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Notes and IRAs

BECOME A MORE PROFITABLE INVESTOR USING NOTES WITH IRAs

Most note investors aren’t aware that they can use retirement savings such as IRAs, 401(K)s and other qualified plans to invest in nearly all forms of notes as well as real estate and other publicly traded investments. In addition, many do not fully understand the incredible wealth-building power these government sanc-tioned plans hold.

Any IRA invested in low interest CDs or government bonds will grow exponen-tially due to the tax-deferred or tax-free status that IRAs possess. What makes this tool so much more powerful to note investors is the fact that they are able to achieve substantially greater returns than most stocks or mutual funds through their current note investing strategies.

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.

JEFF AND RICHARD DESICH are General Principals of EQUITY TRUST CO.

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