My Retirement Action Plan

Can YOU Afford To Retire?

It's a fact today that a growing number of people simply cannot afford to retire.

*One-third of Americans over 50 aren't confident that they will have enough money to retire, and over two-thirds expect to have to keep working well into old age. Despite making good incomes, many people live paycheck to paycheck and see their IRA and 401K funds either not growing fast enough or even shrinking with the stock market. Plus, they're concerned about whether Social Security's going to be around when they hope to retire. (*Source: TransAmerica SecurePlan March 12, 2008)

I was one of these statistics and decided to do something about it. I've spent several years studying and researching virtually everything I can get my hands on about investing: books, tapes, CD's, DVD's, seminars, webinars, workshops, investor's clubs, you name it!

Here's what I learned from all of this:

My IRA and 401K funds didn't even offer some of the most lucrative investment alternatives available!

1) Approximately 97% of IRA and 401K funds in the United States are limited to "Traditional Investments" which are primarily stocks, bonds and mutual funds.

2) Most Fund Managers and Financial Advisors are NOT going to tell you about "Alternative Investments" outside of their own investment offerings because they don't earn a commission for doing so.

As a result, people like you and me are kept in the dark about valuable investment alternatives that could help us achieve our retirement goals. Furthermore, because of this restriction imposed by our own 'trusted' financial fund managers and advisers, most people are not properly diversified and therefore, at risk in the event of a severe stock market downturn.

What You Can Do About It

I've spent years perfecting a "Retirement Action Plan" to achieve my own financial goals. Now I'm on a mission to educate others and help them toward their retirement goals using what I've learned and implemented for myself.

MY RETIREMENT ACTION PLAN

1) Take control of your investments and responsibility for your retirement: Essentially this means making a promise to yourself to be responsible for your future and not simply rely on others to do this for you.

2) Establish specific financial goals for your retirement: You'll need to ask yourself critical questions to determine how much it will cost you to live during retirement and how much money you'll need to have in your portfolio to support you. (e.g. How long do I expect to live in retirement? Where do I expect to live? What type of lifestyle do I want to lead?)

NOTE: Many people will find that they do not have sufficient funds to support their retirement goals. Don't panic! This is exactly where I was too. The following steps will help you learn how to close the gap between what you have and what you need to achieve your goals.

3) Start educating yourself about your existing investments and finances: Congratulations! You've already started by visiting this blog. First, get organized. Itemize each of your investments and assets - review past performance of each. Become familiar with investment terminology and alternatives.

4) Research "Alternative Investments" and how to truly diversify & protect your portfolio. **(See page bottom for information on Alternative Investments)

5) Consider converting your Traditional IRA to a "Self-Directed IRA" account. This will allow you to invest your IRA funds in a whole new spectrum of Alternative Investments that were previously not available to you.

6) Consider new investments (in both Traditional and Alternative Investments) that will help you achieve your retirement goals. There's an old saying: "If you keep on doin' what you've always done, you're gonna keep gettin' what you've always got!" There's truth in this. If there is a gap between what you have saved today and what you'll need to retire, changes have to be made.

7) Make the changes in your portfolio, stay involved and keep studying alternatives! This isn't a one-time deal, you need to stay close to your investments and adjust as needed. (Remember the promise you made to yourself to take control of your future in Step 1.)

Alternative Investments

Approximately 97% of all U.S. IRA and 401K portfolios are entirely invested in Traditional Assets (e.g. stocks, mutual funds & bonds) with similar price movements. As a result, these portfolios are at extreme risk in the event of a market downturn, which, if severe enough could wipe out people's lifetime savings and set them back many years in their plans and dreams for retirement.

Much more consideration, therefore, needs to be given to including assets with dissimilar price movements, which we call "Non-Traditional or Alternative Assets" to hedge against market risk. What are they?

Here are a few examples:

-Land Development Projects (my personal favorite)
-Commercial & Residential Real Estate
-Precious Metals (gold, silver, platinum, etc.)
-Gemstones (diamonds, rubies, etc.)
-Commodities
-Oil & Gas
-Tax Liens & Tax Lien Certificates
-Trust Deeds
-Tenancy In Common Properties (TIC's)
-Real Estate Investment Trusts (REIT's)
-Timberland
-Fishing Rights
-Etc.

All investors should seriously consider incorporating some of these into their portfolios if they want to be 'Truly' Diversified and protected when the market winds shift. But be sure to do your homework first.

I really encourage you to embrace this action plan - it can put you on track for a secure retirement.

To learn more, click on the picture below:

Until next time! Retirement Wiz (you can email me at Johnha7@yahoo.com)

If The Stock Market Crashed Would You Be Wiped Out?

Click on the Arrow to play Video

Duration: approx. 14 minutes

Link to Video Author's website: www.JohnHanlin.com

Until next time! Retirement Wiz (you can always email me at: Johnha7@yahoo.com)

The 5 Secrets Of Success

"There are five key traits that all successful people share. What separates the average or unsuccessful people from those who achieve great success can be attributed to several key differences."

Good News!

If you were to watch of movie of people's lives, these five characteristics would be illuminated in their successes or failures - over and over again. For some, these traits come naturally. For others, they may take years to learn, or they may never learn them at all - without coaching.The good news is that these traits CAN be learned. And, it's a proven fact that by embracing them and making these five characteristics a part of your 'being', you WILL achieve success in your personal life. These key traits are relevant for success in relationships, business, investing.... you name it.

Secret #1: "No" Usually Means "I Don't Get It"

Whether you're trying to convince someone to vote for you or you're trying to sell them a fishing rod - it's critical that the potential buyer clearly understands what you're offering. More importantly, it's imperative that you understand their needs, desires and problems in order to give them what they want. You can't solve a problem if you don't know what it is.

Typically, when someone doesn't understand what they're being offered or told, it's because they don't have the necessary information on which to base a decision. So, their natural response is to say "no" to the offer. This is because many people don't want to admit: "I don't get it" and appear foolish or unintelligent. So, to avoid embarrassment, they will simply reject the proposal or offer.

Successful individuals realize that "no" is often a natural response to confusion or missing information. So, they make it their mission to provide the listener with all of the necessary information, in a form they can understand, in order to make an educated and, usually, a positive decision.

Secret #2: You Can't Read People's Minds

Your thoughts control your results. Many people are held back or unsuccessful in certain aspects of their lives because they make assumptions or believe things to be true without actual proof. This often happens subconsciously.

These assumptions can limit a person's recognition of tremendous opportunities that surround them every day. This affects the choices they make, the actions they take, and can severely limit the success that they attain.

Example: A gentleman is interested in a lady friend and would like to ask her out to dinner. However, he repeatedly passes up opportunities to do so, because he feels that she will decline. Perhaps he has experienced rejection in his past. But now, he is assuming that this lady and perhaps 'all' ladies will react the same way to his invitation. He's afraid of risking embarrassment and what others might think about him. So, to protect his self-esteem, he does nothing, without ever knowing the true end result.

Successful people realize that just because one outcome occurred in the past, doesn't mean that it is the only outcome that can occur forever into the future. They recognize that they can't read other people's minds and so, they proceed toward their goals accordingly.

Secret #3: Ideas Are Worthless Without Motivation & Action

Have you ever had a great idea about an invention or concept that really seemed to make perfect sense? It's a pretty common occurrence. I'll use my son's idea from about 10 or 12 years ago as an example. He said: "Daddy, why don't people's houses have clickers like your car?" What he meant was: "Why don't we have the same technology to open the front door of our home as our car does with the keychain 'thingey'?"

Guess what? That was a genius idea for any age group! And, I'm not boasting here (OK, maybe a little), but come on - a nine year-old with a life-altering idea! (More to come on this is a later edition - maybe.) Most of us have had situations like this where we said: "I thought of that!". But, did you take action? Well, the successful people among us DO take action. (FYI: keep me posted if you see anyone with a front door clicker on their keychain.)

Important note: most successful people often fail several times before they achieve success. in fact, they usually fail at least 3-5 times before they land on a winner. Now, how you & I define "success" is going to vary greatly, but the philosophy of achieving "success" will not, it's the same 5 traits I'm explaining here.

"Momentum"

Let's go back to my own son's idea. Let's assume I think his was a 'big idea'. So, it started with an idea. Next, came 'the dream' or 'visualization of the outcome'. Now, parlay that image into your own mind. Do you have an idea or invention you've been mulling over?

These are critical questions that you need to ask yourself in the 'motivation' stage of taking action. To achieve success, you have to ask yourself at this point: "How far am I willing and able to go?". Do you know? Can you visualize what great opportunities are ahead of you if you just take one more baby-step towards attaining your dream?

Here's the key, one more time! MOMENTUM

It only requires one baby-step: "Just get the sled moving up the incline."

What successful people realize is 'gravity'. "Once you crest the top of the incline, momentum will take effect and your sled will glide."

I'm not judgmental in any capacity, but the following quotation will follow me to my end: "If you have faith, nothing shall be impossible unto you."

Secret #4: Focus On Positive Thoughts Not Negative Ones

If you watch or read the news it's usually pretty negative - because it sells. And on a personal level, it's much easier to fall into a negative emotional trap of fear, doubt and low self esteem than it is for optimism, belief in one's self and confidence.

Have you ever heard the saying "be careful what you wish for, you'll surely get it"? This is another way of describing a 'self-fulfilling prophecy'. This simply means, what you think about is actually subconscious goal-setting. If you think about negative things, some of those things are likely to occur. On the other hand, think about positive things and some of those are likely to occur as well. Don't take my word for it, many research studies have been conducted to confirm this.

Successful people recognize the power of positive thinking. They form a mental image of the outcome they desire. Their mind then begins to formulate and construct ideas and plans to obtain that outcome. It ties closely with MOMENTUM in Secret #3. Does this mean that successful people never consider problems? Of course not, however, they do this differently than most people -- they are not focusing on these problems, they are looking for roadblocks they might have to avoid to achieve their desired outcome. They "hope for the best and plan for the worst". They don't let negative thoughts control them and throw them off target. Instead, they use what they think about as tools in achieving their goals by thinking positively.

Secret #5: Success Is In Attention To Details

One of the things that sets successful people apart is that they pay close attention to details. They make sure that the details are taken care of because this can be the difference between success and failure. Whether you're running a business or running a triathlon, a tiny adjustment somewhere within the race can make the difference between winning and losing.

Until next time! Retirement Wiz. Email me anytime: johnha7@yahoo.com

FREE retirement fun stuff: ebooks, jokes, quotes, speeches, poems, gifts & more!

With today's blog, I thought I'd offer up some fun and interesting links and freebies that I've come across recently. So -- please review, download, and enjoy!

I'll start with a FREE ebook download that includes the preface and 1st chapter from a bestseller titled "The Joy of Not Working", by Ernie J. Zelinski. This is not only a fun read, but great advice about living happy. Click on the book image link below:


Here's a couple of excerpts from the book:

"Whether you are retired, unemployed, or working, you can use "The Joy of Not Working" as a practical and reliable guide to create a paradise away from the workplace. Because all of us need reminders from time to time about the obvious and the not-so-obvious, we can all use a handy guide on how to enjoy life more." -- Ernie Zelinski

"My father taught me to work, but not to love it. I never did like to work, and I don’t deny it. I’d rather read, tell stories, crack jokes, talk, laugh - anything but work." —Abraham Lincoln


The next item of interest is another FREE ebook download by Ernie Zelinski titled "101 Really Important Things You Already Know, But Keep Forgetting". I really enjoy this book. It's a compilation of truly valuable life lessons that you may already have learned and forgotten, plus some others that you may not have encountered -- yet. The free ebook includes 15 of the 101 'important things' that are included in the complete book that you can purchase from the Amazon.com "I Recommend" box on the right border of this page. To download your free ebook, click on the book image link below:

Here's another fun one from Mr. Zelinski. Click on the book image link below for your FREE ebook download of "Graffiti for the Employee's Soul":

The next FREE ebook "The 437 Best Things Ever Said About Retirement" is chock-full of funny & interesting quotes and sayings that are great for retirement dinners or just to keep your conversations lively. A lot of fun! Click on the book image link below to download a free copy of this ebook:

Click on the image link below to enter the "Retirement Cafe" website which offers a FREE Collection of Retirement Jokes, Speeches, Retirement Letters, and Poems:

Need retirement gifts or supplies for a retirement party? Click on the image link below for great party ideas and supplies, plus retirement jokes, shirts, poems, and other retirement gifts. (Note: these products are NOT free, but I think this is the best resource of its kind anywhere):



Well, that's about it for today. I hope you enjoy these resources. -- Retirement Wiz

Email me anytime at: johnha7@yahoo.com

Enjoy high yields & low risk with Trust Deed Notes

A few months ago, I was in a bank lobby that provided little or no privacy for the people that were conducting their business with the tellers. I couldn't help but overhear a conversation taking place with a couple probably in their early 60's. They were trying to figure out how they could put more money into the bank under the FDIC's $100,000 insurance - by opening separate accounts, opening accounts in the name of their trusts, children, grandchildren, etc. And it really saddened me. You might wonder why?

Well, it's because the interest rate that they were going to be earning on their money was MAYBE keeping up with inflation. In other words, they weren't growing their money. And it saddened because there are alternative investments that they could be putting their money into that earn far greater returns with low risk and high security!

Let's take a look at what banks and other lending institutions are paying today - these are national overnight averages from BankRate.com:

2.38% Money Market Accounts
2.89% 6-month Certificate of Deposit (CD)
3.27% 12-month CD
3.86% 5-year CD

Click on the link below to check out today's rates for yourself:

BankRate.com

Again, these are national averages, so you can find some banks with higher rates around the country. For example, I know of one bank that is offering 3.9% on its Savings Accounts right now. Regardless, we're still talking about interest rates that are barely keeping up with inflation if we're lucky. And, I'll step out on a limb and say that they are NOT keeping up with inflation because of the way that the government calculates and reports it. (We've been quoted 3% inflation since the price of gas was well under $2.00 a gallon. Who still believes that inflation is 3% now that the price of gas is approaching $5.00 a gallon??)

So, let's take a look at one Alternative Investment that can earn much higher yields with low risk:

TRUST DEED INVESTMENTS

There are many investors that only invest in this one asset type and consistently make a steady 9-12% annual return. But there are many more investors who have never even heard of Trust Deeds, let alone know how to invest in them.

Basically, investing in Trust Deeds involves your becoming a lender to a homeowner or a builder. For the purposes of this blog, I'm going to narrow it down to lending to homeowners.

Now, as a Trust Deed lender, you can either 'create' a Trust Deed loan directly with a borrower yourself (usually with an attorney's assistance) or more commonly, you can purchase an existing Trust Deed loan from a Mortgage Loan Broker (aka 'Hard Money Lender').

Many homeowners are unable to obtain loans from banks or other large financial institutions due to various reasons: low credit scores, gaps in employment, etc. However, they may have a very immediate need for the money. This is where 'Hard Money Lenders' come in. These are typically smaller local businesses with money to lend. They are much more flexible than the large financial institutions, can react very quickly, but charge significantly higher interest rates for the use of their funds.

The typical Hard Money Lender doesn't intend to hold onto most of the loans or Trust Deeds that they initiate. Instead, they seek to sell these loans to individuals, institutions, trusts, etc. They make their money by charging loan fees and points in the initiation and resale processes.

Before I get too far along, let me explain WHY you should consider doing this with some personal examples: I own several Trust Deed loans in California. The interest rates I earn on these loans range from 12% to 16.99% and I get paid every month on these loans by my borrowers. And I've turned downed Trust Deeds as high as 18.99%.

You might be saying "there's no way!". Quite the contrary my friends. In fact, these interest rates are very common in the "Hard Money Lending" business, which you are going to learn about shortly - and they are completely legal. I won't go into "usury law" in this blog because the laws vary by state, but I will be happy to speak with you about it if you care to send me an email with a question. (My email address is: Johnha7@yahoo.com)

Now, I'd like explain more on what Trust Deeds are and why they can be very secure investments. Then, we'll discuss what determines their value and then, how you can invest in Trust Deeds.

The Trust Deeds we'll discuss in this blog are related to real estate. When someone purchases a home, they commonly take out a loan (mortgage) to acquire the property. Loans against real estate have two components:

1. The Trust Deed (aka Mortgage or Deed of Trust): this legal document pledges the property to the lender as security in case of a default or non-payment by the borrower.

2. The Promissory Note: this legal document specifies the payment terms of the Trust Deed, including the amount of the loan, monthly payment amount, payment due dates, interest rate, term of the loan (# of months), and penalties in the event of late payments or default. This is essentially, the borrower's promise to repay the loan amount plus interest.



Now, there are many situations when an existing homeowner needs money and their only significant asset is their home. It may be for a 'hot' new investment asset, a remodel of their home, a family or medical emergency, etc. So, they might seek to take out a 'Home Equity Loan'. There can take various forms, but I'll focus on the following:

* First Trust Deeds: if the homeowner/borrower has no current mortgage on their property (they own it free and clear) and they took out a Home Equity Loan, it would be considered a First Trust Deed. This means that in the event of a default or failure to pay and subsequent foreclosure, this loan would be paid off before any others. (As noted above, the Trust Deed pledges the property as security in the event of a default.)

* Second, Third, Fourth.... Trust Deeds: if the homeowner/borrower does have a current mortgage (this would be their First Trust Deed) and they have a good amount of equity in their property (their home is worth more that they owe on their mortgage) -- they might take out another loan(s) against their remaining equity in the property.

These 2nd, 3rd, 4th.... Trust Deeds, however, are named as such because it identifies their 'lien position' in the event of a default. Sometimes, as we're experiencing in a number of U.S. markets today, the property values can go way down and the equity that was borrowed against virtually disappears. In the event of a foreclosure and subsequent resale of the property, whatever funds are obtained from the sale are paid out in order of priority: First Trust Deed gets paid off first and if any money is left over, then the Second Trust Deed gets paid, etc. Unfortunately, there may not be enough funds to repay even all of the First Trust Deed off. In this case, the 2nd, 3rd, 4th Trust Deeds, etc. don't receive anything. That's right, they're out of luck!

So, what's the lesson here? Well, like any investment, you need to do your homework and research before you invest in a Trust Deed. My definition of risky investments are those that are made in the dark.

Now please don't let this scare you off. Here's why - there are:

Five Simple Ways To Reduce Risk For Trust Deed Investments

1. Make sure any Hard Money Lender that you will be purchasing your Trust Deeds from is reputable and experienced. Check them out. We'll discuss how to do this a little later.

2. Review the property appraisal and title (this will determine if the borrower has equity and if the property has clear title with no other liens or complications). Is the appraisal current? Who did it? You want an independent 3rd party doing these. Some investors will have their own appraisals done. Make sure that there is title insurance! This is added SECURITY you don't want to invest without.

3. Research the market value of the property and trends. Is the real estate market stable? What have comparable homes in the immediate area sold for recently?

4. Give yourself a 'cushion' between the amount of the loan and the value of the home which you researched in steps 2-3 above. This is called Loan To Value (LTV). It's calculated as follows:

Amount of Loan divided by Market or Appraised Value = Loan To Value

A good LTV is my opinion is under 70%. This means that if a home is valued at $100,000 - then I will loan no more than $70,000 on it. Why?

Well, if the borrower defaults on their loan and I foreclose, I could take possession of the property valued at $100,000 for which I only have $70,000 invested in the loan. It's now mine and I have an automatic $30,000 in equity if I can sell it for the market value of $100,000 AND I would get my original investment back!

There are two big benefits here:

* Potential for additional profits: The 'cushion' of the 70% LTV means there is potential for additional profits in the event of a default and foreclosure. (In the example above, it was an additional $30,000 of profit that I didn't originally plan on.) This isn't ever my intended outcome, but it's nice to have the added security and cash.

* Added SECURITY: In the event that the real estate market were to depreciate like it's doing in many areas today, with my 'cushion' provided by the 70% LTV -- the value of the property can decline by as much as 30% and I'll still be protected and able to get my original investment back if there's a foreclosure.

IMPORTANT: In a situation where the borrower already has a First Trust Deed on the home and they are seeking a Second Trust Deed, I still stick to my 70% LTV model. If the COMBINED loan amount (1st + 2nd Trust Deeds) is under 70% LTV, I would loan the money. In other words, if the home is worth $100,000 and the 1st Trust Deed balance owed is $50,000, I would loan up to $20,000 for a 2nd Trust Deed. This would add up to a total amount borrowed of $70,000, which is within my 70% LTV guideline.

5. Research the borrower's ability to pay. Check employment, credit scores and payment history where possible. Honestly though, if I get a really good LTV, say 60%, I'm not concerned about this. Why? Because, if the borrower defaults and I foreclose, I get the property at 60 cents on the dollar.

If you follow the five steps above, you will virtually eliminate the risk from your Trust Deed investment.

Factors That Determine The Value Of Trust Deeds

All of the following factors needs to be considered together when investing in Trust Deeds. In other words, you should look at everything before you decide to lend money - not just one factor by itself.

* Loan-To-Value: as explained above, this is the relationship between the amount borrowed and the valuation of the property. I stay below 70% LTV. A Trust Deed at this LTV is more valuable than one at 80% because it has less risk (more 'cushion'). Trust Deeds with higher LTV's will commonly pay a higher interest rate to compensate for the greater risk level.

* Interest Rate: obviously, a Trust Deed with an interest rate of 12% is more valuable than one with 9%.

* The Loan Term: this is the period of time in which the debt has to be paid off. Most investors like to get their money back quickly. So, Trust Deeds with shorter terms are more valuable than those with longer terms.

* The Borrower: the creditworthiness of the person borrowing the money is another factor. Trust Deeds for borrowers with sound employment, high credit scores and good payment histories are more valuable than those with lesser credentials.

OK, we now know what a Trust Deed is; how to reduce risk when investing in Trust Deeds; and the factors that create value in a Trust Deed investment. Next, we're going to look at:

How To Invest In Trust Deeds

There are two ways to invest in or acquire Trust Deed investments:

1) By lending the money directly to another party and creating a new Trust Deed yourself.
2) By purchasing an existing Trust Deed from a Hard Money Lender.

We are going to focus on # 2 above:

Key Steps For Purchasing An Existing Trust Deed:

A) First, you must locate a reputable, experienced "Hard Money Lender" (aka Mortgage Loan Broker). There are a number of ways to find these companies - I typically look in the classified ads of my local newspaper under 'real estate', 'business opportunities', or 'money to loan'. Other good ways are to search the internet for 'hard money lenders' in your area and to consult with friends or business associates who may have experience with Trust Deeds already.

I recommend that before you invest any money with a Hard Money Lender, that you meet and interview them - ask for a professional profile, background, experience, etc. Then check them out with your State Dept. of Real Estate and Better Business Bureau. Most states also have Mortgage Loan Associations that you can research.

B) Once you've identified a qualified Hard Money Lender, you'll want to review the existing Trust Deed Loans that they currently hold and are offering to sell. (By purchasing the Trust Deed from the Hard Money Lender, you are actually becoming the new Lender on the property associated with this loan.) A good Hard Money Lender will have the critical information you need to use for 'sifting' through the offerings and narrowing them down to a short list for further, more detailed research and due diligence by you. This critical information should include:

* Property information: description, location, photos, etc.
* Loan amount
* Loan position (1st, 2nd, 3rd, 4th Trust Deed, etc.)
* Other loans on the property
* Total combined LTV (all loans)
* Appraisal
* Market comparable sales
* Interest rate
* Term of loan
* Title information
* Borrower information: credit score, employment, etc.
* Etc.

With this information, you should be able to identify a couple of Trust Deeds that might fit your requirements. From here, you may want to take these and dig even deeper, perhaps visiting the property, driving the neighborhood, talking to realtors about the area, researching market trends, etc.

C) Assuming you've found a Trust Deed that fits the bill, you will start the Escrow process. Your Hard Money Lender will lead you through the process and serve as middleman to get the property assigned to you as the new lender of record. I always recommend communicating directly with the borrower via letter/email and telephone to establish a good working relationship with them.

D) Finally, you'll need to start getting paid! Some Hard Money Lenders provide the administrative duties of processing payments for you. Others do not and you'll have to determine whether you want to handle those chores yourself or farm it out to a third party note processor. Personally, I use a third party service called The Note Servicing Center. They're national and very good at what they do. In fact, they are located very near my old hometown in Midpines, CA. Click on the image link below to check them out:


Well, I hope that this information inspires you to explore Trust Deed investing further. If you go about it the right way and do your homework, these investments can help to truly diversify your portfolio and add stable, high yielding assets with low risk. And please, don't rely on CD's as your primary investment strategy! There's too many great options available and Trust Deed loans are just one of them.

Until next time, I am the Retirement Wiz! (email me anytime at: Johnha7@yahoo.com)

If the market crashed would you be wiped out?

Many people would be wiped out if the stock market were to crash today. Not me. I'll tell you why in a minute.......

Here's another question: Is your retirement portfolio diversified?

Most people would say YES. And I'm gonna say that they really are not. Why? Read on.......

The American Heritage Dictionary defines the word "DIVERSIFY" as follows:

1.a. To give variety to; vary.
1.b. To extend (business activities) into disparate fields.
2. To distribute (investments) among several companies in order to average the risk of loss. To spread out activities or investments, especially in business.

"Approximately 96% of U.S. retirement portfolios are limited to 'traditional' market investments. As a result, retirement portfolios are very vulnerable to market risk, which, if dramatic, can wipe out an individual's lifetime savings." (Source: PENSCO Trust Company, April 25, 2008).

What the heck does all this mean?

It means that "many people think that their portfolios are diversified but they really don't have a clue".

Now this may sound harsh at first blush, but if you can grasp the concept below, it can be life changing and protect you from financial disaster. And, it's the reason I said at the start that I wouldn't be wiped out if the stock market crashed today.

"TRUE DIVERSIFICATION"

"True Diversification is a means to increase your expected rate of return and at the same time, reduce your portfolio volatility and risk."

Does this sound improbable or impossible? Allow me to introduce you to:

'Modern Portfolio Theory' (MPT)

Modern Portfolio Theory is a sophisticated, yet simple to execute, investment approach first developed by Professor Harry Markowitz of the University of Chicago in 1952. In 1990, he received a Nobel Prize in Economics for MPT, which has become the framework upon which many institutions such as Harvard and Yale universities' endowment funds and savvy investors construct their investment portfolios.

It was Markowitz's position that portfolio risk could be reduced and the expected rate of return increased, when assets of dissimilar price movements were combined. "A diversified portfolio, of uncorrelated asset classes (or 'Alternative Assets'), can provide the highest returns with the least amount of volatility or risk."

"Many investors are under the delusion that their portfolios are adequately diversified if they are invested in various individual stocks, mutual funds, bonds, and international stocks." While these are different investments, they are still in the same general asset class, with similar price movements and generally move in concert with each other. For proof, take a look at what happened in the last market crashes. "TRUE diversification’ according to MPT, is in ‘uncorrelated and Alternative Asset Classes’ that move independently from one another."

So, now I'm going to repeat myself:

Approximately 96% of U.S. retirement portfolios are limited to 'traditional' market investments, and although the inclusion of 'Alternative Assets' is increasing, it has a long way to go. And as a result, retirement portfolios are very vulnerable to market risk, which, if dramatic, can wipe out an individual's lifetime savings. More consideration therefore, needs to be given to 'True Diversification' and incorporating Alternative Assets and non-correlated asset classes into retirement portfolios to hedge against market risk.

Are you "Truly Diversified"? Here are some Alternative Assets/non-correlated asset classes that you might consider including in your own retirement portfolio to provide that 'hedge' against market risk:

Alternative Asset Examples

• Land development projects (my personal favorite)
• Raw land
• Commercial & residential real estate
• Tenancy in common investments (TIC's)
• Real estate investment trusts (REIT's)
• Trust deeds
• Tax liens & tax lien certificates
• Precious metals (gold, silver, platinum)
• Gemstones
• Commodities/futures
• Oil & gas
• Hedge funds
• Private equity
• etc.

I believe the pick of the litter is Land Development because it has outstanding returns and is secured by the land itself. For more information, click on the image link below:

Hopefully, you'll take this information to heart and do something with it. I did and I sleep a lot better at night. Now, you may be saying "but I can't do anything, my retirement money is tied up in my IRA or 401K". Well, guess again. You absolutely can use those funds to invest in Alternative Assets. Check out my Blog dated March 4, 2008, titled "How to take control of your IRA & 401K investments". It will explain the easy steps to do this & there's a FREE information guide you can download there to explain everything.


To your retirement portfolio health! Until next time!

- Retirement Wiz. (email me anytime at:johnha7@yahoo.com)

How you can profit from the 'Rebuilding of America'

In today's blog, I want to address a tremendous financial and social opportunity that is available to anyone with the knowledge I will share and the vision to do something with it. It's the "Rebuilding of America".

What am I talking about?

We are sitting at 'ground zero' for a land/construction development boom that, by the year 2030, will make the build-out following World War II look like "Lincoln Logs". (I assume that most who read my blog are old enough to know what Lincoln Logs are.)

Most state and local governments across the US conduct their own research to estimate trends in demographics, households, markets, and industries in their geographies over the coming years. These projections serve as the basis they use to develop localized growth plans and public policy related to future development requirements for their geographies. However, until recently, there has not been a "national" study conducted to evaluate the development needs for the entire United States.

In December 2004, the highly acclaimed Brookings Institution Center on Urban and Metropolitan Policy supported a project titled "Toward a New Metropolis: The Opportunity to Rebuild America" by Virginia Tech urban planning professor Robert Lang. This is the first study of its kind, whether by government, public or private sources. I will be referencing information from this study and others in today's blog. (Click the Brookings image below to view this study.)

The purpose of this study was to gain an understanding of how projected changes in our nation's population, plus demographic, household and market trends will impact our development requirements for the future. That is: how many new homes, schools, parks, libraries, shopping centers, hospitals, office buildings, industrial complexes, etc, will we need to accomodate future growth?

First, let's start with the 'engine' that's driving the need for future development in the US:

The US population is growing. This is due to:

* Extended life spans (people are living longer)
* New births
* Immigration (legal and illegal)


U.S. CENSUS BUREAU PROJECTIONS:

Year..... Population...... Cume Increase...... Cume % Change
2000...... 282Million.......... ---------------------------------
2010...... 309Million........... +27Million ............. +10%
2020...... 336Million...... .... +54Million ..............+19%
2030...... 364Million........... +82Million ............. +29%

Summary: Between 2000-2030, the US population is expected to grow by >82Million new people (a 29% increase!).

According to the Brookings Institute study noted above:

* By 2030, total "built" square footage in the US (including residential, commercial & institutional, and industrial square footage combined) will need to increase by 42% to accommodate the projected new population growth. That means adding another 127 BILLION square feet of buildings.

* By 2030, approximately 27% of previously existing square footage will need to be replaced. That means another 82 BILLION square feet of re-development building.

* All told, this amounts to 209 BILLION square feet of total development needed between now and 2030.

* Most of the new square footage will be residential space (79%). That's over 100 BILLION square feet of new homes.

* Total projected cost of this new "Rebuilding of America"? $25 Trillion Dollars!

The bulk of the $25 Trillion Dollars will be spent in developing 10 major metropolition regions, which the Brookings study calls "MEGAPOLITANS":

Source: "The $25 Trillion Land Grab" article by Paul Kahlia (Business 2.0 Magazine).
Click on the image below for a copy of the article.

1. CASCADIA: Will encompass land from Seattle to Portland. Vast quantities of cheap, prime greenfield surrounding Seattle, Portland, and Eugene give the Northwest megapolitan explosive growth potential. By 2030 the three metro regions will be intertwined.

2. NORCAL: Will encompass land from San Francisco to Sacramento plus the Central Valley. The action is moving east from the Bay Area: The Sacramento metro region will build more housing and office space in the next 25 years than any other Western megapolitan city except Las Vegas.

3. SOUTHLAND: Will encompass land from Los Angeles to San Diego in the south thru the Inland Empire to Las Vegas in the east. Trade with China through the country's largest port, Los Angeles, will fuel a boom in logistics, warehousing, and distribution centers for companies like Target. New military and space programs will do for the Southland what the Internet did for NorCal in the 1990s.

4. VALLEY OF THE SUN: Will encompass land from Phoenix to Tuscon. This is the smallest megapolitan, but the one with the greatest supply of raw, buildable land at the lowest prices--one reason it will soon be the fastest-growing metro region in the country. The big draw: a Palm Springs lifestyle for the masses at a substantial discount.

5. I-35 CORRIDOR: Will encompass land from San Antonio to Dallas to Kansas City. No region better captures and caters to the Latino population boom. A new generation of Hispanic business owners and industrialists will drive the growth, and the area will become a magnet for foreign firms trying to cash in on the U.S. Latino market.

6. GULF COAST BELT: Will encompass land from Houston to New Orleans. Hurricane Katrina will for decades exaggerate a divide at the Texas-Louisiana border between the region's richer western section and the poorer eastern one. Surrounding megapolitans will enjoy spillover growth because of the Gulf Coast Belt's higher risk premium.

7. GREAT LAKES HORSESHOE: Will encompass land from Chicago to Detroit to Pittsburgh. Hit hard by manufacturing's decline, the constellation of Northern industrial cities is morphing into a service-economy region and will draw a flood of immigrants.

8. ATLANTIC SEABOARD: Will encompass land from Boston to New York City to Washington DC. The country's most heavily populated megapolitan braces for another boom. Where will most of the development go? Up: Urban infill will outstrip suburban growth.

9. I-85 CORRIDOR: Will encompass land from Raleigh-Durham to Atlanta. The 410-mile stretch from Atlanta to Raleigh is fast becoming a contiguous strip of McMansions and McDonald's. As textile manufacturing fades, consumer banking in Charlotte, telecom in Atlanta, and high-tech in the Raleigh-Durham Research Triangle drive the growth.

10. SOUTHERN FLORIDA: Will encompass land from Tampa to Miami. The state posted the nation's highest job growth in 2004, as baby boomers from the North poured in to take advantage of the job market and climate. Land scarcity will drive urban growth.

BONUS: UTAH 'MINIPOLITAN': This is my own addition to the $25 Trillion Land Grab markets. Utah is experiencing tremendous population and job growth and needs to be added to the list.

How can YOU profit from the 'Rebuilding of America'?

Well, I suggest that you find a way to participate financially in the development process, particularly in the 'Megapolitans & Minipolitan' geographies listed above.

Personally, I am investing in a company that specializes in real estate development.

If you would like to learn more about what I'm doing, click on the image below:

That's it for now. See you next time! Retirement Wiz (email me at: johnha7@yahoo.com)

How to avoid running out of money in retirement

I just came across a very informative report that I'd like to share with you today. It's called "The 15-Minute Retirement Plan: How to avoid running out of money when you need it most", prepared by Fisher Investments.

For a FREE copy of this report, click on the image below:

Here's a brief summary of what I believe are key points in this report, plus some of my own thoughts on the subject:

Running out of money is one of the worst things that can happen to a person in retirement. You might work your whole life saving for your future and then find out that you don't have enough money to last for the duration of your life.

To avoid this happening to you, there are several key factors that you need to consider:


1. The length of time that you will need to save for. Many people underestimate their life expectancy. In 1952, the average lifespan was 68.6 years. In 2006, that had increased to 77.8 years. And, with continuing improvements in medicine and healthcare, it's expected that life expectancy will only continue to increase.

What does this mean to you? Expect to live a long time and build this into your savings plan for retirement. Below is a 2006 life expectancy table from the IRS to help you with this.

Age.....Life Expectancy
51-----------84.3
55-----------84.6
60-----------85.2
65-----------86.0
70-----------87.0
75-----------88.4
80-----------90.2
85-----------92.6
90-----------95.5


2. The effects of inflation. Many people believe that if they're earning 10% per year on their portfolio, that they can withdraw 10% per year without reducing their principal. This isn't correct. They forget to take into account INFLATION, which historically has averaged 3% per year. So the real earnings for their portfolio is just 7% per year (10%-3%=7%). If they're withdrawing 10%, they are actually reducing their principal every year.

More on inflation: it has a compounding effect on your cost of living. If you need $50,000 per year today to cover your living expenses, in 20 years you'll need $92,000 to keep the same lifestyle. In 30 years you'll need $125,000. You get the point.

3. The amount of money you withdraw from your retirement portfolio each year. The amount of money that you withdraw each year obviously will affect how long your money will last. Here are three scenarios based on an average 10% annual return on a $1 million portfolio over a 30-year time horizon, adjusted for inflation:


* Withdraw 10% per year: the portfolio will last approx. 18.2 years
* Withdraw 7% per year: the portfolio will last approx. 24.2 years
* Withdraw 5% per year: the portfolio will last approx. 27.9 years


4. The makeup of your retirement portfolio. In particular, if you're heavily into stocks, you must take into account the volatility of the stock market. If you need to take 10% withdrawals each year and take it in a year when the market and your portfolio are way down, you could significantly cut into your principal. To illustrate: if your portfolio has declined 20% this year due to a stock market downturn, and you withdraw 10%, you'll need your portfolio to grow 39% next year just to get it back to even.

What can you do?

I recommend that everyone take a good look at raw land development investments for their retirement portfolios.

Here's why:

Though nothing is certain with any investment, raw land development is one of the most lucrative investment vehicles available to investors. And that includes stocks, bonds, commodities, other real estate products, etc. Professional land developers commonly increase the value of their raw land investments by 200-500%. And it can be much higher. (I consider that pretty lucrative.)

These investments are typically secured by the value of the land being developed. This is in contrast to stocks where there is really no security at all.

Land developers do not rely on market appreciation for their profits, unlike residential real estate. Instead, they CREATE value by taking raw land, obtaining government permits and approvals to rezone the land so it can be subdivided and built upon - then they resell these newly approved lots to production builders for typically 2-5 times more than the land developer paid for the land. So, there is typically far more stability and much less volatility.


To learn more about raw land development investments, click on the picture below:

See you next time! Retirement Wiz (e-mail me at: Johnha7@yahoo.com)

The best places to retire in America

Today, I thought we'd have a little fun and review "the best places to retire in America". As my source of information, I'm referencing articles from US News & World Report dated 9/20/07 and 9/25/07.

Here's the process they used to arrive at their selections for the Top 10 Best:

* They started with a list of 2,000 places with populations of >15,000 people. Their reasoning for this population minimum was that communities smaller than this are less apt to have adequate medical facilities or income opportunities for those who might wish to work a little during retirement.

* Next, they narrowed the field to about 1,000 places based on things like cost of living, crime rate, climate, healthcare, recreation, etc.

* Finally, they selected their Top 10 list from this grouping as Editor's Picks - shown below in no particular order.

NOTE: Click on the pictures beneath each city to go to specific information about that city.

Enjoy!!

> Smyrna, Tennessee:


> Bozeman, Montana:


> Concord, New Hampshire:


> Fayetteville, Arkansas:


> Hillsboro, Oregon


> Lawrence, Kansas


> Peachtree City, Georgia


> Prescott, Arizona


> Venice, Florida


> San Francisco, California


** Remember to click on the pictures above for specific information about each city.


I hope you enjoyed it! Until next time -- Retirement Wiz (email me at: Johnha7@yahoo.com)

Why land development is one of the best investments you can make....period!

Back on March 11, 2008, I wrote a blog titled "A well-kept secret: Investing in Land Development". There, I gave four reasons why everyone should consider investing in land development. Here, I'm going to explain further about why land development is one of the most lucrative investment vehicles of them all -- and that includes stocks, bonds, other real estate products, commodities, precious metals, etc. You name it.

Here goes....

Land development, also known as raw land development, is the process of converting raw or undeveloped land into land that can be used for a higher economic purpose -- i.e. it can be built upon. How does this magical transformation take place?

It's simple, but not easy. The developer obtains the necessary permits from the government and public agencies that are required to give permission to modify the land for a different purpose or use. It's a lot of red tape and can literally take years to complete depending on the size and scope of the project. In addition to being very time consuming, it can require a bunch of legal wrangling, a lot of politics, financial and management expertise and a great deal of patience.

Most developers are rookies and they usually fail because they don't have the relationships or experience needed to do this expertly. Many go into it with a great piece of property, in a great location, with a great idea for the property -- then fail because they couldn't get the necessary permits approved before they ran out of time and money.

The successful land developers are professional companies that do this all day every day. There are very few of these in the U.S., but these are the guys making all the money. They have the relationships with government officials, local business leaders, lenders and builders across the country. In a way, it's a 'good old boy network'. More importantly, they have experience.
So, how do these 'professional' land developers make their money? Well, simply put, they "create value". They do this by conducting a tsunami of research (that's a lot of research) about where population shifts are taking place, where communities are growing to, where jobs are being created.... you get the idea.

Once they have identified where the growth is going to take place (they look years into the future), they then search for raw undeveloped land or property in the path of this growth. Once they identify some raw land to their liking (it could be anywhere from a few acres to thousands of acres), the developer generates preliminary plans for this property in the form of a greater economic use. This could be a shopping mall, a master-planned residential community, an industrial complex, a golf course, etc.

The next step is to obtain the rights to the property. This is another area where non-professional developers often over-extend themselves and fail. The professional developer rarely will pay cash for a property up front and tie up his or her capital. Instead, they will employ modest deposits or 'right to purchase' contracts, etc. to obtain the rights to the property with little out of pocket expense. Meanwhile, a non-pro often doesn't have the knowledge or expertise in this area and they get in over their heads financially, causing them to ultimately run out of money and fail.

Next, the professional developer, will usually contact their network of builder relationships and present their preliminary plans (they might do this even before they obtain the rights to the property) and get a 'handshake' agreement to build-out the project once the government permits are obtained. And from there, the land development project goes into high gear -- meaning the permits and approvals are pursued full-time until completed.

To be clear, a true land developer does NOT build on the land. They simply (but not easily) obtain the approvals to do this. Sometimes, they will install the "infrastructure" - which could be the sewer and water mains, utilities, curbs & gutters, etc. -- but not always. Once they have obtained the permits and approvals, they will then sell the property to the builders and that's the end of their involvement in the project!

You may be thinking, that's it? How could that be so lucrative? Well I can assure you that it is. It is by far the most lucrative form of real estate. The reason is that it takes many years to become expert at what land developers do. I've already told you that most developers fail because they lack experience, so there is a lot of risk if you don't know what you're doing. So, the pros get paid very well for what they do because the builders have confidence that THEIR projects have a great opportunity for success.

One other thing.... Land development isn't susceptible to market fluctuations like residential real estate. Land developers don't rely on appreciation for their profit like builders and residential investors do! As I've illustrated above, the land developer CREATES value by obtaining approval to build on the previously undeveloped land:

A typical land development project increases the value of undeveloped land by 200-500% !! And it can be much greater. I consider that pretty darn lucrative don't you?

Now I hope you can see why any investor who can fog a mirror should consider land development as a component of their portfolio.

In the past, small investors like me couldn't participate in land development projects as investors. As I mentioned above, it's been a 'good old boy network' for many years among the few professionals in the business. So, you had to be know somebody to be 'invited' to invest and even then, you had to have millions to invest or you weren't worth their time.

But that's changed!
Recently, a new type of investment structure was created that now allows smaller investors to participate in this very lucrative field. I sure do!

To learn more, click on the image below:

Until next time! Retirement Wiz (email me at: Johnha7@yahoo.com )

Use your IRA funds to invest in Real Estate tax deferred

For years and years, we've been literally "hoodwinked", "brainwashed", "convinced" by the big financial brokerage houses and banks that our IRA funds can only be invested in things like stocks and bonds and CD's (certificates of deposit) -- products that they sell. However, we are also aware that the stock market is volatile and can decline sharply in just one day - putting our retirement plans on hold until it (hopefully) recovers.

The good news is that we don't have to ride that rollercoaster if we don't want to!

There are investment alternatives that offer far more safety and upside potential: REAL ESTATE products. Yes, real estate! And you can use your IRA funds to invest in real estate products and still retain the same tax deferred status that you currently have with your IRA. You can do that with a self-directed IRA as I detailed in a previous blog (please see my blog archive: "How to take control of your IRA and 401k investments").

OK, let's move past that point as a given for now, alright?

So, I know what you're thinking... The residential real estate market is in foreclosure isn't it? Well, yes it is. Residential real estate is hurting is many areas around the country. I can make a strong case that there are very profitable investment opportunities in this environment for the savvy investor -- in fact, many pros are gobbling up foreclosure properties aggressively right now. WHY?

The answer is: because residential real estate is cyclical. Remember the 1980's? So soon we forget. We've been there before and done that, right? The dynamics are different this time around with the sub-prime lending issues, but the cycle will win the day and here's why......

The U.S. Census Bureau projects that the U.S. population will balloon by >111 Million new people between NOW-2050. That's a 36% increase! And where are all of these new people going to live?? That's right, they'll need houses, schools and communities to support them.

It's all about Supply and Demand. The population growth quoted above represents increasing demand. Today, we have more supply than warranted -- we're over-built with homes, but that's going to change in the next couple of years as the population swells and demand outstrips supply of homes.

Since we're talking about retirement investing, we're also talking about patience and growth potential in connection with our investments. I can't think of another investment category that offers better potential than real estate for the coming decades.

The Brookings Institution Center on Urban and Metropolitan Policy released a paper (44 pages) in Dec. 2004 titled "Toward A New Metropolis" - The Opportunity To Rebuild America." This document was summarized in an article published by Business 2.0 on CNN Money.com in Nov. 2005 titled "The $25 Trillion Land Grab." It states that we are on the groundfloor of the biggest "land grab" since the build-out after WWII. It goes on to identify 10 geographic areas around the U.S. where this "land grab" will be taking place. The fact is that this is taking place RIGHT NOW. Professional developers and investors are quietly and aggressively acquiring raw land in these key markets ahead of the "path of growth". (Click on the image link below to view the article.)

What does this mean for you and me as investors? Well, a couple things:

1) We know that the population is going to grow significantly creating more demand for homes and land development.

2) We also know geographically where that growth is going to happen.

So, as investors, we can choose to capitalize on this opportunity or not. I've made the choice of capitalizing on the opportunity. If you would like to know how, click on the image link below.

In future blogs, I'll be sharing a number of real estate investment products that you can invest in using your IRA funds. These will range from products with immediate cash flow to products with longer term profit potential -- and some with both.

Until next time..... Retirement Wiz (email me at: johnha7@yahoo.com)