When
you combine the wealth building powers of an IRA with the knowledge and
incredible returns of a note investor, you create a situation capable of
tremendous growth. By creating, transferring, or rolling over a 401(K) or
other qualified retirement plan to a truly self-directed IRA, you
will have complete control of how these funds are going to be invested.
Imagine being able to complete note investments almost exactly as
you currently are, but gaining the added advantages of IRAs and their
tax-deferred/free status offer.
Amassing
A Fortune
One
of the greatest features of the IRA is that it allows Americans to enjoy
the true power of tax-deferred compounding interest. Compound interest is
basically interest earned on interest.
The additional interest you make on your profits is compound interest. Compounding can
occur with any investment you make, but the “true” power of
compounding is obtained when you make an investment in a tax-deferred
environment. By taking advantage of an IRA’s tax-deferred status, you do
not have to pay tax immediately on the earnings.
“The
Most Powerful Force On Earth
is
compounding interest.” (Albert Einstein). Let’s look at an example.
We have a man who is 35 years old and contributes $2,000 annually
to his Traditional IRA until the age of 65.
These thirty contributions total $60,000. Assuming a 10% annual rate of return, the individual’s IRA
at 65 will be worth over $400,000.
The same investment made without the
IRA’s tax deferred environment would be subject to a 28% annual tax
rate. The total value of the account would be just $227,220, a loss
of over $170,000!
Remember,
this example was based on a Traditional IRA.
A Traditional IRA is funded with before-tax dollars which, in most
cases, is tax deductible. To
increase this power one step further, an individual could invest using a
Roth IRA. With the Roth
contributions
are made using after-tax dollars, so you don’t receive a deduction.
BUT your earnings will not be taxed when you make a qualified
distribution. Imagine making
the same deals you are currently making, but receiving your profits
tax-deferred or tax-free, just by using your IRA to invest!
Protect
Your Hard-Earned Assets
Unlike
qualified plans, IRA regulations pertaining to asset protection are
created at the state level. In
most states IRAs have considerable protection against most creditors
(excluding the IRS and your spouse).
For more information on this subject, please visit www.trustetc.com.
By naming beneficiaries, you can insure that your assets are passed
directly to your loved ones or causes that are close to your heart.
Take control of your future and let Equity Trust Company help you
begin to take advantage of the many benefits a self-directed IRA has to
offer. For more information on any topic we have discussed in this
article or information about IRAs in general, please visit our web site
at www.trustetc.com.
To get an extended version of this article in PDF format, please visit www.iraetc.com/mrej
RD&JD
