Posts Tagged ‘self directed ira’

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.

How Could The Federal Rate Hike Affect Your Retirement?

Thursday, November 5th, 2015

Rate hike - taller

It hasn’t even been 24 hours since Fed Chair Janet Yellen told Congress that the Federal Reserve may be closer than ever to hiking interest rates for the first time in nearly a decade, and already, there’s already been an uproar from the market in anticipation. The Washington Post reported that mortgage rates have surged as of Thursday morning due to talks of the possible Federal rate hike from Chair Yellen. Although economic and job growth has slowed recently, Yellen told the House Financial Services committee the economy is performing well. But a decision on whether to hoist rates at the Fed’s Dec. 15-16 meeting will depend on economic reports in coming weeks, she said.

While rates are most likely rising next month, this makes us question whether or not these changes will affect retirement in any adverse way. There’s some speculation that Federal Reserve doesn’t want Americans to retire, that they want to keep rates as low as they have to encourage spending, and deter saving in order to prolong retirement. While there might be some truth to that, it is far from the grand conspiracy that some claim it to be. And unfortunately, no one can say with certainty whether the effects of a hike will be mostly positive or negative until it happens. For those who hope to retire someday, that uncertainty is disconcerting at best.

When it comes to long-term debt, increased rates directly affects how much it costs banks to borrow from one another, and subsequently, to consumers, the cost of borrowing will also increase. For those who have say, a variable rate mortgage loan or are in the market to borrow money for a large purchase, the fed rate hike will make borrowing slightly more expensive. The best thing to do if you’re in either of those situations is to either lock in today’s low rates or work to eliminate potentially expensive debt that could eat away at retirement savings.

With equities, experts say that in preparation of a hike, that investors should do what’s called ‘sector rotation’ within portfolio and should think about selling some stocks from industries that perform well during falling rate environments, such as apparel, retail, construction, durable goods and autos, and buying stocks in industries that perform well during rising rate environments, such as energy, consumer goods, utilities, food and steel products.

Experts suggest that when it concerns bonds, investors should get out and look for safer options. The reason for this is because history shows when interest rates go up, bond values go down, and since most people use bonds to protect their money, when interest rates go up, bonds will no longer hold the title of safe. As the Fed begins to solidify its plans, retirement savers will need to move some of that money into other securities to offset the price drop.

Retirement savers should not be afraid when the Fed initiates its first interest rate hike in more than nine years. Our economy and markets have been through them many times before and weathered the storm. As always, asset allocation within your self-directed IRA, or 401K, and persistence remain the most important ingredients to retirement success.

What is an IRA? Roth or Traditional: Which is Better

Monday, November 2nd, 2015

roth or traditional

An Individual Retirement Account, or IRA, is an account that payments are made into bi-monthly or monthly, earnings such as interest, dividends or capital gains are accumulated, investments can be made with it through a self-directed IRA, and it is meant to supplement income after a person is retired. The account, depending on the type, whether Roth or Traditional, can be tax-free or tax-deferred.
If you’re new to the retirement planning world, and all of this new information is confusing, hang tight, we’ve got you covered.

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What is an IRA - Infographic

Here are the Stats: Why You Should Start Retirement Planning Today

Thursday, October 22nd, 2015

Retirement stats

According to the 2014 Survey of Household Economics and Decisionmaking, conducted by the Federal Reserve, American’s are very ill-prepared for retirement. A whopping 38% of the more than 5,800 respondents answered that they had no intention of retiring, or planned to work for as long as possible. 31% of non-retirees had no retirement savings or pension whatsoever, including a quarter of the people in the survey age 45 and up.

If this trend keeps up, and we’re unable to make up this deficit, a big majority of American’s could be forced to rely on Social Security in their would-be retirement years, or may have to work passed the desired age. The biggest issue with working well into retirement age is that unfortunately you can’t know for sure that your health, or your employer will accommodate you working 60 and beyond.

The problem with us relying on Social Security is that ideally, it’s only meant to make up %40 of retiree’s income. With people living longer than before, and baby boomers beginning to retire, it’s no wonder that Social Security is making headlines lately with talks of it possibly drying up.

start saving today

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Fortunately, there are several options when it comes to retirement planning, 401K’s and pensions offered through your employer, the rollout of myRA through the government, individual IRA’s and Self-Directed IRA’s hosted through IRS approved custodians, SEP IRA’s for self-employed people or small business owners, and more.

Talking with your financial advisor is important when making retirement decisions, they’ll give you an objective view on where you are, and what can be done to help you reach your goals. The most important thing is to not throw your hands up in defeat. Small victories and goals can be met, and make a big difference in the long run.

Click here to open an IRA today, and click here and fill out the form on the right to get more information on how you can get started today.

Author: Tanya