Could We End The Fed? June 14, 2009
Posted by Jeff Nabers in : Money , add a comment
The U.S. House is going to debate the “Audit The Fed” bill. I don’t pay close attention to what’s being debated and passed on the floor of the Senate of House of Representatives because what’s usually written up, sponsored, and voted on isn’t even read by our Congressmen.
This Audit the Fed bill is a different story. It’s sponsored by a Congressman who some call 
(more…)
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…)
Warning: Don't let administrators act as custodian – Part 3 January 15, 2009
Posted by Jeff Nabers in : Self Directed IRA Solo 401k , add a comment
*** This is Part 3 of a series about the dangers of letting an administrator act as custodian. Make sure you read Part 1 and Part 2 first to make sense of this post. ***
The illegitimate custodian test
Ask “Who should the check be payable to for the rollover contribution or transfer?”
Ask “If my IRA buys real estate and rents it out, to whom should the tenant make the rent checks payable?”
Ask “If my IRA owns real estate that needs repairs, who issues and signs the check to the repairmen?”
These questions will tell you who is actually serving as custodian. For instance, if you live in TX and unregulated company Dotrust is marketing its self-directed IRA services to you, the answer to one or more of the questions above will probably be something like Dotrust of Texas, Inc. If this is the case, ask to see its bank or trust charter – if it is an illegitimate custodian it won’t have one, and it will insist that another bank is technically the custodian. It not only matters who’s the custodian on the paperwork is; but it also matters who is acting as custodian as uncovered by the answers to the 3 questions above.
Why would somebody operate an illegitimate custodian company?
First of all, if it’s a franchise operation, the franchisee might not even know that he or she is part of an illegitimate IRA custodian scheme. Secondly, there can be a lot of profit to be made in an illegitimate IRA custodian scheme. The company can earn interest off of your IRA funds, and it may pass only some (or even none) of that interest earned on to you. It may also be able to earn higher interest rates when it collectively has custody of hundreds of millions of dollars in funds.
Surprised?
You may be thinking “This sounds like a company I’ve run into. But it promotes and and advertises and has been in the business for decades… it can’t be illegitimate, can it????”
Many high-profile schemes have been shut down. The private annuity trust scheme was promoted for over a decade before the IRS shut it down. Additionally, being in business for decades doesn’t guarantee that business is legitimate. Look at Bernie Madoff.
Madoff may be a harsh comparison. Those involved in an illegitimate IRA custodian scheme may not be knowingly harming anyone. They may even be attorneys or CPAs. They may believe they’ve merely created a loophole for themselves with the “stepped transaction” arrangement. They may be good people. But the bottom line is that there are significant risks you take in using their services, and you will pay the consequences if uncovered by the authorities. In my opinion, it never makes sense to use an illegitimate custodian because there are dozens of regulated/legitimate self-directed IRA custodians out there. There should be a balance between risk and reward. There is significant risk of using an unregulated/illegitimate custodian, and it offers no unique reward that isn’t offered by other self-directed IRA custodians.
Confused? If you have a self-directed IRA or are thinking of opening one at a custodian company, perform the illegitimate custodian test as described above.
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Warning: Don't let administrators act as custodian – Part 2 January 13, 2009
Posted by Jeff Nabers in : Self Directed IRA Solo 401k , add a comment
*** This is Part 2 of a series about the dangers of letting an administrator act as custodian. Make sure you read Part 1 first to make sense of this post. ***
Signs that your custodian may not really be a custodian
- They sometimes call themselves an administrator. “Administrator” is an accurate label for any company who provides record keeping services. Being an “administrator” doesn’t require any regulation. These types of companies may expand their services to include asset custody without actually registering as a bank or trust company.
- Their name contains the word “trust” attached to other letters or words. A legitimate custodian usually has the word “bank” or “trust” as a separate word included in its name. In most states, the word “trust” is a restricted word for naming companies – just like the word “bank”. This means that you can’t start a company called “ABC Bank” unless it’s registered as a bank. You also can’t start a company called “XYZ Trust Company” without being a registered trust company. An illegitimate custodian might get around this by calling themselves Trustus rather than Trust Us, Dotrust rather than Do Trust, or Safetrust rather than Safe Trust. You see, if trust is attached to another word instead of used as a separate word, then it sneakily gets around the naming restrictions.
- They have dozens of offices all around the country. Expanding to dozens of cities across the country can (more…)
I.O.U.S.A viewing this weekend on CNN January 9, 2009
Posted by Jeff Nabers in : Health, Money, Personal Enjoyment, Personal Productivity, Self Directed IRA Solo 401k, real estate , add a comment
CNN to Broadcast I.O.U.S.A. | Obama Foresees Trillion-Dollar
Deficits |
A Bipartisan Plea for Fiscal Responsibility | The Government We
Deserve
CNN to Broadcast I.O.U.S.A.
The public has spoken, and we’ve listened. In response to demand
for information about our country’s financial challenges, CNN/U.S.
will air the broadcast premiere of the acclaimed documentary
I.O.U.S.A. on on Saturday, January 10 at 2:00 p.m. EST and on
Sunday, January 11 at 3:00 p.m. EST. Accompanying the documentary
will be an unscripted panel discussion with policy leaders about
various economic solutions currently under consideration.
This exclusive televised event will air only on CNN, and will be
hosted by Ali Velshi and Christine Romans, co-anchors of CNN’s
Your $$$$$, the network’s weekend business roundtable program.
Throughout I.O.U.S.A.’s broadcast premiere, Velshi and Romans will
engage a distinguished group of panelists, including Pete
Peterson, Chairman of the Peter G. Peterson Foundation and former
U.S. Commerce Secretary; Dave Walker, President and CEO of the
Peter G. Peterson Foundation and former U.S. Comptroller General;
Alice Rivlin, noted economist and former Director of the Office of
Management and Budget; and Bill Bradley, a Managing Director of
Allen & Company and former U.S. Senator and Democratic
presidential candidate, in discussions about issues raised in the
film and their ties to current economic events.
Learn more about the film at www.IOUSAtheMovie.com. And be sure to
spread the word about the U.S. broadcast premiere!
Obama Foresees Trillion-Dollar Deficits
CNNMoney.com reported on Tuesday that when President-elect Barack
Obama takes office on January 20, he’ll inherit an economy deeper
in debt than ever.
Obama commented on the unprecedented deficit, saying, (more…)
Warning: Don't let administrators act as custodian January 7, 2009
Posted by Jeff Nabers in : Self Directed IRA Solo 401k , add a comment
To have a self-directed IRA, unlike a Solo 401k, you must have a self-directed IRA custodian… and you should stay away from unregulated companies masquerading as a custodian. A self-directed IRA custodian is one that will have less investment restrictions than the more common tradition stocks/bonds/funds brokerage-type custodian, and they usually allow investment into real estate, private companies, and other alternative assets.
An IRA is technically a trust, and a custodian is basically a trustee who performs fewer duties than a trustee usually would. As the name suggests, the sole duty is custody-holding assets and/or property on behalf of the trust.
The Internal Revenue Code says that the IRA custodian role can only be served by:
- A bank
- A trust company (this is the most common type of company to serve as self directed IRA custodian)
- A company specially & specifically approved by the IRS (this is very rare)
So, essentially, in the self directed IRA market, most custodians are chartered as (more…)
Meet The Fed November 23, 2008
Posted by Jeff Nabers in : Money , add a commentI ran across this video recently. There are a lot of videos about the Federal Reserve, but this one is rather interesting because it contains a interview footage with their Corporate Communicaitons Officer. This isn’t some conspiracy theorist’s take on the Fed, it’s the Fed’s take on itself. You’ll probably be surprised from some of the information.
FYI – The interview itself starts at 3:39 in the video.
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CPI Explained – Part 2 – Substitution November 5, 2008
Posted by Jeff Nabers in : Money, Personal Enjoyment , add a comment
This picks up where a previous post left off. You may want to read that post first in order for this one make sense.
Looking at the picture above, I can only imagine that this is the way that the following idea was made into government policy. The second major way BLS’s CPI calculation policies were altered is through the concept of subsitution. In brief, this concept argues that as the price of an item rises, consumers start buying cheaper alternatives.
Consumer substitution is absolutely true. It’s a fact; we all do it. It’s a sign of inflation. We know there is significant inflation when prices of things we buy go up in price. Everything doesn’t go up equally all at the same time. As prices are rising, consumers will substitute goods to get the best deal. BLS uses this concept to reduce the mathematical weighting of items in their basket of goods that rise sharply in price. It is an assumption that (more…)
CPI Explained – Part 1 – Hedonics November 3, 2008
Posted by Jeff Nabers in : Money, Personal Enjoyment , add a comment
While the measurement of inflation varies wildly depending on which economist you talk to, here we will examine the official figures published by the Bureau of Labor Statistics (BLS): CPI or Consumer Price Index. The purpose of publishing CPI is to measure inflation and/or deflation, the decreased or increased buying power of the U.S. dollar. Awareness of inflation is essentially an awareness of how much our central banking system, the Federal Reserve, is printing or destroying money through “monetary policy”. This side of economics can get confusing, but it doesn’t have to be. This account will be an understandable explanation intended for accountants and laymen alike.
CPI is not calculated the same today as in the 70s & 80s
While remarkably high inflation is a key part of our memory of the 70s and 80s, if today’s CPI calculation methods were applied to the 70s & 80s, the CPI figures would be revised to show very low inflation – probably under 6%. Why? Two important concepts have (more…)
Bail yourself out with an Unlimited® 401k October 21, 2008
Posted by Jeff Nabers in : Money, Precious Metals, Self Directed IRA Solo 401k, real estate , add a comment
With trillions of dollars going to bailing out failing corporations, who’s going to save you?
Take a look around… you’ll probably have to save yourself. Rollover your IRA or 401k funds into an unrestricted account to open a world of possibilities without triggering any taxes. Here are some ideas…
Invest in gold silver, and other precious metals. The last 35 years is just a tiny blip in human history. The rest of the time humans have been walking this earth, gold has been used as money. We came off the gold standard in 1971 and seem to have forgotten that gold will always be valuable while paper will not. Consider buying gold, silver, platinum and other precious metals to store the value of your wealth.
Cash Flow Real Estate. With the real estate market in turmoil, find a bargain. Instead of hoping for appreciation, look for properties that provide a return-on-investment of at least 10% based on rental income, and own it forever.
Raw Land. Buy land in areas that will always have high demand. As energy prices rise, land near dowtown areas of major cities should have a bright future as urban sprawl reverses.
Foreign Currency. If you are petrified of investing, make the safest bet and keep your money in a foreign bank account in a stable currency. Try Canada or Switzerland.
Foreign Stock Markets. Many countries in Asia and South America have booming stock markets. Skip the U.S. middleman and invest directly with a broker in one of these foreign countries.
Private Companies. You can lend money to small businesses. If you find a business that is looking for investors, you may even be able to buy stock in their business. Sometimes evaluating a small, local business is much easier than a large publicly traded one.
Start your own business. You can use up to $50,000 of your retirement funds to start your own business.
Nabers Group helps individuals enter a world of never ending possibilities every day using Self Directed IRA and Solo 401k plans. Don’t let your personal economy be dragged down with the crashing banks and financial service companies. Be independent and take your finances into your own hands.
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