Need help with retirement plans! Quickly!

[Jill]

OK, I'll admit, this is kinda cheating. But one of the goals for which I'm accountable to my mastermind group tonight is that I was supposed to research ideas for my retirement account. I have about $90k sitting in cash that needs a good home. Options I've considered are private placement real estate deals (aka SteveO), foreign currency, and real estate flip deals.

Anyone have anything interesting that I may have missed? I know we could all put forward a generic "angel investment" or "options contract", but I'm looking for specifics. I'll admit that I could drill down on any one of these topics and come up with some data worthy of analysis. But if you guys have already been looking into the same stuff, I would REALLY appreciate your input. (Just don't tell my Mastermind group that I outsourced! :nonod

 

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[andviv]

RE Private placement is my favorite (but you already knew that).

Another alternative is to invest in a starting small businesses. If you see a project that sounds interesting then your retirement plan could buy a percentage of that business as a mid-to-long term investment. I can think of a couple of start ups that make sense.

 

[Runum]

No way Andres! My pocket would be a great place to park your retirement Jill. Large bills would be fine.:cheers:

 

[Jill]

Gosh, you're such a giver, Greg. So sweeet. Thx!

 

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[hakrjak]

$90k would be a perfect amount to use to get into flipping, but it sounds like you travel an awful lot, so I dunno what you're involvement level could be -- Or if you have someone local you could really trust to run things in your absence... The hiring a general contractor route could work best for you.

That's what I'd do with it though, or maybe buy 3 cashflowing rentals (About $25k down each, hold $15k in reserves), if you can get good deals in your town right now.

Cheers,

- Hakrjak

 

[NerdSmasher]

Only other places I can think of would be things such as:

CDs
Becoming an investor of other sorts - I.E. Angel, or otherwise, to some extent.
Mutual Funds, or specific stocks which may not be bad if you think we're coming out of the down economy now.
Bonds
Gold, Oil, or other commodities.

Or, perhaps ideally, some combination of your favorite ideas.
Obviously you want to go for whatever gets the best returns; or, whatever you think will, at least. I imagine Real Estate would do well if we are coming out of the down economy, so investing in RE Private Placement certainly sounds like a good idea to me

 

[randallg99]

hands down private placement investing. but be shrewd or be screwed.

 

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[MrPink]

What is your goal with the 90k?
-have this be a safety net that you can count on?
-grow as much as possible?

What is your time line?
-retirement is 2 years, 5 years, 10 years

How much risk do you need to take?
-related to how much you need this money to grow

How much risk are you taking?

 

[Jill]

What is your goal with the 90k?
-have this be a safety net that you can count on?
-grow as much as possible?

What is your time line?
-retirement is 2 years, 5 years, 10 years

How much risk do you need to take?
-related to how much you need this money to grow

How much risk are you taking?

Maximum return. I don't plan on touching it until I can do so legally (which is what? 10? 15 years?)

 

[Bilgefisher]

Possibly a private investor like many suggested.

Hard money is hard to come by at the moment. (Maybe just for me...who knows)

90k at 12%-15% simple credit secured to a property as a first lien.
2-5 points to borrow $1800-$4500
10800/yr @ 12%
900/mo @12%

If you can lend 2 times in one year for 3 months per time assuming 4 points borrow each time at 12%.
4points*900*2deals = 7200
6months @ 12%=5400.

(7200+5400)/90000= 14% return


Just an idea.

 

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[phlgirl]

Initially, I had the same thought as Bilge - hard money lending. It does require a more hands-on approach though, unless you really trust the investor's expertise. Even then, not sure I would be comfortable not being somewhat involved. You would need to know the investment area well, would need to perform your own appraisals (or have someone on hand to perform them for you) to ensure that you were lending on a product at a low LTV (60%), so that in the case that you actually end up with the property, you have more than one exit strategy.

I don't know your exact situation but, from the sounds of it, you are dealing with a substantial income base. I would think one of your primary goals would be attempting to lower your tax bracket, if at all possible. The only way I know of doing this is to hold real estate assets. That way, not only do you get income from the real estate but you get the annual tax write-off as well. This not only makes the real estate income tax-free but some of your ordinary income tax free as well. If you are in a 33-35% tax bracket, you would be saving this amount based on the RE loss figure. I am sure there are other legal ways to offset your taxable income (I just don't know any).

Now that I am back to a more income generating activity (as opposed to long term wealth building activity), I am happy to have all of my real estate losses. We have projected a fairly substantial income basis for 2009 and I hope to have the entire amount be tax-free. Met with the CPA last week and he seems to think this will be doable.

Note: You may already have this covered........

 

[Jill]

Thanks for the thorough response, Phlgrl. No, since this is in my Self-directed IRA, I'm not really concerned about the tax ramifications at this point. Just want to build!

I think that the flip scenario that Hakrjak mentioned would probably yield the highest return (I think), but you have to be really careful. If I wanted to go paint the house myself, then it would be considered an additional (read: illegal) contribution to my IRA. So everything has to be outsourced in order to keep it a "qualified" account, which means that the returns would not be as good as if one did the work themselves.

 

[phlgirl]

Oh, I see, Jill. I did not realize your funds were in an IRA.

Yes, then I would think Private Placement might be a good (and likely much easier) way to go.

I know a few people who have dealt with the ins and outs of buying RE through an IRA. I think if you were buying to hold long-term, that might be be one thing - a lot of work up front but you can deal with a 'custodian' and once everything is set up, you are good to go.

Flipping, on the other hand, might end up becoming a constant juggling act. One false move and the whole thing could be disqualified.

 

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[Jill]

Flipping, on the other hand, might end up becoming a constant juggling act. One false move and the whole thing could be disqualified.

Exactly right. That's my fear... and why I like's SteveO's setup.