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)

A well-kept secret: Investing in Land Development

The wealthy have been doing it for years....

You've probably never heard about this opportunity...

Your financial advisor certainly won't be telling you about it...

What am I talking about??? RAW LAND DEVELOPMENT INVESTING

Raw land development is widely regarded as the most lucrative form of real estate investment. In fact, land development is one of the most lucrative investment vehicles available (and that includes stocks, bonds, commodities -- you name it).

200-500% increases in land value are common returns for professional land developers. (And, they can be even greater.)

Q: What exactly is raw land development?

A: Simply put, it is the process where raw, unimproved land is acquired by the acre and governmental approvals are obtained to prepare the land for building upon. This newly "improved" land is then resold to building contractors in surveyed lots and parcels.

Why should anyone consider raw land development as an investment?

1st, as I already mentioned above, it can be very lucrative. Who wouldn't want to share in these 200-500% potential returns? However, until recently you had to have millions of dollars to invest to even be considered as a potential investor -- and, even if you had the money, you had to be "invited" by a developer in order to participate. BUT THAT HAS CHANGED, as I'll explain a little later.

2nd, because these investments are typically secured by the value of the land that's being developed -- which is in contrast to stocks, for example, where you really have NO security at all on your investment.

A 3rd reason to consider land development is because unlike residential real estate, which we all know is in foreclosure in many markets, raw land development is aggressively expanding, particularly in 10 key markets around the U.S. In fact, it's widely held that we're on the ground floor of the largest "land grab" since the build-out following WWII. (Reference: "The $25 Trillion Land Grab", Business 2.0/CNN Money.com - NOV. 2005) -- click on image link below:

A 4th reason is because the population is projected by the U.S. Census Bureau to balloon by over 111 MILLION new people between NOW-2050 (a 36% increase in our population). And these new people will require new homes, schools and communities to support them, which DICTATES more land development!

At the end of the day, it's all about supply and demand. The demand created by the population growth will need to be supplied by more and more land development.

Guess what? It's happening right now! As I write, in the 10 key markets detailed in the article mentioned above, raw land is quietly and aggressively being acquired for development now and into the coming decades.

As I mentioned above, in the past, you couldn't participate in land development investing without millions to invest and an invitation from a developer. I also, mentioned that something has changed all that. What is it?

Well, several years ago, a new investment structure was developed, now allowing smaller, accredited investors who don't have millions to invest, but who want to participate in the 200-500% value increases possible with land development investments.

To learn more, click on the image link below:

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

Have some fun with Penny Stocks

I don't have a lot of time today for my blog, but I wanted to share a fun topic: Penny Stocks. If you have some spare time and you're a bit of a gambler, this can be an enjoyable venue for you.

I got started playing with penny stocks a few years ago. Basically, they are stocks priced under $1.00 per share - hence the name "penny" stocks. I own some that cost LESS than $0.01 per share!

Why would you gamble on penny stocks (and that's exactly what you're doing)??

Well, first of all, it's fun to buy these and watch what they do. Second, there's always the chance that you'll pick one that could turn into the next Microsoft.

And there are tons of them out there to choose from. All you need to do to find ideas on stocks is to Google the terms "penny stocks" or "hot penny stocks" and you'll find dozens of sites providing tips. Here's a link to one I just checked out this morning:

http://www.thehotpennystocks.com/

Now, I caution you on a few things:

1) I haven't made a penny with my penny stock portfolio - so I won't share my personal picks with you unless you ask me to do so.

2) This is like Vegas or Atlantic City, unless you can afford to lose the money, don't play the game.

3) This can be addicting! Like I said, it's basically gambling. And, it's kind of cool to say "I own 1 Million shares of this company!"

If you're interested, here's a link to a FREE online book by penny stock guru Peter Leeds titled "Understanding Penny Stocks:

http://www.pennystocks.org/

To get started you WILL need an online trading account. I use E*Trade, but there are a number of others to choose from like ScottTrade. These have low commissions (you have to pay a commission for each buy or sell order that you make - ranging from about $7-$13 depending on the company you choose). Here are the image links below to E*Trade and ScottTrade:

It's simple to set up an online account with these companies. They will require a deposit (I believe E*Trade requires $1,000) to get you started trading. Once you're set up with an account, you just need to type in a stock ticker symbol (e.g. GOOG is the symbol for Google - but it's definitely NOT a penny stock). Then, you need to decide how many shares you wish to buy. You'll also be asked to choose how long your buy offer is good for (e.g. one day only, one week, 60 days, etc.) and you'll be asked if your offer is a "market" offer or a "limit" offer. A "market" buy offer means you'll pay whatever the market price is at the moment you submit your offer. The "limit" offer means that you can set the price you'll pay (it can be under the current market price). I always use the limit offer because I'm in control of what I'll spend. However, if you feel like you just have to have a stock right away, the market offer is the way to go.

Those are the basics. Honestly, I didn't read any books beforehand, I just waded in and learned as I went. I didn't even have the weak advice that I'm providing here to go on.

Anyway, I hope I'm not turning people into gamble-aholics with this blog. Just have fun with it and who knows? You could be the next Warren Buffett!

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

How to take control of your IRA & 401K investments

For most of my adult life and working career, I let my 401K and IRA fund managers invest my money as they saw fit. I believed that they were paid professionals and would seek out the maximum returns possible to build my account. And, to a point, that's true. However, these fund managers can only work with their own proprietary investment products. In other words, there are a lot of investment alternatives out there that they can't include in MY 401K or IRA portfolio.

It took me a long time to figure this out. I just assumed that my best interests were being served. If the stock market took a licking and my 401K didn't drop as badly as the overall market, I felt like I was doing good.

Then I came across a phenomenon called "self-directed IRA's". They aren't new to the planet, they were just new to me (they've been around for >30 years).

What are they? Self-directed IRA's are legally no different than any other IRA. The difference is that you choose the IRA's investments from a much broader set of alternatives. You have much more flexibility and control.

Basically, to set up a self-directed IRA, you need a third party "custodian" for the assets of your IRA. There are two classes of companies legally allowed to hold IRA assets:

1) Banks: (banks, trust companies, savings & loans, and credit unions).
2) Non-bank custodians separately licensed by the IRS (broker-dealers, mutual fund companies, and insurance companies).

There are about 20 self-directed IRA custodians available in the US. The one I use is PENSCO Trust Company (they fall under class 1 above). PENSCO has been around since 1989. They service customers in all 50 states. Their corporate offices are in San Francisco, but their Trust Company offices are in New Hampshire. They are regulated by the IRS, the NASD (Nat'l Assoc. of Securities Dealers), the US Securities & Exchange Commission and a state banking commissioner. I felt that was good enough oversight to help me sleep at night knowing my funds were safe. Plus, they are excellent communicators and very efficient. You can check them out at the image link below -- also, be sure to download their FREE ebook "Answers to Investors' Top 50 Questions About Self-Directed IRA's from the image link below:

Self-directed IRA's are growing rapidly in popularity, but they still only represent about 3% of the IRA funds invested in the US. However, people like me are catching on and word is spreading.

The initial concern I had was: is this legal and legitimate? After doing my homework, I clearly found the answer to be a resounding YES. But you'll be surprised how many people, including professionals like attorneys, bankers and accountants who still aren't familiar with self-directed IRA's.

What really sparked my interest was the fact that I could still invest in the securities like stocks and bonds that my old fund managers were investing in if I wanted to, plus things like Certificates of Deposit, annuities, mutual funds, etc. -- but I could also invest in a whole new spectrum of investment vehicles. These include things like raw land development projects, rental properties, trust deeds, tax liens and tax lien certificates, new or existing businesses, commercial property, race horses, airplanes, billboards, fishing rights in Alaska, foreign real estate, etc. There are some restrictions, as there are on any investment type. For example, all of these must be handled as investments and can't be for personal use (e.g. you can't live in a rental property owned by your self-directed IRA).

There are a few assets that you CANNOT invest in with your IRA

Life insurance contracts
Collectibles (cars, stamps, furniture, rare coins, etc.)
Capital stock in an "S" corporation

Anyway, I recommend that EVERYONE at least check out self-directed IRA's. With the stock market gyrations these days, it's worth exploring your options.

See you next blog. Retirement Wiz (email me at: johnha7@yahoo.com )

Is your Financial Advisor lying to you?

What investment opportunities is your investment advisor NOT telling you about?

I'm a little past middle-aged. Up until a few years ago, I managed my retirement investments from a distance. A loooong distance. I figured that was what my fund manager was paid to do. They're the experts right? They're looking out for my best interests right?

Once I woke up and finally realized that I needed to take control of my future, I started surfing on the internet and one day a stumbled across a "Retirement Calculator". I was curious about this because the finish line to retirement is getting closer and closer, so I started filling in the blanks on this calculator to see where I stood.

Well, talk about a MAJOR wake-up call! In short, this calculator told me in no uncertain terms that I wouldn't have anywhere near the amount of retirement income that I would need based on my savings and current retirement investments. It really scared me. I was afraid that I couldn't afford to retire -- certainly not when I wanted to.

What was I going to do? I needed serious retirement help. So, I started studying everything I could find about investing: books, tapes, CD/DVD's, seminars, workshops - you name it. And guess what?

I found out that my 401k and IRA funds didn't offer some of the best investment alternatives available! The glaring omission was real estate secured investments. Products like raw land developments, high-yielding real estate-backed notes, trust deeds, income-producing properties from rental homes to commercial buildings, tax liens and tax certificates, etc. These include some of the most LUCRATIVE investments available and I didn't know anything about them and didn't have access to them.

Q: Why wasn't my investment advisor telling me about these investment options?

A: Because they only earned commissions on the stocks, bonds and various other mutual fund products that their company offered and managed for my little IRA and 401k accounts.
(Notice that I wrote this in the "past tense" -- they are no longer managing my retirement funds.)

Bottom line: financial / investment advisors deal primarily in stocks, bonds and the occasional REIT (real estate investment trust) or TIC (tenancy in common properties) -- but largely NOT in real estate.

So what did I do? I took control of my retirement money. I transferred my funds into a Self-Directed IRA Account. Now I can invest in the same investments and funds as before BUT I can also invest in a whole spectrum of new alternatives: real estate backed investments like land development, businesses, etc.

Here's a link to a FREE e-book with 50 FAQ's (frequently asked questions) concerning Self-Directed IRA's -- click image below:

More to come on this in future blogs. In the meantime, if you'd like to check to see if YOU can afford to retire, click on the link below for a FREE 5-Minute Retirement Calculator (Courtesy AARP):

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

Initial thoughts from Retirement Wiz

This is my opening act. I'm brand new to blogs, so here goes....

Six or seven years ago as a mid-level manager for a major int'l conglomerate I burned out. I was too young to retire, had no immediate plans on what I wanted to do - but I resigned anyway. I know it sounds dumb, but that's what I did.

So, I embarked from there on an adventure spanning numerous failed business ventures as a self-employed nobody. I even took on partners twice in two separate ventures since that time and those failed as well.

Then, one day I guess I woke up and realized that my large nest egg wasn't so large anymore and I'd better get serious about my future. I wasn't getting any younger and needed to find something that would pay the bills now and in retirement - which I knew I couldn't afford.

It's weird - but one night I couldn't sleep, so I turned on the TV in the middle of the night and started watching Public TV here in Southern California and they had a guest named Robert Kiyosaki (of Rich Dad, Poor Dad fame). At the time, I'd never heard of Mr. Kiyosaki but I was honestly inspired by what he had to say. So, in support of the Public TV fundraising offer, I ordered a set of CD's. Next, I went to one of the Rich Dad seminars, bought some books and more CD's, etc.

Here's an image link to the Rich Dad website for anyone interested:

To make a long story short, I learned a lot about investing and more importantly, I learned that I still had much more to learn. So, I started to educate myself more and more (and still do). I read just about everything I can get my hands on the subject. I surf the web for information. I attend free and paid seminars. All about investing in its various forms.

One of the key things I learned along the way that many people like me probably aren't aware of is the fact that you can use your IRA and 401K funds to invest in a LOT more things than are offered by the fund managers. For example: Real estate! raw land, land developments, rental houses, trust deeds, tax lien certificates, local businesses, and much more.

I was literally amazed to learn this. Why didn't I hear about this before? The answer is simple really: Fund Managers and Financial Advisors don't make any money or commissions if you invest in these alternatives outside of their stocks, bonds, and occasional REIT (real estate investment trust) funds.

Anyway, you absolutely CAN use your IRA and 401K funds to invest in alternative investments such as Real estate, etc. through a self-directed IRA and it's very simple to set up. You simply contact a quality self-directed IRA custodian and they walk you through the steps. I use a company called Pensco Trust Company. Here's an image link to their website if you want to learn more:

By the way, I don't make any money by sharing these sites with you. This is simply my way of offering what I've learned and I hope that it might help someone else.

Anyway, that's it for now. I hope my first blog was OK. I'll expand on some of these thoughts in future blogs. Regards! Retirement Wiz

(email me at: johnha7@yahoo.com )