Ever since the dot com bubble burst in 2000 and the catastrophic events of 9-11, as a country we have been struggling to recover the value in our retirement accounts. One article that I read indicated that the losses in value due to these two events were as high as 60%.With the overall market averaging an historical annual return of 7%, do you know how long it would take to recover that 60%.
14 years.
If, of course, the average return stays at 7%. Do you know what it was in 2006? 16%.
In 2005? -0.6%.
In 2004? 3.1%.
Since January 2002? ONLY 5.5%!
What does this mean?
That after six years, those retirement accounts that have continued to invest in the “market†are less than halfway back to breaking even with where they were in 2000.
Less than halfway back. Doing things the same way that they have always been done. This is having a real, material impact on retirement planning, isn’t it?
Now I’m sure that you’ve looked at some other alternatives, as I have – derivatives, currencies, commodities, and the rest – to find your way back. If you did then you found the same thing that I did – that for the privilege of chasing those elusive higher returns, I had to sign up for exponentially greater risk. Kind of like betting the whole retirement farm on black in Vegas. I said no thanks. I hope you did too.
I’m here now to tell you that there’s a better way.
There’s a better way to earn high returns in your retirement accounts. A better way with less risk.
The Self-Directed IRA
Did you know that it’s possible to invest your retirement accounts in products other than stocks, bonds, and mutual funds? It wouldn’t surprise me if you didn’t, because most people that I talk to aren’t aware of it. But it is possible.
Unfortunately, though, most people usually don’t have much variety available in their traditional-type accounts, so in order to broaden your choices wide enough, you must have a retirement account that is “self directed”.
A self-directed IRA allows you to invest in both “traditional” investments such as stocks, bonds, and mutual funds, as well as “non-traditional” investments, like commercial and residential real estate.
The best part is that anybody can have a Self-Directed retirement plan, because they’re not limited to certain people or business owners or the self-employed.
But that’s only part of the story. Think for a moment about the power of combing the tax deferability of an IRA with the higher yields of real estate investments. When you combine them you have . . .
The Self-Directed Real Estate IRA
Historically, real estate had supplied many people with a stable investment vehicle. Not only stable, but real estate can also can provide predictable, fixed rate returns far above what the market offers on average. How far above? How about 10, 12, or 15% annually? With far less risk than the stock market.
The primary benefit to you of course will be that the rate of return for this portion of your IRA portfolio will be based on investments secured by real estate, not on the ups and downs of the stock market. You’ll have a truly diversified portfolio.
The most important things to remember are that 1) with a self directed real estate IRA, the type of investments you make will be exactly the same kind you presently are making for your personal account. The only difference is that the profits in your real estate IRA investments are tax free/deferred, and 2) you will need an IRA custodian because the IRS does not allow you to personally “touch†your self-directed IRA account.
So – how do you set up a Self Directed IRA to invest in real estate?
It’s actually simple to do. It involves picking a custodian that has experience with these types of IRAs, deciding how much of your retirement funds you’d like to invest in real estate projects, and then filling out the paperwork. It’s that easy. Then you can join me in laughing at the volitility in the market!
Visit www.MPSG-LLC.com for more information.
