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Self Directed Investor Talk: Alternative Asset Investing through Self-Directed IRA's & Solo 401k's

Build Real Wealth Through Real Estate In Self-Directed IRA's and 401(k)'s

Do you INSTINCTIVELY KNOW that Wall Street doesn't have your best interests at heart, and that there's a better way to grow and protect your money to build wealth for generations? Then this is the alternative investments... More
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2019-6-13

Self-Directed IRA vs Self-Directed 401(k), Part 2 | SDITalk.com/314

Ep. 314

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 – for which you can find all of the links and resources at SDITalk.com/314 – is the second installment of our “Choosing the Right Tool” series, where we’re 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 won’t rehash those other than to say that you MUST have one or both of earned income from a job/employer and/or you’ve got to have money in an existing IRA or 401(k) to transfer into the account. In other words, you’ve got to have an allowable way to get money into the account. The details are in installment #1 of this series, to which I’ve linked on today’s show page at SDITalk.com/314.


If you’ve been a long time listener of SDI Talk, first of all – THANK YOU for being a long time listener! – 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 I’ll share with you now, if you’re investing in non-Wall Street assets, you should have a bias towards using a 401(k) rather than an IRA if that’s an option for you.


Now way back in the beginning of this show, Episode #3 – literally five years ago – 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. You’d do well to check that out, and I’ve linked to it from today’s show page at SDITalk.com/314.


But a quick recap of just SOME of the reasons – there are far more than just 7 – 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.     401ks’ offer SUBSTANTIALLY better protection against creditors and lawsuits than IRA’s

4.     Checkbook-like control of your investment capital is built into properly structured 401(k)’s. For IRA’s, on the other hand, that level of control is expensive, tedious and risky to establish.

5.     If you’re using an IRA and you break the IRS rules about handling your account, you’re out of luck. It’s going to be very painful and there’s nothing you can do to fix it. Not so with 401k’s, that provide a clear path to correcting errors.

6.     You can’t BORROW money from your own IRA, but you can from your own 401k!

7.     A 401k includes BOTH Traditional and Roth subaccounts… 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 – the one about committing prohibited transactions – 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 both… it’s the question of qualification that’s our first determining factor, and that leads to the one, and I believe only, way in which IRA’s are superior to 401k’s.


That way is that nearly anybody who has a job or an existing retirement account can qualify to set up a self-directed IRA. There’s just not a lot required beyond having a source of earned income.


Not so with 401(k)’s. The requirements aren’t huge, but they’re 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 doesn’t have to be a lot of income, and it doesn’t 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 you’ll 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 that’s it. You’ve got to own a business that makes money, even if it isn’t profitable. That’s 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 – which is linked on today’s show page at SDITalk.com/314 – for more information that compares 401k’s to IRA’s.


Here’s the good news and the bad news about 401k’s:  They can be relatively simple and inexpensive to set up, but they are NOT all the same… and sometimes, the differences are REALLY severe. I’ll do an episode sometime in the future to help you see how stark those differences can be. But in the mean time, if you’d 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 feedback@sditalk.com and I’ll be happy to get you connected.


Now, having clarified the general superiority of 401k’s over IRA’s, 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! We’ll dig into that question in the NEXT episode of our Making The Right Choice series here on SDI Talk, so stay tuned!


My friends… invest wisely today, and live well forever!

2019-6-13

Self-Directed IRA vs Self-Directed 401(k), Part 2 | SDITalk.com/314

Ep. 314

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.


----


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 – for which you can find all of the links and resources at SDITalk.com/314 – is the second installment of our “Choosing the Right Tool” series, where we’re 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 won’t rehash those other than to say that you MUST have one or both of earned income from a job/employer and/or you’ve got to have money in an existing IRA or 401(k) to transfer into the account. In other words, you’ve got to have an allowable way to get money into the account. The details are in installment #1 of this series, to which I’ve linked on today’s show page at SDITalk.com/314.


If you’ve been a long time listener of SDI Talk, first of all – THANK YOU for being a long time listener! – 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 I’ll share with you now, if you’re investing in non-Wall Street assets, you should have a bias towards using a 401(k) rather than an IRA if that’s an option for you.


Now way back in the beginning of this show, Episode #3 – literally five years ago – 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. You’d do well to check that out, and I’ve linked to it from today’s show page at SDITalk.com/314.


But a quick recap of just SOME of the reasons – there are far more than just 7 – 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.     401ks’ offer SUBSTANTIALLY better protection against creditors and lawsuits than IRA’s

4.     Checkbook-like control of your investment capital is built into properly structured 401(k)’s. For IRA’s, on the other hand, that level of control is expensive, tedious and risky to establish.

5.     If you’re using an IRA and you break the IRS rules about handling your account, you’re out of luck. It’s going to be very painful and there’s nothing you can do to fix it. Not so with 401k’s, that provide a clear path to correcting errors.

6.     You can’t BORROW money from your own IRA, but you can from your own 401k!

7.     A 401k includes BOTH Traditional and Roth subaccounts… 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 – the one about committing prohibited transactions – 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 both… it’s the question of qualification that’s our first determining factor, and that leads to the one, and I believe only, way in which IRA’s are superior to 401k’s.


That way is that nearly anybody who has a job or an existing retirement account can qualify to set up a self-directed IRA. There’s just not a lot required beyond having a source of earned income.


Not so with 401(k)’s. The requirements aren’t huge, but they’re 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 doesn’t have to be a lot of income, and it doesn’t 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 you’ll 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 that’s it. You’ve got to own a business that makes money, even if it isn’t profitable. That’s 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 – which is linked on today’s show page at SDITalk.com/314 – for more information that compares 401k’s to IRA’s.


Here’s the good news and the bad news about 401k’s:  They can be relatively simple and inexpensive to set up, but they are NOT all the same… and sometimes, the differences are REALLY severe. I’ll do an episode sometime in the future to help you see how stark those differences can be. But in the mean time, if you’d 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 feedback@sditalk.com and I’ll be happy to get you connected.


Now, having clarified the general superiority of 401k’s over IRA’s, 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! We’ll dig into that question in the NEXT episode of our Making The Right Choice series here on SDI Talk, so stay tuned!


My friends… invest wisely today, and live well forever!

2019-6-12

Mark Cuban said WHAT? | SDITalk.com/313

Ep. 313

Mark Cuban said WHAT? Political correctness rears its ugly, stupid head again. Today, we take a brief break from our “Choosing the Right Tool” series to address some utterly foolish comments made by a normally reasonable and thoughtful person. I’m 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.


Today’s 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). We’re 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 I’d address with you.


Mark Cuban – the businessman who famously became a billionaire when he sold Broadcast.com to Yahoo in 1999 – 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 Cuban’s thinking may now be muddled and more politically-oriented than business-oriented.


Case in point: A new article on Yahoo Finance called “Mark Cuban describes the best way to reduce wealth inequality”. I’ve linked to it today from SDITalk.com/313, be sure to check it out.


Now right away, whenever you see the words “wealth inequality”, 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 “wealth inequality” seem to mean that some people have more wealth than some other people. Yep, that’s 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. That’s what “wealth inequality” really is: The scorecard of capitalism and the financial representation of dogged determination.


That’s capitalism at the core, and capitalism is a good thing. My model of wealth building and your model of wealth building – self-directed investing – depend on capitalism. Always remember that.


Now “wealth inequality” 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 can’t make that dollar… well, in that case, the scarce supply of wealth might change the game. But that’s 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, it’s likely that every one of them have IMPROVED your odds in some way.


That’s why Cuban’s promotion of this issue is disappointing to me, and also quite illogical. In the Yahoo Finance interview, he’s 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 – the provision whereby a cap is placed on the amount of federal income tax deductions one can take for the STATE and LOCAL taxes they’ve already paid – 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 here’s the problem: It’s 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 doesn’t 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 I’m 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 you’re like me, you’re a self-directed investor and you’ve taken Mark Cuban’s advice to be the kind of advice which is inherently always worth considering seriously, well… maybe it’s 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, you’re not a Republican and you’re not a Democrat. You’ve got expenses to cover and bills to pay… and nothing said by a politician or aspiring politician will help you with that.


My friends, invest wisely today and live well forever.

2019-6-11

What's Best For You: Self-Directed IRA or Solo 401(k)? | SDITalk.com/312

Ep. 312

What’s better for you: A self-directed IRA or a solo 401(k)? This is a critical and distinctly untrivial decision… particularly if you’re investing in real estate, syndications or any type of complex transactions. I’m Bryan Ellis. I’ll 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 “Choosing The Right Tool” Series wherein you’ll 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 today’s show, feel free to visit SDITalk.com/312 and you’ll find it all there, available for you to freely enjoy with my complements.


Before we jump in today, I have a quick announcement that’s very exciting! Next month, July of 2019, will see the publication of Issue #1 of a brand new magazine that’s being published by yours truly. It’s called Self-Directed Investor Magazine and if you enjoy this show – and come on… come on… you know you do! – hehehe if you enjoy the Self-Directed Investor Talk podcast, you’re 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 didn’t get that job because we’re married. She’s 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 it’s subscribership of over 600,000 investors worldwide. Point is: Carole is a highly-regarded professional in the sphere of magazine editorial work and there’s literally no one I’d hire instead of her. I’m genuinely honored she’s decided to do this, and I know you’re going to enjoy the fruit of her effort too.


And oh… by the way… would you like a free subscription to Self-Directed Investor Magazine? I mean… totally free? Well, I’ll tell you how to do that momentarily. But first:


So which is right for you: A self-directed IRA or solo 401(k)? That’s a great and very important question, as you’ll begin to truly understand forthwith.


First, let’s define exactly what I mean. When I say “self-directed IRA” or “solo 401(k)” or even the more generic “self-directed retirement account”, I’m referring generically – unless I say otherwise – 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 “captive” retirement account. 

Captive accounts are the ones provided by your bank or your company’s 401(k) plan or your stock brokerage company.  It’s not necessarily easy to know, just based on the name of the account, whether you’re using a “captive” account or a “self-directed” account because a lot of the companies that provide captive accounts still called them “self-directed” or something similar to that. 


So if you need to know which type you’re currently using, here’s 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 “yes”, you’ve got a self-directed account. If the answer is “no”, then you have a captive account. Easy-peasy.


With that foundational question out of the way, we’ll return to the question of whether a “self-directed IRA” or a “solo 401(k)” is the better tool for you. Now, you might notice the bias from which I’m working, that being that you should definitely be using one or the other of those types of self-directed accounts.


I’d like to disabuse you of such thinking right now. In fact, not everyone needs a self-directed account. They really don’t. And if they don’t actually need these accounts, they shouldn’t 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 there’s no real need for you to have a self-directed IRA or solo 401(k) at all. You’re 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 “earned income” 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 let’s 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, it’s quite likely you could simply transfer the money in your existing accounts – which are probably with “captive” account institutions like your bank or stock brokerage – over to a “self-directed” account so you have the ability to invest that money any way you want.


So what we have so far is: If you don’t plan to invest outside the realm of publicly-traded securities, then you don’t 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 we’re out of time for today, so when we resume tomorrow, having this well-established foundation, we’ll dig deep into the question of which type of self-directed account – IRA or 401(k) – is the superior choice for YOU and YOUR needs.


Hey my friends if you have any questions you’d like for me to address, be sure to send them to feedback@SDITalk.com and also – about getting a free subscription to the magazine – join me for tomorrow’s episode #313 and I’ll tell you how to do that then.


In the mean time: Invest wisely today and live well forever!

2019-6-10

YES! a RISK-FREE $100,000+ Bump To Your Retirement Savings? | SDITalk.com/311

Ep. 311

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. I’m 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 #311… so when you get the itch to hear this show again or to review any of the resources I refer to in today’s episode, remember that that’s available to you at no cost by visiting SDITalk.com/311.


So let’s do this.


Ok, I’ve got to clearly disclose something to you… I’m still doing my research into what I’m about to share with you. I’ll have some excellent additional clarity on this within 2 weeks, and if you’d like to find out what I determine as a final matter, I’ll tell you how to get that info in just a minute.


So the premise today is this: I’m 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, doesn’t it? Maybe it is… I’ll know within 2 weeks… but I have great reason to think this is going to work out.


So let’s set the stage here.


One of the most interesting investment strategies I’ve ever heard of is called “viatical settlements”. 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 you’re investing in viatical settlements, then the amount you’ll offer for that policy is based entirely on how soon you’ll 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 you’ll have to pay $950,000 for the policy, because you won’t 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 that’s what a viatical settlement is, and it’s 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 me… he’s eclectic, he’s brilliant, and he’s definitely among the most generous people I’ve ever encountered. He’s 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 settlements… but as a seller, not a buyer!


In other words, what he’d 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 him… 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 friends… here’s where my research is still ongoing, so don’t take what I’m about to tell you as absolute gospel. Rather, I’m telling you about the research I’m doing. But here’s 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 won’t work for self-directed IRA’s because they can’t 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 life… 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, folks… that could be HUGE… really huge.


Now my friends, let me remind you: I’m still doing the research to confirm whether the fact is as good as the theory on this, including whatever tax ramifications may exist. I’ll know soon and will be happy to update you soon as I know. If you’d 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 feedback@sditalk.com and just let me know you’d like for me to update you when I get the info and I’ll be happy to do it. Again, just drop an email to me at feedback@sditalk.com and I’ll update you within a couple weeks when I have final information.


My friends, I hope you’ve enjoyed this excursion into some rather creative investment thinking and remember this: Invest wisely today, and live well forever.

2019-6-7

The DANGEROUS ASSUMPTIONS You're Making In Your Investing | SDITalk.com/310

Ep. 310

What are the big assumptions you’re making in your investment decisions? Can you list them? Is there any chance they’re WRONG? I’m Bryan Ellis. We’ll 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, you’re welcomed to visit today’s show page to get a transcript and links and resources that are relevant to today’s discussion. The address for the episode #310 show page is https://SDITalk.com/310


So the big question today: What are the big assumptions you’re using as a basis for your investment decisions? More importantly, is there a chance any of them are wrong?


That’s a big, important question. Here’s some context for why I ask it:


I’m something of a science geek. I routinely and very happily spend a relatively large amount of time learning what’s going on in the world of scientific research. One of the geekiest things that I do – and that I really love to do – is to watch formal debates that feature scientists and philosophers duking it out intellectually to see where everyone’s ideas fit in the grand scheme of things.


And do you know what kind of evidence I’m seeing a LOT in the last 3 years… I mean, a LOT of it? And as I answer that question, remember that the topic of today’s show is a look at the big assumptions you’re making in your portfolio, and whether they could possibly be WRONG.


So here’s what I’m seeing a lot of: I’m 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 1800’s. I mean, legitimate, top-tier people like the famed synthetic organic chemist Dr. James Tour at Rice University. There’s 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 you’d 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, you’d be utterly blown away.


Now look, this isn’t a discussion about Darwinian evolution. Unless I have the pleasure of meeting you in person and you’d like to discuss this, then right now I don’t 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 can’t either… and yet, whatever your position on the matter, any objective look at that theory suggests there’s a real chance that, after all of this time, the entire theory is just a crumbling house of cards. We don’t know that yet, of course, but it surely looks that way.


So let’s shift that line of thinking over to our investments. Ask yourself: What are the core, operating assumptions you’re making each and every time you make an investment decision? The assumptions that are so deep that you don’t even think about them consciously?


I’m thinking about this for myself, and some of them are:


·       Paying less tax is better than paying more tax

·       Making more profit is better than making less profit

·       Only take calculated risks

·       Physical assets are more secure than paper assets

·       Etc…


Now having thought about this for a bit of time, I’m coming up with a lot of fundamental assumptions that I’m making, far more than the few I’ve mentioned here. And here’s how this becomes interesting:


If considering each and every one of my fundamental assumptions, I then ask myself these questions:


·       Is this absolutely true?

·       Is this absolutely false?

·       Is this relatively true or relatively false, depending on the circumstances?

·       Is there a better assumption that I could adopt?


This has been enlightening for me, my friends, for this reason: I’ve 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 C’s: 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 that’s true only in an environment where it’s 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 I’ve learned a lot about myself and my assumptions I preparing for this episode… and where those assumptions may not be serving me well. Let’s you and I do our best to see to it that the only things that are crumbling are faltering scientific theories rather than our life’s savings.


My friends, invest wisely today, and live well forever.

2019-6-6

3 Reasons To Dump Stocks: Facebook, Amazon & Google | SDITalk.com/309

Ep. 309

For the longest time, the big boys of Silicon Valley – Facebook, Amazon and Google – were all the reason you needed to be invested in stocks. Now, they’re the best reason to get out. I’m Bryan Ellis. I’ll 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 today’s special edition of the SHOW OF RECORD for savvy self-directed investors like you.


This is episode #309. That means you can find today’s 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, there’s 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 we’re 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 stronger… and frankly, this one may just be the thing to motivate SOME OF YOU – and you know who you are – to begin diversifying some of your assets AWAY from Wall Street and into alternatives like real estate or private companies or… 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, you’d not be unreasonable to make that guess, but you’d 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 “bipartisan” seems an impossibility, it appears there’s 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? They’re going to feel some real heat, and with good reason.


And while I certainly have an opinion on whether regulator scrutiny is called for, that’s not relevant to the bigger point today, which is this:

Anti-trust actions – which appears to be the path that Google will face, and maybe Amazon and Facebook too – 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 90’s, 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 wanted…


…until the FTC took an interest in a serious way. When Microsoft’s anti-trust trial was done, restrictions so severe were placed on the software giant that its stock would flounder for year after year… and it would take until 2016 for Microsoft’s 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 that’s 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 it’s 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 Microsoft’s 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, it’s like déjà vu all over again… 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 90’s and early 2000’s 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 and… APPLE. That’s right, folks… Apple is under the microscope, too.


Why do I share this with you?


Well, I don’t want you to lose your money, folks. And history tells us this could be a risky time for the market.


What should you do? That’s 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 stocks… just leave your money invested as is… 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, you’ll be ready to do that at a moment’s notice.


And, of course, if you need any help with that, reach out and I’ll be glad to help. You can reach me at feedback@sditalk.com. I’ll be happy to give you some good, unbiased advice since I’m not an IRA or 401(k) company… I just want you to be set up for success.


My friends, invest wisely today and live well forever!

2019-6-5

The "HOTTEST" (Frozen?!) Sector of Real Estate Today Is... | SDITalk.com/308

Ep. 308

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 company’s chart looks. I’m Bryan Ellis. I’ll 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 today’s 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.

Let’s jump right in, shall we?


Back in January of 2018, an Atlanta-based company began went public on the New York Stock Exchange. There wasn’t 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 company’s stock went on a tear that continues to this day. Now trading in the low $30’s range – nearly twice it’s IPO level of just 18 months ago – this stock is turning some heads.


Now if you’re asking, “why, 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?”… Well, dear listeners, I shall endeavor to answer you plainly now.


So what is the company to which I refer? This isn’t 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, it’s 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 warehousing… the kind of commercial space required primary by food delivery companies.


I learned about this on an unusual source. Every now and again – and with decreasing frequency, frankly – the people over at CNBC push past their political agenda and cover actual financial news. This is one of those days, as there’s an interesting article on their website about the very topic of our discussion. It’s linked on today’s show page at SDITalk.com/308.


So the rationale being given for a glowing analysis of this sector is simple: There’s 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 one’s portfolio. And should you deem the business of frigid commercial space to be worthy of your investment capital – and in particular your retirement savings – what are you to do?


One alternative – likely the simplest – is to direct your stock broker to buy shares of AmeriCold. I’m not recommending for or against that. What we know is that so far the stock has done very well, and that’s 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 course… but is a very legitimate option which should not be ignored.


What’s best for you? That’s a decision only you can make, with appropriate input from your advisors, of course. But here’s 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 – whether in cold storage facilities or anything else –  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 IRA’s or 401(k)’s, don’t 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 you’re 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 bryan@sditalk.com. I’ll be happy to help you.


My friends, invest wisely today and live well forever!