Episoder
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Heās gone and done it now. Joe Biden is officially targeting your IRA and 401(k). If you value your retirement savings, you need to listen right now. Iām Bryan Ellis. This is Episode #327 of Self-Directed Investor Talk.
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Hello, Self-Directed Investor Nation, all across the fruited plane! Welcome to the SHOW OF RECORD for savvy self-directed investors just like you.
Joe Biden, Democrat candidate for President of the United States, has tried to slip in a doozy of a tax policy change that, frankly, will hit me and you right in the pocketbookā¦ and heās trying to make sure that nobody knows about it by not bringing any attention to it.
But this has not escaped the watchful eye of the team here at Self-Directed Investor Talk.
On todayās page, which being that this is episode #327, that page is, of course, SDITalk.com/327ā¦ On that page, Iāll link to the sources from which this data comes so you can judge it for yourself.
But hereās the bottom line: If you elect Joe Biden as president, your IRA and 401(k) tax benefits are going to be slashed. Period.
The specifics of the policy are not yet well described by the Biden campaign, because I suspect theyāre trying to avoid the absolute CRAPSTORM that will result whenever the public gets wind of this. But itās such a clear and obvious negative that, wellā¦ Iāll just read a quote to you from RollCall.com that has some good coverage of this issue. The quote is:
The former vice presidentās "drastic" proposal, in the words of one industry lobbyist, would upend existing tax preferences for retirement saving in 401(k)-style plans. The Investment Company Institute, which represents mutual funds, exchange-traded funds and other investment vehicles in the U.S. and abroad, has already promised opposition.So, my friends, it looks something like this:
Under the current system - which has worked beautifully for decades - when you contribute money to a traditional IRA or 401(k), you get to deduct that contribution against your taxable income.
And old creepy Joeā¦ it will work the same way under his system. But with one ālittleā caveat.
Joe will still let you take a deduction for your contribution. But heās going to limit the amount of that deduction to some as yet underdetermined top rateā¦ probably 26% according to current expectations.
So that means that, for those of you higher income earners - of which there are many in the SDI Talk audience - and whose marginal tax rate is not a mere 26% but is 32% or 37% or even higherā¦
Wellā¦ youāre just out of luck. Sure, you can still make the contributionsā¦ only your tax benefits will be puny under Joe Biden versus how every other President - Democrat and Republican - has handled things in the past.
But thatās not the worst of it, my friends. What happens whenever Washington begins to limit a tax benefit? The answer is always the same: They limit it EVEN MORE in the future.
So mark my word: If you elect Joe Biden and let him begin to slash your tax benefits on your IRA or 401(k) nowā¦ itās just a matter of timeā¦ a matter of VERY LITTLE TIMEā¦ before somebody decides that even Joe didnāt slash your tax benefits enoughā¦
...and soon enough, the tax advantage to your IRA and 401(k) is gone.
But you have a choice. You can make sure that doesnāt happen. If youāre made the connection that voting for anybody but Joe Biden could be a wise decision, youāve reached a wise deduction indeed.
Ohā¦ and a quick noteā¦ the latest edition of Self-Directed Investor Magazine is now out, and itās a SPECTACULAR edition, if I do say so myself. If youād like a complimentary copy, just send a text message to my office to request it and weāll take care of you. The phone number is 678-888-4000ā¦. Again 678-888-4000.
My friendsā¦ Invest wisely today and live well forever!
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It seems pretty clear that ONE of the two Presidential candidates absolutely opposes everything you and I stand for as self-directed investors. I'm Bryan Ellis. Right now in Episode #326 of Self-Directed Investor Talk, I give you the proof...
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Hello, Self-Directed Investors, all across the fruited plane. Welcome to the show of record for savvy self-directed investors like you, where in each episode, I help you to find, understand and profit from exceptional alternative investment opportunities.
It is the season for Presidential Politics... and you know, of course, that means I'll poke my head out of the shadows and begin to share with you the harsh realities of politics as it relates to my plight and yours as self-directed investors.
You and I, we think alike. We're looking for opportunity. We're looking for a way to apply that most valuable asset of them allā¦ our mindsā¦ to fortify our financial positions for the benefit of ourselves, our families, future generations and to help the causes that matter most to us.
Yesterday, Motley Fool published a list of 12 tax law changes that one of the Presidential candidates is pushing in his bid to serve in the highest office in the land for the next four years. Iāll link to it on todayās page, at SDITalk.com/326 so you can check it out yourself.
Now I wonāt even sully the conversation by saying WHICH candidate ā obviously thereās only Trump and Biden ā but I wonāt shift this to being about those men. Letās just look at the policies and how theyāll impact you and me as builders of wealth.
Policy Shift #1: An increase in the corporate tax rate from 21% to 28%. Thatās an obvious negativeā¦ rising corporate tax rates are ALWAYS ā I repeat ALWAYS ā passed on to consumers. I could say more, but I suspect itās unnecessary, so letās look at...
Policy Shift #2: A minimum tax on corporate income. Basically the idea here is this: If a company complies with the tax law in such a way that even the U.S. Treasury is unable to fault their tax planning, and as a result that company does not have to pay income taxes, this policy would mean that that company must pay taxes ANYWAY. Basically, this is a tax on good planning.
Theyāre targeting this one at Amazon and some others that have been astoundingly good at using the tax law to their benefit. But hey, remember: This means that all of those Amazon packages WILL be more expensive in the futureā¦ no doubt about it. More expenses for the providers means more cost to the consumers.
But surelyā¦ SURELYā¦ the remainder of these new policies wonāt so directly target ā and thus discourage ā productive members of societyā¦ right?
Wrong-o. Whether itās policy #5 that increases marginal income tax rates for higher earners, or policy #6 that raising the payroll tax on high earners or raising capital gains taxes onā¦ you guessed itā¦ high earnersā¦
Well, it almost sounds like the particular Presidential candidate who is pushing for all of these changes really doesnāt like high earners or successful companies very much, does he?
And donāt forgetā¦ if building a FINANCIAL LEGACY is important to you, then the STEPPED UP basis changes ā thatās policy #8 ā will matter to you. This is a way of making sure that a horrible tax burden is transferred to your beneficiaries when they receive your assets in the future. Right now, that does not happenā¦ but it would under this proposed tax policy.
All that isnāt even to mention the slashing of tax deductions for both personal incomes ā thatās policy # 9 ā or phasing out small business deductions if you happen to be a successful small business owner, which is policy #10.
If you hear a common theme here, itās because there is one. The candidate who wants these policies to be law ā none other than the basement baron himself, Joe Biden ā wants, quite fervently, to punish your success.
In other words, if itās your objective to minimize your taxes, creepy Joe wants to MAXIMIZE them.
If itās your objective to build a small business, creepy Joe wants to make sure your tax bill stands in the WAY of your doing so.
If you want to build a basis of financial assets for the benefit of future generations, creepy Joe wants to make sure that when those future generations receive your assets, that theyāre forced to sell off those assets to pay their tax bill.
My friends, a vote for Joe Biden is a vote against yourself. Itās that simple. Donāt vote against yourself.
My friendsā¦ invest wisely today and live well forever.
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CoronaVirus has created more abject terror than anything Iāve ever seen. If weāre to believe Warren Buffett, then wise investors are to be āgreedy when others are fearfulā. So how, exactly, can you be wisely greedy right now? Iām Bryan Ellis. Iāll tell you RIGHT NOW in Episode #325 of Self-Directed Investor Talk.
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The world changed radically a few weeks ago. Free countries went on total lockdown. The hottest commodites in the world became hand sanitizer, toilet paper and medical masks. And the stock market went on a volatility spree never seen before or since.
And yet, the whole time, savvy investors kept hearing the famous words of Warren Buffet echoing in their minds: "Be fearful when everyone else is greedy, and greedy when everyone else is fearful."
The question, my friends, is how to be very wisely greedy during a time when the prevailing emotion all around us is, without any doubt, not mere fear... but abject terror.
The one clear answer - well supported by history and the leadership of current experts - is to invest in well-vetted, well-operated RV Parks.
Now, in case you're not a user or owner of RV's yourself, I understand. I'm not either. Just in case you donāt know, RV stands for āRecreational Vehicleāā¦ the big rolling hotel rooms like Winebagos.
But whether thatās āyour thingā doesn't matter. Kind of like you donāt need to live in an apartment in order to justify investing in a great apartment complex.
So Iām going to make a very quick, but rather overwhelming, case to you right now that RIGHT NOW, in the height of this epidemic of terror and infection, that RIGHT NOW is the right time to jump into RV parks.
And as always, I don't expect you to take my word for it. In fact, I insist that you don't take my word for it... that's because history makes this case for me in such a compelling, unquestionable way.
Before CoronaVirus, the pinnacle example of economic downturn during most of our lifetimes was the Great Recession of 2007 & 2008... if any economic event was going to doom an industry where "recreation" is the literally first word in the name, the Great Recession would have been that phenomemon. But what actually happened?
Well... not much. As the economy of the United States slowed and weakened with each passing week, the data shows us that average length of stays at RV parks got LONGER. Not shorterā¦ LONGER.
And I take this from a deeply authoritative source. Itās a report called āEffects of COVID-19 on the Campground Industryā. Itās written by American Property Analysts ā the absolute leading valuation experts in America for the RV Park and campground industry. This report was written last week, at the request of and for the benefit of the banking industry. As the economic carnage began to mount from the CoronaVirus scare, banks who finance RV parks wanted to know where their exposure stood in connection with COVID-19, and of course, they hired the most knowledgeable experts in that field at American Property Analysts, Inc.
And according to that report, when looking at the Great Recession, itās all summed up in this quote: "What campers did not do was discontinue using their RV's."
That report goes on to say that "In most locales, demand exceeded available supply" and that "attendance held fairly steady".
Now remember... the setting here is the aftermath of the Great Recession, when our country suffered the worst economic contraction since the Great Depression. It was a time when, according to the respected California-based newspaper called the Orange County Register, nearly 9 MILLION jobs were lost... 4 million homes were foreclosed EACH YEAR... and 2.5 million businesses were shuttered.
It was the worst of times for the American economy.
But what happened in the RV park industry? Well, I remind you: "attendance held fairly steady" and "in most locales, demand exceeded available supply."
But it's better than that still: To further quote the American Property Analysts report, "Waiting lists for seasonal sites popped up nearly everywhere, and many of those lists remain in place today at the more desirable properties. Some folks even paid non-refundable fees just to be on certain lists, and some of those campers are just now nearing the front of their lines."
If you understood me to say that the backlog of demand created during the LAST recession still exists to this day, you understand me correctly. I can't imagine how much demand and backlog the economic fallout of the CoronaVirus pandemic will create for the RV park industry... but history suggests it will be HUGE.
Am I suggesting to you that every RV park in America did a booming business during the Great Recession? No. Not at all. There will always be the superstars and the laggards, and doubtlessly that's true here as well.
But what I am telling you... scratch that... what the historical data cited by the American Property Analysts report is telling you is that, overall, RV parks as an industry hardly - if at all - noticed that a recession happened at all.
And my friends, history is repeating itself right now. And if you think about it, it makes complete sense for at least 3 strong reasons:
Reason #1: One of the immediate results of the national shutdown from CoronaVirus was the closing of National Parks. Now that's an awful thing because I, for one, realy love and frequently visit the parks in my area. But as owners of RV Parks, we aren't sad to see it. Why? National parks are one of our biggest sources of competition. Right now, that competition is completely GONE... Kaput... poof. It'll return someday, but for now, it's GONE.
Reason #2: The totally justified concern over the risk of infections connected with hotels, cruise ships and other recreational destinations likely will drive growth in the RV industry, as one's RV is a completely private space, not subject to the risk of exposure from third parties.
and Reason #3: I'm happy to report to you that our EXPERIENCE is matching the THEORY I've shared with you, because presently, we've seen exactly ZERO cancellations at any of the RV parks that we already own... and there has DEFINITELY been an uptick in interest since CoronaVirus was declared a pandemic and the nation was put on lockdown.
My friends, I return again to Buffett's famous advice: Be fearful when others are greedy, and greedy when others are fearful. Now hereās what you might not know about RV parks: Even average ones can be incredibly profitable. Imagine if you had all of the benefits of owning a great apartment complex, but your cash flow was more like a mobile home park. Well, itās like that, only better. Well-vetted, well-operated RV parks don't merely compare favorably to other real estate asset classes, RV Parks dramatically outshine them and the data makes that overwhelmingly clear.
So where does that leave you? If you're savvy enough to take seriously the advice of Warren Buffet, the man widely considered to be the greatest investor of our lifetimes, then the only reasonable conclusion you can draw is this: These are times of great fear... and that's your signal to be wisely greedy. And there's no better asset class - as proven by history - for that wise greed he recommends than RV Parks.
The time is now.
Thank you for listening in today. Every now and again, we encounter exceptional RV park investment opportunities. Best for well-qualified investors, these opportunities always fill rather quickly as only a small number of openings for outside investor partners are made available. If you'd like to be considered for participation in the next such project, please send an email now to [email protected], thatās [email protected]., `to set an appointment to speak with me or a member of the team. Happy investing!
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Thereās an asset class that affluent investors REALLY loveā¦ extraordinary cash flow is the norm and the tax benefits are the best around. But thereās a HUGE LANDMINE just waiting for affluent investors who try this in their self-directed retirement account. Iām Bryan Ellis. Today, you affluent investors learn how to sidestep certain disaster in Episode #324 of Self-Directed Investor Talk.
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Hello, Self-Directed Investors, all across the fruited plane. Welcome to the show of record for savvy self-directed investors like you, where in each episode, I help you to find, understand and profit from exceptional alternative investment opportunities.
For you folks with a bit higher net worth, you need to pay close attention today.
So for those of you who may not yet quite be in the high net worth world, something you should know about your wealthier brethren is that one of the most popular asset classes among them is one Iāve mentioned here before, but only very brieflyā¦ and that is oil well drilling.
It makes perfect sense because the cash flow beats the heck out of basically everything else, and the tax benefits makes real estate and other supposedly tax efficient investments look like childās play. Yes, the risk is theoretically higher, and thatās why this is the domain primarily of accredited investors.
But to set up this dilemma, and the brilliant solution for it, letās consider a scenario, with real numbers. So hereās the deal.
This investorā¦ weāll call her Taraā¦ has decided to invest in an oil drilling deal. It looks like a pretty good one, Iām actually quite familiar with itā¦ sheās got to invest $150,000 to buy into the deal, and based on the preliminary geological research, the expectation is that sheās going to bring in something on the order of $12 to $13,000 per month or so, based on current oil prices.
Now if youāre doing the math, you know that $12,000 per month equals $144,000 per year, which is shockingly close to being a 100% cash-on-cash return. Well, thatās one of the reason high net worth investors love this stuffā¦ the cash-on-cash numbers are just breathtaking, enough so that the additional risk is quite regularly totally worth taking.
So thatās great, right? Tara makes this investment, and assuming it works like expected, then she yields a MASSIVE cash-on-cash return for 5-7 years until the oil well runs outā¦ and then sheāll likely do it again, if sheās like most high net worth investors Iāve worked with.
And to make it better, sheās doing this in her Roth IRAā¦ so all of that juicy ROI is totally tax free! Right? Right? Isnāt it tax-free?
Wellā¦ no.
Here, my friends, we consider an important distinction between the two types of income: Earned and Unearned. Earned income is just what it sounds likeā¦ money you earn from a W2 job or a 1099 contracting position or something like that. You work, you get paid. Thatās earned income.
Unearned income, on the other hand, is profit from investmentsā¦ itās a more passive type of thing So if you buy stocks and they rise in value or pay dividends, thatās unearned income. If you buy real estate and it appreciates and/or generates cash flow for you, thatās unearned income. If you make a loan and are repaid for that loan, thatās unearned income.
So hereās the thing: itās widely believed that IRAās and 401(k)ās ā particularly the Roth variety ā are just not taxable. Unfortunately, thatās not true. Itās almost ENTIRELY true that any UNEARNED income ā the kind from stocks and real estate and loans, for example ā pretty much all of that will be tax-favored inside of a retirement account and thatās great!
But this is where we return to Taraās oil & gas deal. Yes, sheās going to make a lot of income from that deal. But thereās a catch. Federal tax law makes it abundantly clear that under most circumstances, the income generated from drilling an oil well and selling that oil is NOT UNEARNED income, but is EARNED income.
That means two things: First, that the money is taxable. And second, that the tax rate thatās relevant in that case is NOT personal income tax rates, but is the income tax rates for TRUSTS, since both IRAās and 401kās are, under the law, types of trusts.
And that, my friends, is BAD news. You see, income tax rates for trusts are, for all intents and purposes, 37%. Thatās astronomical. If Tara brings in $12,000 per month on average as expected, that equates to $144,000 per year. 37% of that is over $53,000ā¦ so her IRA would have to stroke a check for over $53,000 to pay income taxes. That would leave her with a net of nearly $91,000 per year which is still just off-the-chain exceptionalā¦ but stillā¦ thatās a BIG tax bite.
What to do, what to do? Most of the time, investors do oil & gas deals OUTSIDE of a retirement account because the VERY BEST tax benefits in oil & gas donāt really apply to IRAās and 401kās. But in Taraās case, thatās where she happens to have the available capital, and quite justifiably, she doesnāt want to miss this opportunity.
So hereās what I recommended to her: Since we canāt eliminate those taxes, why donāt we just slash them dramatically? You may remember that one of the thing that President Trumpās signature tax bill did was to slash corporate tax rates to 21% as the maximum. So I suggested that Tara form a c-corporation inside her IRA, and capitalize it with $150,000 from the IRA. She could then buy the oil & gas interest with that money, inside the corporation. That money ā weāll just say $144,000 per year ā will still be taxed, but not at 37%. Itāll only be taxed at 21%. Bottom lineā¦ sheāll pay about $23,000 PER YEAR less in tax this way!
Over the course of 5 years, thatās a very real saving of over $100,000ā¦ just by using the subtle brilliance you learned right here on Self-Directed Investor Talk!
Now before I sign off for the day, Iāll go ahead and answer the question I know is coming: Maybe. The answer is maybe. The question, of course, is something like: āBryan, I just heard you talk about the crazy results people are getting from oil and gas dealsā¦ can you hook me up with some of those opportunities?ā Well, the answer is MAYBE.
There are some qualification requirements. So the best path to take is this: If youāre interested in learning more, just text me now at 678-888-4000 and Iāll be happy to have a team member talk this through with you. Again, just send a text to me at 678-888-4000 and weāll chat about it right away.
My friendsā¦ invest wisely today and live well forever!
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Coronavirus, real estate investors and the stock marketā¦ or, how real estate investors are making absolute jackasses of themselves during a very bad time. Iām Bryan Ellis. This is Episode #323 of Self-Directed Investor Talk.
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Hello, self-directed investors, all across the fruited plane. Welcome to the show of record for savvy self-directed investors like you where in each episode, I help you to find, understand and profit from exceptional alternative investment opportunities.
Today, my friends, I share with you my expectations about the REALITY of the coronavirus and how I see it affecting our economy and more importantly my and your investments. But first, a quick word about a clear way to identify some people who, at their very core, are clearly complete jackasses.
Now, note that this isnāt a test for ALL jackasses, just some of them. But here we go:
You probably know that, due to Coronoavirus fears, the stock market has taken a MASSIVE dive in the last two weeks. The Dow Jones Industrial Average has fallen by over 15%... itās been just absolutely brutal. Iāll tell you when that ends in just a minute, but thatās a different story.
So back to identifying jackasses: If you see a real estate investor post something on Faceobok or elsewhere that basically says: āHey, all you stock market investors, youāre really taking it on the chin now, arenāt you? Iāll bet you wish you had gotten into real estate instead of stocks now!ā
When you see something like that, what youāre seeing is a jackass. Someone who is childish, pathetic and heartless. Such a person, regardless of whether theyāre successful in real estate, deserves to be ostracized and ridiculed for their short-sighted and juvenile attitude.
So to all the jackass people out there, remember: Youāll get yours. I donāt wish it on anybody, but nobody bats 1.000. Where financial market losses are concerned, your attitude should always be: There but for the grace of God go I.ā
Now, as for the Coronavirus, the stock market and the economy?
Totally overblown. I see stocks beginning to recover today, frankly. Is it a serious thing? Yesā¦ but almost entirely for psychological reasonsā¦ because the media has scared people so badly that thereās a lot of irrationality out there.
Remember this: We all keep hearing that 2% of the people who get this disease die from it, compared to the flu, which kills only 0.1% of the people who get it.
That would be disturbing, for sure. BUT there are 3 facts you should know.
Fact #1: The actual mortality rate in China, according to a report from China published in the New England Journal of medicine 3 days ago, is much lower, at only 1.4%. Thatās a significant difference.
Fact #2: The mortality rate is almost certainly much lower than that because most of the cases of it are so mild that they are never caught or reported. Thatās not my opinionā¦ but the opinion of Dr. Anthony Fauci, director of the U.S. National Institute of Allergy and Infectious Diseasesā¦ the one guy who everybody agrees is THE authority on these matters here in the U.S.
And finally, Fact #3: Whatever the mortality rate, thatās the mortality rate in CHINAā¦ not in America. CHINA! Thatās a country that literally is happy to execute their citizens as a matter of convenienceā¦ an evil regime that exists to protect the Xi Xinping and the Communist Party as itās highest priorityā¦ a place where the health of the citizenry is the last thing they care about.
So how you SHOULD think about this is as follow: Even in China, the death rate of coronavirus is, at worst, 1.4%. We donāt really know how many people are killed by the flu in China. Iāll bet itās quite comparable.
Does that mean Coronavirus isnāt serious? Nope. Be careful, of course. But what it does mean is that while it is highly contagious, itās more likely to be a pain in the rear rather than an issue of fatality.
As for the effect of Coronavirus on stocks?
I think we saw the bottom on Friday. I wouldnāt bet the farm on itā¦ but Iād be willing to bet a barn door or two.
By the wayā¦ if youāre looking for an astoundingly powerful tax break that happens to be coupled with an investment offering a potentially exceptionally high yieldā¦ well, drop a note to me at [email protected] and Iāll fill you in. This is crazy good stuff, folks.
Well my friends, thatās all for nowā¦ invest wisely today, and live well forever!
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If for every dollar you put into improving one of your real estate assets, you could get that dollar back within 12 monthsā¦ and then enjoy decades of free and clear cash flowā¦ wouldnāt you do that? Right now, Iāll show you not 1, but 2 ways to do that in my current favorite asset class. Iām Bryan Ellis. This is episode #322 of Self-Directed Investor Talk.
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Hello, Self-Directed Investors, all across the fruited plane. Welcome to Episode #322 of Self-Directed Investor Talk, the SHOW OF RECORD for savvy self-directed investors like you. Guess whatās going to happen today? Today, Iām going to help you find, understand and PROFIT from exceptional alternative investment opportunities!
In yesterdayās exciting episode, I introduced you to the asset class that I think is stealing the crown from multi-family housing as the GO-TO real estate asset class. If you missed that episodeā¦ you missed a great one! Drop me a text message to 833-212-2112 and ask for the RV Parks episode Iāll send you a copy so you can get caught upā¦
...and youāll certainly want to do that because today, Iām going to tell you two ways that, using that asset class - which is, of course, the high-cash-flowing world of RV parks - Iāll tell you not one but TWO ways that my partners and I - and maybe you, too, possibly - are planning to spend a bit of money on some of our RV park properties and generate a MASSIVE and rather immediate return of our capitalā¦ to be followed immediately by many years - possibly even DECADES - of free and clear cash flow.
But understand this: Iām not just bragging on our deals - though Iāve got to admit, maybe thereās a LITTLE BIT of that hehehe - but more importantly, Iām trying to show you whatās POSSIBLEā¦ because deals like this are in much greater supply than financially similar deals in other asset classes like self-storage facilities and mobile home parks.
And Iām also telling you because, who knows, maybe you can actually participate in these deals with us. More on that in a bit.
So what are these two crazy-powerful value adds weāre going to perform?
So you may recall from yesterday, weāre acquiring 2 separate RV parks. Specifically on the one in Wisconsinā¦ weāre going to be able to add, at a cost of about $50,000 per cabin, about one dozen nice little cabins which will be available for rental in our parks.
Now hereās the really CRAZY thingā¦ based on the rates our clients are ALREADY PAYING for space in that park, itās actually quite plausible to think that weāll collect more than $50,000 of income per unit after just two, or maybe 3, seasons. RV parks, you see, are seasonal, generally with 2 4-month high seasons per year. And after only 2 or 3 of those season, those cabins will basically be totally free and clear cash flow, with only minimal incremental expense for maintenance!
That, my friends, is ASTOUNDINGLY WONDERFULā¦ super-high-ROI stuff. Iām so excited about this deal!
And thatās not all
For the property in Michigan, weāre going to add a particular water feature there which is an absolute super-powered electromagnet for attracting families with children. This is just an amenity weāre adding to the water amenities already onsite. It wonāt be cheap to do thisā¦ with the cost coming in around $150,000 or so, but get this:
The evidence is absolutely overwhelming that this type of amenity brings more families with children to an RV parkā¦ and these are families who wouldnāt have otherwise come. In other wordsā¦ new customers!
And whatās astounding is that thereās data - anecdotal, admittedly, but still relevant - that suggests that the presence of this type of water feature can, all by itself, increase the net income of certain well-run parks by 20-30% after 3 years. With rates like that, it takes no time at all to recoup the $150,000 and investment and then be SOLIDLY in the money.
And whatās EVEN BETTER is that I havenāt even begun to scratch the surface of whatās possible with RV parks. If you find multi-family real estate attractive because of the potential to add value and create new income streams, then youāll find RV parks to be like an absolute candyland of potential, much of which can be realized near term and at shockingly low costs.
I couldnāt possibly be more excited about the future with these assets. Weāve already begun the hunt for even more of them.
If youād like to learn more about investing in RV parksā¦ and maybe even participate in some of the deals that my partners and I are doing, drop a text to me at 833-212-2112 and let me know. We havenāt yet decided if weāre going to take on outside investors, and if we do, weāll open up an application process, the first step of which is to be on my investor alerts listā¦ and the way you make that happen is to text me at 833-212-2112 and let me know youād like to be included.
Ohā¦ and failed to mentionā¦ you can actually use your IRA or 401(k) to do this type of investing! Want to know how? Well how about I give you those details in the very next episode of Self-Directed Investor Talk?!
My friendsā¦ invest wisely today and live well forever!
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For the last few years, the asset class thatās been all the rage is multi-family housing. But Iām here to tell you, my friends, thereās a new king of the hill. Youāll find out what it is RIGHT NOW in Iām Bryan Ellis. This is Episode #321 of Self-Directed Investor Talk.
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Hello, Self-Directed Investors, all across the fruited plane. Welcome to Episode #321 of Self-Directed Investor Talk, the SHOW OF RECORD for savvy self-directed investors like you. Guess whatās going to happen today? Well, Iām going to help you to find, understand and profit from exceptional alternative investing strategies and opportunitiesā¦ so buckle up!
So, the telephone rings, and I recognize this guyās name. Heās a friend, a fellow investor, and someone whose judgment I trust quite strongly. Heās the kind of guy that when he says āIāve got a dealā, if youāre smart, what you say in response is āwhere do I send the moneyā.
So I picked up the phone, earnestly hoping that one of his life-changing opportunities awaited But thatās not what he said, this time. Instead, what he says, is this: Iāve got TWO dealsā¦ and instantly, I know this is going to be my lucky day.
Iām going to tell you about those two deals and why you should keep your ears open for similar opportunities for yourself. In fact, it may even sound to you, as I describe these deals to you, that Iām trying to sell YOU on investing in these deals with us.
Nope. Weāre closing on both of them with our own money, because both of these are just too sweet to turn down. But I can tell you, with some confidence, that youāre going to wish you were in on this when you hear about it. Who knows, we may raise capital for these deals so we can get some of our money back out to find even more of themā¦ but we may just keep themā¦ theyāre that good. If youāre already on my investor waiting list, Iāll let you know if we decide to make this available. And if youāre not already on my waiting list, and if you are liquid for atleast $100,000 - then you probably want to get on that list right away. Just text me at 833-212-2112 and ask to get on the waiting list and Iāll take care of you.
So what is this spectacular asset class?
Oh nowā¦ surely you can venture a guess? Think with meā¦ the biggest demographic phenomemon of the last 60 yearsā¦ the BABY BOOM generationā¦ theyāre retiring at the rate of about 10,000 people per day. A whole lot of them have MONEY, and lots of it. And all of their kids and grandchildren have spread out all over the country. What are these people doing? Theyāre buying RVās - in MASSIVE volumes - and taking their home with them all over the country.
So what opportunity does this create for me and youā¦ and what is the ACTUAL opportunity that my friend reached out to me about?
RV parks, baby! Imagine the benefits of owning a hotelā¦ where you get a very, very high rental price for a very, very small portion of real estateā¦ but you do NOT have to think about things like laundry or furniture or linens or any of the things that makes a hotel so very expensive to establish, operate and own.
Instead, what youāre renting out is, essentially, a piece of concrete. A small piece of concrete, where your customers bring THEIR OWN bed and THEIR OWN furniture and THEIR OWN linens. All you do is provide them with a hookup for electricity and water and, if youāre smart, some great amenities, and what do you have? You have a situation where youāre collecting hotel-like nightly rental rates in exchange for a service that is FAR LESS EXPENSIVE and SO MUCH EASIER to provide than with a hotel.
But thereās another HUGE benefit to RV parksā¦ lots of them, actually. And this one explains why, we are expecting, conservatively, an internal rate of return of 15-20%+. That benefit is REPEAT BUSINESS! You see, we know, as a sociological fact, that people who use RV parks are, by and large, very habitual in their behavior. Once they find an RV park that they like, chances are theyāll come back every year or two over and over and over againā¦
...and that means not only are the profits in this business VERY HIGH, but they can also be incredibly CONSISTENT.
Both of the deals that weāre buying and closing on in the next two weeks are actually ALREADY very profitableā¦ and the REALLY beautiful thing is this: A little money spent wisely goes a REALLY LONG WAY with RV parks. There are two examples I want to share with you, both of which will ABSOLUTELY blow your mindā¦ youāll see why we are SO UTTERLY THRILLED with this asset class.
But before I share those two examples with you, think about this name: Sam Zell. Sam Zell is a LEGENDARY real estate investor, Bloomberg pegs his net worth at $4.4 BILLION. Zell started and currently owns a very large percentage of several publicly-traded REITs - kind of like a mutual fund for real estate investments - and each of those REITs are focused on different real estate segments like commercial real estate, multi-family andā¦ surprise, surpriseā¦ RV parks and mobile home parks. And guess which one is outperforming the others? According to a recent story in BisNow.com, the answer is no surprise at all: Zellās RV parks are CRUSHING the results from commercial real estate, multifamily and every other real estate sector.
As for those two examples of how an investor can easily spend a TINY amount of money in an RV park and get that money back entirely very, very, very quicklyā¦ youāre just going to be bowled over, my friends.
Unfortunately, weāre short of time today, so Iāll tell you those two things tomorrow, so be sure that you have SUBSCRIBED to Self-Directed Investor Talk in Apple Podcasts or whatever podcast system you use.
If youād like for me to send you a notice when I release that episode so you are sure you donāt miss it, just drop a quick text to me at 833-212-2112 and let me know.
Iāll look forward to pulling back the curtain for you a little more tomorrow, my friendsā¦ and Iāll even give you my advice on how YOU can get involved in this incredibly, incredibly attractive asset class yourselfā¦ maybe even using the money in your IRA or 401(k), so donāt miss it!
My friendsā¦ invest wisely today and live well forever!
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Want to flip real estate in your IRA or 401(k)? Think you wonāt owe taxes on your profits? Youāve made a very common errorā¦ but so did I in a solution I devised to that problem. Maybe my error will keep you from making any of your own, and Iāll tell you about it right now. Iām Bryan Ellis. This is Episode #319 of Self-Directed Investor Talk.
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Hello, Self-Directed Investors, all across the fruited plane. Welcome to Episode #319 of Self-Directed Investor Talk, the SHOW OF RECORD for savvy self-directed investors like you, where each day, I help you to find, understand and profit from exceptional alternative investing strategies and opportunities!
I have a great show headed your way right now. If youād like to get the transcript or links to the resources I share with you today, just send text the word ep319 with no spaces to 833-212-2112. Again, to get a link to the transcript and resource links for this episode, #319, just text the word ep319 with no spaces to 833-212-2112 and weāll get it right out to you.
Well, Iāll admit it, folksā¦ the brilliant idea I had yesterday isnāt going to pan out. Still, thereās a very helpful lesson in it that youāll want to know, particularly if you like the idea of flipping real estate in your IRA or 401(k), and Iāll tell you all about it right after thisā¦
So hereās the idea: In the last couple of episodes Iāve shared with you 5 reasons that Iāve reconsidered my formerly 100% negative stance against oil and gas investing. Itās not that I never believed it could work, just that I had a misunderstanding of how risk can be mitigated, so the risk was all I saw. Iām definitely infinitely more open to that asset class now, and one of the big advantages created by many oil & gas investments ā which is HUGE tax deductibility ā sparked an idea in my mind:
The idea was this: There are a lot of people who like to flip real estate in their IRA or 401(k). Unfortunately, most of those people seem to not be aware of the fact that most such transactions are technically āearnedā income rather than āunearnedā income, and as such, the IRA or 401(k) will have to pay income taxes on any profits realized from flips.
So here was my thought: If a person does a flip deal that generates a lot of profit, why not just ā assuming you have the available capital to do so ā just mitigate those taxes by doing a separate oil & gas investment? That would generate a tax deduction which would otherwise be totally irrelevant for a retirement account since oil & gas probably IS unearned income, and therefore shielded from taxes by the IRA or 401(k), so you could take the tax deduction generated by the oil & gas deal and apply it to the income generated on your flip deal and VOILA, problem solved.
Right?
Wellā¦ Yesā¦ until recently, that is. During the end of yesterdayās show when I described this idea, I kept hearing a voice in my mind sayingā¦ check it out, check it out! It was as if this idea absolutely SHOULD work, but for some reason, it wonātā¦ I just couldnāt remember why.
Well, I did what I always do when I have a question of this natureā¦ I reached out to the Great One, attorney Tim Berry, for clarification. And he filled in the blanks for me. Apparently, before the recent Trump tax cut, it WAS possible for deductions generated by one investment to offset the profits generated by another investment in an IRA or 401(k). But apparently, that went away with the new tax law. Thatās unfortunate. That tax bill has been so very good on such a broad basis and so clearly very good for our economyā¦ but the fact is that there are still some somewhat crappy parts to it, and this is one of them.
Soā¦ this idea wonāt pan out. Not all of them do. Thatās ok. Letās keep thinking creatively together, shall we?
My friends, invest wisely today and live well forever.
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News flash: I was wrong. Thereās one asset class that Iāve never embraced and certainly never invested in because it is, I convinced myself, incredibly risky. Well, I was wrong. Iāll tell you HOW I was wrongā¦ and the upside potential of this asset class RIGHT NOW in Episode #317 of Self-Directed Investor Talk.
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Hello, Self-Directed Investors, all across the fruited plane. Welcome to Episode #317 of Self-Directed Investor Talk, the SHOW OF RECORD for savvy self-directed investors like you, and today we have an excellent show for you.
Our telephone number here for you folks that have questions is easy to remember: 833-212-2112. And thatās also our TEXT number, tooā¦ because if youād like a link to the recording of this show or to the transcript ā maybe to review for yourself or forward to a friend of yours, itās very easy to get that and costs nothing other than normal message and data rates. Just text todayās episode number ā 317 ā to 833-212-2112 and weāll send those links out to you right away.
The asset class we consider today isnāt a new one, but itās still a sexy one. Two of the most famous TV shows of the 1980ās ā Dallas and Dynasty ā were based on the immense wealth created by this asset class, and the frankly, the money involved in this arena has done nothing but get bigger and bigger and bigger.
That asset class is, of course, the oil & gas industry.
Now lookā¦ Iāve never invested a single penny in this asset class. I have no experience with it. None. My interest in it is solely because a friend of mine for whom I have great respect, and whose acumen as an investor is absolutely first-rate, and has been so consistently for many years nowā¦ well, he reached out to me as he does from time to time for help with raising some capital for a project of his. Given his success, I always take such calls quite seriously, but this time, his latest project stopped me cold: He wants to do a big oil & gas investment, and he wants me to help him raise money for that investment.
Normally, Iād turn down the request just because I think oil & gas is so risky. But I had to give him a fair hearing because of his track record. And Iāve got to sayā¦ I think I may have been operating under some faulty assumptions for a long time.
Iām still doing my research, but hereās what Iāve found out so far:
First, risk doesnāt exist in a vacuum in the oil business. I mean that, by and large, itās relatively simple to know in advance, through the use of modern science, whether a particular high-risk, high-reward new oil well might be a total dud. In other words, if youāre careful, itās not extremely likely youāll ever be taken by surprise if you invest in a new well that ends up being unproductive. Youāll know going in about your odds of success, and you can likely mitigate that risk in several different ways, which leads to
The Second point, which is this: Risk mitigation is the key in oil & gas. It appears that the āsmart moneyā in that business mitigates their up-front risk by a combination of careful and aggressive investment in the geological research necessary to make well-informed predictions, and by always spreading risk around by way of investing in not just one and only one oil well, but in MANY oil wells, so that the failure of any one can be overtaken, probably in substantial volume, by the other more successful wells.
Now those first two bits of learning are helpful and useful but not overwhelmingly surprising. But these last two points, I never would have guessed. And Iāll tell you what they are in about 45 seconds from now, when we return from this quick word from our sponsor.
Hey folks, Bryan Ellis here. An industry thatās really caught my attention lately is oil & gas. Itās not for everybodyā¦ but if youāre looking for the ability to take an income tax deduction for practically EVERY PENNY you invest into your dealsā¦PLUS a method of investing so reliable that banks lend against this kind of income, you should reach out to my friend Aldo over at FlowTex Energy. I donāt know if theyāre funding any investments right now or notā¦ but what I do know is Aldo can help you see whether oil and gas is a good fit for youā¦ and why itās probably a much better fit than you think. Learn more now. Just text the word ALDO ā thatās ALDO ā to 833-212-2112 right now. Again, text the world ALDO to 833-212-2112 right now.
So, continuing on with the 5 things Iāve learned about investing in oil & gas that may be changing my mind about that asset classā¦
The Third thing Iāve learned is this: Thereās more than one way to play the oil & gas game. You see, the thing we probably all think of ā acquiring land, drilling for oil, hoping for big gushers and selling oil by the thousands of barrels each day ā well, thatās certainly one way to play it and itās a very HIGH DOLLAR kind of way. But itās not the only way. For example: Itās actually quite common for niche-type companies to do very, very well in the oil and gas business simply by buying wells that are ALREADY PRODUCING and simply to monetize those wells. It turns out that the state of the art in science where oil and gas detection are concerned is sufficiently advanced that many banks will actually lend against the production capabilities of oil wells, so predictable and reliable is the ability of scientists to forecast the productivity level of any particular oil well.
But why would an oil company sell an oil well that they already own, that is producing reliably, and that has a predictable value in the future? Well, it has to do with the fourth issue I learned about, and that one ā along with issue #5, which is the most important one of them all, the one that actually makes it HARD TO LOSE as an oil & gas investor, weāll have to reserve for tomorrow, since weāre out of time for today.
I really hope this has gotten you thinking about the potential of oil & gas investing. Iāll be straight with you: Iām not yet 100% sold. But every day, the pendulum swing is getting closer and closer to a big, fat YES.
So join me tomorrow to hear about the final two HUGE things Iāve learnedā¦ more substantial even than the first 3. If youād like to hear this episode again or read the transcript ā or even forward it to a friend of yours you know is interested in oil & gas investing ā then just text todayās episode # - which is 317, 317 ā to me at 833-212-2112 and weāll get those links to you right away.
In the mean time, my friends: Invest wisely today and live well forever!
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Is the big-time AirBnb boom opportunity winding to a close? There are three totally anecdotal, but eerily accurate, indicators Iām seeing, each of which gives an unambiguous answer to that question. Iām Bryan Ellis. Iāll tell you what those 3 indicators are RIGHT NOW in Episode #316 of Self-Directed Investor Talk.
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Hello, Self-Directed Investors, all across the fruited plane. Welcome to Episode #316 of Self-Directed Investor Talk, the SHOW OF RECORD for savvy self-directed investors like you, and today we have an excellent show for you.
To ask question, just call 833-212-2112. Or if youād like to receive a link to this show you can listen again at your leisure or possibly share it with a friend, just text todayās episode number ā 316 ā to 833-212-2112 and Iāll get that link to you right away. Again, thatās text todayās episode number ā 316 ā to 833-212-2112 right now.
Today we jump into a topic that I bring up with some concern. I want the answer to this question to be different than I fear it might be. The question weāre considering is this: Is the big-time boom opportunity in AirBnb drawing to a close?
Iāll give you my answer, along with the 3 pieces of evidence Iāll cite to support that opinion. But first, a quick word from a sponsor I know youāll enjoy hearing from:
Hey folks, Bryan Ellis here. An industry thatās really caught my attention lately is oil & gas. Itās not for everybodyā¦ but if youāre looking for the ability to take an income tax deduction for practically EVERY PENNY you invest into your dealsā¦PLUS a method of investing so reliable that banks lend against this kind of income, you should reach out to my friend Aldo over at FlowTex Energy. I donāt know if theyāre funding any investments right now or notā¦ but what I do know is Aldo can help you see whether oil and gas is a good fit for youā¦ and why itās probably a much better fit than you think. Learn more now. Just text the word ALDO ā thatās ALDO ā to 833-212-2112 right now. Again, text the world ALDO to 833-212-2112 right now.
Ok, AirBnbā¦ Very cool concept, Iāve really respected the creative thinking of this company since the beginning. The idea is simple: You have a property. You let AirBnb list your property for short-term ā as little as a single night ā rentals, and the two of you share revenue from that rental. And it turns out that that concept has been so popular that many people who otherwise would have tried to monetize their real estate by doing conventional year-long or month-to-month rentals have instead been making money, and frequently MUCH more money, by doing short-term rentals through AirBnb than by using the more conventional approach to generating rental income.
But all gravy trains slow down, and this one will too at some point.
Are we there yet?
I donāt think so. But I think weāre getting pretty closeā¦ close enough that making money on AirBnb is no longer easy as āshooting fish in a barrelā, so to speak. Iāll share 3 pieces of evidence that leads me to this thinking, but Iāll go ahead and readily admit:
Each of these 3 reasons are anecdotal, not statistical. You probably know that my formal education is in engineering and computer science, so I donāt typically have a lot of use for anecdote. But I have noticed that anecdotal evidence is frequently a leading indicator for the more empirical form of evidence I prefer, so I canāt ignore it and neither should you.
So without further adieu, here are my 3 anecdotal indicators that suggest the AirBnb gravy train is slowing down:
Reason #1: Anytime thereās a cable TV show about an investing strategy, youāve got to wonder if that strategy might be spentā¦ or at least that thereās more competition than makes sense. And guess what? Thereās now a TV show on the cable TV station CNBC called CashPadā¦ and that show is about NOTHING BUT people turning their houses into AirBnb properties for profit.
Does this mean disaster is imminent? No, but it does mean itās becoming so well know that itās looking like a āgood ideaā to John Q. Publicā¦ and thatās historically not a good sign for anything.
Reason #2 the AirBnb gravy train might be slowing: The government. Look, the government is really only good at a few things, and the thing they do best is to destroy great business opportunities. Thatās what is happening now in a number of jurisdictions where local governments are trying to flex their muscles and put rather onerous restrictions on AirBnb property owners. Some of these restrictions are reasonable, because AirBnb hosts and their guests arenāt always particularly respectful of the neighborhoods where they stay. But itās bigger than that. Local governments see an opportunity here to generate more revenue, and frankly, I suspect this will, in many places, increase the effective cost of renting AirBnb properties enough to make serious, frequent travelers ā the backbone of the hospitality industry ā return exclusively to the big hotel chains.
And finally, reason #3: This is most anecdotal of all and Iāll admit itās a little condescending, though I donāt mean that to be the case. Hereās the deal: Have you noticed that some of the people doing well with AirBnbās donāt seem to be the sharpest knives in the drawer, if you know what I mean? Donāt get me wrong: I know that thereās not an actual connection between high intelligence and the ability to be successful as an investor. But it appears to me that the money has been so easy in that game that up until now, itās been pretty easy for everybody ā whether theyāre more of the āwheatā or the āchaffā variety ā to make a lot of money from it. And when something is too good to be true, thereās inevitably a market adjustment.
Now as I said, all of these reasons are āsoftā reasons without data to back any of them up. Theyāre all observations, and theyāre such soft observations that Iām certainly not suggesting anyone change their plans on the basis of what Iāve shared with you. But maybe, just maybe, it might be a good idea for you to keep an eye on this stuff.
After all, job #1 of the self-directed investor is to RESPECT YOUR OWN CAPITAL.
My friends, invest wisely today and live well forever!
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Have rental properties and want to set up a company and an associated self-directed 401(k)? Good ideaā¦ but the IRS might stand in your way. Iām Bryan Ellis. Iāll tell you all about it RIGHT NOW in Episode #315 of Self-Directed Investor Talk
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Hello, Self-Directed Investors, all across the fruited plane. Welcome to another action-packed, edge-of-your-seat thrill ride into the fantastic world of tax-free alternative asset investing. This is Self-Directed Investor Talk, the SHOW OF RECORD for savvy self-directed investors like you, and today we have an excellent show for you
This is Episode #315, so to get the transcript and other resources for todayās show, visit SDITalk.com/315, thatās SDITalk.com/315 for all of those resources, provided to you with our compliments.
Soā¦
I regularly hear from rental property investors who want to use a self-directed 401(k). The idea is that they want to form a company connected to their rental properties since one must have a business in order to establish a self-directed 401(k). On the face of it, this isnāt a bad idea.
My regular listeners will, of course, know that I am a huge proponent of self-directed 401(k)ās as being the absolute crĆØme-de-la-crĆØme of self-directed retirement accounts versus any type of IRA in Every Single Wayā¦
ā¦Except one.
āWell Bryan, what is that one exception?ā I can practically hear you asking right now? It is this:
Far fewer people actually QUALIFY to set up a self-directed 401(k) in the first place. The qualifications arenāt complicated ā really, all you have to have is a business that you own which has no full time employees other than you and maybe also your spouse, and your business has to have earned income. Thatās really about the size of it.
But therein, thereās a pretty big GOTCHYA for rental property owners who want a self-directed 401(k). What is it? Well, itās that caveat of having EARNED INCOME.
Earned income, as you may know, is the type of income that results whenever an employer gives you a paycheck or, if weāre talking about a business rather than a person, itās the type of income that results whenever a business is paid for the purchase of a product or a service. Itās income thatās earned on the basis of active effort.
Youāll note that that definition doesnāt directly apply to rental income. Rental income is, under the tax code, whatās known as UNEARNED income. Not unearned in the sense that youāre unworthy of receiving the income, but unearned in the sense that rent is payment for the use of an asset rather than for the purchase of a product or service. From a tax perspective, thereās no active effort involved in receiving rental income.
So thatās a problem. If the only income you are receiving comes from rental income, then all youāre receiving is UNEARNED income rather than EARNED income. And it really doesnāt matter whether those rents are being paid to you personally or to a company you form to own the properties. Either way, the nature of the income itself is still UNEARNED.
And if thatās the only kind of income youāre receiving, thatās not sufficient basis to establish a self-directed 401(k), I am sorry to say.
But NEVER FEAR, my friends. As always, I have a solution, which Self-Directed Investor Society clients have been using quite productively for years now, and it is this:
While RENTAL INCOME wonāt qualify you to set up a self-directed 401(k), what COULD qualify you to do so is to establish a PROPERTY MANAGEMENT company which serves your rental properties. In other words, letās imagine you have one or ten or a thousand rental propertiesā¦ you could very realistically and legitimately establish a company that provides property management services to your rental properties, for which it receives payment, usually in the form of a percentage of rents collected.
And in your quest to set up a self-directed 401(k), that will go along way. Because while RENTAL income is UNEARNED and doesnāt qualify you to establish a self-directed 401(k), PROPERTY MANAGEMENT income is distinctly of the EARNED varietyā¦ and thus is a legitimate qualifier for the āearned incomeā requirement to set up a self-directed 401(k).
Capiche? The idea is simply to segment a small portion of your income and do something to convert it, in a legal and legitimate sense, to the form of income that will allow you to qualify to establish a self-directed 401(k).
But even this solution has a rather serious drawback. Two of them, actually. Did your investing guru ā who isnāt an expert in self-directed retirement accounts ā mention these drawbacks to you? I didnāt think so. But I, your exceptionally well-informed, highly opinionated, always lovable and deadly accurate host wonāt hold back the goods from you.
But youāre going to have to listen in tomorrow to get THE GOODS because Iām out of time for today.
And that reminds meā¦ if you havenāt SUBSCRIBED to Self-Directed Investor Talk, please do that now so you get a notice when we publish new episodes! As I suspect you can tell, this isnāt information you can afford to miss, and itās not information youāll get anywhere else.
And secondā¦ if you like this showā¦ and heyā¦ YOU KNOW YOU DO! Hehehehe. Seriously, if you like this show, please consider giving us a nice 5-star rating and review in Apple Podcastsā¦ that really, really helps to get the word out and brings in more listeners, which motivates me to make this show better and better with each passing day.
Thatās all Iāve got for you today my friends, except for this one parting thought:
Invest wisely today, and live well forever!
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Which is better for you: A self-directed IRA or a self-directed 401(k)? Today, you learn the first big distinction to help you answer that question in the best possible way for you. I am Bryan Ellis. This is episode #314 of Self-Directed Investor Talk.
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Hello, self-directed investors, all across the fruited plane! Welcome to Episode #314 of Self-Directed Investor Talk, the SHOW OF RECORD for savvy self-directed investors like YOU where each day, I help you to find, understand and PROFIT from exceptional alternative investment opportunities and strategies.
I, of course, am your sometimes opinionated, always accurate and consistently lovable host, Bryan Ellis. This episode ā for which you can find all of the links and resources at SDITalk.com/314 ā is the second installment of our āChoosing the Right Toolā series, where weāre looking at whether an IRA or a 401(k) is the right answer for you as a self-directed investor.
Now in the last episode I did share with you some circumstances under which you need not have EITHER type of self-directed account. I wonāt rehash those other than to say that you MUST have one or both of earned income from a job/employer and/or youāve got to have money in an existing IRA or 401(k) to transfer into the account. In other words, youāve got to have an allowable way to get money into the account. The details are in installment #1 of this series, to which Iāve linked on todayās show page at SDITalk.com/314.
If youāve been a long time listener of SDI Talk, first of all ā THANK YOU for being a long time listener! ā but if that describes you, you probably already know that I have a very, very, very strong preference for using a 401(k) over an IRA whenever possible.
To be clear, both tools have their place. But to my way of thinking, and for some reasons Iāll share with you now, if youāre investing in non-Wall Street assets, you should have a bias towards using a 401(k) rather than an IRA if thatās an option for you.
Now way back in the beginning of this show, Episode #3 ā literally five years ago ā I did a whole show that showcases rather clearly 7 big reasons that a properly structured 401(k) is vastly superior to a self-directed IRA. Youād do well to check that out, and Iāve linked to it from todayās show page at SDITalk.com/314.
But a quick recap of just SOME of the reasons ā there are far more than just 7 ā that you should use a 401(k) if you can are as follows:
1. You can contribute FAR MORE MONEY to a 401(k) than to an IRA
2. You and your spouse can contribute money to the same plan, thus POOLING your capital and making it easier to do bigger deals.
3. 401ksā offer SUBSTANTIALLY better protection against creditors and lawsuits than IRAās
4. Checkbook-like control of your investment capital is built into properly structured 401(k)ās. For IRAās, on the other hand, that level of control is expensive, tedious and risky to establish.
5. If youāre using an IRA and you break the IRS rules about handling your account, youāre out of luck. Itās going to be very painful and thereās nothing you can do to fix it. Not so with 401kās, that provide a clear path to correcting errors.
6. You canāt BORROW money from your own IRA, but you can from your own 401k!
7. A 401k includes BOTH Traditional and Roth subaccountsā¦ you get both types in one 401k plan, which creates astounding flexibility not available in an IRA.
Again, there are MANY more reasons that I firmly endorse the use of a 401(k) over an IRA for any self-directed investor who qualifies for both. Issue #5 ā the one about committing prohibited transactions ā if that was the only difference, that would be more than enough. But the reasons are far more extensive than that.
But that caveat I mentioned: That you should use a 401(k) over an IRA if you qualify for bothā¦ itās the question of qualification thatās our first determining factor, and that leads to the one, and I believe only, way in which IRAās are superior to 401kās.
That way is that nearly anybody who has a job or an existing retirement account can qualify to set up a self-directed IRA. Thereās just not a lot required beyond having a source of earned income.
Not so with 401(k)ās. The requirements arenāt huge, but theyāre notable. Here they are:
First, you have to be owner or partial owner of a business.
Second, that business have to make real income. It doesnāt have to be a lot of income, and it doesnāt even have to be profitable, but it does have to earn income.
Third, if your business has any full-time employees other than you, your partners and your spouses, then youāll need to use a normal self-directed 401(k). But if the only full-time employees of your business are the owners and their spouses, then you can use the solo 401(k), which is the same thing but intended for smaller businesses.
So thatās it. Youāve got to own a business that makes money, even if it isnāt profitable. Thatās basically what it takes to qualify to set up a self-directed 401(k) plan.
Again, my strongest advice to you is this: If you qualify to use a self-directed 401(k) plan, you almost certainly should do that rather than using a self-directed IRA plan. Again, check out Episode #3 of this show ā which is linked on todayās show page at SDITalk.com/314 ā for more information that compares 401kās to IRAās.
Hereās the good news and the bad news about 401kās: They can be relatively simple and inexpensive to set up, but they are NOT all the sameā¦ and sometimes, the differences are REALLY severe. Iāll do an episode sometime in the future to help you see how stark those differences can be. But in the mean time, if youād like to set up a self-directed 401k and want a referral to someone who can do that for you and do it exactly right the first time, just drop an email to me at [email protected] and Iāll be happy to get you connected.
Now, having clarified the general superiority of 401kās over IRAās, that still leaves us with a big question: If you only qualify for an IRA and not a 401k, which TYPE of IRA should you use? Because it turns out there are a LOT of variation with HUGE differences! Weāll dig into that question in the NEXT episode of our Making The Right Choice series here on SDI Talk, so stay tuned!
My friendsā¦ invest wisely today, and live well forever!
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Mark Cuban said WHAT? Political correctness rears its ugly, stupid head again. Today, we take a brief break from our āChoosing the Right Toolā series to address some utterly foolish comments made by a normally reasonable and thoughtful person. Iām Bryan Ellis. This is episode #313 of Self-Directed Investor Talk.
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Hello, Self-Directed Investors, all across the fruited plane! Welcome to Episode #313 of Self-Directed Investor Talk, the SHOW OF RECORD for savvy self-directed investors like you, where each day, I help you to find, understand and profit from exceptional investments and strategies.
Todayās show notes, transcript and resources are available to you, at no cost and with my complements, over at SDITalk.com/313.
Yesterday we began to focus on the question of determining which type of self-directed account is better for you: the self-directed IRA or solo 401(k). Weāre going to return to that tomorrow and likely for a couple of additional episodes as well, but something came up today in my news feed that I thought Iād address with you.
Mark Cuban ā the businessman who famously became a billionaire when he sold Broadcast.com to Yahoo in 1999 ā is someone to whom I pay attention and whose words are generally surprisingly grounded given that he is, after all, a billionaire. I respect that.
Furthermore, I know a lot of you respect him and his work, too. And you and I as self-directed investors are obligated to pay attention to smart people since we make our own investment decisions. Unfortunately, it looks like Mark Cubanās thinking may now be muddled and more politically-oriented than business-oriented.
Case in point: A new article on Yahoo Finance called āMark Cuban describes the best way to reduce wealth inequalityā. Iāve linked to it today from SDITalk.com/313, be sure to check it out.
Now right away, whenever you see the words āwealth inequalityā, you know someone is speaking to a political audience and not an investor- or business-oriented audience, because wealth inequality is a totally contrived problem.
On the surface, the words āwealth inequalityā seem to mean that some people have more wealth than some other people. Yep, thatās true. And thank God for it. Those who do better than I do provide great inspiration, motivation and examples for me to up my game. Hopefully I provide a good example for those not at my level. Thatās what āwealth inequalityā really is: The scorecard of capitalism and the financial representation of dogged determination.
Thatās capitalism at the core, and capitalism is a good thing. My model of wealth building and your model of wealth building ā self-directed investing ā depend on capitalism. Always remember that.
Now āwealth inequalityā might represent an actual real problem, rather than a totally contrived one, but only if our economy was a zero-sum game. If, in other words, it was the case that every dollar I make means that you canāt make that dollarā¦ well, in that case, the scarce supply of wealth might change the game. But thatās not reality. When another oil well is found, new wealth is discovered. When a new software program is developed that has commercial appeal, new wealth is created. Wealth in a capitalist economy like ours is not a zero-sum issue, but is simply a representation of the value of resources and ideas. There are zero circumstances under which it can be said that the fabulous wealth of Bill Gates or Warren Buffett or Jeff Bezos or Mark Cuban has hurt my ability or your ability to become wealthy in any way. In fact, itās likely that every one of them have IMPROVED your odds in some way.
Thatās why Cubanās promotion of this issue is disappointing to me, and also quite illogical. In the Yahoo Finance interview, heās suggesting, for example, that to really change the wealth inequality situation, that people on the lower end need to begin accumulating assets. I totally agree with this, by the way. But then he goes on to suggest that one of the provisions of the new Federal Tax law ā the provision whereby a cap is placed on the amount of federal income tax deductions one can take for the STATE and LOCAL taxes theyāve already paid ā Cuban suggests that this provision makes it harder for lower-income people to actually buy houses or other assets in order to get themselves above the lower-end of the financial spectrum.
That sounds good to people of a certain political persuasion, but hereās the problem: Itās wrong. Low-income people are, almost by definition, unaffected by the tax code provision he cites. As in, an effect of zero, zilch, nada. It just doesnāt make any sense what Cuban is saying here.
Of course, some of the other things in the interview he says DO make rational sense, so Iām not saying that this guy is a fool or is absolutely misleading. What I am saying to you is this:
Mark Cuban is now definitely endorsing some ideas that only make sense in a political world, not in the real world. Not all of them, but definitely some of his ideas can be described that way. So if youāre like me, youāre a self-directed investor and youāve taken Mark Cubanās advice to be the kind of advice which is inherently always worth considering seriously, wellā¦ maybe itās time we rethink the degree to which we take his opinions seriously.
Because at the end of the day, folks, this is true: When it comes time to pay for your retirement, youāre not a Republican and youāre not a Democrat. Youāve got expenses to cover and bills to payā¦ and nothing said by a politician or aspiring politician will help you with that.
My friends, invest wisely today and live well forever.
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Whatās better for you: A self-directed IRA or a solo 401(k)? This is a critical and distinctly untrivial decisionā¦ particularly if youāre investing in real estate, syndications or any type of complex transactions. Iām Bryan Ellis. Iāll tell you how to make the right choice for you right now in episode #312.
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Hello, self-directed investors, all across the fruited plane! Welcome to Self-Directed Investor Talk, the SHOW OF RECORD for savvy self-directed investors like YOU where each day, I help you to find, understand and PROFIT from exceptional alternative investment opportunities and strategies.
I, of course, am your kind, lovable host, Bryan Ellis. Today we venture into the start of a new series that I call the āChoosing The Right Toolā Series wherein youāll see rather clearly how to choose which type of account is right for you, because the answer is truly not the same for everyone.
This, my friends, is episode #312. To hear the episode again or to read the transcript or enjoy the resources I mention on todayās show, feel free to visit SDITalk.com/312 and youāll find it all there, available for you to freely enjoy with my complements.
Before we jump in today, I have a quick announcement thatās very exciting! Next month, July of 2019, will see the publication of Issue #1 of a brand new magazine thatās being published by yours truly. Itās called Self-Directed Investor Magazine and if you enjoy this show ā and come onā¦ come onā¦ you know you do! ā hehehe if you enjoy the Self-Directed Investor Talk podcast, youāre going to LOVE Self-Directed Investor Magazine.
Furthermore, it will be under the editorial control of my wife, Carole Ellis, so it will be GREAT. She didnāt get that job because weāre married. Sheās got that job because she is the best there is for this task. She has VAST editorial experience, having been editor-in-chief for the well-respected journal called Research (published by the University of Georgia). She was also the editor in chief of Think Realty Magazine, a niche publication for individual real estate investors. And she also had full control of my own real estate newsletter, the Bryan Ellis Investing Letter, and itās subscribership of over 600,000 investors worldwide. Point is: Carole is a highly-regarded professional in the sphere of magazine editorial work and thereās literally no one Iād hire instead of her. Iām genuinely honored sheās decided to do this, and I know youāre going to enjoy the fruit of her effort too.
And ohā¦ by the wayā¦ would you like a free subscription to Self-Directed Investor Magazine? I meanā¦ totally free? Well, Iāll tell you how to do that momentarily. But first:
So which is right for you: A self-directed IRA or solo 401(k)? Thatās a great and very important question, as youāll begin to truly understand forthwith.
First, letās define exactly what I mean. When I say āself-directed IRAā or āsolo 401(k)ā or even the more generic āself-directed retirement accountā, Iām referring generically ā unless I say otherwise ā to a retirement account that has nearly no limits on the types of investments you can make. This is in contrast to the term I coined for the other type of IRA which is the ācaptiveā retirement account.
Captive accounts are the ones provided by your bank or your companyās 401(k) plan or your stock brokerage company. Itās not necessarily easy to know, just based on the name of the account, whether youāre using a ācaptiveā account or a āself-directedā account because a lot of the companies that provide captive accounts still called them āself-directedā or something similar to that.
So if you need to know which type youāre currently using, hereās a simple and very decisive test: Call up your retirement account provider and ask them this question: Can I use the money in my retirement account to purchase a herd of dairy cattle? If the answer is āyesā, youāve got a self-directed account. If the answer is ānoā, then you have a captive account. Easy-peasy.
With that foundational question out of the way, weāll return to the question of whether a āself-directed IRAā or a āsolo 401(k)ā is the better tool for you. Now, you might notice the bias from which Iām working, that being that you should definitely be using one or the other of those types of self-directed accounts.
Iād like to disabuse you of such thinking right now. In fact, not everyone needs a self-directed account. They really donāt. And if they donāt actually need these accounts, they shouldnāt use them.
Who might NOT need a self-directed IRA or solo 401(k)?
Well, if you are deeply and exclusively committed to investing only in the assets that are available to you from your current IRA or 401(k) provider, then thereās no real need for you to have a self-directed IRA or solo 401(k) at all. Youāre not going to get better investment results by investing in publicly-traded stocks or mutual funds simply by performing those investments inside of a self-directed retirement account.
Also, you really need not have a self-directed account unless you have a way to get some money into that account. In general, there are two ways to get money into a retirement account. The first one is that you set aside some money from the income you earn from your job or business. So in tax parlance, this means you must have what is called āearned incomeā in order to qualify to make contributions to any kind of retirement account.
The other way to get money into a retirement account is by way of TRANSFER. So letās just imagine you have a 401(k) from a previous job or maybe an IRA that you began building years ago. If you wanted to have a self-directed retirement account, itās quite likely you could simply transfer the money in your existing accounts ā which are probably with ācaptiveā account institutions like your bank or stock brokerage ā over to a āself-directedā account so you have the ability to invest that money any way you want.
So what we have so far is: If you donāt plan to invest outside the realm of publicly-traded securities, then you donāt need a self-directed account at all. And if you want to have a self-directed account, you must have one or both of some sort of earned income and/or an existing account in order to fund your new self-directed account.
Now, unfortunately weāre out of time for today, so when we resume tomorrow, having this well-established foundation, weāll dig deep into the question of which type of self-directed account ā IRA or 401(k) ā is the superior choice for YOU and YOUR needs.
Hey my friends if you have any questions youād like for me to address, be sure to send them to [email protected] and also ā about getting a free subscription to the magazine ā join me for tomorrowās episode #313 and Iāll tell you how to do that then.
In the mean time: Invest wisely today and live well forever!
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This may be the most astoundingly brilliant and simple way to bring in a 6-digit bump to your retirement account balance practically overnight and without risk. Iām Bryan Ellis. Get ready to be blown away right now in Episode #311 of Self-Directed Investor Talk.
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Hello, Self-Directed Investors all across the fruited plane! Welcome to Self-Directed Investor Talk, the SHOW OF RECORD for savvy self-directed investors like you.
I, of course, am your host, Bryan Ellis. Today is Episode #311ā¦ so when you get the itch to hear this show again or to review any of the resources I refer to in todayās episode, remember that thatās available to you at no cost by visiting SDITalk.com/311.
So letās do this.
Ok, Iāve got to clearly disclose something to youā¦ Iām still doing my research into what Iām about to share with you. Iāll have some excellent additional clarity on this within 2 weeks, and if youād like to find out what I determine as a final matter, Iāll tell you how to get that info in just a minute.
So the premise today is this: Iām going to tell you how to bring in a 6-digit bump to your retirement account balance in no time flat with no risk. Sounds too good to be true, doesnāt it? Maybe it isā¦ Iāll know within 2 weeksā¦ but I have great reason to think this is going to work out.
So letās set the stage here.
One of the most interesting investment strategies Iāve ever heard of is called āviatical settlementsā. The basic idea is this: An investor identifies a person who has a life insurance policy and who, for whatever reason, would rather have money right now rather than waiting for their beneficiaries to receive the money later.
So maybe this person has a life insurance policy that will pay out $1,000,000. If youāre investing in viatical settlements, then the amount youāll offer for that policy is based entirely on how soon youāll receive the payout. So if the person is already in a hospice care facility and will likely pass on within a few weeks, then maybe youāll have to pay $950,000 for the policy, because you wonāt have to wait long for the payout.
But if the person is 60 years old and in great health, then you might only pay $100,000 because it could still be 30 years before you receive a payout on that policy.
So thatās what a viatical settlement is, and itās always interested me as an asset class.
But then recently I was having lunch with a dear friend of mine, whose name is also Bryon. Bryon has been a very good friend to meā¦ heās eclectic, heās brilliant, and heās definitely among the most generous people Iāve ever encountered. Heās also been rather successful financially, and also comes from a family who experienced great financial success, and he has the wonderful frame of reference that goes with such an upbringing.
Bryon once told me something about his father that totally blew my mind and struck me as utterly brilliant: His father was seriously involved in viatical settlementsā¦ but as a seller, not a buyer!
In other words, what heād do is to establish a life insurance policy, and then promptly sell that policy to a viatical settlements investor. So maybe he would set up a $1,000,000 policy and then sell that policy to an investor for $100,000 to $200,000.
Just think of where that put himā¦ With no more effort than establishing a life insurance policy, he suddenly has $100,000 to $200,000 cash in his pocket that he can use for whatever he wants! This is astounding!!!
And what if you need to establish or quickly grow the size of your retirement savings?
Well, my friendsā¦ hereās where my research is still ongoing, so donāt take what Iām about to tell you as absolute gospel. Rather, Iām telling you about the research Iām doing. But hereās how the theory goes:
If you happen to be wise enough to be using a self-directed 401(k) for your retirement investing, this could work for you. It wonāt work for self-directed IRAās because they canāt own life insurance.
But if you use a self-directed 401(k), it is actually allowable under certain circumstances for your 401(k) to buy a life insurance policy on YOUR lifeā¦ and then instead of YOU selling off your life insurance policy to a viatical settlement investor, your 401(k) would do it instead. And voila! Your 401(k) suddenly has a big chunk of income and has done so in a risk-free manner.
Just think of that, folksā¦ that could be HUGEā¦ really huge.
Now my friends, let me remind you: Iām still doing the research to confirm whether the fact is as good as the theory on this, including whatever tax ramifications may exist. Iāll know soon and will be happy to update you soon as I know. If youād like for me to be sure to let you know when I get conclusive information on this, then do this:
Drop an email to me at [email protected] and just let me know youād like for me to update you when I get the info and Iāll be happy to do it. Again, just drop an email to me at [email protected] and Iāll update you within a couple weeks when I have final information.
My friends, I hope youāve enjoyed this excursion into some rather creative investment thinking and remember this: Invest wisely today, and live well forever.
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What are the big assumptions youāre making in your investment decisions? Can you list them? Is there any chance theyāre WRONG? Iām Bryan Ellis. Weāll look at this serious but nearly never-discussed issue right now in Episode #310 of Self-Directed Investor Talk.
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Hello, Self-Directed Investors, all across the fruited plane! Welcome to the SHOW OF RECORD for savvy self-directed investors like you.
This is episode #310 of Self-Directed Investor Talk, and should you be so inclined, youāre welcomed to visit todayās show page to get a transcript and links and resources that are relevant to todayās discussion. The address for the episode #310 show page is https://SDITalk.com/310
So the big question today: What are the big assumptions youāre using as a basis for your investment decisions? More importantly, is there a chance any of them are wrong?
Thatās a big, important question. Hereās some context for why I ask it:
Iām something of a science geek. I routinely and very happily spend a relatively large amount of time learning whatās going on in the world of scientific research. One of the geekiest things that I do ā and that I really love to do ā is to watch formal debates that feature scientists and philosophers duking it out intellectually to see where everyoneās ideas fit in the grand scheme of things.
And do you know what kind of evidence Iām seeing a LOT in the last 3 yearsā¦ I mean, a LOT of it? And as I answer that question, remember that the topic of todayās show is a look at the big assumptions youāre making in your portfolio, and whether they could possibly be WRONG.
So hereās what Iām seeing a lot of: Iām seeing a LOT of scientists who are absolutely the very top people in their respective fields offering very, very serious scientific resistance to the famous theory of evolution posited by Charles Darwin in the mid 1800ās. I mean, legitimate, top-tier people like the famed synthetic organic chemist Dr. James Tour at Rice University. Thereās also Dr. Marcos Eberlin, the internationally renowned mass spectrometry expert at the University of Campinas in Brazil. And Michael Behe, the respected biochemist at Lehigh University. Now some people try to disregard the opinions of those guys because all of them have religious beliefs which would predispose them to resist the theory of evolution. But then youād have to explain away highly-regarded atheistic and/or agnostic scientists and professors who also openly criticize and question Darwinian evolution like famed philosopher and mathematician Dr. David Berlinski, biologist Dr. Denis Noble at the University of Oxford, and professor Thomas Nagle at NYU. And frankly, this is only scratching the surface of dissent among serious academics and scientists of today. If you knew the extent of it all, youād be utterly blown away.
Now look, this isnāt a discussion about Darwinian evolution. Unless I have the pleasure of meeting you in person and youād like to discuss this, then right now I donāt care what you think about that question and you need not care what I think, either.
But the question is this: Can you think of any assumption that has been pounded into all of as being any more fundamental than the theory of evolution? I canāt eitherā¦ and yet, whatever your position on the matter, any objective look at that theory suggests thereās a real chance that, after all of this time, the entire theory is just a crumbling house of cards. We donāt know that yet, of course, but it surely looks that way.
So letās shift that line of thinking over to our investments. Ask yourself: What are the core, operating assumptions youāre making each and every time you make an investment decision? The assumptions that are so deep that you donāt even think about them consciously?
Iām thinking about this for myself, and some of them are:
Ā· Paying less tax is better than paying more tax
Ā· Making more profit is better than making less profit
Ā· Only take calculated risks
Ā· Physical assets are more secure than paper assets
Ā· Etcā¦
Now having thought about this for a bit of time, Iām coming up with a lot of fundamental assumptions that Iām making, far more than the few Iāve mentioned here. And hereās how this becomes interesting:
If considering each and every one of my fundamental assumptions, I then ask myself these questions:
Ā· Is this absolutely true?
Ā· Is this absolutely false?
Ā· Is this relatively true or relatively false, depending on the circumstances?
Ā· Is there a better assumption that I could adopt?
This has been enlightening for me, my friends, for this reason: Iāve again shown myself that having extremely dogmatic rules about anything can be a very dangerous thing UNLESS you take the time to clarify not just the rule or the assumption, but also clarify what I call the two Cās: context and caveats.
For example: Physical assets are, I think, more secure as an investment than paper assets. But a relevant context might be that thatās true only in an environment where itās legal and practical to sell that asset when I need to do so, since physical items are usually not highly liquid. And a caveat to that rule might be that if owning the physical asset entails more direct, physical involvement in the asset than I am willing or able to provide, then in that case, it might make sense for me to do something like own shares in a real estate investment trust rather than owning real estate directly myself.
These are simple examples, but Iāve learned a lot about myself and my assumptions I preparing for this episodeā¦ and where those assumptions may not be serving me well. Letās you and I do our best to see to it that the only things that are crumbling are faltering scientific theories rather than our lifeās savings.
My friends, invest wisely today, and live well forever.
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For the longest time, the big boys of Silicon Valley ā Facebook, Amazon and Google ā were all the reason you needed to be invested in stocks. Now, theyāre the best reason to get out. Iām Bryan Ellis. Iāll tell you why right now in Episode #309 of Self-Directed Investor Talk.
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Hello, Self-Directed Investors, all across the fruited plane! Welcome to todayās special edition of the SHOW OF RECORD for savvy self-directed investors like you.
This is episode #309. That means you can find todayās transcript and show notes over at SDITalk.com/309.
The stock market, as you likely know very well, has been booming with astounding consistency since the day that President Trump won the Presidency in 2016. Yes, thereās certainly been plenty of volatility, but even this year, 2019, when the markets have been a bit rougher than in some other years, still, the Dow Jones Industrial Average is STILL up by about 10% since the start of the year, and weāre not even halfway through. So the bull market rages on in a HUGE way.
But there is a headwind resisting the markets which will only get strongerā¦ and frankly, this one may just be the thing to motivate SOME OF YOU ā and you know who you are ā to begin diversifying some of your assets AWAY from Wall Street and into alternatives like real estate or private companies orā¦ nearly anything but Wall Street assets.
Now if you guessed that the headwinds have something to do with the ongoing trade wars with China, which now seems to be engulfing Mexico as well, youād not be unreasonable to make that guess, but youād be mistaken, my friends.
Rather, the big issue is the intense regulatory scrutiny of the big tech companies that is coming from both the department of justice and from Congress. Just when the word ābipartisanā seems an impossibility, it appears thereās support from both sides of the aisle to limit the power of Big Tech, albeit for entirely different reasons.
The companies most at risk in here are Facebook, Amazon and Google. I suspect there might be some saber rattling towards Twitter as well, but the truth is that Twitter is not relevant in the grand scheme of things. But Facebook, Amazon and Google? Theyāre going to feel some real heat, and with good reason.
And while I certainly have an opinion on whether regulator scrutiny is called for, thatās not relevant to the bigger point today, which is this:
Anti-trust actions ā which appears to be the path that Google will face, and maybe Amazon and Facebook too ā can be utterly devastating and require decades for recovery. You have to look no further than Microsoft. Under the command of Bill Gates back in the 90ās, Microsoft became the most valuable company in the world and was the envy of the world. Gates was practically a cult figure, and Microsoft was so profitable it could do almost literally anything it wantedā¦
ā¦until the FTC took an interest in a serious way. When Microsoftās anti-trust trial was done, restrictions so severe were placed on the software giant that its stock would flounder for year after yearā¦ and it would take until 2016 for Microsoftās share prices to again reach the previous high point it had achieved way back in 1999, nearly 17 years earlier.
17 years is a LONG TIME for a stock to be flat, but thatās exactly what happened. Now at that time, Microsoft was the clear market leader. No doubt about it. And guess what happened to the market as a whole when itās leader went flat for years on end?
You guessed it: The broader market did the same thing. At basically the same time as all of the air went out of the tires of Microsoftās stock in 1999 and 2000, the broader market just treaded water for several years.
As the market leader went, so went the market.
And now, itās like dĆ©jĆ vu all over againā¦ only the names have changed. This time, the crosshairs are focused on Facebook, Amazon and Google. If your last name is Zuckerberg, Bezos or Pinchai, you should be sweating right now.
And if your portfolio depends on those companies, you should be sweating too. But not just on those companies. The Microsoft lesson from the 90ās and early 2000ās is clear: When the Department of Justice gets involved, that can change the market as a whole. And not only is that happening right now, but Congress is apparently launching its own investigation of Facebook, Amazon, Google andā¦ APPLE. Thatās right, folksā¦ Apple is under the microscope, too.
Why do I share this with you?
Well, I donāt want you to lose your money, folks. And history tells us this could be a risky time for the market.
What should you do? Thatās up to you, but strategically I think it would make some sense to put yourself in a position to be able to very easily diversify OUT of stocks and into some other asset class whenever you decide to do that.
You could, after all, simply transfer your IRA or 401(k) into a self-directed IRA or 401(k) without even cashing in your stocksā¦ just leave your money invested as isā¦ but go ahead and get your money into a self-directed account so that when the time is right for YOU to cut bait and move on to greener pastures, youāll be ready to do that at a momentās notice.
And, of course, if you need any help with that, reach out and Iāll be glad to help. You can reach me at [email protected]. Iāll be happy to give you some good, unbiased advice since Iām not an IRA or 401(k) companyā¦ I just want you to be set up for success.
My friends, invest wisely today and live well forever!
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When does the stock market give you great clues to investing in REAL ESTATE? When a stock chart looks as beautiful as this newly-public real estate companyās chart looks. Iām Bryan Ellis. Iāll identify the company and extract some valuable investment intel for YOU, right now in episode #308.
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Hello, Self-Directed Investor Nation all across the fruited plane! Welcome to todayās special edition of the SHOW OF RECORD for savvy self-directed investors like you.
This is episode #308. If you want to circle back for the transcript or to listen to the show again, go to SDITalk.com/308, SDITalk.com/308.
Letās jump right in, shall we?
Back in January of 2018, an Atlanta-based company began went public on the New York Stock Exchange. There wasnāt a huge pop on the IPO day. In fact, the share price started at $16 never got higher than about $18 bucks and change for nearly 3 full months. Then that companyās stock went on a tear that continues to this day. Now trading in the low $30ās range ā nearly twice itās IPO level of just 18 months ago ā this stock is turning some heads.
Now if youāre asking, āwhy, oh why, Bryan, do you fill my ears with tales from Wall Street when you know I am focused on real estate or other alternative assets?āā¦ Well, dear listeners, I shall endeavor to answer you plainly now.
So what is the company to which I refer? This isnāt just any company, it is a real estate investment trust, also known as an REIT or REIT for short.
For those of you not familiar, a REIT is a special type of entity that can trade on public markets and which is designed for businesses whose income is almost entirely generated from the ownership and monetization of REAL ESTATE. Ah yes, so now the relevance to you and me begins to peek through, does it not?
But there are many publicly-traded REITs. Why is this one different or unusual?
Well, my friends, itās because of the KIND of real estate upon which they focus. This company is called AmeriCold Realty Trust, and as you might guess from the name, their specialty is COLD STORAGE warehousingā¦ the kind of commercial space required primary by food delivery companies.
I learned about this on an unusual source. Every now and again ā and with decreasing frequency, frankly ā the people over at CNBC push past their political agenda and cover actual financial news. This is one of those days, as thereās an interesting article on their website about the very topic of our discussion. Itās linked on todayās show page at SDITalk.com/308.
So the rationale being given for a glowing analysis of this sector is simple: Thereās not a lot of cold storage warehousing available, and the demand for it is skyrocketing because of food delivery companies like Peapod, Blue Apron and of course Amazon Fresh.
Well, to me that sounds like enough of a reason to look into cold storage as a way to invest oneās portfolio. And should you deem the business of frigid commercial space to be worthy of your investment capital ā and in particular your retirement savings ā what are you to do?
One alternative ā likely the simplest ā is to direct your stock broker to buy shares of AmeriCold. Iām not recommending for or against that. What we know is that so far the stock has done very well, and thatās positive.
But investing via publicly-traded assets, while very simple, represents a different risk: The risk of the lack of choice and control.
So a second alternative is to find a syndication or partnership that focuses on cold storage into which you can invest. This will allow you to use the resources and expertise of the investment partner to run the investment so you can passively provide the capital.
Your final alternative sacrifices the simplicity of investing in either publicly-traded stocks or privately-held syndications, but what you get in return is absolute control and absolute choice. That is, of course, to invest directly into the acquisition or construction of a cold storage facility of your own. This is a big commitment, of courseā¦ but is a very legitimate option which should not be ignored.
Whatās best for you? Thatās a decision only you can make, with appropriate input from your advisors, of course. But hereās the bigger point relevant to you no matter whether you care anything about Cold Storage or not:
If you happen to be investing your RETIREMENT funds, chances are very good that only ONE of those three options is available to you. Unless you have already transferred some of your retirement savings into a self-directed IRA or 401(k), your retirement portfolio will be handcuffed to Wall Street, wholly denying you the opportunity to work with an expert partner through a syndication and denying you the alternative to acquire or construct a cold storage warehouse of your own.
You must ALWAYS be ready to make investments ā whether in cold storage facilities or anything else ā by having your capital in an accessible situation, because all too often, opportunity requires quick movement. So to the extent that your portfolio is held within retirement accounts such as IRAās or 401(k)ās, donāt delay in moving your money into a self-directed retirement account. Do it today. The days or weeks required to make that transition may just mean youāre too late.
And by the way, yes, it is a big and important choice to use the right kind of account and to use the right self-directed IRA or 401(k) provider. If you need some unbiased help getting to those answers, drop me a note to [email protected]. Iāll be happy to help you.
My friends, invest wisely today and live well forever!
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What is the mysterious QRP? And how is it different from the self-directed 401(k)? Iām Bryan Ellis. Iāll give you the answer right now in Episode #307 of Americaās largest, fastest growing podcast for self-directed investors
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Hello, self-directed investor nation, all across the fruited plane! Welcome to the show of record for savvy self-directed investors like you, where in each episode, I help you to find, understand and profit from exceptional alternative investment opportunities and strategies.
Earlier this week I was having a conversation with a colleague who heads a really cool group of dentists and doctors who mastermind together to build great investment portfolios. He told me that several of his members reached out to him because theyād heard about something called a QRP that was clearly superior to a self-directed IRA, and maybe even better than a self-directed 401(k) as well.
Whatever it was, it generated a lot of excitement. The propaganda that my colleagueās clients heard suggested rather heavily, but maybe only indirectly, that this mysterious new financial tool was a different sort of animalā¦ distinct from self-directed IRAās, distinct from self-directed 401(k)āsā¦ a different animal entirely.
My colleague asked me about it, and wanted to know what I thought about it. It immediately struck a strange tone with me, because the acronym QRP is not well known in the world at large, but is extremely well known in the retirement industry. It stands for Qualified Retirement Plan.
In a generic sense, a qualified retirement plan isnāt actually an account typeā¦ itās a broad category of account types that includes other categories like ādefined benefitā plans and ādefined contributionā plans. So QRP is a known quantity to people in the retirement industry.
But the way it was described to my colleagueā¦ and indeed, the marketing propaganda that support this particular offer, try very hard to maintain an air of mystery about the QRP and to suggest that it is something totally unique and distinct. It claims some wonderful features, such as:
Ā· Very high contribution limits
Ā· Very favorable tax treatment of debt-financed investments, which is a big problem area for IRAās
Ā· Near instant access to a $50,000 loan from the account at any time
Ā· Checkbook control of the funds in the account
Ā· No income limits
Ā· And a few other things
Really attractive features, to be sure. But those features make it sound strikingly like something you and I know very wellā¦ the solo 401(k). But was it actually something different? Why was this promoter calling it a QRP? Had he stumbled onto a wonderful tool about which I was not aware?
Well, no. It was exactly as I thought.
The ādirty little secretā of the promoter who pushes QRPās is simply using the term QRP to refer to self-directed 401(k) plans. Thatās kind of misleading because 401(k)ās are only one of a large number of types of qualified retirement plans, but heyā¦ whatever, you know?
So to you, my dear friends in SDI nationā¦ allow me to tell you with the utmost clarity: As has already begun to happen, youāre going to see more and more people marketing solo 401(k)ās, because it turns out that you donāt really have to have any particular licensing to do so. And some of them are going to be creative in their marketing and will call their product by a different name like QRP.
I guess I donāt blame them. Itās different than the typical name āsoloā or āself-directedā 401kā¦ and being an unusual acronym, QRP sounds mysterious.
But donāt let yourself be distracted. I can tell you now with astoundingly high confidence that anytime you hear about a self-directed account that offers that collection of features, itās nearly certain that what youāre dealing with is a solo 401(k), no matter what else itās being called.
My friendsā¦ invest wisely today and live well forever.
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- Se mer
