Self-Directed IRA Articles & Informational Blog

Are You Better Off Than You Were Four Years Ago?

September 19, 2012

Article by Glen Mather, President & CEO, NuView IRA, Inc:

Thirty two years ago, this question was asked during the 1980 presidential debates, and one that is often reprised when the incumbent administration is faltering. But I couldn’t help but translate it to, “ is your dream of retirement more secure today than it was four years ago”?

Politics aside, the economic challenges of investing wisely has undergone significant shifts in the past four years. Stocks, as represented by the S&P 500, are at the same point now as they were in 2008. Gold has more than doubled, while the average sales price of a new home has dropped by 20%, and of course existing home sales prices have dropped much more. The US prime rate has remained unchanged at 3.25% with the target rate of fed funds at 0-.25%. Meanwhile, the Federal Reserve continues to artificially drive rates down by buying debt and increasing the inevitability of future inflation.

It’s difficult to make sense of it all, yet the inevitability of being one more day closer to retirement is a drumbeat that none of us can ignore. The professional money managers are moving to alternative investments as a way of increasing diversity and yield. According to Research Magazine (Oct 2011), 78% of all advisors are now using alternative investments in their clients’ portfolios. Morningstar also reported that in the ten year period from 2002 through 2011, alternatives outpaced stocks by over a three to one margin.

The attraction of a NuView self-directed IRA permits the alternate investor the broadest range of choices, even beyond the Wall Street offerings of Real Estate Investment Trusts (REITS), hedge funds, and oil leases. Our clients take advantage of bank lending constraints to gain yields of 6-15% or more on their self-directed loans. Instead of a stock-based real estate investment, they may prefer buying a duplex and having the rent accrue tax-free to their IRA. Others find entrepreneurs and help fund start-ups, gaining future profit potential.

No matter whether you watch Fox News, MSNBC, CNN or avoid the news altogether, no one will care more about your retirement than you. Get involved, make good choices, and your retirement dream will be much better four years from now.

To take control of your retirement future, contact NuView IRA at (407) 367-3472. With a self-directed IRA from our Florida self-directed IRA administration company, you’ll have the opportunity to invest in many ways you may have never thought possible!

Retiring – Then Living with your Kids: The New Reality

My household situation is not as rare as it may seem. My wonderful 91 year-old mother lives with me, a very patient daughter-in-law, and four grandchildren. While God has blessed her with great health and vitality, I’m not sure that living with her son would have been her dream several decades ago when she was in the workforce.

According to the MetLife Mature Market Institute, there are over 10 million adult children taking care of their aging parents. Still others are contributing to assisted living care, which averages about $3,500 per month.

While having my mother with us is an incredible blessing, many senior parents would choose, if financially able, to be on their own. Indeed, the financial fall-out of the past five years has robbed many seniors of a healthy retirement nest egg and resulted in very limited choices for the years that were to have been “golden”.

At NuView IRA, our clients think every day about their view of retirement and what choices they need to make to achieve their dream of retirement. Unlike others, they not only think and dream, they act. We have clients that lend their IRA to investors secured by recorded mortgages, with note rates ranging from 6-15% and more. These types of investments are particularly attractive to seniors who may need to live on the interest earned.

Through joint ventures, a rollover IRA holder can partner with a real-estate rehabber to purchase a wholesale property, fix it up, and put a renter in the home, with all the net proceeds due to the IRA deposited tax-free.

Fact is, the choices with a self-directed IRA are considerable, and the potential returns may be far more attractive than what is offered by the stock market. So do your homework, make good choices, and plan for a retirement that will allow plenty of visits to your relatives – but not force you to move in!

How Will You Spend Your Retirement?

September 12, 2012

Thanks to a seating assignment onboard the Monarch of the Seas on a cruise to the Bahamas, I was recently able to meet a delightful couple with whom we shared breakfast. When I inquired about what they do when they weren’t cruising, they said they were retired (partially). Come to find out, they live in the Villages, a large retirement community in Central Florida, and have purchased rental real estate both inside and outside their IRA.

Mary finds tenants, collects rent checks, and oversees the maintenance of the five houses they own. She requests expenses to be paid from her IRA for those homes held in a self-directed IRA account. John is nearing Required Minimum Distribution (RMD) age from his IRA, which will occur when he turns 70.5. They are not concerned, as the rental properties they have purchased in their IRA are providing cash flows of 8-10%.

Because they have good tenants and friends who assist them in looking after the properties, they spend over 100 days per year on cruises. Evidently Mary scours the internet looking for last minute deals on cruise lines and usually pays less than half-price for their travels. They use the rental income from their non-IRA owned rentals to help fund their time on the water while amassing their IRA rental funds for future retirement needs.

After a good breakfast with Mary and John, it dawned on me that most of our self-directed clients are much like them – wanting to stay in control. Whether on the seas or simply walking on the beach, NuView IRA is ready to help you achieve your retirement dreams on your own terms. Give our Florida self-directed IRA administration company a call today at 877-259-3256 to discover your retirement options.

The Power of IRAs

August 29, 2012

According to the Investment Company Institute, there are 46 Million US households with IRAs. What is remarkable is the difference in those households that have an IRA, and those that do not.

Assets of an IRA household were 8 times larger than those households that did not have an IRA. Eight times! While the IRA may not be the holder of all the wealth, there is little doubt that the discipline involved in saving and contributing to an IRA is likely illustrated by other choices made by the members of the IRA household.

Your ability to achieve your retirement dream is dependent on two variables: saving and contributing consistently, and investing wisely. For many, investing wisely is the most difficult challenge. The super investor Warren Buffet is often quoted as saying, “Never invest in a business you cannot understand.” Most of us that are invested in mutual funds and selected stocks seldom have any idea on what our investment dollars are doing.

If you are a bit frustrated with not being in charge, the answer may be to self-direct your IRA. We have thousands of clients who feel much more confident in their own choices that those brokered by others. Private placements, real estate, tax liens, and joint ventures are just some of the ways you can seize control of your retirement plan through NuView IRA, while earning tax deferred or tax free profits.

If you would like to learn more about your investment options with a self-directed IRA, contact our Florida self-directed IRA administration company by calling 407-367-3472.

What will happen to the tax rate once the Bush tax cuts expire?

August 24, 2012

Regardless of your political opinions, Congress agreeing to keep taxes low while we are experiencing the highest deficit in our nation’s history may be unsustainable. As the House and Senate pass versions of bills that neither will sustain, the taxpayer is left more confused than ever.

If you have already put funds into a traditional IRA account, the government may have given you a tax write-off on your contributions and let you defer the tax on any earnings. Now, the government may be changing the tax rate you have to pay when you withdraw the money in the future. In addition to this, when you turn 70 1/2, the government does require you to take at least the required minimum distribution (RMD) from your IRA each year to force you to pay that tax.

You can think of your IRA as if it has a mortgage on it and next year the government may be raising the rate you have to pay. However, converting to a Roth IRA is like paying off the mortgage on your IRA early, and at these lower rates.

Nearly everyone is a candidate for a Roth conversion this year. However, executing a Roth conversion requires professional assistance. Contact our Florida IRA administrators at NuView IRA today to learn how to convert your IRA. Call 407-367-3472 today!

Mitt Romney and the Mystery Behind His IRA

August 17, 2012

During Romney’s time at Bain Capital LLC, the company used a SEP-IRA that had a maximum contribution limit of about $30,000 per year. Assuming Romney maxed out these tax-deferred contributions, he would have invested approximately $450,000 in his individual retirement account during his tenure at Bain. BUT, he may have up to 227 times that amount in his IRA! The baffling mystery about Mitt Romney’s significant wealth is how he was able to build up between $21 million and $102 million in his IRA during the 15 years he was at Bain Capital.

So how did he do it? Of course, we don’t know, but there are several theories out there that attempt to make sense of it all.

One theory is that Romney contributed to his IRA using the low-basis, low-value stock he received as a partner at Bain Capital in the different buyouts the company did while he was there. Another theory is that Romney contributed limited-partnership interests to his IRA in Bain’s buyouts, and quite possibly only at a fraction of their market value.

While there are limitations concerning the amount of money that can be contributed tax-deferred to an IRA, there are no restrictions on the amount that the contributed funds can earn, and can continue to earn, on a tax-deferred basis, even after the contributions have stopped. Therefore, in the future when Romney withdraws funds from his IRA, the IRS will get a hefty sum of money in taxes. Too bad his money isn’t invested in a Roth IRA!

Diversify!

August 13, 2012

Diversification is a strategy that should be deployed by anyone who cannot accurately predict the future – which is just about everyone. While the stock market provides an ability to spread investment risks over geography, company size, market sectors, and other categories, the fact remains that public exchanges cannot provide full diversification.

You cannot own titled real estate purchased from your broker in your IRA – instead, he will likely offer a choice of publically traded Real Estate Investment Trusts (REITS). You cannot own gold bullion in your IRA if you rely on the stock market – rather, the market will proffer equity interests in mining companies instead. Most business startups have no access to public markets at all, with investors unaware of the potential attractive returns to the early equity participants.

Without a self-directed IRA from our Florida self-directed IRA administration company, it is unlikely that full diversification can be achieved in a retirement account. Whether you are looking for cash flow from property rentals, private lending and investing in tax liens, or instead investing for future appreciation in precious metals, limited partnerships or new business ventures, the choice is yours with a self-directed IRA. Call us at 407-367-3472 to learn more!

True diversification lies with understanding you choices, taking time to know the market, and executing your purchases with confidence, then staying involved in your investments.

Finding Opportunity in Private Placements

August 7, 2012

A hush sweeps over the ballroom of a four star Orlando Resort as a well-dressed CEO and CFO stride to the stage. They now have exactly 20 minutes to convince a sea of well-heeled investors and venture capitalists that their new business venture has a compelling market advantage, will enjoy meteoric growth, and one day, be acquired or “go-public”. They are seeking a five million dollar infusion for further product development and market expansion.

Meanwhile, across town, several leading bankers from competitive firms meet in secret at a private business club to discuss the chartering of a new community bank to serve an underrepresented business segment of the marketplace. It will take a minimum of $6 million to launch the bank, and over the course of raising capital, involve from 400-600 individual investors.

In 2006, there were 179 new banks chartered in the United States, led by 21 new financial institutions in both California and Florida. Over $1 billion was raised for these banks – all from the bank principals, board members and private individuals. In the same year, venture capital funds based in the US raised over $24 Billion – representing a mixture of pension plan dollars, combined with investments from high net worth individuals. Florida Venture, the sponsor of the annual ballroom event, has assisted in raising over $1.4 Billion for new companies headquartered in the Sunshine State.

What does each of these groups have in common? They each represent an opportunity for private investors to risk capital in order to potentially reap the rewards of significant growth – outside the traditional stock market choices. Just as importantly, these investments may be accessible to IRAs and Individual 401(k) plans through a self-directed administrator such as NuView IRA in Orlando.

While your stock broker may consider private investments a risk not worth taking, it may provide an important avenue to diversify your holdings and spread your risks across another class of investments. Here are just a few of the pros and cons of private placement investments:

Advantages:

Ability to meet/know the principals involved
Utilize your personal knowledge of an industry
Get in on the ground floor
Access large up-side potential
Help the company grow – through referrals, etc…
Participate in the excitement of funding a new venture

Disadvantages:

May be difficult to exit the investment quickly
May require investor qualification
True Market Value may be a challenge to determine
Company may have limited operating history to judge performance
Could be higher investment risk
May not be subject to certain government reporting requirements

The challenge of investing in private placements often can be locating the opportunity. If your interest is banking, most states will post a listing of denovo (newly chartered) banks on their state regulatory website, together with contact information. For other private ventures, you may turn to the myriad of venture capital clubs that meet routinely in cities across the country – one such listing is found on www.venturea.com. Simply by talking with financial professionals such as bankers, lawyers, CPAs, opportunities may also be uncovered right in your own community.

Regardless of the source, the responsibility is on the investor to properly vet the company, do the research and make a calculated decision on risk vs. reward. Self-directing your IRA or tax deferred funds may also prove to be the best source of capital for you, especially if the investment may be illiquid for several years – and the funds are not needed short term.

Glen Mather is President of NuView IRA, Inc., a leading self-directed IRA administrator in Orlando. He can be contacted at 407-367-3472 or gmather@nuviewira.com

Self-Directed IRAs

August 3, 2012

Last week, the Romney team visited the Villages, a sprawling community of over 100,000 residents over the age of 55, only about an hour from the NuView headquarters in Orlando. What does this group have in common? And why do politicians consider this a critical stop to deliver their stump speech? These residents have an obsession with protecting their social security, Medicare, and retirement plans. Politicians use this group as a surrogate to prove their policies are “senior-friendly”. I’m told that until you are retired, you cannot understand the helplessness of relying on personal savings, which have been ravaged by low interest rates and stock market uncertainty.

If only those of us who are still working had the same obsession about saving and investing wisely! Most workers continue to rely solely on the advice of money managers, or mutual fund managers to ensure their retirement is adequately invested. When the market takes a dip, participants in employer sponsored plans often scale back their contributions, due to a lack of confidence in their investments or their advisors. Most professional financial advisors see lower stock market prices as a golden opportunity to buy, while human nature moves investors to become more cautious and withdraw.

It’s time that we all woke up to the fact that no institution, money manager, or even financial advisor has more at stake than you do – in the health of your retirement funds. Despite the droning platitudes of the politicians, their ability to ensure a stress-free retirement for you is limited by huge budget deficits, tax stalemates, and the burgeoning growth in the number of taxpayers moving into their retirement years.

If you feel inadequate in making good investment decisions, find several friends, associates and professionals who can serve as your advisors – and avoid being influenced only by one source. Just as you wouldn’t subject yourself to a critical medical procedure without a second opinion, don’t move forward with important investment choices without consulting with several advisors.

As stated in the Wall Street Journal, over the next ten years, private investment choices are likely to outpace the public markets. Ensure that you understand all your options, including a self-directed individual retirement account that can access those private investment choices. You may find that understanding your options for investing in rental real estate, private lending, or buying precious metals through your IRA may be easier than reading a 100 page disclosure on the latest IPO. The best result is one that results in making your retirement political proof, providing a greater insulation against the potential damages of future policy decisions, and less reliant on the governments “dividends”.