Posts Tagged ‘Investing’

Responsible Investing While the Economy is Booming

Wednesday, June 6th, 2018

Timing the market is usually a pretty bad idea. The market continues to hit new highs, which usually leads to even more money heading toward stocks. No one knows when the next bear market will start, nor do they know when it will hit its bottom. This means that it’s a pretty good idea to diversify across several different asset classes to minimize the pain that the inevitability of the next recession will bring to many. Here are some assets that are good ideas as the current bull market starts to get a bit long in the tooth.


Getting rid of all stocks is not a good idea, because the bull market could continue to run. Additionally, not all sectors will necessarily get hit during a bear market. Consumer staples, for example, tend to do better than other sectors in down markets. People still need to buy toilet paper and bleach. While it’s not a good idea to exit stocks altogether, it is probably a good idea to take some profits and look into other asset classes to mitigate the possibility of a crash.


Stashing all excess cash under a mattress or in a low-interest savings account is not really a good idea. Inflation will make this cash worthless in terms of buying power over time. This does not mean, however, that you should have no cash on hand. When the next recession hits, it’s likely that many people will lose their jobs. An emergency fund can provide a buffer between jobs. For those who do not lose their jobs, the cash could buy stocks at fire-sale prices. This cash can be held in a higher-interest savings account or a certificate of deposit to at least earn a little bit of interest in the interim.


Government bonds do not pay much in the way of interest at this point, but they are considered stable investments. Also, they pay out the interest that can provide a bit of income on a monthly basis. This interest can help offset some lost income that might be a consequence of the next recession.

Gold and Precious Metals

While gold might not be a productive asset like the stock of a company or a plot of farmland, it does tend to preserve capital in down markets. In fact, as people start to panic and sell off stocks at any price they can get, precious metals can actually appreciate. This has been the case in the last two major recessions. Those invested in gold did much better than those in stocks.

Real Estate

The value of real estate can fluctuate pretty extensively during an economic cycle. However, this does not mean that real estate is not worth holding as an investment. As long as real estate remains occupied, it can provide a nice cash flow. Sometimes this cash flow can return as much as 8 to 10 percent of the initial investment on an annualized basis.

As the market melts up, it is probably not a good idea to hold 100 percent of a portfolio in stocks. There are other asset classes that should provide a bit of cover when the inevitability of the next recession becomes a reality. The time for investors to prepare for this decline in stock prices is now. It’s possible to take some profits and diversify to preserve more capital over the long run.

Funding an IRA Account with Alternative Investments

Monday, April 23rd, 2018

funding investments 2

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 in 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.

Tapping into Multiple Retirement Income Avenues

Monday, February 19th, 2018

If you’re a lucky enough of a person to have a pension, a matching 401K, or any other type of retirement saving option, and you’re fully taking advantage of those benefits, then this article may not be for you. This is more geared towards the 70% of American’s who have either less than $1000 saved for retirement or nothing at all. The thing is, there is more than one way to save for retirement, you don’t have to fully depend on your employer.

Self-directed IRA

A self-directed individual retirement account is an account that you can open with the custodian of your choosing (so long as they offer this account type, some don’t for varying reasons). You contribute funds to your account either after-tax as a Roth IRA or before-tax, as a Traditional IRA. The reason investors like self-directed IRAs is that they’re self-directed, meaning you choose what your money is invested in. You can invest outside of the stock market and into real estate, precious metals, small businesses, farmland, the options are almost endless.

Rental income from SDIRA

Among the short list of assets you can invest in above, we’re going to focus on one, real estate. The reason for this is obvious, right? The money that can be earned on investment property is what makes it such a lucrative and sought-after asset type. Not only is there money to be made on buying and selling, but getting a steady income from tenants is what we’re all ultimately after. When you buy a property through your self-directed IRA, any and all costs associated with that property are paid for through your IRA. Any repairs, HOA fees, maintenance, it’s all paid for by the IRA.


Annuities can be looked at as retirement insurance, because they’re essentially for uncertain times. To put it frankly, the longer you live, the more care you’ll need, and thus, the more strain on your finances. Even if you were diligent about saving for retirement all throughout your career, it sometimes might not be enough. A fixed annuity, which offers a lifetime income stream at a set rate of interest, is one way to manage that risk. You can even buy deferred annuities that don’t pay out until you reach a certain age. Once they kick in they offer bigger payouts than immediate-annuity products.

The Rules of Buying Property with your Real Estate IRA

Monday, February 12th, 2018

Real estate is one of the most sought-after and lucrative hard asset types that investors love. It’s popular because it’s not just single-family homes, but commercial real estate, farmland, business parks, apartment complexes, and more.
What most Americans don’t know is that you’re allowed to invest in these types of real estate with your self-directed IRA, and any gains made off of your investments go back into your retirement account.
As with any investment, there are rules that you have to follow to make sure that your IRA is compliant with IRS laws, so let’s go over a few rules.

Your personal use

When real estate is purchased as an investment property, it almost seems like second nature to want to inhabit that property. But when your IRA has purchased the home, your IRA is the technical owner, not you, unfortunately. Neither you or your family are allowed to use the property for personal use, either as rental tenants, overnight guests, or anything in between.


This rule seems like it should be fairly self-explanatory, and seems easy to avoid, but if you’re found violating these rules, your IRA could be disqualified. Self-dealing is when the IRA owner uses their IRA for personal gain or promotes their own self-interest. Say if you’re looking for a single-family home to buy with your real estate IRA, and your own home is for sale, so you think about buying your home with your IRA. That’s self-dealing. Because you directly benefit from your IRA buying your home, it’s not allowed.

Limited Liability Company

A Limited Liability Company is better known as an LLC, and an LLC paired with your real estate IRA isn’t a rule, but a perk. By opening an LLC, you will then have checkbook control, a physical checkbook that allows you to pay fees, services, any costs affiliated with the property your IRA owns.