Think you’re too old to get in on alternative investments? Think again May 22, 2009
Posted by reformedinvestor in : Money, Self Directed IRA Solo 401k , add a comment
Mature investors close to retirement age are likely kicking themselves wishing they had pulled their money out of the market while they had the chance.
But too often these investors were told to “stay the course” and that “the market will come back.” Truth be told, no one knows for sure what the market will do.
But we do know is that you still have time to recover your losses – as long as you don’t just sit back and “hope” the stock market will recover. You have to do something about it.
Real estate can be a wonderful option for someone nearing retirement. With depressed housing prices, you may be able to find a home that offers positive cash-flow so that it provides a healthy monthly income. When the market recovers, you can consider selling the property only if the numbers add up and you will benefit from appreciation. If not, you can continue to cash-flow the property and create income for yourself for a long time.
So the point is that you’re never too old to consider alternative investments. A diversified investor is a smart investor at any age.
Deciphering the Bank Stress Tests May 20, 2009
Posted by Jeff Nabers in : Money , add a commentHere are a couple highlights for a recent post over at Daily Reckoning regarding the bank stress test results.
- Banks need about $75 billion to reach “adequate capitalization”
- “Adequate capitalization” is when common equity equals 4%
- Common equity being at 4% means a debt-to-equity ratio of 25-to-1
- The current bank needs do not factor in the potential for bank assets to lose their value
- The current bank needs are based on a rosy worst case scenario of (more…)
How to break America’s 401(k) addiction May 19, 2009
Posted by reformedinvestor in : Money, Self Directed IRA Solo 401k , add a comment[Contributed by reformedinvestor]
This is my favorite excerpt taken from the interview between Steve Kroft of 60 Minutes and Brooks Hamilton, who Kroft interviewed in his expose on 401(k)s. Hamilton is an expert in designing retirement plans for large corporations.
“The fact is that the typical 401(k) investor is a financial novice. They don’t know a stock from a bond. And we give ‘em a list of 20 or 30 mutual funds with really, really powerful names, you know, they sound like, ‘Gee, that’s where I want to have my money,’” Hamilton said.
“What are the, generally, the quality of the mutual funds in 401(k) plans?” Kroft asked.
“Mediocre,” Hamilton replied. “I’m being real honest with you, with half the funds on the list really dogs, what people would characterize as dogs shouldn’t be on the list to start with.”
So many Americans believed that the 401(k) would be the sure-fire way to safely save for retirement. In fact, it has been reported that 401(k) plans that have become the primary source of retirement income for 60 million Americans. Companies would match our contributions making it irresistible to sock away money in these mutual funds. But the truth is, as exposed by 60 Minutes a few weeks ago, that companies turned to 401(k)s as a cheap alternative to offering costly pension plans. This decision created millions of new employee investors in Wall Street – creating a boom on Wall Street and putting trillions of dollars of investable cash into the hands of unsophisticated investors.
In the 60 Minutes piece, however, experts in the field say (more…)
Who will arrest the investment police? May 17, 2009
Posted by Jeff Nabers in : real estate, Self Directed IRA Solo 401k , add a comment
An unsurprising story surfaced a couple of days ago… SEC attorneys are under investigation for insider trading!
If you can’t truly value that exclamation point I just used, let me help you. The Securities & Exchange Commission (SEC) is a government organization that was formed to convince us that investing in the stock market was safe. Part of their role is to make sure people don’t use their non-public knowledge to make profitable investments in the stock market (yeah, right). This is called “insider trading”. In business, this is known as “doing business”. In real estate, non-public knowledge can turn a peon into a mogul overnight. But in the stock market it is a crime and we give the SEC billions of our dollars to make sure it doesn’t happen.
But, whoops, SEC attorneys are doing it themselves. And a lot. One of the two SEC attorneys currently under FBI investigation made 247 stock (more…)
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