Everyone Pays for What Bernie did if the same thing happens again...

They said that people in the courtroom cheered when the 150 year sentence was announced on the "Day of Reckoning" for Mr. Madoff. Since Bernie is 71, this is a life sentence. He will lose his lavish lifestyle on Park Avenue in trade for a small prison cell where he is still guaranteed free a free room, 3 square meals a day and the best of free health care. There are more than 48 million Americans who do not have the "luxury" of health care benefits, and I would guess that many of those have no free room are not guaranteed 3 squares a day, so to that extent Bernie is still ahead of many Americans.

Who Else Loses?

Of course the innocent members of his family (there must be some) ...<< MORE >>

Buy Deeply Discounted Cash Flow Real Estate in your Self Directed Retirement Plan

Everyone has heard about the exceptional values in the real estate marketplace represented by Bank Owned, "Real Estate Owned Properties" (REO). Banks which have foreclosed on properties are marketing them through retail channels that include Brokers and Agents that specialize in REO properties. These brokers and agents in particular are familiar with the processes and procedures used when dealing with the Asset Managers and Loan Servicers who control the sale of these deeply discounted properties. On a daily basis, investors are buying properties that yield very competitive cash on cash returns in California and many other states and there is the possibility of future appreciation over time on top of monthly returns.

Not everyone is aware that you can make Alternative Investments in a Self Directed Retirement Plan including the purchase of REO real estate for investment.

The process ...<< MORE >>

Due Diligence in your Self Directed Retirement Plan

Recently I have had a number of calls from clients and readers who have lost money in alternative investments they selected for their own self directed plan. My first question when I get a call  like this is, "what Due Diligence did you do to determine if the investment sponsor was legitimate and what calculations did you base your decision on?"  In almost every case, the decision to buy was made in the heat of a selling event and almost no Due Diligence was conducted prior to the purchase. The purchase of local hard assets, like real estate you can physically see, touch and inspect is one way to avoid an investment fiasco.

We are in tough times and tough times often bring out the best in human nature, but also nuture the worst. People under financial pressure will do and ...<< MORE >>

Or, if I only knew then what I know now...

Recently while surfing the net I came across a well written blog by a "thirtysomething" on "Financial Commandments for Your Thirties" that brings home to me the slow spread of a new paradigm among younger generations about money. Namely that there are good reasons to carefully manage it and to save it for the future and specifically that "Debt is not Wealth".

As a Baby Boomer I was very happy to see this viewpoint expressed and I realize that younger generations may have a better grasp of financial reality than mine at that age. This realization was reinforced when I recently held an open house (one of my hats is as a Realtor in CA for a Broker specializing in Bank owned (REO) properties). A group of young people came in to see an REO property in a popular ...<< MORE >>

Dealing with New Realities in Middle Class America

In a recent entry on one of my other blogs at http://unsustainabubble.com in an entry called "Going Down with the Joneses", I wrote about the paradigm shift that is taking place in the American Middle Class. Specifically the difficult, disruptive and very painful adjustments that are being made in saving, spending and consumption and over all life styles, accelerated by the current economic crisis and rapidly expanding unemployment. In a future article I want to discuss the key factors in our financial history that have brought us to this point and the strategies we can use going forward to best create sustained abundance, regardless of the external environment.

One of the ways people will begin to rebuild wealth once they have dealt with their debt and created an emergency fund, will be to increase the amount of contributions they make to ...<< MORE >>

Why Self Direction of Pension Funds Should Replace the Broken Promises of Corporate Plans

It's not bad enough that the value of shares in many Corporate 401k plans have been slammed by the sell off of securities in 2008, but there is another unintended consequence of the sell off in securities that will likely impact earnings on shares of companies with an active Defined Benefit Plan for many years to come.  The best short discussion I have seen on these issues is about a likely $409 Billion hole in Pensions that is likely to reduce U.S. corporate earnings for a long time.  

"Defined Benefit " (DB plans have largely been replaced at many corporations with "Defined Contribution" ( DC, or 401k ) plans. This process is part of a massive transfer of the financial responsibility for pension benefits to workers from corporations. This transfer has taken place because of the long term liability created ...<< MORE >>

Get Ready, Because History Will Repeat Itself

Back in 1870 the U.S. resembled the China of today in many ways. Most of our citizens were still in the country, living near or working on family farms (this is the case in China today). Poor, disabled or ill and elderly people were taken care of by family or friends or through local religious groups in the local community. There was no health or disability insurance and no company pension to count on, only the hard assets that were saved or purchased or inherited. Today we are closer than ever to being back in the same situation we were in back in 1870.

From 1870 on as we became an Industrialized nation, people left the farms for the cities and gave up the social network that protected them for the lure of higher pay in the cities. The burden of caring for people in need ...<< MORE >>

63% of Americans Have Stopped Making Pension Contributions!

Given the difficult financial times so many are facing, I was not surprised to see some shocking statistics like the one above in an article titled "Four Ways to Protect Your Retirement From the Ongoing Financial Crisis at:
http://www.moneymorning.com/2008/10/29/retirement-assets/ .  But it really got me thinking about what so many of us have not done about planning for the future.

There is really no reason to be surprised by this statistic, considering that most Americans have lived well beyond their means for years (peaking at 113% of income in 2005) and most stopped saving for the future in 1985.  For more than 23 years we have lived primarily for the moment, expecting that the future would take care of itself.  Why not when our political leaders and consumer companies keep telling us that it is OK to spend?

Almost all of ...<< MORE >>

Why Tempt Fate?

As a businessman and investor I can relate to clients, prospects and students who contact me with personal financial problems that they hope to solve using IRA money, without taking a taxable distribution.  Many times, they are looking for solutions to current problems in their personal or family finances, using assets currently in a Self Directed IRA account. Frequently the solutions they seek to implement are based on "self dealing" with "disqualified" parties and so constitute "prohibited transactions" (sometimes called PT's) in an IRA.  In a recent response to a client concerning some potential investments, I made the following comments, which I have paraphrased here for the benefit of others:

From our perspective as people working self directed retirement plans(who do not provide legal, accounting or investment advice), the loan you propose to make to a spouse or lineal family member and the investment in a siblings existing business venture are transactions that would ...<< MORE >>

From "Hard Money" to "Private Money" Lending, Using Pension Assets

What follows is a discussion explaining why I think “Private Money Lending” will become "The New Sub-Prime" resource for lending on many Single Family Residential (1-4 Unit SFR) loans in America and many other types of properties as well. The opportunity for you is to use money from Self Directed Retirement Plans, secured by real estate and other types of collateral. The returns from these “Private Money” loans will help you reach or exceed your retirement plan goals much faster, with control and real security.
 
Historically Private Money Lending (PML) was called "Hard Money" or sometimes "Equity Lending" or "Asset Based Lending" (ABL). Each loan was made based on a much lower "Loan to Value" (LTV) than "Conventional" loans from a Bank or Savings and Loan. Hard Money Loans have had a maximum LTV between ...<< MORE >>