sales which is down from 2014 which was at 15 percent.
What does all of this mean for a self-directed IRA real estate investment? It means that the current market is improving. Typically, improving markets aren’t a buyers market. But will this year be more of a buyers market than next year? It could very well be. Does that mean that you may want to try buying sooner than later? Nobody knows that answer but my guess would be that signs point to a better market in the near future. There are many things that can affect that though. 
All things considered, if you have found a great property and want to invest for the future a great option is with a self-directed IRA real estate account. It gives you all the same tax benefits of a regular IRA but the ability to invest in the real estate properties of your choice. 
There are some rules that you need to be aware but that is where we come in. Let us help you invest in real estate with your IRA all while helping you abide by the rules that the IRS has put in place for IRA investing. 


The Supreme Court Sides With Employees but Why Worry When You Have Other Options?

Monday, May 18th, 2015

Reserve to change 401k issues

There is change coming to 401ks that can make a huge impact on your retirement nest egg thanks to a ruling from the supreme court.

Currently, many company 401k plans and their investments are quite expensive compared to many new mutual fund and ETF options. While this has been going on for years the tide is finally turning to favor the employee.

There have been several lawsuits that have shown that employees will push back against companies to offer better investment options than previous alternatives with only a few limited mutual funds with high fees.

These lawsuits generally are about high 401k fees and conflicts of interest. The employees are pushing plan sponsors to do what is in the best interest of the employee.

Monday the supreme court ruled unanimously in favor of participants in employee retirement plans who object to companies’ investment decisions that eat into retirement savings.

What does this mean for employees? It means that those who oversee 401k retirement plans have an ongoing duty to ensure investments are prudent. What this hopefully means is that all things considered going forward you should have a little more faith in your 401k plans and their associated costs. It still doesn’t mean that costs are going to be way lower but that you should have more decent options and more plan sponsors should be focusing on the best interest of the employee.

One thing to note for those who are self-employed is that you don’t have to worry about many of the fees and issues associated with investing in the stock market through your 401k. You can invest with a self-directed 401k account. A self-directed 401k gives you all the same benefits as a regular 401k except that it gives you the ability to invest in non traditional investments like real estate, gold and private placements.

While you may like the idea of having your whole nest egg reliant on the stock market it may not be your best options. One smart way to invest your retirement savings is with diversification. One way to do that is to diversify outside of the stock markets into alternative investments.

We are glad to hear that the supreme court is siding with employees about high costs/fees. 401k plans and options will be getting better for employees but while the change is needed it won’t be changing things drasticaly anytime soon. Remember you have other options when investing with a 401k. Check out a self-directed 401k for more information on how you can invest more diversely.


Baby Boomers are Starting to Retire but are They Ready?

Thursday, May 14th, 2015

The Baby boomer generation isn’t getting any younger. In fact, there are just over 40 million Americans age 65 and older, and they make up 13 percent of the population. By 2030 all baby boomers will have passed age 65 and will make up over 20 percent of the population.

Currently, the average life expectancy for a 65 year old American is 17.7 years for a male and 20.3 years for a female. That is roughly three to four more years of life expectancy compared to what the prior generation had. The average income for those between 65 and 69 is $37,200. For those over age 80 that number drops significantly to just below $20,000. There is no doubt that we are living longer than prior generations and because of the Baby Boomer generation we are seeing a lot of people entering retirement. What really intrigues me is how retirement ready we are, especially the Baby boomer generation. I know one thing from the following statistics, we could all probably use a retirement guide to help figure this all out.

The following infographic shows some of the issues that retirees are currently facing. It also shows some of what the expectations are for retirement for middle class Americans.

One of the biggest shocks is roughly one out of four middle class Americans say that they will need to work until at least 80 to live comfortably. That is crazy!!! I know for myself I do not want to be working until I am 80 to live comfortably while in retirement.

What does this mean for most of us? It means that we need to start saving and investing for our retirement. No matter how young or old. The more we do now the better our retirement can be.

So where do you start? You can start preparing for your retirement by checking out our retirement guide. That will give you more direction as to where to start.

We specialize in non-traditional retirement investments. Some of these investments include real estate, gold and private placements. There are so many options available to you but you need to start today so that you can secure a comfortable retirement.