How To Invest In Real Estate Without Paying Taxes, Legally

If you own a piece of real estate and gain profit from it either by giving it on rent or letting it just sit there and increase in value, you have to pay a large chunk of your profit to the government. The property tax is large enough to question this method of investment as an efficient enough strategy to be worth your while. But did you know that it is possible to invest in real estate by using a specialized retirement account? Unlike some of the other more traditional retirement accounts, your options of investment are not limited either. With a 401k or a traditional IRA, you can only invest in stocks, bonds and mutual funds.

The thing about these traditional investment assets is that the risk is low, but the return in profits is also quite small. If you open this retirement account, then by the time you reach the age of retirement, which is 59½, you will only have enough money to feed yourself and maybe one other person. But if you choose to put your investment strategies to good use and opt for the self-directed IRA to invest in real estate, then you can spend your golden years in a luxurious home by the seaside.

The closer a piece of land is to the city, the more expensive it is. This is the trend seen around most urban societies. The faster a city expands, the faster the price of land around it tends to rise. This is why a self-directed IRA with “checkbook control” is important to gain maximum advantage of abruptly changing trends. If you find out that a certain piece of land close to a bustling metropolitan has been put on sale for a low price, you can own that land as fast as you can write and sign a check.

Without this great amount of control over your funds, you would have had to wait for your custodian or broker to be available to approve of this transaction. By the time, contact is established, the perfect opportunity for investment in real estate could be long gone. This is why you should have your self-directed IRA account up and running and keep your checkbook at arm’s length.

Before starting up your self-directed IRA, it is important for you to go over the IRS guidelines. Many people get in trouble with self-dealing after investing in a house using a self-directed IRA. The result is a heavy fine. Also, you are unlikely to get any guidance from custodians or brokers, so you will be on your own when you are hit with taxes and penalties. A little bit of common sense is all that is needed and you should be fine. According to the real estate investment rules for self-directed IRA holders, the investor is not allowed to deal with spouses, parents or themselves. Also, you can’t use money from your self-directed IRA to pay for a rental property for your own personal use.

Being able to retire rich is advantage enough for most people and breaking or bending the IRS rules is not often considered necessary.

George Smith is President and CEO of Self-Directed LLC IRA. His company specializes in providing expert advice, guidance, and consulting for those interested in Self-Directed IRA’s (SDIRA). George is an accomplished businessman and experienced professional consultant dedicated to help individuals in achieving their personal and financial goals through SDIRA’s.

Six Common Mistakes in 401(K) Plans

We help many business owners improve and manage their 401(k) retirement plans. In doing so, we get a chance to educate and advise many plan participants on their investments. We see six common mistakes that people tend to make repeatedly.

Not saving enough.This is the biggest mistake with the largest consequences for people. Most people are not saving nearly enough. The average person saves only about six to seven percent of their salary in their 401(k) retirement plan (excluding any match). Studies by Fidelity and Vanguard, among others, show that employees actually need to save closer to 12%-15% (including any company match and profit sharing) over the course of their careers to be able to retire successfully. Company pension plans are a thing of the past, and social security is looking increasingly underfunded and at risk. Many companies offer a 100% 401(k) match up to the first 3% of salary, and some offer a match above that level. By participating in your 401(k), at least up to the match amount, you are getting an instant, guaranteed, 50%-100% return on your investment. We haven’t come across a better investment than that in 30 years of looking. We recommend people save as much as they can, even if it is not at the 12%+ level initially, then increase their contribution rate by 1% per year until they get to that level. We recommend saving at least enough in your 401(k) plan to get the full company match.

Not being diversified. Many people own two or three different large U.S. company growth stock funds and believe they are diversified.That is not a very diversified portfolio. Your portfolio generally should include U.S. stocks (large and small), international stocks, and bonds.

Not having the proper amount of risk. Many retirement plan participants have no idea how much risk is in their portfolio, or how much risk they should be taking. For example, a young person with nearly all of their investments in cash and bonds may not be taking the appropriate risk level. An older person close to retirement probably should not have 100% invested in stocks.

Not rebalancing the portfolio. A good strategy to improve returns and to keep the risk of your portfolio from getting away from the target is to periodically rebalance your portfolio back to pre-set asset allocation targets periodically. If stocks perform dramatically better than bonds (such as in 2013), it may make sense to rebalance your portfolio by trimming back on stocks and adding to bonds to get back to your target allocation of 75% stocks, for example. Some 401(k) plans allow you to set up automatic rebalancing.

Chasing performance. Many retirement plan participants look at the year-end performance of all the funds in their plan, and then shift their investments into the funds that performed best over the past 1-3 years. They believe that since those funds have performed the best in the past, they are likely to continue to be the best performing funds going forward.This is not a good investment strategy, and often results in buying high and selling low.

Not making your portfolio more conservative as you age. Most people “set it and forget it” when it comes to their investment allocations in their retirement plan.They often don’t change anything for 5-10+ years. For many people, it can make sense to make your portfolio gradually more conservative as you get closer to retirement age, because your portfolio has less time to recover if there is a big downturn in the financial markets.

What can be done to help people make fewer mistakes and end up with better long-term performance in their retirement plans? We can educate them about these common mistakes, and offer a simpler way to invest using target date funds or model portfolios. Target Date funds are portfolios offered in most 401(k) retirement plans.They greatly simplify the investing process for employees. We think they are an excellent investment choice for many employees.Target Date funds are a single fund that invests in many other funds, at least one in each of the major asset classes.They are named by the year in which you are expected to reach the age of 65. For example, if you are currently age 49 you would be expected to turn age 65 in the year 2030. You might consider investing in the Target Date 2030 fund. You don’t have to choose the Target Date fund that corresponds with you turning age 65. You could pick one above or below your actual retirement date. Not all people of the same age will have the same risk tolerance. Some of the factors besides age that we consider for a target risk level are wealth, income, debt, natural risk tolerance, timing of cash needs, investment experience, financial goals, riskiness of other assets, and the risk/volatility of their career/income.

Target Date funds reduce or eliminate 401(k) investor mistakes two through six listed above. They set your investment allocations on auto-pilot. You don’t have to watch or worry about them as close as individual funds. Target Date funds make many of the smart moves automatically for you. By using these funds you will have a diversified portfolio with about the correct amount of risk for someone your age. These funds rebalance automatically, don’t allow you to chase performance, and gradually get more conservative as you age. The only major problem they can’t help fix is you not saving enough.

Target Date funds typically have about 80%-85% in stocks for younger investors, and the equity allocation gradually declines to about 50%-60% for people at the typical retirement age (65). Studies of actual 401(k) investors show that these Target Date funds tend to outperform the vast majority of employees who pick their own funds in the plan, and by a significant margin. If you have a professional advisor that can set up a customized asset allocation in your 401(k) plan, you may be able to do better than the Target Date funds. We can often include lower cost funds, more asset classes, and a value tilt to our customized portfolios.

Traditional 401(K) or Roth 401(K)?

Most 401(k) retirement plans now offer a Roth option, along with the traditional 401(K). The vast majority of people are still investing in the traditional 401(k) plan. In the traditional 401(k) option, you get the tax deduction now (when the money is contributed), but the money is taxed at your ordinary tax rate when it is pulled out in retirement. The Roth option offers no tax deduction in the year you contribute the money, but you are not taxed on the money when it is pulled out in retirement. It is helpful to compare your income tax rate now to your estimated tax rate in retirement to decide whether the traditional or Roth 401(k) is best for you. If your tax rate is currently below your estimated tax rate in retirement (such as for many young people), you may want to consider the Roth 401(k). If your tax rate in retirement is expected to decline compared to your current tax rate, you may want to stick with the traditional 401(K). To diversify your future tax exposure, you could put some of your retirement plan in the traditional and some in the Roth 401(k). You can do both.

How to Choose the Best IRA Custodian for the Best Gold Ira Account

Investing in gold is that easy, that is why choosing the right gold company is critical before you actually start buying loads of it. Gold investing is now making a ‘noise’ than ever before because everyone is starting to realize how the US dollar stands… on the verge of a collapse. You’ll still continue to use the currency, don’t get me wrong, but you cannot rely on it these days anymore. It has lost it purchasing power since the government left the gold standard. US dollar is backed-up by nothing at all! To date, 97% of its value is down the drain.

Those who are depending so much on their 401K, Roth, IRA or any other individual retirement annuity can rollover to a gold Ira account for a more secure and prosperous retirement days.

Below, is the list of what you need to look at in choosing the best Ira custodian:

Call them. You get to feel the company’s integrity just by speaking with them on the phone. You can gauge how accommodating their customer service is by allowing them to lay down to you all necessary information you need to know or by being proactive. You will know if they are just after the sale. You can hear how ‘pushy’ they are in the manner they speak with you. So, call them and feel who they really are.

Reliability. Check their rating with the Business Consumer Alliance or BCA. Triple A rating is where you need to lean your back to. If this investing involves the money you sweat for, for a long time then they must be someone you can rely on. BCA has their standards in giving such rating only to those deserving of it.

Trustworthiness. Go to BBB or the Better Business Bureau where you will see the complaints of people who made actual transactions with a gold company and how they were resolved. BBB is only one of the many institutions you can go to check who gives promises they cannot deliver. It is a plus if the company has the

Customer satisfaction. Trustlink is an online platform where real people provide comments on a specific company that they made transactions with. You can log on to this site and read for yourself what people are sharing how accommodated they were with the service of this gold ira custodian.

Affiliations. The gold company you’ll work with should be a member of ICTA or Industry Council for Tangible Assets, wherein, regulations in the precious metals industry are made sure followed and maintained favorably to investor and custodian. Also, check the following authorities if that trustee is a member of: the CCE or Certified Coin Exchange and the PMG or Paper Money Guaranty Corporation, the U.S. Mint, Numismatic Conservation Service or NCS, the NGC or Numismatic Guaranty Corporation, and the Professional Coin Grading Service or PCGS.

Call them again. This is after you have made your tedious job of going through each of them and decided to hold physical gold or roll part of your IRA to gold IRA.

Due diligence is a must.

You are not limited to the above mentioned list.

If, again, investing involves your hard-earned money and your IRA funds you must perform what’s necessary to obtain as much information before cutting that check for somebody. It will take a bit of your time but it will not be a daunting task.

The best gold IRA account.

Gold investing is what will make the IRA very promising. Throughout the history of human kind, gold is the only one that remained the real money. People knew how valuable it was. The forefathers knew how stable gold was that every dollar was backed-up by it until it was abolished in 1971.

Since then the dollar collapsing cannot be avoided, heightened by the continued printing of the paper money. For all currency printed, gold will revalue itself and no way of stopping it. The price of gold will shoot up so high when everyone is awakened of this truth. And this is just one of the many reasons.

Before the crowd is awakened of the rush that is coming, invest in gold [] now. NOW is the time. You don’t want to be left behind only to find your self unable to buy a pound of gold due to a very high price… do it today! Don’t worry about shelling out money… you can roll funds from your IRA, 401K, Roth to a gold IRA [] account today!