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Putting your hard-earned IRA assets into a “self-directed” IRA can be a very good idea to grow long-term, tax-deferred or tax-free assets. But it doesn’t work for everyone.

With taxes going up for most people, you might be paying more attention to your tax-deferred retirement investing options, such as your Individual Retirement Account (IRA). And with property prices going up, you might ponder whether you can invest those IRA funds in real estate to both defer (or eliminate) taxes and earn a fair rate of return.

Here are a few things you should specifically consider if you think using an IRA to buy investment properties could work for you.

Eligible properties

The real estate you buy must be a business property, not a personal residence, second home or occasional rental. Also, you can’t use your IRA to buy a property you already own; it has to be a new purchase directly into the IRA.

If you wanted to buy a rental property, you would open an IRA custodial account, transfer cash from an existing IRA account — or possibly 401(k) — into the custodial account and then purchase real estate under the IRA account name. Very specific rules outline what you can and cannot do in funding and managing the investment, so make sure to get good advice on those rules.

  

You can also buy and sell real estate in a self-directed IRA if you are in the flipping business, but there are limits on how many you can do per year. The profits on any transaction would be tax-deferred or tax-free and allow your IRA to continue to grow with those tax advantages.

IRA investing concerns

You can’t get a traditional mortgage loan in an IRA, so you really need to have enough money in your IRA to purchase properties for cash if you plan on having the property as a long-term rental. There are also costs to administering the IRA, so factor those into your calculations when penciling out any real estate investment. And you cannot write off losses or depreciation from any investment property in an IRA, so there won’t be the traditional tax savings you’d get on rental properties. Lastly, if you fail to comply with any of the rules, it may kill your IRA and cause you many tax penalties.

Financial considerations

Don’t put all of your IRA eggs into one basket. Too many people don’t properly diversify their retirement assets — present company included. It would be smart to talk to a financial adviser on how to allocate all your investment savings into different assets, based on your age and risk tolerance.

If you want to use your IRA to buy real estate, you need to understand what you can and can’t do. More key information can be reviewed at udirectIRA, which is a self-directed IRA custodian. And as always you also should get professional guidance from an accountant and lawyer.

Good luck!

Originially posted by Zillow on Forbes.com click HERE for the orginal article

If you'd like to learn more about investing in real estate with us go to our Investor's tab or free feel to contact us.

 

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Stock market volatility has left investors looking for other ways to grow retirement assets.

Consider Mark Shaw, a reader who wrote to me recently. Shaw, 48, who works as an employment specialist with a non-profit in Whiteville, NC, is thinking about investing his IRA in tax deeds and real estate, but is afraid of getting snookered.

The account, which by his description holds a modest sum (he wouldn’t say how much), consists of money rolled over from 401(k)s at previous employers. “My problem is I don’t know of a trustworthy source to do business with,” he wrote in an e-mail. “I just want to deal with a good company and not get taken.”

As I noted in my Forbes magazine article, “How To Invest Your IRA In Real Estate And Alternative Assets,” an apparently growing number of people like Shaw are investing IRAs in assets not traditionally associated with these accounts. IRAs are not allowed to own by life insurance, collectibles (like stamps, art or antiques) or stock in small partnerships known as Subchapter S corporations. But that leaves many other possibilities, from oil and gas, solar energy and cattle, to promissory notes and private equity.

How To Choose A Financial Advisor Deborah L. Jacobs Forbes Staff Eight Ways To Make Collecting Pay Off Deborah L. Jacobs Forbes Staff The Best Foreign Retirement Havens Deborah L. Jacobs Forbes Staff Inherited IRA Rules: What You Need To Know Deborah L. Jacobs Forbes Staff

The big brokers, banks and mutual fund companies that act as custodians for most IRAs generally limit investments to publicly traded stock, bonds, mutual funds and bank CDs. However, about two dozen smaller custodians of “self-directed IRAs” (an odd term, since any investment you chose yourself for an IRA held anywhere is self-directed) allow you to invest in assets like real estate and new business ventures. Self-directed IRAs can pay off handsomely, but scams abound.

For example, the Securities and Exchange Commission in August charged an Indiana resident with conducting a Ponzi scheme targeting retirement savings of investors. In its complaint, filed in federal court in Indianapolis, the SEC alleges that John K. Marcum touted himself as a successful trader and asset manager to raise more than $6 million through promissory notes issued by his company Guaranty Reserves Trust to at least 37 people.

Marcum helped investors set up self-directed by IRA accounts, assuring them he could safely grow their money through investments in widely-held publicly-traded stocks, and he promised annual returns between 10% and 20%. Marcum also told a number of investors that their principal was “guaranteed” and would never be at risk.

Instead, the SEC alleges, Marcum used investor money as collateral for a $3 million line of credit at Merrill Lynch, where he used to work. He took frequent and regular advances from the line of credit to fund such start-up ventures as a bridal store, a bounty hunter reality television show, and a soul food restaurant owned and operated by the bounty hunters.

Marcum’s lawyer, Patrick E. Chavis IV of Indianapolis, did not respond to a phone call requesting comment.

In an Investor Alert, the Securities & Exchange Commission noted “a recent increase in reports or complaints of fraudulent investment schemes that utilized a self-directed IRA as a key feature.” State securities regulators have investigated cases where a self-directed IRA was used to lend credibility to a fraudulent scheme. And the SEC has brought cases in which promoters of fraudulent schemes steered investors to self-directed IRAs, as noted here.

Custodians for self-directed IRAs have for many years sponsored seminars featuring investment promoters, even as they told customers that they couldn’t recommend specific investments and their contracts said they weren’t on the hook if you picked a bad or bogus one.

So what’s an investor to do? The sage advice to not invest in something you don’t understand or that sounds too good to be true applies here, just as it does with any other investment.

Before you turn over a dime, do your homework about the person making the pitch. Go beyond the promoter’s own website.

  • Google the names of promoter and its firm (click through at least 20 of the hits you get).
  • Look for third party content that mentions the promoter or their firms (newspapers, magazines, websites).
  • Use keywords to uncover problems. Combine the promoter’s name and the firm names with these words: fines, scams, fraud, lawsuits, guilty, suspensions, FINRA (the Financial Industry Regulatory Authority), and SEC.
  • Check promoter and firm compliance records with FINRA and the SEC.

Keep the latest cautionary tales in mind the next time a pitch for a great sounding by IRA investment comes your way. Ask probing questions. If you’re not satisfied with the answers, you might want to let it go by.

 

This a reposted article from Deborah Jacobs originally posted on Forbes.com you can see the origanl post here: http://www.forbes.com/sites/deborahljacobs/2013/10/18/how-to-get-the-most-bang-for-your-ira-buck/

A online business is something a lot of people strive to have, but fewer actually successfully obtain. A lot of people forget to learn all there is to know about maintaining a home business enterprise. When you learn all that you can, then your success can only become that much more likely.

Team

Network with other local work from home business owners. This can accomplish a few things: you get out of the house to see your network; you team up to sponsor local events and get publicity; and you support each other. It's good to get away from your computer and to see people sometimes, too.

Freelancing may be the simplest of all home businesses to start. You must be motivated to work on your own without a team or boss. Next, you must have a service or product to offer in the market place. Writing, graphic design, and programing are just a few examples of profitable freelance businesses. So, if you possess a marketable skill and self motivation, a freelance home business enterprise may be just the thing for you.

Involve your family as a team and play for home business enterprise success. Your extroverted spouse might be eager to do cold calls and handle clients. Your daughter may be great for articles and ad copy, while your son could create cool logos, web sites and brochures. Above all, they must have fun.

Figure out what safety equipment you’ll need to work at your home business and pick it up as soon as possible. It’s important to keep every member if your team healthy and safe, so they can do their hardest work on your company’s behalf instead of having to pay their medical bills.

Opportunity

Provide free products for others in the community to use as prizes. Not only does this increase your reputation for generosity in your area, but it gives your products exposure. The individuals who win may not have heard of you before but having the opportunity to sample your product could turn them into a customer.

Publicize yourself using what's available. Place a bumper sticker on your car that has a link to your website, for example. Sponsor a local event and display a large poster with a link to your site on it. Use every opportunity to market yourself well and your website will become very popular.

Do not spend more on a online business opportunity than you can safely afford to lose. Even the programs that are completely legitimate do not work for everyone. You may find that the program just does not mesh well with your way of thinking, and then you will be out the cost of the program.

If you feel, even after reading this article that there is still more to learn about home business enterprise, then you’re right. There is a lot to learn about how to be successful in a home based business. The information in this article is great but just keep in mind that there is always more to learn. If you apply yourself, then success should follow

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The U.S. has fallen behind much of the Western world when it comes to phone, cable and Internet service. Americans actually pay much more for inferior service compared to their global counterparts.

In his new book, The Fine Print: How Big Companies Use ‘Plain English’ to Rob You Blind, Pulitzer Prize-winning reporter David Cay Johnston highlights these astounding facts:

  • Americans pay four times as much as the French for an Internet triple-play package—phone, cable TV and Internet—at an average of $160 per month versus $38 per month.
  • The French get global free calling and worldwide live television. Their Internet is also 10 times faster at downloading information and 20 times faster uploading it.
  • America has gone from #1 in Internet speed (when we invented it) to 29th in the world and falling.
  • Bulgaria is among the countries with faster Internet service.
  • Americans pay 38 times as much as the Japanese for Internet data.

Since the mid-1970′s when Ma Bell was cited as holding a monopoly over phone service, Americans have been told more competition would lower their phone bill. But the promise of lower prices has actually led to higher prices, says Johnston. In his book, he tells of a woman who in 1984 paid $9.51 for her local phone service. He writes:

“By 2003 her bill had swollen fourfold to $38.90. In the two decades since the breakup of the AT&T monopoly, even after adjusting for inflation, [her] telephone cost $2.30 for each dollar paid in 1984. And that was without any charges for long-distance calls.”

Not only have prices increased, phone service providers now charge fees for everything, including options that used to be free, such as directory service. Bills have also become increasingly complicated. A poll of 1,000 people found that only three people actually knew how to read their statement. That means virtually no one understands their phone bill in its entirety. Of cable service Johnston writes:

“Since 1995, average cable prices have been rising 2.6 times faster than the cost of living, reaching an average of almost $53 a month for basic, no frill service in 2009, FCC reports show….

According to SNL Kagan, a market research firm, the average cable bill in 2011 was $78, almost double the price of $40 in 2001 and significantly higher than the FCC figure.
How did this happen?

“The telecos got the rules changed while we weren’t watching,” says Johnston in the accompanying interview. Basically, the phone and cable companies lobbied Washington to change laws and regulations to favor their business over their customers.

And remember the so-called “Information Superhighway”?

Over the course of the last 20 years, nearly $500 billion has been collected by the telecom companies to (allegedly) bring America into the 21st century with an “Information Superhighway,” says Johnston. That works out ot $3,000 per household to have access to high-speed Internet.

But America did not get what it was promised and much of the country will never get fiber optic lines, Johnston tells The Daily Ticker. And even in cities that do have the faster service, the service is not always accessible.

“This is terrible for commerce and our economic future,” says Johnston, adding that our global competitors are investing in the proper infrastructure.

*this is a repost. Check out the full post here http://finance.yahoo.com/blogs/daily-ticker/why-phone-cable-internet-bills-cost-much-130914030.html

 

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Budget travel tips|Travel Safety

It is tough to mentally justify a  travel holiday when the economic situation is bad, as it is at the moment. This article will give you some great ideas for the budget-minded traveler.

First travel alone if possible, traveling with others can lead you to spend more to be part of the group. You are also likely to eat out more often than not if you are traveling with a group, simply because it is harder to cook for many while traveling. If at all possible stay at hostels or hotels where breakfast is included and that have a common kitchen.

Leave your pets at home instead of traveling. The extra costs associated with pet travel add up extremely fast. Hotels normally have extra fees and  if you a flying can cost hundreds to transport.

If you really need a room at a booked hotel, ask if they are willing to let you pay for a room that is marked out of service. A room that is out of service usually has walls that aren’t painted or other minor issues such as carpet stains.

Budget travel tips|Travel Safety

Be wary of any current social or political drama at your destination. The travel.state.gov website provides real-time information about affairs that may be troublesome for travelers. Checking this site out will prevent you from traveling to a potentially dangerous country.

When traveling, it is important that there are copies of any important documents you may have. Photocopies of your passport, insurance, and other travel documents should be stored separately from those that you are carrying with you. To protect yourself from the headaches that will happen if your documents are stolen or lost, leave a set of copies with someone trustworthy.

Budget travel tips|Travel Safety

As discussed in the article, you may feel as though you should pass on your yearly vacation because of the economy. If you use the advice contained in this article, you will have no problem getting that next vacation set up.

To your travels,
Brad Bailey
Escape Artist
616-301-5753
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P.S. Click Here to get access to the system that allowed me to make money blogging while I travel and get e-mails like these.

 

budget travel tips| travel| travel safety

 

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