A common question we are asked from those finally reaching retirement is which payout option do I choose? The options usually include lump sum payout, lifetime income or term certain. A lump sum payout is fairly easy to understand … you are paid a lump sum and sent out the door. But now what do you do with it? If you don’t move it to an IRA, be prepared for a huge tax consequence. If you move it to an IRA, how will you invest it?
Beginning with this newsletter, we offer you a glimpse into our SFM Model Portfolios. This is not a list of stocks, but instead a screened and factored list of our favorite funds—made up mostly of ETFs. A healthy majority of these funds trade commission-free at TD Ameritrade, thereby lowering costs for our clients.
It is with this blog post that we announce an optional (you must opt in or it doesn’t change for you) change to our fee structure for 2014 and beyond. Instead of simply telling you we’re reducing your advisory fees, you must take action—as there is a small catch. (more on that later)
Did you know that you can buy the house next door as a rental with money in your IRA? Well, you can’t—but your IRA can. Your IRA is basically it’s own entity, and has nearly limitless ability to invest in all kinds of odd-ball—or hair-brained—investment ideas. There is a small list of “prohibited transactions”.
In the spirit of what’s not in SFM’s best interest, we are going to suggest you consider the idea of investing in rental real estate—from which we do not collect an advisory fee; and which may take a down payment from funds currently under our management. With the Federal Reserve Bank effectively printing $85 billion a month, and setting interest rates at zero, investors are being “forced into risk assets” like stocks & real estate. Don’t believe me? Check your local bank for CD rates on $100,000 for five years. Yep; 1.5%—if you’re lucky. There are three ways that your household finances can be improved by investing in rental real estate:
This Christmas, during a discussion with my family, I could sense hesitancy about the value I add to my clients’ investment portfolios. At times (...2008...), I admit to having doubts regarding the value that we add; but after reading about a 2012 study released by Morningstar, I am comforted by the results.