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LLC Registration – Choosing a state

May 7, 2008 By Leave a Comment

For many small businesses forming an LLC in your home state is the simplest and most convenient option. An LLC that does business in a state other than where it was initially registered must register as a “foreign LLC” (foreign meaning from a different state, not a different country) with the state in which it conducts business.

When an LLC is registered with a state, a registered agent must be named. This is the person or corporation designated to accept official documents on behalf of the LLC. This person or corporation must reside in the state of formation. If you are registering an LLC in a state in which you don’t reside, you’ll need to choose a person or corporation residing in that state to serve as your registered agent. There are many companies who provide a registered agent service for a nominal fee.

There are advantages to choosing certain states in which to initially register your LLC. Many large corporations choose to form an LLC in Delaware because [Read more...]

Filed Under: Self Directed IRA Solo 401k Tagged With: 401k, delaware, foreign, ira, llc, nevada, register, registration, self directed, state, wyoming

Consumer confidence falling & the $600 checks to save the day

May 5, 2008 By Leave a Comment

Did you get your $600 check yet? What will you do with it? Surveys are saying that most Americans will use their “Economic Stimulus” check to deal with gas, food, and catching up on bills. This doesn’t stimulate the economy.

Consumer spending stimulates the economy. In other words, the Department of Treasury sent out checks to us all totaling $150 billion in hopes that we would buy clothes, jewelry, and electronics. Let’s take a step back for a moment and assess how our system works:

Two thirds of our nation’s economic activity is coming from people spending money. When our economy is “going good” it is because people are spending money – often more than they make or have. When our economy is “doing badly” it is because people are saving money or living within their means.

Finances 101

This is America and everyone wants to be rich. How does one become rich?

Make more money than you spend.

Or spend less than you make… in case that hits closer to home for you.

A person following those rules is becoming wealthy, while a person who practices opposite rules is becoming poorer. Here’s where things start to look funny. Our economic system is booming when people are becoming [Read more...]

Filed Under: Money, Personal Enjoyment, real estate, Self Directed IRA Solo 401k Tagged With: 401k, consumer, cycle, economic, economy, education, finance, invest, investing, ira, poor, retirement, rich, self directed, spending, stimulus, wealth, wealthy

How come I've been losing 4% per year over the long run in a stock market that returns 10% per year?

May 2, 2008 By Leave a Comment

One investment philosophy that has grown in popularity is “Because most mutual funds can’t even outperform stock indices, just invest in index funds.” This idea builds on the assumption that “over the long haul, the stock market goes up 10% each year.” Guess what…

The stock market does not go up 10% per year in the long run

  • The math is just plain wrong. Lying averages tell us if you average the annual returns of the stock market it will equal its performance… but, as the name implies, it is not true. Lying averages tell you that if you are aiming for a 10% average return, and you have a 20% loss one year, it will take a 30% gain the next year to get back on track. Truthful math will tell you it will take a 50% gain just to get back on track for a 10% average annual return. Think about that in light of the stock market activity in 2000, 2002, and 2007.
  • Any returns less than inflation is truly a loss. With inflation currently at 11.58%, you’ll need a 21.58% annual return to grow your wealth at 10% per year.

Just look at the last 10 years of data…

On the chart above, the red line reflects [Read more...]

Filed Under: Money Tagged With: 401k, average return, bond, charts, dollar, fund, index fund, inflation, invest, ira, mutual fund, peformance, real estate, s&p 500, self directed, stock market, stocks

Grading Promoters – Fairpointe… B

May 1, 2008 By Leave a Comment

I ran across a site advertised on Google today – www.coloradodeedsoftrust.com – run by a company called Fairpointe. This post is just my initial opinion from reviewing their web site. I haven’t spoken with or met these people or anyone who has done business with them. Once I have I will post an update.

Fairpointe offers self directed IRA investors the ability to invest in deeds of trust for properties in Colorado. A deed of trust is essentially a mortgage. Fairpointe’s site says in one place that the minimum investment amount is $25,000, while in another place they claim it’s $50,000. Either way, I immediately can respect what they are promoting more than those who promote putting all your retirement funds into one or two pieces of real estate through direct ownership. They also seem to allow, possibly encourage, forming an investment group so that each investor can invest a smaller amount which allows for diversification. I like the sound of that.

In the past, I’ve run across self directed IRA/401k promoters who really bash the stock market. Usually it’s in a very emotional way that just comes across as a cheap shot, and those people lose credibility in my book. Now, Fairpointe on the other hand does oppose the stock market, but in an interesting way. They point out what I believe to be the single misunderstood fact about numbers, math, money and investing. In fact, I think that the securities industry would not exist if everyone understood this concept:

Lying averages

Ever heard the phrase “numbers don’t lie”? Oh, yes they do. If 4 different investment portfolios each start at the same time, start with the same amount of principal, experience different gains/losses each year, but have the same average return during a period of time, would they perform the same during that period of time? No.

While many people believe [Read more...]

Filed Under: Self Directed IRA Solo 401k Tagged With: 401k, average, deed of trust, fairpointe, history, investing, ira, losses, mortgage, returns, self directed, stock market
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