In life there are a lot of things we learn by accident, which can be very beneficial to us. Sometimes understanding these processes can take a while. Sometimes after proper explanation …BLAM, you get it. That is exactly what happened to me. When I first heard about the topic, I will discuss in this E-book, it was perplexing, however, I knew that it could reap huge rewards in the future. It took a while for me to understand the process. I remember trying to tell a buddy who
owned an apartment building about and what it could do for him. I remember getting it all confused (like telling someone a good joke, but while you are trying to say the good joke, in mid sentence you realize that you don’t remember it all and it is not coming out right, so you just say forget it because you are screwing the joke up). Fortunately, by mistake I came across the company Pensco Trust who has educated me on this great opportunity ofI am considered one of their “Preferred Professionals.” My learning curve is your benefit. Enough with my teasing games, the purpose of this E-book, is to educate you on Self Directed IRAs. So buckle up! Legal Steroids Europe
This publication is made to provide basic information in regard to Self Directed IRA’s. It is presented with the understanding that I am not engaged in rendering accounting or legal advice. If you need legal advice services of a proficient professional should be contacted. I can not in any way guarantee that this material will be properly used for the purposes intended and I assume no responsibility for its correct and proper use.
We all know that Social Security (SS) is struggling and the money there will eventually disappear. Prior to 1935 there was no personal SS. All that existed were people saving their money in their bank/under the mattress. In 1935 SS was created. Remember that this was the same time period of the Great Depression. Keep in mind the life expectancy back then was like 62 years old. Now it is 76. Baby Boomers make up a huge portion of the population. Baby Boomers are retiring everyday. You want some hard facts? Well according to Research Corporation Study: The New Landscape of IRA Rollover © 2005 BISYS Retirement Services.
Now on the flip let’s say there was no problem with SS. Have you ever talked to someone who gets SS checks? They don’t get a lot of money. It is sad sometimes. I am not trying to offend anyone, but the majority of the older people you see at Wal-Mart greeting you and marking your receipt didn’t have a “nest egg” to rely on when they “retired”. The topic I will discuss will prevent that from ever happening to you and I.
1974 congress created IRA (Individual Retirement Account) to supplement Social Security. We know these are programs to help shelter money away for tax benefits. Typically people go after the traditional investments. We always hear about stocks, bonds and CD’s. Yes all investments have risks, but the thing about these investments is that you can not affect the outcome of the business/your return. You are a spectator, watching the game. Also, you can’t use leverage (an example of using leveraged will be discussed later). Also, with stocks if any little blip in market occurs, like oil, war, scandal, etc. your value could go down. Real estate does go up and down but generally you don’t lose all of your money in worst case scenarios. Real estate appreciation has kept pace or exceeded inflation. It is a cycle. When it goes down, the value does not go down instantly (like Enron).
Self Directed IRA (SDI) an overview. Now I am not bashing stocks, I have them, if you talk to any financial planner, they will tell you to always be diversified in your investments. This is what SDI does for you. Ideally you should have SDI, stocks, bonds etc.
SDI has been a well kept secret. Why? I think it is because of ignorance, and I also the folks on Wall Street don’t benefit. A broker at an investment company will not tell a person about it, because they can’t make money off of the transaction (let alone having them understand how it works). The last reason is because there are “professionals” who don’t have a clear understanding on its use.
To get a SDI, you would either have to go through an Administrator, or a Custodian.
What is an Administrator? Banks, brokerage firms (like Charles Schwab) and insured credit unions.
What Is A Custodian?
There are very few self-directed IRA/401k custodians in the United States. In order to be a custodian for self-directed products, the custodian is known as a “passive custodian.” This simply means that they are obligated by law to provide only custodial and administrative services for the qualified plan. They can provide NO investment advice. This tremendously reduces the fees associated with traditional investments because you, the investor, make all of the investment decisions. They are also FDIC insured.