Archive for September, 2016

Funding an IRA Account with Alternative Investments

Monday, September 26th, 2016

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Whether you’ve been diligent about funding your retirement account for years, putting away the recommended 10% of your paychecks into an IRA or 401K, or if you’re just starting to save at 25 or 26, the last thing that you want is to watch your hard-earned funds dissipate into fees, or completely tank into nothing during a stock market crash. So what do you do to protect yourself? Diversify, and invest in alternative investments that are outside of the stock market. You have options when it comes to investing, but as with any investing, there are pros and cons when it comes to risk and reward.

The IRA Investments

For decades, IRAs and other tax-deferred retirement plans, like a 401K, have been used to fund retirement accounts for millions of Americans. In most cases, these accounts are funded with investments like stocks, bonds, mutual funds, unit investment trusts, CDs, treasury securities, and fixed, indexed, and variable annuity contracts. Other less common investments such as mortgage-backed securities, precious metals IRAs, and real estate investment trusts (REITs) have at times been used by the more savvy investor.

There are certain types of investments have always been prohibited inside IRAs and qualified plans, such as life insurance, collectibles and antiques, and real estate that is being used by the IRA owner. These restrictions are found inside the IRS Code and cannot be breached under any circumstances.

New Trends in Your IRA

Although this category of investments is hardly appropriate for everyone, it has become appealing for more and more investors in the wake of the market meltdowns over the past few years. Those who have seen their retirement account balances shrink to a fraction of what they were in the ’90s have become more inclined to seek alternative avenues that have little or no real correlation to the stock and bond markets. These investments offer the potential of substantial gains for those who are able to absorb their risks.

Five Questions Most Americans May Have About Retirement

Monday, September 19th, 2016

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With so many different retirement accounts and so much advice given out online and on TV, saving for your future can be confusing. However, this shouldn’t deter you from saving no matter how old you are or how much money you have. Let’s answer some common questions that you and millions of other Americans may have when it comes to securing their financial future after they are done working.

What Type of Account Should I Open?

Most Americans have either a 401k or an IRA to help them save for retirement. A 401k is an employer-sponsored plan that is available to anyone who is over the age of 21 and meets other minimum employment requirements. Teachers and government employees may have a 403b, which is similar to the 401k. Those who are self-employed may also get a 401k, and they are also entitled to make contributions both as an employer and employee.

An IRA is an individual retirement account, and they are available through a few select banks and financial institutions. Brokerages and other trading platforms may allow you to have an IRA with them that you can use to invest with an eye toward retirement. Generally, you can start to contribute as soon as you are old enough to start making money.

What’s the Difference Between a Roth and a Traditional IRA?

Whether you have a self-directed IRA or 401k, or have one through your employer, you should know the difference between traditional and Roth accounts. A traditional account allows you to use pre-tax dollars to save for retirement. The money grows tax-free until you start making withdrawals by age 70 1/2. With a Roth account, the money used to contribute has already been taxed. Therefore, the money grows tax-free and is tax-free when you starting taking withdrawals.

How Much Should I Save Each Month?

You should aim to save at least 10 percent of your income every month toward retirement. If you have a 401k, your yearly contribution limit is the greater of $18,000 or 100 percent of your wages. Your employer can contribute up to 25 percent of your wages as a matching contribution or 20 percent if the employer is a sole proprietor. IRA savings limits are $5,500 a year regardless of how many accounts that you have. Those who are 50 or older may be able to contribute an extra $5,000 a year to their 401k or an extra $1,000 to their IRA.

When Should I Start Saving?

You should start saving as soon as possible. However, there is no bad time to start contributing to an account as you can still take advantage of compounding interest at any age. You may also be interested in using a self-directed IRA to invest in real estate or other business ventures that may yield large and steady returns that can help you secure your financial future no matter when you start saving.

When Should I Start Taking Social Security?

Currently, full retirement age is 62. Ideally, you will wait until you are that age to start taking benefits as that’s when they reach their peak. However, if you wait until you’re 70, you will actually receive about 76% more in benefits, so there’s a serious argument for waiting to take Social Security. Check out the graph below to see how much you could be getting every month when you retire.

The ability to retire should never be taken for granted. While there is no bad time to start saving, you have to be smart about where you put your money and have a long-term strategy to increase your nest egg today and how to make it work for you long after you have stopped working.

6 Safety Tips for Investment Properties

Thursday, September 1st, 2016

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When you own a rental property, safety is something that you should always keep in mind. Here are some tips on creating a safe environment at your rental.

1. Always Screen Applicants

Completing a thorough screening on all of your applicants is a way to determine if a prospect will be a good fit for a rental property. Not only does this protect the landlord and property manager from issues, but it also protects other tenants, if you have a multi-family housing unit. It is important to use the same screening process for all of your renters and comply with federal, state, and local laws regarding Fair Housing.

2. Make Repairs Immediately

It’s easy to prioritize an emergency, like a broken water line, but don’t let smaller repairs go unnoticed. Small nuisances can quickly become hazardous over time. A loose floor board or cracked stair could lead to a tenant’s injury.

Make sure that railings and banisters for staircases are secure, inside and outside the property. If your exterior staircases have the tendency to be slippery, you could consider investing in skid-resistance stair treads. Routine maintenance can keep many of these issues from happening, but unexpected repairs do come up.

3. Communicate with Tenants

Your renters can provide valuable information in regards to the condition of the property, so be sure to listen to what they have to say. If there’s a task that you aren’t able to fix right away, let your tenants know promptly. Chances are, your renters have noticed the issue, so it’s better to address it and keep the line of communication open.

When doing a walkthrough with your tenants, point out where important safety features are and how they work. Show them how to shut off the power and test smoke detectors. Don’t forget about a lead-based paint disclosure. Federal law requires that before signing a lease for housing built before 1978.

4. Maintain Security Measures

Keeping renters and rentals safe is easier when security measures are in place. If you have an alarm system, be sure to show your tenants how to use it. Make sure that there are locks on doors and windows and that they close tightly and securely. Motion-sensor lights placed strategically on the exterior of the property can prevent crime and injury to your tenants in places that are too dark to navigate safely.

5. Check HVAC and Electrical Systems

Heating, ventilation, and air conditioning units should be in working order. Unchecked systems can waste a lot of energy and increase the risk of a fire. Check with the manufacturer to see what they recommend for routine maintenance.

6. Test Carbon Monoxide and Smoke Detectors

According to the National Fire Protection Association, three out of five home fire fatalities occur at homes without a smoke detector. They recommend testing smoke detectors once a month and replacing them after ten years, or whenever they stop making a sound when tested. You can read more amount this at the website for the U.S. Fire Administration. Carbon monoxide detectors should be also checked and the batteries should be replaced as needed.

Make safety a priority at your rental property so that you can protect your tenants and your investment for years to come.

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