Before You Invest http://beforeyouinvest.com Investing | Saving | Banking Wed, 12 Apr 2017 12:20:31 +0000 en-US hourly 1 https://wordpress.org/?v=4.7.5 60379974 Jackson Hewitt Review http://beforeyouinvest.com/jackson-hewitt-review/ Tue, 21 Mar 2017 15:00:59 +0000 http://beforeyouinvest.com/?p=1144 Jackson Hewitt Tax Service is the second largest tax preparer in America (behind only H&R Block) and completes over 2.2 million returns each year. With over 6,500 locations throughout 48 states (and D.C.) you can probably find a branch near you. Many are even located in Wal-Mart and Kmart super stores or in mall kiosks, [...]

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Jackson Hewitt Tax Service is the second largest tax preparer in America (behind only H&R Block) and completes over 2.2 million returns each year. With over 6,500 locations throughout 48 states (and D.C.) you can probably find a branch near you. Many are even located in Wal-Mart and Kmart super stores or in mall kiosks, offering convenience and quick service.

Jackson Hewitt will prepare your income tax return (both federal and state) and file it electronically. You can come into one of their offices to have a return completed or you can opt to prepare your own taxes using their proprietary online software. For a basic return you can do this for free, or if it is a little more complicated there is a nominal charge. Generally the more complicated the tax return the more expensive the service.

You can elect to receive your tax refund directly from the IRS (Internal Revenue Service) or avail yourself of one of several financial products that Jackson Hewitt offers. These include RALs (refund anticipation loans), assisted refunds and gold guarantee.

• Refund Anticipation Loan (RAL) – These are loans offered by third party banks and institutions available to customers and are secured by their anticipated income tax refund. This will allow Jackson Hewitt customers access, usually within one day, to funds very quickly.

• Assisted refunds – Sometimes also known as accelerated check refunds or assisted direct deposits, these allow customers to have their processing and preparation fees taken directly from their income tax refund. A third party financial institution opens a bank account for the express purpose of depositing the refund; the customer can then accept a bank check for the net amount, or have a transfer to their own account.

• Gold guarantee – this is a warranty that customers can purchase to provide protection against potential errors made in the preparation of that customer’s tax return. For those customers that choose this service they can choose to receive their refund in the form of the iPower Cash Card (a debit MasterCard card).

Begun in 1982 by a former H&R Block employee, John Hewitt and his wife bought the Virginia based Mel Jackson’s Tax Service (six locations), renamed it Jackson Hewitt and began to slowly grow the business. By 1998 The Cendant Corp bought the entire company for $480 million and began rapid expansion. Jackson Hewitt Tax Service, Inc. was spun off as a separate company in 2004.

Jackson Hewitt has partnered with the Magic Johnson Foundation to provide “Community Empowerment Centers” that offer tax services and financial planning and educational resources in Sacramento, Houston, Cleveland, Chicago and New Orleans. Services are provided free of charge in underserved communities for seniors and the disadvantaged. Clients in these communities have free access to a Jackson Hewitt money manager, an online budgeting tool and assistance in creating a savings plan.

As is the case in most large corporations, you can find dedicated, passionate people to help you with your tax return at Jackson Hewitt, but there are inevitably some who are just trying to collect a pay-check. The level of service that you will receive depends upon the individual you are interacting with at the moment. To be safe, take time to interview the person behind the desk before giving them your tax information; it will be worth it in the long run.

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Warren Buffet – HBO Documentary http://beforeyouinvest.com/warren-buffet-hbo-documentary/ http://beforeyouinvest.com/warren-buffet-hbo-documentary/#comments Mon, 06 Feb 2017 13:06:42 +0000 http://beforeyouinvest.com/?p=4125 Becoming Warren Buffet. – The great HBO documentary about one of the greatest investor.    

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Becoming Warren Buffet. – The great HBO documentary about one of the greatest investor.

 

 

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6 Stocks to Buy in a Trump Presidency http://beforeyouinvest.com/6-stocks-buy-trump-presidency/ Fri, 02 Dec 2016 20:06:09 +0000 http://beforeyouinvest.com/?p=4104 Donald Trump will soon be the U.S. president, giving him vast power to affect the U.S. stock market and the global economy. A Trump presidency could be good for investors. Here are six stocks to look into buying during a Trump presidency, based on news of how he plans to proceed as president: U.S. Steel Corp. [...]

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Trump presidency

Donald Trump will soon be the U.S. president, giving him vast power to affect the U.S. stock market and the global economy. A Trump presidency could be good for investors.

Here are six stocks to look into buying during a Trump presidency, based on news of how he plans to proceed as president:

U.S. Steel Corp.

The Chinese dumping of steel on the U.S. steel market has hurt such manufacturers as U.S. Steel by lowering prices that American companies can’t match.

Trump has proposed large tariffs on China and other countries. A Trump presidency could increase steel prices in the U.S., helping U.S. Steel and other manufacturers.

Bank of America

The Federal Reserve has signaled that it plans to raise interest rates soon. A Trump presidency could lead to higher inflation and a growing federal deficit. With interest rates at historic lows, the Fed could look to other financial moves made by the new administration as reason to increase them for the next few years.

Bank of America and other U.S. banks would benefit by making more money on loans they make. Banks that are already holding billions of dollars in checking accounts that they don’t pay any interest on would make more money by a rise in interest rates.

General Dynamics Corp.

Pick any strong defense company, and you may see strong growth in its stock if a Trump presidency leads to a bigger military.

General Dynamics is diversified in aerospace, combat systems and information technology, and is a key supplier to the Navy.

Cemex SAB de CV

Headquartered in Mexico, Cemex may be a logical choice if the Trump presidency moves forward on his plan to build a wall along the border with Mexico.

Cemex is one of the top cement-producing companies in the world. If Mexico has to pay for the wall, as Trump has called for, then officials there may want to pick a local company.

Corrections Corp of America

A Trump presidency may start filling America’s prisons fast, and Corrections Corp is one of the biggest companies that builds federal prisons.

Illegal residents could be imprisoned before being sent back to their home country under a Trump presidency, and this company could benefit from it.

Consol Energy Inc.

If America goes back to digging more coal, as a Trump presidency plans, then Consol Energy could benefit largely.

The company is known for its coal mining processes that allow it to change production levels quickly. Energy policy changes under a Trump presidency could boost Consol Energy’s stock price.

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7 Ways to Spend Less and Enjoy Life More http://beforeyouinvest.com/7-ways-to-spend-less-and-enjoy-life-more/ Wed, 02 Nov 2016 15:31:07 +0000 http://beforeyouinvest.com/?p=4097 The holiday shopping season is approaching, which is good news for retailers. But not so good for consumers who overspend and end up with big credit card bills in January and would prefer to spend less. Buying gifts for people you love may make you happy, but there are ways to spend less money and [...]

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spend lessThe holiday shopping season is approaching, which is good news for retailers. But not so good for consumers who overspend and end up with big credit card bills in January and would prefer to spend less.

Buying gifts for people you love may make you happy, but there are ways to spend less money and still be happy during the holidays.

If you’re one of those people who buy a few things for yourself while out shopping for others, it may not lead to more enjoyment anyway. Researchers have found that investing in relationships and experiences “buys” more happiness than spending on material things.

If you want to spend less during the holidays and enjoy life more, here are seven tips from Pamela Yellen, a financial investigator and the author of “The Bank on Yourself Revolution: Fire Your Banker, Bypass Wall Street, and Take Control of Your Own Financial Future.”

1. Wants vs. Needs to Spend Less

“Those slick Madison Avenue types would have us believe that we ‘need’ lots of things, from the latest techno-gadget to that trendy new shoe,” Yellen says.

“They tell us that we’re not sexy/successful/cool without what they’re selling.…What do we really need? Stop and think about it and get clarity for yourself. And if you have children, teaching them the difference between needs and wants will empower them for life.”

2. Curb the Impulse, Break the Spell

“Next time you feel the urge to buy something you hadn’t planned to buy, simply clench your fist or flex your bicep. Voila! The spell is broken and you can actually think clearly again!”

3. Wrap Charge Cards and Spend Less

“Some financial advisors tell you to leave your cards at home to avoid temptation,” she says.

“I prefer to wrap my cards in my goals. Every time I take a card out, I see a picture or some words that represent a goal that’s important to me. I get the opportunity to stop and decide whether what I’m about to purchase is more important than that goal.

“If it is or it doesn’t undermine my goal, I might go ahead and buy it. If it isn’t, I get the satisfaction of knowing I’m a step closer to my goal because I chose to not purchase the item.”

4. Distinguish “Big Happy” from “Little Happy”

“The Big Happy for most of us is having memorable experiences and being with the people we love. That other stuff we chase? That’s usually Little Happy – fleeting and not very fulfilling.”

5. Be Consistently, Consciously Grateful

“When we practice gratitude, we feel ‘wealthier’ and more prosperous in all ways,” Yellen says.

“Our self-esteem is greater and we just generally feel happy and appreciative of many aspects of our lives. Because of this, we’re less likely to crave material goods to feed an emotional need. And, studies have shown that having a grateful attitude actually enhances our ability to make good decisions.”

6. Create Value Comparisons

“Rather than falling for some marketer’s value comparison, how about setting up your own? Put a price tag on some things you really enjoy and value.”

7. Know Your Spending Triggers

“Do you feel driven to buy extravagant gifts as soon as the mall’s Santa shows up or when holiday decorations pop up in the stores (earlier and earlier each year)? When you have a rough day at work, do you crave some retail therapy to feel better?

“When you’re out with old friends, do you order the most expensive item on the menu? Are you triggered to overspend in a bookstore, hardware store, or swap meet?”

“‘Know thyself’ – and especially know your spending triggers so you can outwit them.”

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How Earnings Income Gap Widens by Education Level http://beforeyouinvest.com/earnings-income-gap-widens-education-level/ http://beforeyouinvest.com/earnings-income-gap-widens-education-level/#comments Mon, 19 Sep 2016 17:31:24 +0000 http://beforeyouinvest.com/?p=4083 For anyone considering going to college who is blinded by the high costs, the light at the end of the tunnel after graduating with a bachelor’s degree and improving their education is pretty bright. College graduates are more likely to find jobs, make more money, and be in jobs that are unionized and offer retirement [...]

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education

For anyone considering going to college who is blinded by the high costs, the light at the end of the tunnel after graduating with a bachelor’s degree and improving their education is pretty bright.

College graduates are more likely to find jobs, make more money, and be in jobs that are unionized and offer retirement plans than workers with only high school diplomas, among other benefits.

Millennial college graduates (born after 1980) who usually worked full time in 2012 earned $45,500 per year, compared to others in their age group who graduated from high school and earned $28,000, according to a Pew Research Center analysis of U.S. Census Bureau data. Those with two-year degrees or some college earned $30,000.

The earnings gap adds up over a lifetime, with a bachelor’s degree worth $2.8 million on average, according to a report from the Georgetown University Center on Education and the Workforce. That’s 84 percent more in lifetime earnings than those with only a high school diploma.

Even within the same occupation, more education equates to more money. Truck drivers with less than a high school education make $1.3 million over a lifetime, the Georgetown study found, compared with $1.5 million for truck drivers with a high school diploma. Elementary and middle school teachers with a bachelor’s degree make $1.8 million over their working lives, compared to $2.2 million for those with a master’s degree.

High college loans

That extra money will be needed by college graduates to pay off the average student debt of $28,950 at graduation. That amount of debt is 56 percent higher than it was in 2004, according to a report by the Institute for College Access and Success.

The average cost of tuition and fees for the 2014-15 school year was $31,231 at private colleges, $9,139 for state residents at public colleges, and $22,958 for out-of-state residents at public universities, according to the College Board. That doesn’t include room and board, ranging from $9,804 at four-year public schools to $11,188 at private schools.

While college-educated workers can have more difficulty finding work today than earlier generations of young adults did, once they’re employed, their earnings are higher than other generations of college-educated adults, the Pew Research Center found.

More education helps in many ways

Here are some other ways that college grads fare better than those with a high school diploma, according to the Pew Research Center data:

Higher household income: Millennials in 2013 with a bachelor’s degree or more had a median adjusted household income of $89,079, about $50,000 more than the $39,842 for high school graduates.

Less poverty: In 2013, 6 percent of college-educated 25- to 32-year-olds were living in poverty, compared to 22 percent of those with a high school education.

Higher net worth: Wealth is a household’s nest egg or what it has been able to save over the years to help during unemployment or other adversity. It’s the value of what is owned minus what it owes. The median net worth of households headed by 25- to 32-year-olds with a bachelor’s degree was $26,058 in 2011, or eight times as much as the $3,137 of high school grads.

Less unemployment: In 2013, 12.2 percent of Millennials with only a high school education were looking for work, eight percentage points higher than the rate for college-educated Millennials.

The college grads also look for work for less time. The average unemployed college-educated Millennial looked for work for 27 weeks in 2013, four weeks less than those without a college degree.

Working full time: In 2013, 89 percent of employed college-educated Millennials worked full time o at least 35 hours per week, compared with 82 percent of high school grads.

Union jobs: Some 14 percent of college-educated Millennials worked in a unionized workplace in 2013, compared to 6 percent of high school grads.

More in retirement plans: Sixty-one percent of these young workers with a bachelor’s degree or better were offered a pension or retirement plan by their employer, compared to 36 percent for high school graduates.

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4 Smart Lessons I Learned in an Investment Club http://beforeyouinvest.com/4-smart-lessons-i-learned-in-an-investment-club/ Thu, 01 Sep 2016 12:37:24 +0000 http://beforeyouinvest.com/?p=4073 Years after my initial interest in the stock market in high school when I was assigned to follow some stocks for a few months to see how they performed, I took my next big step into learning about investing: I joined an investment club. Some people at work had started an investment club a few years earlier, [...]

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investment club

Years after my initial interest in the stock market in high school when I was assigned to follow some stocks for a few months to see how they performed, I took my next big step into learning about investing: I joined an investment club.

Some people at work had started an investment club a few years earlier, and invited me when an opening came up.

Like many types of clubs, our investment club was a way for about a dozen members to learn together about the stock market through education and pooling our investment dollars. I was a member for about three years before my learning curve with the group plateaued.

Here are some of the best financial lessons I learned from the investment club:

Learn before you invest

Investing in a stock can be a spur-of-the moment decision based on the news of the day. I’ve done that a few times, but for the most part, studying a company before investing in it has paid off better than not looking into it deeply and buying anyway.

Using analytical tools that are basic to investing, club members each month were responsible for researching a company and giving a report. With a table full of members asking you questions about past performance of the stock and the CEO’s background, among other things, it was enough encouragement to do your best and research it well.

Learning about a company before investing in it is a fundamental step, and the club help me learn the groundwork required.

What’s a P/E?

This can sound like a minor thing to long-term investors, but before I joined the investment club I didn’t know what a price-earnings ratio, or P/E, was.

I won’t go into all of the detail of what a P/E is here — I wrote an earlier article about it — but it’s a simple calculation that helps determine if a stock is worth its price.

What’s a good P/E? The lower the better, with the most recent S&P 500 ratio at 25.

When a stock price has increased, its price has risen faster than earnings and may not be so much of a good deal. As a frugal investor, I’m looking for good deals, and P/E helps me find them, which leads me to my next lesson.

Investment club = long term

I’ve had my share of short-term investments, and most of them don’t turn out so well.

One main goal of the club was to invest for the long term and not look for short-term gains. We were thinking five to 10 years out, not a few months, when picking stocks.

This helped me learn about dividend reinvestment plans, or DRIPs, where people can buy stock directly from a company without a stockbroker and have the dividends automatically reinvested in fractional shares.

DRIPs make it easy to be a long-term investor, and I contributed monthly to my DRIPs for years during and after I was a member of the investment club.

Only spend what you can afford to lose

This is another basic tenet of investing, and one I took seriously after joining the investment club.

I’ve never used money set aside for bills to invest in the stock market, treating it like I would a trip to a casino: Only spend what I can afford.

In other words, if it was money I didn’t mind losing, then it could be spent buying a stock.

I can remember at least two companies I’ve invested in going south, and it’s not a good feeling. Still, it was money I was prepared to lose, so the sting wasn’t so bad.

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5 Stocks to Encourage Kids to be Investors http://beforeyouinvest.com/5-stocks-encourage-kids-investors/ Wed, 24 Aug 2016 13:11:53 +0000 http://beforeyouinvest.com/?p=4068 Picking stocks probably isn’t something many kids would choose to spend their free time on. But for teenagers and even pre-teens, it can be an interesting entrance into the world of investing — especially if they’ve got a little money to invest in a dividend reinvestment plan to help show them the long-term consequences of buying [...]

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kids

Picking stocks probably isn’t something many kids would choose to spend their free time on.

But for teenagers and even pre-teens, it can be an interesting entrance into the world of investing — especially if they’ve got a little money to invest in a dividend reinvestment plan to help show them the long-term consequences of buying and holding stocks.

And that may be the best way to teach children about investing, by encouraging them to buy and hold stocks for the longterm so they can see how the stock prices (hopefully) grow over 15 years or more while measuring their risk capacity. It’s a way to teach them patience, if nothing else.

Stocks for kids

In picking the five stocks below that should get kids excited about learning about the stock market and becoming life-long investors, I tried to meet a few criteria:

  • The company should be suited to long-term investing of 15 years or more.
  • It shouldn’t be a fad business but have staying power.
  • A strong balance sheet is needed.
  • It has a record of innovation without taking on too much risk.
  • It’s an interesting company that kids will want to explore as a stock.

These characteristics can be difficult to meet for every buy-and-hold company, but should meet a majority of them to help your children learn what makes a good long-term stock.

Here are five stocks that I think can be a good start to getting kids interested in investing:

Walt Disney Co.

Disney (NYSE: DIS) is an entertainment and mass media giant that every child knows something about. They’ve likely seen a Disney movie, been to one of its theme parks, watch its TV channels or own clothes and toys with the company’s many characters on them.

There are all kinds of financial numbers that can be thrown at investors for any stock recommendation, but one that stands out for Disney is its 222 percent return over 10 years through Aug. 19 — double the broader market’s 108 percent return, according to The Motley Fool.

The stock is trading at 17.22 times earnings, the lowest price-to-earnings ratio since early 2013.

Apple

What child doesn’t own an Apple (NASDAQ: AAPL) product or have access to their parents’ iPhone, iPad, iPod, MacBook or other Apple product? It’s a company they probably use every day, and encouraging them to learn about the company’s stock is a smart next step.

With a P/E ratio of 12.73, the stock is a bargain and is good enough for long-term investor Warren Buffett to buy. Apple has low debt and a quarterly dividend that has grown by 50 percent since November 2012.

While the company has its share of growth problems and relies heavily on iPhone sales, it is always innovating.

Netflix

Of all of the streaming companies to choose from, Netflix (NASDAQ: NFLX) is the biggest and has been around the longest. Does that make it the best streaming business to invest in? Maybe not, if short-term gains are your goal.

But if you’re betting on a company that will be around in 15 years, I’d bet that Netflix will still be going strong long after your children graduate from college.

The company has adapted wisely since its inception, going from mailing DVDs to streaming video and being an industry leader in creating original shows.

Its growth is maturing. It ended the first quarter of 2016 with 81.5 million subscribers around the globe, more than double the 36.3 million it had three years ago. Netflix’s competition is increasing, though from past experience the company looks to be up to the task.

Tesla

I know, another tech-related stock. Tesla (NASDAQ: TSLA) is a company that’s built for the future and looks ahead as much as any stock recommended here.

It’s more than a car company. It builds itself as an energy-innovation company that will get the world off fossil fuels. Tesla has invested $5 billion in a factory to build better batteries, proving that it’s trying to make the world a better place. As a company for children to research and invest in, you couldn’t ask for much more.

Coca-Cola Co.

As a beverage giant, Coca-Cola (NYSE: KO) is hard to ignore. Chances are your kids have drank a Coke or two, or one of its products, and know the logo when they see it.

As a stock, Coca-Cola has a long dividend history and a good dividend yield. It’s a stable company that will be around forever.

If you’re looking to teach your kids the value of buy-and-hold stocks and long-term investing, this company may be one of the best ways to show them what success looks like over decades.

Disclaimer: I own Disney and Apple stocks, subscribe to Netflix and have had far too many Cokes. I own an electric car, though it’s not a Tesla.

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Tax Strategies for Small Businesses http://beforeyouinvest.com/tax-strategies-small-businesses/ Wed, 01 Jun 2016 12:25:19 +0000 http://beforeyouinvest.com/?p=4028 Small businesses have some tax advantages that individuals don’t, allowing some tax strategies and some hefty deductions that are unique to businesses. While you should talk to your accountant or tax preparer about tax strategies specific to your business, there are some tax strategies that small business owners can use to reduce their business income tax [...]

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tax strategiesSmall businesses have some tax advantages that individuals don’t, allowing some tax strategies and some hefty deductions that are unique to businesses.

While you should talk to your accountant or tax preparer about tax strategies specific to your business, there are some tax strategies that small business owners can use to reduce their business income tax bill.

Here are a few tax strategies for small businesses:

Buy a big, heavy vehicle

Section 179 of the U.S. Tax Code allows an instant depreciation deduction privilege of up to $25,000 of the cost of a new or used heavy SUV that’s placed into service before the end of your business tax year.

After that deduction, follow the “regular” tax depreciation rules to write off what’s left of the business portion of the heavy vehicle’s cost over six years.

To qualify, the “heavy” vehicle must have a manufacturer’s gross vehicle weight rating above 6,000 pounds, and must be used for more than half of the time for business. The weight rating can usually be found on a label on the inside edge of the driver’s side door at the hinge.

The maximum write-off is $3,460 for new light trucks and vans (or $11,460 if first-year bonus depreciation is restored) and $3,160 for new cars (or $11,160 if bonus depreciation is restored).

Again, tax law changes happen every year, so check with your tax preparer to be sure this deduction still applies.

Defer income, increase deductions

Your share of your business income is reported on your Form 1040 and is taxed at your personal rates. If you expect to be in the same or lower tax bracket, defer income into next year while accelerating deductible expenditures into this year.

The moves should at least postpone part of your tax bill from this year to next year.

However, if your business is doing extremely well, you may be pushed into a much higher tax bracket and may want to take the opposite approach.

Accelerate income this year, if you can, and postpone deductible expenditures until next year. This strategy will allow more income to be taxed at this year’s lower rate instead of the higher tax rate next year.

You can defer income by charging recurring expenses that you’d normally pay early next year on credit cards. The deductions can be claimed this year, while the credit card bills are paid next year.

Real property deductions

Section 179 also allows an deduction of up to $250,000 for expenditures on certain types of real property. These are: interiors of leased nonresidential buildings, restaurant buildings, and interiors of retail buildings.

Again, check with your tax preparer to ensure this deduction is still allowed.

Depreciation of new assets

A 50 percent first-year bonus depreciation for qualifying new equipment and software is allowed for businesses, on top of any allowable Section 179 deduction. This bonus depreciation was for items such as computer systems, software, machinery and office furniture.

Congress regularly allows business tax breaks to expire before extending them for a year or two. Chances are that some tax breaks that you may think have expired have been returned by Congress and can still help your business this year.

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Self-Directed IRAs for Real Estate Investors http://beforeyouinvest.com/self-directed-iras-real-estate-investors/ Fri, 27 May 2016 16:04:04 +0000 http://beforeyouinvest.com/?p=4023 In a real estate market where all-cash offers can win a bidding war for a house for sale, either from families or real estate investors, a self-directed IRA can be a way to win that war without pulling cash out of your pocket. Retirement account holders and wealthy foreign investors can often pay entirely in [...]

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real estate investorsIn a real estate market where all-cash offers can win a bidding war for a house for sale, either from families or real estate investors, a self-directed IRA can be a way to win that war without pulling cash out of your pocket.

Retirement account holders and wealthy foreign investors can often pay entirely in cash for a house in the U.S., beating out first-time home buyers who may have difficulty qualifying for a mortgage loan or other financing. For investors with an IRA, they can use that money to buy a home with a negotiating tactic that’s often successful: cash.

As an alternative to the stock market, income-producing real estate properties can provide long-term income and appreciation gains for real estate investors while allowing investors to continue earning tax-free IRA benefits in their retirement portfolio.

A self-directed IRA can be used to simply write a check from traditional IRA or Roth IRA funds to buy real estate in the United States or around the world. All of the income and gains associated with self-directed IRA investments grow tax-deferred.

Allowed by IRS

Self-directed IRAs, which are also called real estate IRAs with checkbook control, are allowed by the IRS for real estate and other investments tax-free without custodian consent. The IRS allows real estate to be held inside IRA retirement accounts. Investments with a real estate IRA are allowed under the Employee Retirement Income Security Act of 1974.

It allows the establishment of a limited liability company, or LLC, that is owned by the IRA owner in care of the Roth IRA custodian and is managed by the IRA holder or any third party.

As manager of the IRA LLC, the IRA owner will have control over IRA assets to make traditional as well as non-traditional investments, such as real estate.

With “checkbook control,” real estate investors can make investments quickly without having to wait for the custodian’s consent.

Along with not having to seek the consent of a custodian to make real estate investments with a real estate IRA LLC, investors won’t be subject to custodian account fees based on account value and per transaction.

Help for real estate investors

With this LLC set up, you can write a check or wire funds straight to your self-directed IRA LLC bank account to make the investment. This allows you to make quick real estate investments when the opportunity presents itself, a tactic that can come in handy when multiple offers are coming in quickly for a home you want to buy. Custodian delays could cause you to lose an investment opportunity.

Real estate that can be bought with a self-directed IRA LLC include residential or commercial property, raw land, foreclosure property, mortgage pools, deeds, tax liens, vacation homes, rental units, condos, farm land, industrial buildings, and foreign residential property.

A self-directed IRA can be used to pay a property with cash, but it can also be used as a non-recourse loan to pay for a real estate investment. A non-recourse loan is a laon secured by collateral that the borrower isn’t personally liable for. A recourse loan, which isn’t allowed when using IRA funds, is a loan where the borrower is personally liable.

If a non-recourse loan is used, the debt-financed portion of the investment will likely trigger a tax under the Unrelated Debt Financed Income rules.

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Spotting a Stock Market Bubble http://beforeyouinvest.com/spotting-stock-market-bubble/ Thu, 05 May 2016 17:49:40 +0000 http://beforeyouinvest.com/?p=4013 A stock market bubble where stock prices are much higher than their real value is a difficult thing to see when you’re in one. Definitions vary, but stock market and tech bubbles can happen when investors drive up stock prices well beyond their actual worth as determined by the performance of the companies. Investing bubbles look [...]

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stock market bubbleA stock market bubble where stock prices are much higher than their real value is a difficult thing to see when you’re in one.

Definitions vary, but stock market and tech bubbles can happen when investors drive up stock prices well beyond their actual worth as determined by the performance of the companies. Investing bubbles look as if they will rise forever, but they eventually pop because the high prices aren’t formed by anything substantial.

If you buy a high-flying stock as its price rises and don’t sell before the bubble bursts, you could lose a lot of money. Your capacity for risk can be tested quickly.

There are some things to look out for in determining if a stock market bubble is happening. Here are some:

Ping-pong table sales drop

The Wall Street Journal reports that ping-pong table vendors are selling fewer ping-pong tables in the Bay Area, where tech startups are popular. One business had a 50 percent drop in sales in the first quarter of 2016.

As big tech companies have struggled with layoffs, low revenue and lousy quarterly reports, they’ve stopped buying tables for their workers to play table tennis on.

This may be more of a tech bubble than an overall stock market bubble, though it could lead to a bigger bubble.

Fewer VC deals in stock market bubble

In another sign of a tech bubble, if not a stock market bubble, fewer venture capital deals are being made in Silicon Valley.

VC investment was down 30 percent from a recent spending high in the second quarter of 2015, according to the MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association.

Revenue, but no profit

As Dan Lyons writes in his excellent book “Disrupted” about the start-up bubble, businesses can report high profits for years but still not make a profit. By showing revenue growth each quarter, they can show VC firms and potential stock investors that they’re a growing company.

But that growth doesn’t mean much if they don’t make a profit, Lyons writes. Hubspot, Twitter and other tech companies do this regularly as a way to show investors they’re getting bigger.

Global markets crashing

There almost always seems to be at least one area of the world where the financial markets are in turmoil, which could be a sign of a stock market bubble in the United States.

From the financial troubles of Greece last summer to the latest collapse of the Chinese stock market, the sound of global markets crashing could be a warning sign of a stock market bubble.

If you really want to learn how stock market bubbles happen, read about historic stock market crashes and see how prices peak and implode. Incredibly high stock prices are just some of the most basic tipoffs.

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