Self Directed Investor Talk: Alternative Asset Investing through Self-Directed IRA's & Solo 401k's

Bob died recently, and left a self-directed IRA worth $2 million to his 3 adult children.  Fortunately for Bob, he never saw the huge problem he caused, which threatens to tear his family apart.  Today, I’ll tell you what Bob did wrong, because odds are, you’re doing exactly the same thing and don’t even know it.  I’m Bryan Ellis.  This is episode #226.

 

Hello Self Directed Investor Nation!  Welcome to the podcast of record for SAVVY self-directed investors like you, where each day we help you find, understand and PROFIT from exceptional investment opportunities.

Today’s episode is a serious one, but first I’d like to share something with you from today’s sponsor, Fund & Grow.  Fund & Grow is awesome, plain and simple.  Ari & Mike, the guys who run the company, are MASTERS at helping you acquire ZERO-INTEREST lines of credit of $50,000 to $250,000 or more.  And it’s NOT THEORY in any way… I’ve seen it happen over and over and over again.  So if you need some capital for that great real estate deal, your business or anything else, reach out to them at SDIRadio.com/credit.  I recommend them because they are truly excellent at what they do.

Ok folks, the serious matter at hand today:  Let’s consider Bob, who as I mentioned to you a moment ago, recently passed away.  Bob invested through his IRA and blew it up to being worth $2 million.  A great thing, for sure!  But Bob passed away, and now his 3 adult children own it, each with an equal share.

Now if Bob’s portfolio was in stocks, mutual funds or other highly liquid assets, there’d really be no problem at all.  Each child would be able to have an inherited IRA with 1/3 of the assets of Bob’s account.  Any of Bob’s kid that doesn’t want to keep the stocks or mutual funds could sell them.  Any kid that wants to hold the assets could hold them.  Easy peasy.

But in Bob’s case, he made his fortune through real estate investing.  In fact, the entire value of Bob’s account is attributable to a single piece of real estate he bought way back in the day that appreciated massively.

And now, Bob’s 3 kids are going to own that piece of real estate… somehow.

But how?  As it turns out, Kid #1 wants to keep the real estate.  Kids 2 & 3 want the money from selling the real estate.  And Bob… for all his kindness in bequeathing this incredibly valuable account to his kids, did them no favors at all, because all he did was to stipulate that each child received 1/3 of the account.  He didn’t specify how those assets should be divided, nor did he use any strategies to make real estate – which is inherently difficult to divide – easier for his children to deal with.

And now, Bob’s kids are fighting with each other.  There’s a civil war going on in Bob’s family, and frankly, Bob’s wonderful act of generosity, coupled with his incredible lack of foresight, is clearly the cause.

What could Bob have done differently?

The most simplistic answer would be that Bob could have sold off his property and converted the account to cash before he passed on.  Cash is much easier to divide than real estate.  But even if that had been convenient for him to do, it wasn’t what he WANTED to do, because Bob believed there was a lot of upside potential to the property.

Another option is that the kids could – will probably have to, in fact – hire a lawyer to divide the property among them by re-conveying a portion of the property to each one of their inherited IRA’s.  That can work and will work if they go through this legal division process, but because there’s tension among the kids, there may well be litigation costs involved as well… certainly not what Bob wanted, or what you want for your beneficiaries.

Another option could be that maybe Bob should have titled the real estate in an LLC or trust, and have his IRA be the owner of that LLC or trust.  That way, what the kids would be inheriting would be shares of an LLC or trust… which, like cash, is much easier to divide than real estate.  In fact, Bob could have specified in the LLC or trust documents exactly how the real estate was to be managed and distributed when he was gone, to remove even more uncertainty.  That would have been wise.

Another option of great potential is this:  There’s nothing prohibiting you from explicitly dividing your account among your beneficiaries by some means OTHER than simple percentages.  For example, you could allocate Asset A to Kid 1, Asset B to Kid 2 and Asset C to Kid 3.  Obviously there are some risks here too, but this is particularly relevant and worth considering for those of you who, like me, think that involving the family in your financial decision making is a great way to help them learn from your experience.

Bottom line?  Bob failed in two ways, not just one.

The first one is obvious – he didn’t clarify how his assets were to be divided, even though he knew that real estate is difficult to divide.

The other one is less obvious – he didn’t prepare his children for what they were about to receive… they just had no real connection to or understanding of this wonderful asset Bob was leaving for them.  In so doing, Bob’s wonderful gift to them turned into something of a curse.

My friends, don’t let that happen to you or your family.  It’s actually quite simple to avoid this sort of fate, but since self-directed IRA’s are such a new phenomenon, nobody is talking about this.  But as your THOUGHT LEADER in the self-directed IRA world, I of course consider it my job to think the thoughts you should think, but aren’t yet thinking!  Hehehehe.

And in all fairness, I learned a WHOLE LOT about this topic very recently from IRA attorney extraordinaire, Mr. Tim Berry.  That guy is like a mad scientist, only he’s an IRA lawyer, and he’s REALLY, REALLY good.  If today’s episode stoked any concerns you might have about leaving assets that could cause a problem for your family, Tim is the guy you should reach out to. 

You can get his contact info on today’s show notes page at SDIRadio.com/226.

That’s also where you should go to comment on this episode.  I’d love to hear what you have to say… if you’re investing in real estate or ANY illiquid type of asset, this issue is important for YOU!   So stop by at SDIRadio.com/226 and tell me if you’ve done any estate planning within your self-directed IRA… I’d love to hear from you!

 

My friends… invest wisely today, and live well forever!

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Do you want to build a legacy, and not just a portfolio?  If so, there’s one financial tool that is CHEAP (under $10), easy to use, and will have a bigger impact on FUTURE GENERATIONS than anything else you’ve ever done.  And odds are, you’ve never even heard of it.  I’m Bryan Ellis.  I’ll tell you what it is and how to use it RIGHT NOW in Episode #225.

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Hello, SDI Nation!  Welcome to the show of record for savvy self-directed investors like you, where each day you how to find, understand and profit from exceptional investments… and turn those investments into a wonderful legacy for generations to come!

What a GREAT DAY to be alive, folks!  I’m so honored you’re spending some time with me right now, so let’s get right to it.  But a quick note to you, and I really hope you folks will take this seriously.

Have you ever been in a situation where you were just a bit short of capital for an investment, or for your business, or anything else?  If so, I want you to check out my friends Ari and Mike at Fund & Grow. They are astoundingly good at acquiring zero interest credit of fifty to $250,000 that you can use at your discretion!  I really vouch for what they can do… it’s really amazing, and I’ve seen it work over and over with my own clients, many of whom are your fellow listeners!  To see how & why it works, just check out the short video we’ve posted at SDIRadio.com/credit.  You’ll be very glad you did.

My friends, I know that many of you, like me, think in terms not only of building for your own retirement and other financial wellbeing, but also of building financial assets that will benefit future generations.  And you know, that’s a WISE thing to do.  In fact, right there in the middle of the greatest book of wisdom ever written, the Biblical book of Proverbs, is a verse that says that one thing that wise people do is to leave an inheritance for their children’s children… their grandchildren!  That means that wise people operate with an eye on making an enduring impact on at least 3 distinct generations:  Their own, their children’s generation, and their grandchildren’s generation.

If you agree with that thinking, as I do… then ask yourself:  How would it impact your decisions today, if your time frame was not merely from now until retirement, or now until the end of your life… but at least now until the end of your GRANDCHILDREN’S lives?  Wow… that’s a huge, humbling and EXCITING thought, really… because time well used is the best friend of the wise investor.

Now look, I’m no expert in Hebrew, the original language of that verse in Proverbs, but in the English translation of it I’m reading, there’s no indication that the inheritance that a wise person leaves to their children’s children is or should be limited to a FINANCIAL inheritance.

What other kind of inheritance is there, you might wonder?  Well I’m glad you asked, my friends!  Hehehe

What’s easily more valuable than any money you could leave is the benefit of your EXPERIENCE.  Don’t just leave money or assets… leave an awareness of what those assets are… why you chose them… what alternatives you considered and rejected… what factors about that asset gave you PAUSE, even though you opted to acquire it… what standards you adopted to know how long you should hold the asset… what kind of tax or legal structuring you used for the asset… what you planned to do with the cash flow generated by the asset… how the asset compares to other investments you’ve made in the past.

There’s GOLD in that kind of information, my friends… PURE GOLD.

Imagine if your parents or grandparents had passed on to you a journal… or many journals… that logged their thoughts about the kinds of decisions they made with their money?  There would be SO MUCH TO LEARN… even if your forebears were NOT financially successful… still, how valuable would it be to see the formation of the decisions that led them where they ended up?  Because it was THOSE decisions that affected YOU… and those decisions reverberate to your children, your grandchildren, great-grandchildren and beyond!

I feel a real passion rising up in me for this notion… the notion of financial journaling…. But it’s not really just a financial thing… it’s more like LEGACY journaling… documenting the legacy that I want to leave and that you want to leave.

And all it takes is to go down to the local office supply store and spend $10 on a journal.  I guess you could do it electronically, and there’d be value to that too, I suppose.  But there’s something special, I think, about handwriting.

Can you imagine what it would be like to have the accumulated wisdom of multiple generations of your family to call upon?  Something to pass from one generation to the next… something that makes your family uniquely YOUR FAMILY among all of the families in the world?  Folks, nothing is more indicative of who you are, and who your family is, then how you spend your money.  Where your treasure is… what you use your money for… THAT is where your heart is.  THAT is what’s important to you…

This is important stuff, folks!  And not just for investments.  For all things financial.  What if there was a history you could look back on to see when your parents considered whether to buy a home or a car or an insurance policy or even take a big vacation… how valuable would it be to know what, exactly they considered?  IMMENSELY valuable… because you’d have the benefit of hindsight, and the ability to objectively evaluate whether their decision turned out well or not.

That kind of experience is PURE GOLD, my friends… absolutely priceless.  Absolutely priceless.

And what about your financial RELATIONSHIPS?  Passing on knowledge of great advisors, great bankers, great attorneys, great accountants… that kind of information… those kinds of shortcuts have value of indescribable measure.

This is a practical issue, too, for those of you who are interested in building not just a portfolio, but a legacy.  That’s because, unless you restrict your investments to the most plain-jane of assets, such as stocks or mutual funds, then there will be assets in your portfolio that may be unfamiliar to your children or grandchildren such that they don’t really know how to handle them.  But by WRITING DOWN what you bought, why you bought it, and how to know when it’s time to sell, you’ll be making the job EASY for them!

There’s ABSOLUTE GOLD in that kind of information… and without it, that brilliant and very successful real estate deal you get into TODAY will likely be the one that your future beneficiaries will liquidate far below real value… not because they’re vindictive or foolish or anything other than that they simply don’t understand.

So, that’s it, my friends… start a financial journal today.  Go to an office supply store, spend 10 bucks on a journal, and use it!  Maybe call it a legacy journal… and write down the important decisions you make and why you make them.  Then pass that information on, and teach your family to revere it as worth far more than money, because it is.

Hey, that’s all for today except for one question I have for you:  Did you find today’s show helpful?  If you DID, and if you’d enjoy more shows like this, then PLEASE do this:

 

Tell a friend about SDI Radio, ok?  That’s the best way for us to grow.  Just tell them to stop by SDIRadio.com!  And be sure to leave your comments and questions over at today’s show notes page at SDIRadio.com/225…. I’d love to hear from you!

And hey… if there’s anything you’d like to hear more about, drop me a line at [email protected]. 

My friends… invest wisely today, and live well forever!

 

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Is wealth a badge of honor… or a symbol of shame?  Practically every time Hillary Clinton or Barrack Obama open their mouths, they are vilifying the rich… while Donald Trump is clearly proud of his wealth, and promises repeatedly to bring wealth back to America.  Who’s right?  Is there something MORALLY or ETHICALLY either GOOD or BAD about wealth?  I’m Bryan Ellis.  I’ll spell out the answer for you RIGHT NOW in Episode #224.

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Hello, SDI Nation!  Welcome to the podcast of record for savvy self-directed investors like you!  This is the show where you learn how to be a wise, profitable steward of your money…

Today we’re going to talk about a topic that’s important, timely and rather personal.  We’re going to address the ETHICS… the MORALITY, even… of acquiring wealth, and being wealthy.

But first, I’d like to introduce you to someone you should get to know, and I’d like to do that by asking you a question:

Have you ever been in a situation where you found a great investment, but were a bit short of capital?  If so, I want you to check out my friends Ari and Mike at Fund & Grow. They are astoundingly good at acquiring zero interest credit of fifty to $250,000 that you can use at your discretion!  Yes, it sounds unreal, but it’s totally legit… I vouch for it… I’ve seen it work over and over with my own clients… your fellow listeners!  To see how & why it works, just check out the video we’ve posted at SDIRadio.com/credit.  You’ll be very glad you did.

So… is wealth a good thing?  Is there any moral or ethical position to wealth at all?

We’re in an election year, so it’s highly relevant to see what politicians are saying about wealth.

Our outgoing president has left no doubt where he stands on that.  Remember these words of his from several years ago:  “If you’ve got a business, you didn’t build that.  Somebody else made that happen.”  That’s right, folks… there’s our president saying that those of you who have poured your blood, sweat and tears into building a business, well, guess what… you didn’t build that.  Somebody else made that happen… according to our President.  By the way… the link to the video where Obama said that is in today’s show notes page at SDIRadio.com/224.

So Obama clearly thinks that your business… your wealth… isn’t yours.  Somebody else gave it to you.  You have what somebody else built.  You’ve taken what isn’t yours… you must give it back.

Similarly, current candidate Hillary Clinton – who recently admitted she’s not driven a car since 1996 – commented that “There are rich people everywhere. And yet they do not contribute... They don't invest in public schools, in public hospitals, in other kinds of development”.  Clearly, Mrs. Clinton lumps all rich people into the category of being “takers”, not “givers”… with a clear implication that there’s something wrong, something fundamentally dirty, about wealth.

Donald Trump has the opposite opinion, clearly and proudly embracing his own wealth, and claiming that it’s his wealth that makes him politically incorruptible.

Who’s right and who’s wrong?

Well, I’m right, and I’ll be happy to tell you why.  Hehehehe

My friends, wealth and the things that comprise it… money, real estate, stocks, businesses, etc… these things are distinctly amoral… that means WITHOUT morality… neither good nor bad.  Practically all inanimate objects are completely without moral weight.

I’ll go a step further… the moral character of money or assets does not change based on how that money or those assets were acquired.  Think about a $100 dollar bill.  Is that particular bill any more or less moral than any other $100 bill?  Of course not!  And that’s true whether that bill was acquired through flipping burgers at McDonald’s, through working as a corporate CEO, or even working as a drug dealer.

Money is money.  It’s not good and it’s not bad.  Of course, if you’re a drug dealer, you’re a horrible scumbag who should be put under the jail for the rest of your life.  But that has no relevance whatsoever to the basically amoral nature of money itself.

But we’re not talking about money, really.  We’re talking about wealth… wealth is an accumulation of excess money and assets, beyond what you need to live.

So is WEALTH either good or bad?  There again, wealth is neither good nor bad.  BUT pay close attention to this:

Contrary to what the left-leaning politicians will tell you, wealth is almost always a sign of GOODNESS… a sign that somebody has done something well along the way… an indicator that somebody has worked hard, made wise decisions, and remained diligent through trial.

Allow me to say what’s profoundly politically Incorrect:  Amassing wealth PROBABLY means you’ve done something really, really well that helped a lot of people… or maybe that you helped a few people in a really profound way.

Wealth is nearly ALWAYS an indicator of those three things – hard work, wise decision making and long-term diligence.  All of those are very good traits… and wealth is a common reward for having such admirable traits.

And if you’re one of the bleeding heart types who instantly thinks of Bernie Madoff… or you get all out of what about the amount of money that CEO’s and hedge fund managers are paid… well, with all due respect… GROW UP.  I mean, come on, really!  For every crooked person who got rich, there are MILLIONS who became wealthy the right way… through hard work, wise decision making and long-term diligence.  And Madoff went to jail.  And those rich hedge fund managers… well guess what?  They’re rich specifically because they’ve made their CLIENTS rich, too… and if their clients are happy with them, why do you feel your opinion has a single iota of value?

Yes, my friends… wealth is practically always a badge of honor, and not a symbol of shame.  In nearly every single case, guilt is an inappropriate emotion as a reaction to wealth, but the appropriate feeling is gratitude.

Wealth is good.  The traits required to achieve wealth are good traits, and admirable traits.  And anybody who tells you otherwise is someone who opposes being committed to working hard, making wise decisions, and being diligent over the long term.  No, those traits don’t always lead to wealth.  But where wealth is earned, those traits are always present.

Don’t be proud of your wealth, be grateful for it.  Rather, be proud of the hard work, be proud of the wise decisions, be proud of the diligence that got you where you are.  And be grateful for the wealth that resulted from it.

And never, ever let scumbag politicians make you believe that wealth is bad or that you are bad because you’ve achieved it.  You are to be commended, and America wouldn’t be what it is without you, my financially successful friends.

My friends… invest wisely today, and live well forever!

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It’s good to build wealth… but 100 years from now, what will that mean?  Statistically, probably nothing at all.  But there’s a way to make sure your wealth both provides for your needs, and actually changes the world in an enduring, powerful way.  And it all starts with a shift in perspective you can adopt today.  I’ll tell you all about it right now in Episode #223.

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Hello, SDI Nation… welcome to the podcast of record for savvy self-directed investors like you.  Hey, today’s show is special… I’m going to dig deeper into my personal beliefs about money and wealth in a way much deeper than I’ve done in the past.

So, my friends… today isn’t about investment strategy, capital deployment opportunities or market analysis.  Rather, for just a few minutes, we’re going to talk about something more fundamental:  Financial philosophy.

Allow me to pose an important question to you:   Imagine that you were supremely successful as an investor… maybe even Warren Buffet level.  What does that do for you… and what is your “role” from that point forward, since you’ve already made more money than you could ever possibly spend?

As you ponder that question, also consider this:  Most conventional financial advisors use some variation of the “work-backwards-from-the-goal” type of strategy when advising you how to handle your money.  In other words, they’ll ask you some questions about how you want your life to look in the future.  Then they help you figure out what your chosen lifestyle will cost on a monthly or annual basis.  That information, taken together with statistical projections about your expected life span, yields a certain dollar amount you must have saved by a certain date in order to afford the lifestyle you’ve chosen.

Ok, so all of that is well and good.  But let’s say you follow the plan to the letter, and it works exactly as designed.  What have you really accomplished?  Yes, a nice life for yourself, sure… and there’s value to that.  But what have you REALLY done to leave a mark that makes the world a better place?

In the interest of expediency, I’ll dispense with any flowery verbiage here and just say it like this:  If the purpose of my life is to pay for my life… what a weak, pathetic, temporary purpose I’ve had.  Same for you.  Same for all of us.

There’s got to be more to this wealth-building thing, my friends… there’s got to be more.  If it’s just about making money… well that in and of itself isn’t particularly motivating to me, or to most.  There’s got to be more… a bigger purpose… a grand design in play.

But what’s the bigger purpose for me?  What’s the grand design for you?

My friends… there’s a very specific answer to that for each of us, and for each of us, I believe it revolves around one word:

STEWARDSHIP.

I believe that wise STEWARDSHIP of our resources should be our purposes, rather than wealth building.

The core difference is stark.

The wealth builder says:  This money is mine, and I’ll do what I can to make it grow.

A wise steward says:  This money is under my control, and I’m responsible to make sure it serves the right purpose.

Note that there’s absolutely nothing wrong with doing what you can to make money grow.  In fact, wealth building can be an important piece of wise stewardship… but they are not the same, and I propose to you that stewardship is a better model to pursue.

Stewardship says:  I’ve been entrusted with the opportunity to manage this capital for a bigger purpose.

If I’m a wise steward of resources, that means that my needs or preferences may not always be the first consideration in how money is used, managed or invested.

Wise stewardship requires that I have a perspective far beyond myself… possibly even multiple generations in the future.  One ancient proverb that’s always resonated strongly with me says that wise people leave an inheritance for their children’s children… their grandchildren!  This suggests to me that maybe I’m not being very wise unless I’m carefully considering THREE ENTIRE GENERATIONS – my own, that of my children, and that of my future grandchildren.

That’s a big, broad perspective.

But I think it goes farther than that.  Imagine this:  Imagine that you build an amazing investment portfolio of cash-flowing real estate, private notes and other such high-value assets.  Furthermore, you do this inside of your Roth IRA so that it’s all totally tax-free.

And then, something unfortunate happens… you very unexpectedly meet your life’s end, leaving that IRA to your spouse or children or grandchildren

What will they do with it?  Invariably, somebody is going to have to make decisions about how to handle those assets… will your beneficiaries have understanding of how you were investing… of the factors you considered when making those investments… will they have awareness of what made those investments so wise, and awareness of the signs to watch for to indicate that it’s time to move on from a particular investment?

Will they have awareness of the BIGGER PURPOSE you were aiming to achieve through your capital investments?

In other words, will they be prepared to be wise stewards themselves?

Or will the portfolio you’ve built be turned over to “professional” financial advisors who, for all their training, quite probably have practically zero understanding or perspective about real estate or other non-Wall Street types of investments?  Because if that’s what happens, your portfolio will be liquidated quickly… and probably for far, far less than it’s worth… and folks, there’s nothing wise about that at all.

So in closing today, my friends, I encourage you to think about these things:

Should your aim be adjusted from simply making great investments, to instead being a WISE STEWARD of your resources?

Since stewardship requires you to see yourself as MANAGER of resources rather than owner… who do you view as the OWNER of those resources you’re managing?  Maybe it’s future generations of your family.  Maybe it’s a cause that’s near and dear to you.  Maybe like me you believe your resources are a blessing from God and are His to direct.  But you’ve got to clarify who you believe is owner of those resources, which leads to #3:

And finally, whoever you decide is the owner of the resources you manage, make it a priority to clarify the purpose and values of the owner so that your stewardship hits the mark.

It’s a great thing to make great investments… in fact, it’s necessary.  But so much more rewarding – more deeply fulfilling – is for investing to be a subset of your greater role:  To be a wise steward over the resources with which you’ve been entrusted for a purpose much grander than mere provision of your own needs.

There’s beauty here, my friends.  And through it all, it remains a very good thing for you to invest wisely today, and live well forever!

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“Stocks keep going up, and investors keep saying no thanks”.  At least, that's what a story from the Associated Press says. What's the evidence, and why are the booming results of Wall Street being rejected so broadly?  And most importantly... what superior alternatives exist?  I'm Bryan Ellis.  I'll give you the answer RIGHT NOW in episode #222.

Hello, SDI Nation!  Welcome to the show of record for savvy self-directed investors like you, where we help you build wealth WITHOUT Wall Street!  This is Episode #222, so all of the notes and resources from today’s show can be found there at SDIRadio.com/222.

The first such resource is a really interesting AP story published today at CBSNews.com entitled “Stocks Keep Going Up and Investors Keep Saying No Thanks”.  This one caught my eye because ANYTIME a large group of people do exactly the opposite of what you’d reasonably expect them to do, you’ve got to consider the big question of WHY?

So first, the facts:

The stock market is booming, with the S&P 500 hitting an all-time high on Monday and having been on a very strong trajectory upward since February.

So what gives?  Why is it happening?

Is it because the economy is strong and everyone is investing confidently?  Hardly.  GDP grew by a HORRIBLE 1.2% in the 2nd quarter of this year, and it was even worse in the first quarter.  In fact, Obama’s economic policies are on track to make him the first president in ALL OF US HISTORY not to produce a single year of at least 3% GDP growth.  So the stock market isn’t booming because the broader economy is strong.

Is it because of improving unemployment?  It could be that, because unemployment has finally dropped below 5% for the first time since in 8 years.

Wait a minute… I take that back.  It’s definitely not unemployment, because it turns out that the dirty little secret is that there are MORE PEOPLE NOT WORKING NOW than at any point in history, with an all-time LOW in labor force participation happening this year, with no end in sight.  If you can’t reconcile the fact that there are more people totally out of the labor force than ever before, and yet the unemployment rate is going down… well, you’re not the only one.  There’s no way to reconcile those facts with one another, unless you just desperately feel the need to believe political spin.  I, for one, do not have that need.

So why’s the stock market still going up?

Without citing the highly technical justification known as hocus pocus, AKA smoke and mirrors AKA utter hogwash, it’s safe to say that the US stock market is still riding high on the lingering fumes of QE along with the fact that the U.S. market is clearly viewed as the least bad alternative in the world right now, with economic uncertainty strongly reverberating on account of Britain’s exit from the European Union and the constant reality of China’s deceptiveness about its own financial situation.  Basically, the whole world stinks economically, but the USA stinks a little less… and that’s why big-dollar investors are still pouring money into stocks here and driving up prices.

But didn’t I just tell you that LESS money is flowing into stocks?  Yes, I did… and there’s no conflict.  Where the inflow of capital has substantially slowed and even reversed in many cases is with mutual funds that invest in stocks.  That’s where investors are turning away.

That’s important because by and large, mutual funds are fueled by the capital of individual investors… so it’s the INDIVIDUAL INVESTOR – that’s you and me – who is rejecting Wall Street right at the time when it’s reaching new highs.

So what are they – what are YOU – doing instead?

This article says that some investors are merely shifting their investments around, opting for index funds rather than actively managed stock funds.  But clearly there’s something bigger than that, because a whopping $47 BILLION dollars has left stock funds altogether in the last 12 months.

Where there have been much bigger inflows is into BOND mutual funds, which are perceived as offering more safety and reliability.  But interest rates are so low right now that bonds simply aren’t producing much in the way of income, relegating the investors who are opting for bonds to a position of treating bonds like stocks, and profiting primarily from the changes in the bond prices themselves rather than from the cash flow the bonds create.

BIG EXHALE…. I don’t know about you, but all of this makes me really glad I don’t depend on Wall Street for financial security.

What could those investors be doing instead?

I have 3 quick suggestions.

1. The simplest path to simple, safe and strong returns for them would be to do some real estate secured private lending. For example:  If you have $100,000 to invest, lend that to somebody who has $150,000 worth of real estate collateral so your money is safe, and charge them 6 or 8 or 10 percent interest.  That’s a real gimme.
2. Another great path, which is similar in many ways to buying bonds, is to buy real estate notes that already exist and are paying. All that means is that SOMEBODY ELSE did what I just recommended to you… they lent their money to someone in exchange for collateral and a great interest rate, and now they’re selling that note – similar to a bond – to you.
3. And for those of you who don’t quite “get” the notion of real estate-secured debt, you should consider buying a good high-yielding turnkey rental property. Right now, with no trouble at all, there are several great turnkey properties available that are fully renovated, occupied by a paying tenant with a GOVERNMENT GUARANTEE for payment of the rent and a professional, experienced property manager handling the whole thing.  That means you don’t have to be a LANDLORD, you just get to be an INVESTOR.  And as an investor, the deals I work with routinely generate 10%+ NET INCOME from cash flow alone… that doesn’t even factor in appreciation of the property.  So the numbers here can be really, really attractive.

Here’s why I mention those options to you:  You’ve got to begin thinking OUTSIDE of the Wall Street box… and look at other avenues for growing your capital that are SIMPLE, SAFE and STRONG… because Wall Street, while going through a relative period of strength at the moment, is not now and never will be SIMPLE or SAFE… and wise investors who truly respect their own capital demand all three:  SIMPLE, SAFE and STRONG.

So if that’s you and you’re looking to redeploy some of your capital into opportunities that are SIMPLE, SAFE and STRONG, I’ll be happy to help you.  Just stop by SDIRadio.com/consultation and set up a time to talk with me.  I can help you out whether you're investing on behalf of your self-directed IRA, self-directed 401k or any other capital you're looking to profitably deploy.

My friends, invest wisely today, and live well forever!

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3 things – very bad things – happen INSTANTLY, the very moment you commit a dreaded PROHIBITED TRANSACTION in your self-directed IRA, and you need to understand them.  I’m Bryan Ellis.  This is episode #221.

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Hello, SDI Nation!  Welcome to the podcast of record for savvy self-directed investors like you, where we help you build great wealth WITHOUT relying on Wall Street!  Be sure to visit SDIRadio.com/221 for today’s show notes and transcript and resources I mention in today’s episode.

Over and over again, you’ve heard me warning you about the dangers of prohibited transactions in your self-directed retirement account, and particularly in self-directed IRA’s.  But today we’re going a bit deeper.

But let’s start at the beginning:  What is a prohibited transaction

Here’s a good generalization:  A prohibited transaction results whenever you use your IRA in such a way that you, or someone related to you, derives benefit from the money or assets of the IRA outside of the context of retirement.  So if you buy real estate with your IRA and then you or your family use that real estate yourselves BEFORE it’s distributed to you during retirement, that’s a prohibited transaction.  If you borrow money from your IRA, that’s prohibited.  If you sell to or buy from your IRA, that’s prohibited.  If you use your IRA as collateral for a loan, that’s prohibited.  You get the idea.  The common theme is you’re doing something with your IRA that benefits you or a related party NOW rather than benefiting you during retirement.

But what REALLY happens when you commit a PT?  Let’s just say that you – completely unwittingly and quite surely without malice or intent to commit a PT – do something… anything… that the IRS regards as a Prohibited Transaction.  What actually happens at the moment you do the dirty deed?

Well, there are 3 distinct things that happen, and they are:

#1.  SILENCE.  That’s right… silence.  You’ll hear nothing.  You’ll see nothing.  There won’t be red flags waving or IRS agents knocking down your door.  There will be a whole lot of nothing.  That’s because the IRS – and most likely you, too – don’t even know it’s happened.  Almost nobody commits a PT intentionally, and so when it happens, you don’t even know it.  And so you continue onward… potentially for years… acting as if nothing has happened, continuing to use your IRA as before.

And it may happen that nobody ever finds out you did it.  Generally speaking the only way your error would be “found out” is through an audit of your IRA, which may happen soon, or a long time into the future, or never happen at all.  And unfortunately, there’s no totally clear statute of limitations on this stuff.  There’s case law where the IRS hit an IRA owner about 10 years after the PT.

So you commit a PT in your IRA, and you experience a whole lot of NOTHING right away.  But silence isn’t all that happens, because if the IRS later determines you’ve committed a prohibited transaction, you’ll discover the next thing that happened when you did so, which is:

#2:  Your IRA ceased being an IRA instantly.  Actually, your IRA ceased being an IRA as of January 1 on the year when you committed the PT.  So… no more deductions for your deposits.  No more tax-free sale of assets and tax-free reinvestments.  No more legal protection from things like lawsuits, bankruptcies and creditors.  Basically, your IRA just becomes a financial account that has no benefits for you whatsoever.

Here’s the problem… you don’t know this has happened.  And so you continue to use your IRA just like before… making deposits… buying assets… selling assets… the whole thing.  And you think you’re using an IRA.  But you’re not… which gives rise to the 3rd thing that happens immediately when you commit a PT, which is:

#3:  You begin accumulating taxes, penalties and interest… at a BLISTERING rate.  So maybe it’s 2016 right now and you commit a PT today, but you have no idea you’ve done so.  So 2017, 2018, 2019 come along and you make a full contribution – and take a full tax deduction – for each of those years.  That would be fine if your account was an IRA, but remember… it isn’t.  And so you’re taking tax deductions to which you’re not entitled, and the IRS is going to hit you to repay those taxes along with penalties and interest.

But that’s not the bad part.  The REALLY bad part is that every transaction you perform in your IRA from January 1 of the year you messed up, up until the present day, several years later… well, all of those transactions are FULLY TAXABLE.  But you won’t be paying taxes on them, because you think you’re using an IRA… but you’re not.  This is where the pain can reach stratospheric levels, because, as you know, it’s entirely plausible that you could be dealing with REALLY big profit margins in your IRA… and you’re expecting those profits NOT to be taxed.  But they’re wholly taxable, and you’ll have to pay penalties and interest on top of back taxes, and all of that begins to accumulate instantly when you commit your PT.

That, my friends, is why it’s COMMON for people who commit a PT to lose half or even substantially more of the value of their IRA… they commit the PT completely without awareness and they continue on acting as if they are receiving the benefits of an IRA for many years… only to discover that those benefits vanished very suddenly several years before, and the only thing that’s been growing in the mean time is NOT their retirement savings, but their debt to the IRS.  In a single moment, years of diligent saving and wise investing can be wiped out, and the IRS hasn’t shown a lot of proclivity towards mercy in these situations.  It’s a horrible situation to be in.

So my friends… when using your Self-Directed IRA, always err on the side of caution, opting to seek expert advice early in the process of each investment, so you’re not stuck dealing with the ugly fallout of this problem.  There aren’t very many attorneys who really know this stuff well… so I’ll save you a heap of trouble and recommend one to you… his name is Tim Berry and you can get his contact info over at SDIRadio.com/tim.  If you think you’ve committed a PT, you should do yourself a favor and reach out to him right away.

 

My friends, we’ve got a lot of EXCITING STUFF headed your way ont his show in the coming days, so do this:  If you’re listening on iTunes BE SURE to SUBSCRIBE to this show… it costs you nothing, but guarantees you that you won’t miss anything.  And whether you’re listening on iTunes or in any other way, be sure you’re on the SDI Private Notification list by texting the word SDIRADIO to 33444.

My friends… invest wisely today, and live well forever!

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is tougher, my friends… but I’ve got the answer for you RIGHT NOW!

Here's what you'll learn in this episode: ~ 3 Big Factors That Determine If Section 8 Is Right For YOU! ~ Why experienced property management is key to success with Section 8 ~ Why section 8 is NOT right for everyone ~ How Section 8 can eliminate problems with rental collections and reduce maintenance and vacancy costs

Resources: ~ Show Notes: http://www.SDIRadio.com/220~ Yesterday's Introduction To Section 8: http://www.SDIRadio.com/219 ~ YouTube Page: https://youtu.be/LID1UBUHq_Q ~ HUD Section 8 Info: http://portal.hud.gov/hudportal/HUD?s... ~ HUD Housing Project Info: http://portal.hud.gov/hudportal/HUD?s... Join the free SDI Private Update List by texting SDIRADIO to 33444

Invest Wisely Today, Live Well Forever!

Please check out Self Directed Investor Society here: http://www.SDISociety.org http://www.Facebook.com/SDISociety http://www.Twitter.com/SDISociety http://www.Instagram.com/SDISociety http://SDISociety.Tumblr.com

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Want to cause a heated discussion among landlords? Just say the words “Section 8” and watch the fireworks explode! Today, I’ll tell you what Section 8 is, how it works… and why there’s not a single answer to “is it a good idea”. I’m Bryan Ellis. This is episode #219. Here's what you'll learn in this episode: ~ Where did the Section 8 program come from? ~ Why Section 8 housing is TOTALLY *UN*-LIKE government housing projects ~ How the process works for landlords who use Section 8 Resources: ~ Show Notes: http://www.SDIRadio.com/219 ~ YouTube Page: https://youtu.be/LID1UBUHq_Q ~ HUD Section 8 Info: http://portal.hud.gov/hudportal/HUD?s... ~ HUD Housing Project Info: http://portal.hud.gov/hudportal/HUD?s... Join the free SDI Private Update List by texting SDIRADIO to 33444 Invest Wisely Today, Live Well Forever! Please check out Self Directed Investor Society here: http://www.SDISociety.org http://www.Facebook.com/SDISociety http://www.Twitter.com/SDISociety http://www.Instagram.com/SDISociety http://SDISociety.Tumblr.com Be sure to SUBSCRIBE to our channel for more news and training for affluent self-directed investors!

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THIS CITY is more famous for poverty and civil rights-era protests than for its real estate, and frankly, some of you more “snooty” investors – you know who you are hehehe – will turn up your nose at this market. But you’ll be leaving money on the table, because much SMARTER MONEY has seen the cash flow opportunity here, and is SERIOUSLY jumping into it. I’m Bryan Ellis. I’ll tell you all about it right now in Episode 218.

What You Will Learn: ~ 7 really strong motivators I’ve identified in favor of investing in real estate in Birmingham ~ Why the yields from Birmingham properties are reliable, high, and long term ~ How having Section 8 tenants can be beneficial to you

There’s a LOT MORE in the video, please check it out at: https://www.youtube.com/watch?v=tCLi0zPSpI4 http://www.SDIRadio.com/218

Join the free SDI Private Update List by texting SDIRADIO to 33444

If you missed the last episode of Self Directed Investor Radio, check it out here: http://www.SDIRadio.com/217

Invest Wisely Today, Live Well Forever!

Please check out Self Directed Investor Society here: http://www.SDISociety.org http://www.Facebook.com/SDISociety http://www.Twitter.com/SDISociety http://www.Instagram.com/SDISociety http://SDISociety.Tumblr.comhttps://www.thestreet.com/author/1685512/bryan-ellis/all.html

Be sure to SUBSCRIBE to our channel for more news and training for affluent self-directed investors!

 

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What You Will Learn:

~ What is the hottest market in the WORLD? ~ Why has it been BOOMING for the past 15 years? ~ Why is that market crashing right now... very quickly?

Links & Resources: - http://www.zerohedge.com/news/2016-08-03/deals-are-collapsing-vancouvers-housing-bubble-has-just-burst - http://www.chpc.biz/vancouver-housing.html - http://www.cbc.ca/news/canada/british-columbia/new-figures-show-massive-growth-in-metro-vancouver-real-estate-prices-1.3524888 - http://www.bloomberg.com/features/2016-vancouver-real-estate-market/

There’s a LOT MORE in the video, please check it above or at: https://youtu.be/0eiJl69-pAg http://www.SDIRadio.com/217

Join the free SDI Private Update List by texting SDIRADIO to 33444

If you missed the last episode of Self Directed Investor Radio, check it out here: http://www.SDIRadio.com/216

Invest Wisely Today, Live Well Forever!

Please check out Self Directed Investor Society here: http://www.SDISociety.org http://www.Facebook.com/SDISociety http://www.Twitter.com/SDISociety http://www.Instagram.com/SDISociety http://SDISociety.Tumblr.com

Be sure to SUBSCRIBE to our channel for more news and training for affluent self-directed investors!

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