Archives for February, 2014

11 Feb 2014

What are the Best Retirement Investments?

What are the Best Retirement Investments?

The best answer to that question is  that there is no such thing as the best retirement investments. The reason for that is because everybody’s financial situration is a little different. What might be the best retirement investments for a 30 year old just starting their IRA are going to be totally different than what is good for someone who is only 10 years away from retirement. However, we can shed some light on some different self directed investment strategies that we think are worth taking a look at.


Single Family Rental homes


Single family homes are amongst the most popular real estate investments in all of the United States. Today’s low prices and surplus of available properties make purchasing single family rentals a great place to seek out investment opportunities. This investment vehicle also has the ability to allow investors the opportunity to bring in a monthly income.  This can turn out to be a grat investment if you can handle managing the property (or hiring a property management firm) and are prepared to have a vacant property every once in a while. Not for everyone, but definitely one of the best retirement investments out there.


Apartment Buildings


Like a monopoly game, at some point it may be beneficial to trade in the little houses and upgrade to a big apartment building. One apartment building may provide as much cash flow as 20 little houses. Some additional advantages to these types of investments is that the more units you have, the less impact a single vacancy will affect your monthly cash flow. That said, apartments require much more due diligence and it is important that you have a professional assist you in this process.


Vacant Land or Land Banking


Land Banking involves the purchase of land at or below current market rates. This property is held until the value matures, and it can be sold at a profit. Now, have there been occasions where land increased in value more rapidly than expected because of a growth spurt along the path of progress happening faster than expected? Absolutely. However, for the most part, you want to consider this type of investment a long term one. Keep in mind that raw land is NOT income producing, meaning your IRA must be able to carry the payments, interest, taxes and (if you choose) development costs.


Buying Foreclosures


A foreclosure home is one that is currently being foreclosed upon by a bank. Foreclosure is a legal process through which the homeowner’s property rights are terminated, usually due to a failure to make the mortgage payments. Typically, the bank who owns the mortgage will try to sell the home as quickly as possible, sometimes through a public auction. To secure a quick sale of the foreclosure property the bank will often sell at a low starting price as well. Foreclosure properties can be a good source to find cash-flowing rental properties

to invest in.


Mortgage Notes


A mortgage note can be bought or sold by a private individual. When you, as a private party, buy mortgage notes, you essentially become the lender on the mortgage. You literally become the bank. Whether you buy or sell mortgage notes, the mortgage note is a type of investment that allows you to earn a known rate of return on your investment for a specified duration of time.


Trust Deeds


Trust deeds are short term loans meant to help Real Estate investors buy a property quickly. They are willing to pay higher interest rates for the short term loans (6-24 months on average) in exchange for obtaining purchase monies rapidly. The RE Investor will offers the Trust Deed investment will typically either: sell the property right away and repay the loan and interest; or, repay the trust deed loan when they refinance the loan with long term traditional financing. Trust deeds are used in the short-term; therefore they earn you a higher interest rate. When you invest in a trust deed the loan that you give out is completely secured with real property. Your trust deed is recorded with the county recorder’s office and you show up in the first lien position. If the investor who borrowed money from you fails to pay, the property itself can now be acquired through foreclosure. With trust deeds, you have collateral on your money. Having a secured investment is a big deal, and so are the returns you can earn from investing in trust deeds. You can expect a fixed rate of return between 5 to 15 percent. This rate is much higher than the rates of CDs, money markets, or bonds. The rates never change in trust deeds.



Invest in what you know


Our point here not to sway an investor one way or the other.  What the “best retirement investments” are will be up to you. The goal is to help you determine which path is right for you. If we were ever to give any piece of advice it would be to “Invest in what you know and understand.”


“If you are pepared to invest, then you ought to be able to explain why in a simple language that a fifth grader could understand, and quickly enough so the fifth grader won’t get bored.” – Peter Lynch


To learn more about different investment options or to get resources on how to take part in any of the investments we have discussed in this article, Contact Us today.


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11 Feb 2014

401k Rollover to IRA

401k Rollover to IRA – What to know before making the transfer

Imagine that you had been working for a company for over 10 years. You had a good benefit program and each year your employer matched your contributions to your 401k plan. Now, for whatever reason, you have had to change jobs. Maybe there were layoffs, you moved to a different state, or maybe you just wanted a change of pace. You take a look at your old 401k and are thinking about what options that you have with it. Sure you could transfer it to a new 401k with your new employer, but perhaps there are more 401k rollover options that could be better for you. One of those options is to do a 401k rollover to IRA transfer. This article aims to provide some clarity as to the benefits of doing a 401k rollover to IRA transfer and what you can expect during the process.

The first major difference between rolling over your 401k into an IRA as opposed to rolling it into another 401k is that you will be transferring your account into a personal account.

An IRA is typically an account that is held by an individual alone, not by an employer. Now, we say typically because there are some cases where an employer will include an IRA as part of their benefit package. If that is the case, then the transfer process will be very similar to how we outline it in this article, except you will probably have a plan administrator to assist you. For the purposes of this article, we will assume that when doing a 401k rollover to IRA transfer that the account will be transferred to a personally held IRA.

Having a personal IRA means that you will have to find an IRA custodian or broker to actually hold your account.

There are many commercial entities out there that offer these services and they all have different benefits. When doing your research it is important to work with someone you can communicate well with and who listens to your goals. One of the cautions of working with a standard IRA broker is that you will most likely have to work with an advisor and will have to pay higher fees as a result. You were probably paying fees with your previous 401k too, so you might not see too much of a difference when transferring over to an IRA. Finding the right custodian or broker is important because this is going to be a company that you will probably work with for several years, you want to be able to trust them.

You can also do a 401k rollover to IRA transfer to a self directed IRA.

Self directed IRAs offer many more investment choices than a traditional IRA and can give you more control of your account. Another difference is that self directed IRA custodians do not employ advisors, so you will typically see fewer fees taken out of your account.
Whether you choose a traditional IRA or self directed IRA it is important to do plenty of research. USelfDirect belives in the power of knowledge and we think that you should too! That is why we have loaded our site with tools and resources to help you during your investment journey. We have also employed an excellent staff of IRA experts that can help answer your questions.

More Info on IRA Types

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