If much of what you have been told about building wealth was wrong—when would you want to know? Hopefully, the sooner the better!
I used to be a typical financial planner. I began my career working in a bank, then moved into “typical” financial planning. Several years later, as I describe in Financial Planning Has Failed, I came to understand I was leading clients down the wrong path—or at least, a flawed path.
Typical financial planning can give investors false hope and very little control over their own money. And by the time people realize they are going to owe their brokerage, money managers and Uncle Sam a hefty cut of every dollar they receive in retirement, it’s too late to change course.
During his presidential run, Mitt Romney came under scrutiny when it came to light that he had acquired something of a fortune in his self-directed IRA. According to Forbes.com, Romney’s IRA was worth between $20.7 and $101.6 million. How did he acquire such wealth in a qualified plan environment?
The answer lies in the descriptor “self-directed.” Because Romney this had a self-directed IRA (aka SDIRA), he was able to use his IRA to fund venture capital and private equity investments inside his retirement account. When Bain Capital (in which Romney was a founding partner) became highly successful, Romney’s wealth ballooned.
While few people have the ability to turn limited retirement plan contributions into many millions, the financial container Romney used to grow his investments tax-deferred is not reserved for multi-millionaires. Any American can open a self-directed IRA and use it to invest in (almost) anything they wish.
In this article, we outline self-directed IRA pros and cons and the basics of self-directed IRAs, including:
What is a self-directed IRA?
What can you invest in within a self-directed IRA?
What are self-directed IRA pros and cons, advantages and disadvantages?
Who might benefit from one?
What is the process and how do you begin it?
Then at the end of this article, we’ll list links to additional resources for further information.
This year has been an adventure in uncertainty. We could not take even simple things for granted: going out to eat, attending church, working out at the gym, even finding toilet paper at the store! And financial uncertainty has been a part of that, with record levels of sudden unemployment and business closures.
2020 was a tough year for entrepreneurs and business owners. According to data from a Yelp survey, half of the businesses that closed due to the lockdowns are now closed permanently. In spite of this daunting statistic, there are still compelling reasons to have a business. If anything, the events of the recent months reveal key reasons why everyone should have a business—even if it is a side-gig!
“Gratitude for the present moment and the fullness of life now is the true prosperity.”
– Eckhart Tolle
2020 has been an unbelievable year—one with unusual challenges! In addition to the health and economic crisis, the media floods us with information to keep us stressed and outraged. Ironically, that state of mind only endangers our health and wealth!
Now more than ever, it is imperative that you control and direct your mindset. We have limited control over external circumstances, but we have complete control how we respond to challenges!
How do the wealthy get that way? What determines your level of wealth and success—is it luck, education, or the size of your inheritance?
According to DQYDJ.com, nearly 12 percent of all American households represent a million dollar net worth. About 1 percent of U.S. households are estimated to be worth $10 million or more. Research indicates that about 80 percent of millionaires are self-made. Many did not complete college. And while a little luck can’t hurt—wealthy people have a way of creating their own opportunities.
The real difference between the wealthy and the working class is habits. These include common behaviors as well as habits of thought. (And no—sipping champagne on a yacht is not what we’re talking about!) Here are twelve habits that can make a big difference:
“I just bring the best version of… me to the table because I want everyone else to do the same.”
—Thasunda Brown Pickett, CEO of JP Morgan/Chase Consumer Bank
American citizens are blessed to live in a place that still exemplifies freedom and opportunity for many. As Meredith King Ledford, MMP has written, “Opportunity is one of our country’s most cherished ideals and one of our most valuable national assets (that) inspires each generation of Americans—regardless of race, ethnicity, class, gender, or national origin—to reach his or her full potential.”
Is there still opportunity in America? In 2017, a Gallup poll surveyed people around the world that wished to leave their country and immigrate permanently to another country. Where do they wish to move? By a huge margin of nearly 4 to 1, the number one choice was the United States! (The U.S. was followed distantly by Germany, Canada and the UK).
“Max out your 401(k)” is one of the most common pieces of popular financial advice. Of course, it’s “for your own good,” we are told. But is it really? Today we expose the very real risks of a 401(k), and what you can do to decrease them since financial planning without investment management is tricky.
Investing most or all of your money in a 401(k) is very good for Wall Street’s profits. It’s so good that financial firms spend millions lobbying Congressional lawmakers! As a result, the Department of Labor allows employers to automatically enroll employees into a 401(k) plan. To clarify—unless the employee opts out, a part of each paycheck can handed to Wall Street… without so much as a signature!
This website is provided for informational purposes only. The information contained herein should not be construed as the provision of personalized investment advice. Information contained herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security or investment. Investing involves the risk of loss and investors should be prepared to bear potential losses. Past performance may not be indicative of future results and may have been impacted by events and economic conditions that will not prevail in the future.