Did you know that you can buy the house next door as a rental with money in your IRA? Well, you can’t—but your IRA can. Your IRA is basically it’s own entity, and has nearly limitless ability to invest in all kinds of odd-ball—or hair-brained—investment ideas. There is a small list of “prohibited transactions”.
In the spirit of what’s not in SFM’s best interest, we are going to suggest you consider the idea of investing in rental real estate—from which we do not collect an advisory fee; and which may take a down payment from funds currently under our management. With the Federal Reserve Bank effectively printing $85 billion a month, and setting interest rates at zero, investors are being “forced into risk assets” like stocks & real estate. Don’t believe me? Check your local bank for CD rates on $100,000 for five years. Yep; 1.5%—if you’re lucky. There are three ways that your household finances can be improved by investing in rental real estate:
This Christmas, during a discussion with my family, I could sense hesitancy about the value I add to my clients’ investment portfolios. At times (...2008...), I admit to having doubts regarding the value that we add; but after reading about a 2012 study released by Morningstar, I am comforted by the results.
Joyce’s article about the estate tax initiative here in Oregon prompted me to think about ways to earn and invest money responsibly, while still avoiding increasingly overburdening taxes. There does happen to be one place where the IRS allows you to deduct money that you contribute here on your income tax return, and doesn’t then tax you upon withdrawal of those funds. This in effect gives you the anomaly of truly tax-free money: The one...the only...the Health Savings Account (HSA).
I’ll admit it: I’m addicted to Facebook. When I heard that shares of stock would become available to the public this spring, I thought to myself, “I have to own a share of this company.” It seems most providers of other addictive items have stiff competition. Think coffee, soda, cigarettes, liquor, smartphones; each are offered by multiple brands. When I think of how to connect with friends far and near, there is only one place where everyone seems to be. For the simple reason that you won’t find me (or many others) on Google+ or MySpace, it appears there will be a lone survivor in the race for social network supremacy. If you’re not using Facebook, I fear society will force you to jump on the bandwagon, or (tragically?) be left behind
The 529 College-Savings Plan is a neat planning vehicle, but I want to highlight another legacy building idea: the Roth IRA for children. We have one business-owner client that has been able to contribute to their son’s Roth IRA since he was born (A young Roth IRA account owner can only contribute up to 100% of ‘earned income’, or $5,000, whichever is less). We are eager to see the value of his account at age 59.5, after which he can take TAX-FREE withdrawals.