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The Top 7 Dos and Don’ts of IRA Investments

Posted by on Dec 27, 2017 in Blog | 0 comments

IRAs or Individual Retirement Accounts are some of the most popular personal finance solutions for retirement planning, since they offer significant tax advantages as well as various investment options. An IRA is not an investment in itself, but an account where various investments are held.

However, it’s important to remember that certain types of investments cannot be held within these accounts and will be treated as withdrawals if you try to do so. This involves not only being taxed on the investment, but also a 10% early withdrawal penalty if you’re under 59.5 years of age!

Here are 8 basic dos and don’ts of IRA investments that you should keep in mind while planning for retirement:

1. DO: Common Investments – Mutual funds, including equity, bond and balanced funds, are the most common type of IRA investments and a good place to start. Other popular options include publicly traded stocks, fixed and variable annuities, money market funds, bonds, treasury instruments and cash.

2. DO: Real Estate Investments –IRA contributions can be used for making down payments while buying a home as a first-time buyer. You can withdraw up to $10,000 tax-free, if the funds have been in the IRA for at least 5 years. You cannot use IRA earnings, which would be treated as taxable distributions and subject to early withdrawal penalties.

3. DON’T: Prohibited Investments – Tangible personal property deemed as collectibles by the IRS, such as art, rugs, gems, stamps, fine wines or other alcoholic beverages, antiques and most precious metals are not permitted as IRA investments. The IRS allows some exceptions for coins made of precious metals.

4. DON’T: Life Insurance – You cannot buy life insurance policies as IRA investments, but you can set up your IRA account through a life insurance company to hold an annuity that offers life insurance benefits. As the IRA owner, this annuity must be in your name and proceeds from it can only be paid to you or your beneficiaries.

5. DON’T: Prohibited Transactions – You cannot use an IRA for personal financial gains beyond the tax benefits you already enjoy. The IRS prohibits self-dealing, i.e. engaging in transactions that involve the IRA owner and parties in interest such as members of their family, corporations where they hold controlling interest, etc.

6. DON’T: Prohibited Financing – If you’re using any kind of debt to finance IRA investments, you will get in trouble. The accounts are designed to help with planning for retirement, not making quick profits, so you cannot use margin accounts, rental income from mortgaged real estate, or securities purchased with loans.

7. DON’T: Master Limited Partnerships – While there’s no prohibition, you should avoid buying MLPs or Master Limited Partnerships, such as pipeline or real estate partnerships with your IRA. Most people consider these the same as corporate stock, since they’re traded on the stock exchange. However, the taxation rules are different.

Whether you have a self directed IRA or your account is handled by a brokerage firm, you enjoy a certain amount of freedom over where and how you invest your IRA money. The right decisions will help you grow your retirement savings while reducing your tax bill.

To learn more about permitted and prohibited IRA investments, contact the team at Self Directed Retirement Plans today!

Top 7 Retirement Planning Tips for Couples

Posted by on Dec 22, 2017 in Blog | 0 comments

As a couple, a smart retirement planning strategy can help you enjoy a comfortable and happy life when you’re older. However, you need to sit down and figure out the basics about each other’s financial or retirement goals, annual income and savings. Knowing where you stand financially can help you decide if or when you can afford to retire.

If you’re both working, the first step is to get the full employers match on a 401k. Based on your income and how much you can afford to max out your retirement accounts, the income tax deductions and matching employer contributions can help you boost your retirement savings tremendously.

If one spouse does not work, a spousal IRA can help the working spouse make contributions in the name of the non-working one. Remember, the ability to claim tax deductions is limited if you have a 401k as well as an IRA. If you both have IRAs, you can name each other as a beneficiary of the account.

Other basic tips to follow while planning for retirement:

1. Diversify Investments – When it comes to personal finance and investments, spouses often disagree. Retirement planning can be challenging in this case, but keep in view the family as a whole. Look for IRA investments that are low-risk and offer long-term gains, but diversify your portfolio to help you meet short-term goals as well.

2. Make Collective Savings – Both of you are individually accountable for your own retirement, but just as you decide on the financial aspects of your lives together right now, you should also save for retirement together. If your partner is not enrolled in a 401K, save more in your own plan to help you meet mutual retirement goals.

3. Avoid Retiring Together – Retiring together isn’t wise, since you put double the burden on your lifestyle and the change becomes too extreme. Try on partial retirement by working fewer hours at first. While ironing out the kinks, you will better understand how to utilize your free time before taking on retirement!

4. Review Beneficiaries – Even after choosing a beneficiary while opening a 401k, you need to update it after major life changes like marriage, the birth of your children, divorce or death. Contact your financial planner, IRA custodian or HR representative handling your company’s 401k plan to modify beneficiaries as needed.

5. Discuss Retirement Goals – Spouses usually have different ideas about their lifestyle after retirement. It’s healthy to have varying interests and hobbies, but discuss these so retirement planning becomes hassle-free and you both get what want. In case either of you has a business plan or wants to travel after retirement, plan for it now.

6. Budget Expenses – If you plan on moving or modifying your home, how this would affect your retirement lifestyle and budget? Will it make your life better in old age? Figure out your living situation, how much time you expect to spend with children or grandchildren, funding college expenses when you near retirement, and other questions now.

7. Educate Yourself – Learn everything you can about retirement plans, to understand which kind will best suit your needs. Consult experienced financial advisors to explore asset allocation options tailored to your specifications. Retirement planning is one of the most important decisions of your life, so take your time to get it right.

At Self Directed Retirement Plans, our expert advisors will be glad to help you understand your retirement planning options and choose the right one. If you want to explore self directed IRAs or get the right investment advice for planning retirement savings as a couple, contact us today!

Year-End Retirement Planning Checklist to Help You Boost Savings

Posted by on Dec 18, 2017 in Blog | 0 comments

Year end is a good time for tax and retirement planning, since the last day of the calendar year is also the contribution/distribution deadline for many retirement accounts. You may get extra time with other plans, but planning now could help you avoid higher taxes with last-minute deposits or withdrawals!

Here are 7 important moves for year-end financial planning:

1. Set a Retirement Savings Target – Before you can start successfully saving for retirement, you should know how much you will need. Without setting goals and calculating your retirement needs accordingly, you’re likely to end up with too little saved by the time you reach retirement. Use a retirement calculator to understand how much you should be saving every month, based on your annual income, age, current investments and goals.

2. Contribute to Your IRA and 401k – Even if you make IRA and 401(k) contributions every year, you may not be contributing enough to reach your retirement saving goals. Max out your annual contributions so you can enjoy the full tax savings and benefits. Remember that your biggest ally in terms of retirement planning is time; compound interest and tax-deferred gains can help your investments grow tremendously.

3. Make Catch-Up Contributions – After you turn 50, you can make additional tax-deferred contributions to your 401k by the end of the calendar year. Use these catch-up contributions to maximize your savings and tax breaks while planning for retirement. Workers who are 50 years of age or older can contribute an additional $6,000 to their 401k account, for a total of $24,000 annually.

4. Track Required Minimum Distributions (RMDs) – You need to take RMDs from traditional IRAs and 401ks after the age of 70½. If you don’t take the entire amount by December 31 every year and pay income tax on the distribution, you incur a 50% penalty and tax on the amount that should have been withdrawn. You can delay your first RMD till the following April, but you pay tax twice, and could end up in a higher tax bracket.

5. Explore Conversion to Roth IRA – Investments in a traditional IRA account are not taxed until you make a withdrawal. However, income tax is due on contributions to Roth accounts at the time of the contribution. Roth IRA investments don’t have RMDs, which can be very helpful for tax and retirement planning. You can convert part or all of your IRA into a Roth account, but consult a tax professional or financial planner about whether and when to do this.

6. Review Your Retirement Goals – You may have a general goal in mind when it comes to retirement, but you need a specific plan for effective savings. Reassess your retirement planning goals annually, and prioritize spending needs based on what will make you happy and comfortable. Create a budget for early, middle and late retirement, taking into consideration different expenses for each stage.

7. Optimize Retirement Planning for Tax Breaks – Year end is a good time to review your taxes, both for the current year and the next. If you’ve been holding retirement money in a savings account, move it into tax-advantaged retirement accounts to start maximizing your tax breaks. Sign up for your employer’s 401(k) plan, contribute as much as they will match, and check whether you qualify for saver’s credit.

Retirement planning is not a one-time activity, but something you need to review and update regularly. Year-end reassessments can help you stay on track, especially if you haven’t looked over your investment portfolio and personal finances in a while.

A self directed IRA gives you complete control over your IRA investments. To understand how they work, contact Self Directed Retirement Plans today!

How Small Business Owners Can Benefit From SEP IRA

Posted by on Nov 6, 2017 in Blog | 0 comments

Do you as a small business owner find the process of choosing a retirement plan expensive and confusing? A Simplified Employee Pension IRA or SEP IRA might be the perfect option for you. Do you as a small business owner find the process of choosing a retirement plan expensive and confusing? A Simplified Employee Pension IRA or SEP IRA might be the perfect option for you.

SEP IRA

A wide-array of small businesses, ranging from partnerships, LLCs, S-Corporations, C-Corporations to sole proprietorships can benefit from the powerful features of SEP IRA accounts. These accounts were created so as to provide a tax-advantaged retirement plan for small businesses.

A SEP IRA can simply be set up by executing a written agreement, or setting up the SEP plan with a qualified financial institution (such as a mutual fund company, a bank, a brokerage firm or through a financial advisor), or by opening a SEP IRA for each eligible employee.

Let’s take a look at 7 ways in which small businesses can benefit by choosing a SEP IRA: 

  1. A major advantage of an SEP IRA account is its high yearly maximum contribution limit. Hence, you may contribute more to a SEP IRA as compared to traditional IRA or Roth IRAs as long as you make more than $22,000 approximately.
  2. As with a traditional IRA or 401(k), contributions to a SEP IRA account are not taxed in the year they are made. Instead, until the withdrawals are made, the taxes are deferred. This allows the money to compound tax-deferred for long periods of time.
  3. Employers can reduce the tax bite on the contributions they make to the SEP IRA account of their employees as these contributions are tax-deductible for the employer.
  4. With an SEP IRA, an employer is not required to make contributions each year. Also, the amount of contribution that you can make as a percentage of an income can vary from year to year.
  5. In case of a 401(k) plan, it is mandatory to fill out an annual form 5500. But this is not the case with an SEP IRA. There is no requirement to fill out excess tax forms.
  6. Every participant has immediate and complete ownership of the money contributed by you to his or her SEP IRA accounts. This means the employer is not responsible for the investments within the employees’ accounts. Also, the employer does not have to set up a schedule for vesting or to track service requirements. Each employee is responsible for choosing his or her investments inside this account.
  7. With SEP IRA, employers can take advantage of the flexible funding feature. This means the employers can take the decision every year regarding the amount to be contributed to this account. The amount can vary and the employers can even skip contributing any amount altogether.
  8. Apart from all the features listed above, small business owners can also benefit from the fact that along with contributing for an SEP IRA, they can also contribute to a Roth or a traditional IRA. Also, SEP IRAs are easy to set up, have no initial setup or annual maintenance fees, come with low administrative costs and are easily available through most online investment firms.

If you too are interested in learning more about how an SEP IRA can be beneficial for your business, get in touch with our expert IRA advisors at SD Retirement Plans LLC today.

How Can an SEP IRA Help You Save on Your Tax Bill?

Posted by on Oct 16, 2017 in Blog | 0 comments

A Simplified Employee Pension or SEP plan lets small business owners make tax-free contributions toward their employees’ retirement plan, but SEP IRA accounts can also offer significant tax savings on income. A Simplified Employee Pension or SEP plan lets small business owners make tax-free contributions toward their employees’ retirement plan, but SEP IRA accounts can also offer significant tax savings on income.

Tax bill

If you’re self-employed, running a small business, or making money aside from regular income at work, a SEP IRA can help you increase your tax-deferred retirement savings. Reducing your tax bill and maxing out your contributions every year can help you build larger nest egg by the time you retire.


Here’s how a SEP IRA can help you save on taxes and boost your retirement savings:


1. Tax-Deferred Retirement Savings –
Since a SEP IRA is funded with pre-tax dollars, investment income is tax-deferred. Interest, dividends and capital gains from funds held within the account are not included in your annual taxable income, and you only pay taxes on distributions.

With tax-protected reinvestment and compound interest, your retirement fund can grow much larger in the long run. This is especially important when you’re self-employed or don’t have an employer-sponsored pension plan at work.

2. Business Expense Deductions – Contributions to a SEP IRA count as business expenses, which helps to reduce net profit and taxable income for the business:

  • For self-employed professionals and business owners contributing to their own SEP IRA, adjusted gross income and federal income tax are lower.
  • For self-employed individuals or small business owners contributing to their employees’ SEP IRA, both self-employment tax and income tax are reduced.
  • For corporations contributing to employee SEP IRAs, income tax is lower and contributions are exempt from Medicare and Social Security taxes.

3. Setup and Funding Dates – Unlike a traditional IRA and other retirement plans, an SEP IRA can be adopted and funded after the close of the tax year, right up to the tax return due date and any extensions that apply.

The current year’s business expenses can be included in the previous year’s tax return if needed. This helps you decide how much to contribute based on your current financial condition, as well as spread out contributions over a longer period for more effective budgeting.

Since a SEP IRA boosts business deductions and reduces taxable income, it can help small businesses, freelancers and self-employed professionals lower their tax bills significantly. To get expert investment advice and learn more about tax savings with various retirement plans, contact Self Directed Retirement Plans today!

Catch-Up Contributions: A Guide to Boost Your Retirement Savings

Posted by on Oct 9, 2017 in Blog | 0 comments

Most of us are guilty of not contributing regularly to our retirement fund. So as we grow older, retirement feels like a fast approaching deadline. Are my investments on track? Have I saved enough for retirement? Questions like this loom large especially if you are 50 or older. Most of us are guilty of not contributing regularly to our retirement fund. So as we grow older, retirement feels like a fast approaching deadline. Are my investments on track? Have I saved enough for retirement? Questions like this loom large especially if you are 50 or older.

Catch-Up Contributions

If you are at least 50 years old and are wondering if you have stashed enough for your retirement fund or not, here’s the good news. Catch-up contributions enable you to make additional savings to your IRA and 401(k) as you near retirement.

Most of the people are either unaware of this provision or they think that they cannot afford it. Hence, they are unable to take advantage of it to boost their retirement savings.

Here’s what you need to know about catch-up contributions to make the most of them for your retired life:

What Are the Catch-Up Contribution Amounts?

Like most of the tax-favored retirement accounts which have IRS limits on their contributions, there are certain limits on the catch-up contributions also.

  • If you own a Roth IRA or a traditional IRA, the amount which you can contribute if you are 50 years or older, increases by $1,000. The maximum limit for contribution for both these IRAs is $6,500 in 2017.
  • If you have a 401(k) plan, you can usually contribute as much as $18,000 to your retirement plan in 2017.
  • If you have a Simple IRA, you can generally contribute as much as $12,500 in 2017. If you are 50 years or older and your employer also allows catch-up contributions, your contribution limit raises by $3,000.
  • If you are 50 years or older and your employer allows catch-up contributions, your limit is raised by $6,000. This holds true for a Roth 401(k) or Roth 403(b) also. The total elective contribution limit in 2017 is $24,000.
  • SEP IRAs don’t allow catch-up contributions. However, if you have a plan called SARSEP – a plan in which a small business employer contributes to your SEP IRA, you may be able to contribute an additional $6,000 in 2017. The contribution rules for these plans are complicated so it is better to consult an IRA advisor for a better understanding.

What Are the Advantages of Catch-Up Contributions?

Here’s why you should not miss out on catch-up contributions:

  • While taxes aren’t the primary reason for you to take advantage of catch-up contributions for your 401(k) plan, that incentive can help you save a lot of money. Employees can make a contribution of $18,000 per year to their 401(k) tax deferred. Those over the age of 50 can contribute an additional amount of $6,000. This brings the tax deferred income to $24,000 a year. Hence, the more you contribute and move in to a higher tax bracket, the more you can benefit from the catch-up contributions for your 401(k).
  • Usually most employers provide some kind of match to your retirement plan such as a 401(k). For e.g., an employer may offer a match of up to 6% for employee contributions. While not every company practices the same policy when it comes to matching the catch-up contributions, a lot of companies do. As per the Plan Sponsor Council of America, catch-up contributions are permitted for 97.1% of all 401(k) plans and 36% of plans match the contributions.
  • Also, the catch-up contributions for a Roth IRA allow the investors to boost their after-tax investment. The investors thus end up with a larger account balance in their retirement when they can withdraw the principal, earnings and interest tax-free. If you expect your tax rate to increase as you grow older, maximizing your catch-up contributions and your Roth IRA can be a perfect and cost-effective way for investing for your retirements.

If you want to learn more about how you can use catch-up contributions to boost your retirement savings, get in touch with our expert IRA advisors at SD Retirement LLC today.

How to Invest So That Your Self-Directed Roth IRA LLC Grows Tax-Free

Posted by on Oct 2, 2017 in Blog | 0 comments

Self-directed Roth IRAs expand your investment options massively. However, to ensure that you gain maximum tax benefits and investment returns, you need to know about the types of investments you can and cannot make using your self-directed Roth IRA LLC. Self-directed Roth IRAs expand your investment options massively. However, to ensure that you gain maximum tax benefits and investment returns, you need to know about the types of investments you can and cannot make using your self-directed Roth IRA LLC.

tax free

Type of Investments You Can Make With Self-Directed Roth IRAs LLC

  • Stocks, Mutual Funds and Bonds 
    These are the most standard investment choices for your self-directed Roth IRA, when it comes to investing tax-free. Your self-directed Roth IRA LLC puts you in complete control so you can open an account with any financial institution for trading in stocks. All the income and gains from this investment will flow through tax-free to your Roth IRA nest. There are infinite investment opportunities to explore through stocks, mutual funds and bonds.
  • Real Estate
    One of the most popular investment choices with self-directed Roth IRA is real estate. The biggest advantage this investment strategy offers is that all your gains are tax-free and will not be subjected to tax in case of withdrawal or distribution. For instance, if you purchased a property for $50,000 and later sold it for $100,000, your gain of $50,000 would usually be tax-free. But, if you purchased the property with your personal or non-retirement funds, the gain would be subjected to federal income taxes and state income tax in most of the cases.
  • Precious Metals & Coins 
    A major advantage of purchasing precious metals and/or coins using your self-directed Roth IRA LLC is that the values of these precious metals and/or coins usually keep up with or exceed the inflation rates better than other investments. Besides, you can hold these metals and/or coins in the name of the LLC at any local bank’s safe deposit box and eliminate depository fees also. Under the Technical and Miscellaneous Revenue Act of 1998, Roth IRA owners can invest their Roth IRA assets in certain gold, platinum, silver or palladium bullion as well as in certain platinum coins, provided that the coins are held in a financial organization.
  • Private Businesses 
    You can also purchase an interest in a privately held business. But you need to ensure that the business is not established as an S Corporation. You can choose from businesses which are established as C Corporation, Limited Liability Company, partnership etc. It is also important that you remember the rules regarding the Unrelated Business Taxable Income under IRC 512, and the ‘Prohibited Transaction’ and ‘Disqualified Person’ rules under IRC 4975.
  • Foreign Currencies
    Most of the people believe that investing in foreign currency can offer liquidity benefits to the stock market and other significant opportunities for investment as well. The Internal Revenue Service (IRS) does not prevent the purchase of foreign currencies such as Iraqi Dinars through your self-directed Roth IRA. You can hold these foreign currency notes in the name of the LLC at any local bank in a safe deposit box. This will also save you the depository fees. The foreign currency gains thus generated would be tax-free!

Type of Investments You Cannot Make With Self-Directed Roth IRAs LLC For both types of Self-Directed IRA accounts – traditional and Roth, the Internal Revenue Service prohibits the account holders from holding certain investments. These include S Corporations, life insurance contracts and collectibles. Collectibles comprise jewelry, baseball cards, artwork, memorabilia and other objects which are considered as collectibles and are bought and sold. It should be noted here that this affects the kind of gold that your self-directed Roth IRA can hold.

If you want to learn more about tax-free investment strategies for your Self-Directed Roth IRA LLC, get in touch with our experts at Self Directed Retirement Plans today.

What You Need to Do Before Purchasing a Foreclosure Property with Your IRA

Posted by on Sep 28, 2017 in Blog | 0 comments

Buying a foreclosed property is very different from buying a property through normal channels and thus requires a deeper understanding of the subject matter. If you are looking to invest in a foreclosure property through your IRA, then here’s what you need to do: Buying a foreclosed property is very different from buying a property through normal channels and thus requires a deeper understanding of the subject matter. If you are looking to invest in a foreclosure property through your IRA, then here’s what you need to do:

1. Convert Your IRA into a Self-Directed IRA Having your IRA plan in place puts you in the ideal position to get a good deal on a foreclosure purchase. First, you need to convert your traditional IRA to a self-directed IRA as it gives you the freedom to invest in non-traditional investments like real estate, business, mortgage notes, tax lien, private note, etc. Purchasing real estate through your IRA can prove to be beneficial as it gives you the ability to react to property offers immediately, as opposed to waiting on a third party for a loan approval.

Consider this – If you plan to buy a property through regular channels and require a loan to purchase it, you must be able to meet the eligibility criteria set by the governing bodies. This means that if you want to avail for a loan to purchase a property, you are required to have an excellent credit score, funds to make at least 50% of the down payments and a high income to debt ratio before the loan is approved.

Since distressed properties like foreclosures require immediate bids, your IRA provides you with the necessary funds to put down an offer on the property. Another benefit of using your IRA funds to purchase property is the flexibility it provides in terms of payment options. You can choose to pay for the property partly in cash or you can even co-invest with your non disqualified family members, partners or friends using your respective IRA funds. This also helps you avoid relying on money lenders or loans to purchase your property!

 2. Consult a Foreclosure Specialist The foreclosure laws and regulations vary from state to state and can be extremely complicated, so you consider enlisting the help of a professional before investing in properties. Do your research before choosing your consultant, talk to various IRA advisors, look for information pertaining to the number of short sales or foreclosures have they have consulted over before making your decision. You can also approach a realtor or a real estate attorney who is certified in foreclosure sales to guide you through the process.

3. Be Realistic About the time frame you must factor in the time it takes to complete the purchase process since buying foreclosed properties have certain waiting period requirements. You need to ensure that the timeframe of the purchasing process suits your investment goals and financial needs. Think of the various aspects of the sale, for instance, how you would handle a purchase if the value of the property declines in value? Would you be able to afford to wait for it even so? Will you be able to see some ROI in 5 or ten years? Will you be able to receive a decent sum of money if you rent it out? Be sure to work out the numbers, before jumping headlong into any investment!

4. Analyze the Property Based on Previous Land RatesBefore you make an offer on a property, do your research; try to find more details about the neighborhood, land value as well as the property rates in the previous years to ensure you make a well-informed decision. If there are multiple properties available, compare them and see which option will prove to be a good investment. Pro Tip – Ask your real estate consultant to provide you with the absorption rate of the area to help gain a clearer picture of the real estate situation in the concerned area.  A slower absorption projects a lower value for the property, while an increase in the absorption rate means the projected value of the property will most likely increase as well.

If you are venturing into real estate investments by way of foreclosure purchases for the very first time, and are looking for professional help to oversee the management and allocation of your IRA, contact SD Retirement Plans LLC today. Our IRA advisors will assess the property’s financial requirements as well as your IRA funds in order to provide the most feasible investment solution for you. Call us on (866) 639-0066 to book an appointment today!

4 Retirement Planning Tips for Young Singles

Posted by on Sep 25, 2017 in Blog | 0 comments

While you are young and single, enjoying your freedom from family obligations and spending on trips, movies, and parties, don’t forget to save for your own future self. Of course, you have a life to live and concert tickets to buy but then again life is too short and you need to strike a perfect balance between splurging on sojourns and saving for a financially secure future. While you are young and single, enjoying your freedom from family obligations and spending on trips, movies, and parties, don’t forget to save for your own future self. Of course, you have a life to live and concert tickets to buy but then again life is too short and you need to strike a perfect balance between splurging on sojourns and saving for a financially secure future.

Young Singles

If you don’t want to be among the 56% Americans who have less than $10,000 when they retire, put these 4 things on your retirement savings checklist now:

  1. Ditch Your Financial Follies for Good 46% of the U.S. adults fail to cover unexpected medical costs as low as $400 with cash, even if they have a self-directed IRA or 401(k). A recent report published by the ERBI revealed that single persons are twice as likely to have less than $10,000 in total retirement savings as compared to married workers who can lean on the income of a spouse. If you don’t want to wake up 25 years from now and realize that you lost some really big opportunities, then ditch debt and unfriend overspending right away. Loans, credit cards, and consumer debt can wreak havoc on retirement planning for singles so make retirement savings a habit and build your wealth.
  2. Double Your Money with the Magic of Compounding Interest As a young single, you have time on your side to enjoy the magic of compounding growth. The sooner you start, the more you can save and take advantage of compound interest to enjoy the retirement of your dreams. Let’s say you graduated debt-free and your first job is making you $50,000 a year. At this stage, if you spend your money on a car, exotic vacations, and expensive gadgets and start your retirement savings with $2,000 a year around your 30s, by retirement you would have around $593,000 in 35 years. This is great but if you would have started investing the same amount of $2,000 at the age of 24, you would end up with more than $1 million in your retirement savings.
  3. Build a Safety Net and Invest for the Long-Term Singles persons do not have the earnings of a spouse to lean on so they have less discretionary income to put towards their retirement accounts. Making retirement savings a habit will keep you covered during adversities like loss of a job or accidental injury. Start with an emergency fund for crisis and keep 9-12 months’ worth of your living expenses in a short-term fund that is easily accessible. Invest at least 15% of your income, contribute to your employer’s 401(k) plan and control impulsive purchases. Finally, build a safety net by making provisions for both long-term care insurance and disability. Investing from the beginning will ensure that you have enough money to retire especially if you are flying solo.
  4. Enjoy the Benefits of Buying a Home Just because you do not intend to marry and start a family any sooner does not mean you rule out buying a home for yourself. While owning a house comes with a baggage of liabilities (mortgage payments and maintenance) it also gives you total control over your living space while taking you out of the circle of steadily rising rents.

If you can’t establish your own retirement savings plan, you can hire a financial advisor to help you spend, save, and invest as you stay focused on building a financially secure future.

Why the Self-Directed IRA Beats Other Investing Vehicles for Millennials

Posted by on Aug 28, 2017 in Blog | 0 comments

An IRA or Individual Retirement Account forms the backbone of retirement savings for most of us. A self-directed IRA is quite similar to regular IRAs, but along with tax-deferred gains and income, it also allows you to choose where retirement funds are invested.

Here are 5 ways to make better investment decisions when you’re just starting out:

  • Begin Now – Don’t avoid retirement planning or investment opportunities till you’re earning more. The sooner you start, the more you’ll save.
  • Don’t “Play” – Playing the stock market or choosing asset classes you don’t understand is a bad idea. Start with safe, long-term investments.
  • Get Help – Consult experienced financial advisors for investment advice and recommendations. As you learn, you can start exploring.
  • Stay Safe – Avoid placing all your savings into a single stock, especially if you’re investing with your retirement accounts and don’t have a safety net.
  • Diversify – Invest in precious metals, real estate and other alternative investments in addition to traditional stocks, bonds and mutual funds.

Proposed changes to the Social Security program may affect retirement age, benefits and more, so it’s more important than ever to take retirement planning seriously!

How Does a Self-Directed IRA Help Your Retirement Portfolio?

Here’s why you should consider using a self-directed retirement account:

  1. Freedom from Stock Market Fluctuations – Potential changes to Social Security, market ups-and-downs, rising inflation and terrorism threats all contribute to economic uncertainty, and cause sleepless nights for the individual investor.
    Being restricted to investing vehicles that rely on stock market performance doesn’t help. Instead, you can secure retirement funds with self-directed IRA real estate purchases or investments in precious metals. These long-term alternative assets cannot be funded with a traditional IRA or Roth IRA.
  2. Variety of Alternative Investment Options – Millennials are drawn to alternative investments and want more options for IRA investing. In fact, almost 1 in 4 Millennial investors plan to try an alternative investment strategy within 5 years (Source).
    Self-directed IRA accounts give you this option. Real estate, precious metals, private equity and startups/businesses are all great investment options for self-directed retirement accounts. Just make sure you follow the IRS rules and stay away from prohibited transaction pitfalls.
  3. Greater Safety and Security for Investments – When you have the ability to invest IRA funds in a range of asset types, you retain control of your retirement savings. Choosing the right investment opportunities also improves your financial security.
    Investing in alternative asset types such as IRA real estate ensures a long-term income source for your retirement accounts, especially if you buy rental property. You can also opt for a self-directed IRA LLC, which shields your IRA assets from attack by creditors and provides additional protection through limited liability.
  4. A Perfect Fit for Millennials’ Investing Style – Despite common belief that they don’t know how to save, Millennials are more financially conservative than any other generation. They’ve had no choice!
    If you’re like most Millennials, you’ve already dealt with loss of job security and economic downturns. Self-directed IRA accounts can give you the control, security and flexibility you need, for making investment decisions based on your unique goals, investing style and experience.

To learn more about self-directed IRA basics, IRS rules and tax implications of investing in alternative assets, contact the experts at Self Directed Retirement Plans today!