Posts Tagged ‘Investing’

Unique Types of Properties to Invest in With an IRA

Thursday, December 31st, 2015

unique properties - wide

Flexibility is one of the main reasons savers and investors use self-directed IRAs for real estate transactions. A property can be acquired quickly, with the required fees and costs being directly paid for from the IRA, and in turn, any profits will funnel straight back into the self-directed IRA account.

Commercial Property

The inconsistent performance of the stock market in recent years, and the ever-growing threat of a Federal rate hike has made commercial real estate a prime target for investors. This shift in investment focus has helped fuel the commercial real estate market. That’s because investors who use their IRAs to purchase commercial properties that generate excellent cash flow and appreciation can gain a number of awesome tax benefits. For instance, in the case of a Roth IRA, which is funded with after-tax money, investments are not taxed while growing, and are tax-free upon distribution. Roth IRAs also have no minimum distribution, so savers can decide when and how much to take as distributions. Traditional IRAs are funded with pre-tax money and are taxed at the time of distribution, which is the main difference between the two plans.

Real Estate Overseas

The most common investments made with a self-directed IRA are in real estate, but only a small percentage is invested in real estate overseas. Throughout most of the world, it’s not really possible for a foreign buyer to just borrow money from a local bank and use that money to buy real estate. This is where your self-directed IRA comes into play.
Using the property as a rental property, think how Airbnb does it, where a property is rented out, maybe by someone new almost every week (if not every night), makes it easy to remotely operate from anywhere.
You can purchase real estate, but just as it is with property you own in the US, once you move in, or make use of the property yourself, the total value becomes taxable as a distribution under the terms of your retirement account, and your entire IRA account could get hit with repercussions from the IRS.

Farms

Who knew that you could invest in a farm without owning farmland? Well you can with a self-directed IRA! There are a few more options like REITs, or mutual funds, or ETFs, but today, we’re just going to talk about self-directed IRAs.
Farmland can help your IRA grow in a few ways as an agricultural investment. A farm that produces crops ranging from fruits and vegetables to cotton and other raw materials for manufacturing tend to be the most profitable because these crops, of course, produce income when they are sold (and most regrow annually). In addition, the value of the land may increase, resulting in a capital gain. Before your IRA can buy anything with an IRA, you have to fund it. As of 2015, you can contribute up to $5,500 a year to an IRA, or a $6,500 catch-up limit if you are 50 and older. Keep in mind that you can also rollover money from another retirement plan to buy a farm, and another funding option is to buy partial ownership of the property, and have other investors.

How You Can Invest in Tech with a Self Directed IRA

Thursday, November 19th, 2015

Invest in tech

It’s sometimes forgotten that with a self-directed IRA, people can invest in pretty much anything. While there are exclusions in what you can invest in, technology definitely isn’t one of them.This last year, the technology sector has delivered some of the best returns since the recession in 2008, and while these stocks have the potential for high returns, some of the risks might be too high for some investors. But with that said, there isn’t a sector or stock that doesn’t involve some potential risk, because unfortunately, nothing is foolproof.

Tech Stocks

If you’re the type that pays attention to market trends, or even if you’re a casual listener of APM’s Marketplace (shoutout to Kai Ryssdal), you’ve been hearing lately that tech stocks, like Apple (AAPL) or Google (GOOG) have had a pretty good year. Using Apple as an example, they has improved earnings per share by 38.0% in the most recent quarter compared to the same quarter a year ago. Not only are things going well for Apple, but the tech sector as a whole.

Tech Startups

These days, individuals and businesses alike can turn to the crowd for support in their entrepreneurial endeavors. And if you’re part of the crowd that’s always wanted to invest in a startup, you may soon be able to in ways that you couldn’t before. In 2012, the Jumpstart Our Business Startups (JOBS) Act was signed into law by President Obama. The Act requires the SEC (Securities and Exchange Commission) to write rules and issue studies on capital formation, disclosure and registration requirements. The SEC recently voted to approve crowdfunding rules for investors, an effort spawned by the passage of the JOBS Act from 2012. What that means is that startups or small businesses looking for investors can go through brokers or online platforms to find them—and those investors can now be, well, anyone. This new ruling combined with a self-directed IRA is the perfect opportunity to now only grow your nest egg, but diversify as well.

In the investing world, it’s a good idea to remember the term “risk vs.reward.” Stocks with a higher reward will most likely be more risky than stocks with very little risk, which usually yield very little growth. Having a good balance of low, medium and high risk investments allow you to maximize your reward while keeping your portfolio safe.