5 Ways to Beat Wall Street’s Rigged Game

Couple signing papers Official government statistics acknowledge a whopping 40% drop in the net worth of Americans since the 2007 financial crisis.

So much for the tired advice of so many brokers, planners, or IRA trustees when they counsel: “Buy and hold for the long-term, dollar-cost average into mutual funds… and everything will be alright.”

That investment advice hasn’t worked well since 2000. While the major indexes have rebounded strongly after the Crashes of 2000 and 2008, Wall Street-sponsored investments are not a safe or secure place for your hard-earned money. Unfortunately, most IRA trustees such as Merrill Lynch and Charles Schwab only allow you to invest in Wall-Street related securities and financial products.

Fortunately, you can take control of your money and your financial future with a self-directed IRA. We’ll go over the advantages of these accounts and how you can protect (and even grow) your wealth in the years to come.

The first advantage of a self-directed IRA is the ability to invest outside of Wall Street. It’s 100% legal (if you comply with IRS regulations) to invest your IRA funds in: Income-producing real estate… gold and silver bullion… tax lien certificates… among other “alternative” investments.

Section 4975 of the Internal Revenue Code only addresses investments not allowed within the structure of an IRA:

  • Life insurance proceeds
  • Any work of art
  • Any metal or gem
  • Any alcoholic beverage
  • Any rug or antique
  • Any stamp
  • Collectible coins

There are exceptions for precious metals, which include:

  • One-ounce silver coins minted by the Treasury Department
  • Any coin issued under the laws of any state
  • One, one-half, one-quarter or one-tenth ounce U.S. gold coins (American Gold Eagles contain roughly 5% copper and 3% silver are thus the only alloyed coins approved for IRAs).
  • Other gold coins and bars are eligible as IRA investments, as long as they are least .995 fine (i.e. 99.5% pure).
  • Silver, palladium, or platinum bullion of a certain fineness that is in the physical possession of a trustee that meets the requirements under Code Section 408(a).

As long as you stay in compliance with IRS regulations and avoid prohibited transactions, almost every other type of investment is allowed. A good IRA trustee will help you stay in compliance with these regulations.

The second advantage is paying less in annual fees. Most (if not all) Wall Street-related trustees have multiple fees (mutual funds and ETFs for example, plus a percentage of your account) that silently erode your wealth year after year. Almost all self-directed IRA trustees have a reasonable fixed annual fee to be a fiduciary, and act as a custodian who files the required IRS documents at the end of each calendar year.

The third advantage is being able to protect your wealth against inflation with tangible assets like gold and silver bullion or even real estate. History shows that whenever governments and central banks crank up the printing presses and devalue its currency, higher inflation isn’t far behind. Or in the case of Weimar Germany, the result was hyper-inflation.

Don’t Be Herded into Tired “Mainstream” Investments
Dominated by Money Magicians

Paper financial assets such as stocks, bonds, and mutual funds are all vulnerable to inflation. Gold and silver bullion are excellent insurance policies against central bankers gone wild.

Even if we see more deflation than inflation in the United States, tangible assets will hold their purchasing power in either scenario. Remember – the ultimate collateral backing financial paper assets is the public’s confidence in those assets. When the confidence goes, so does the value of those assets.

Stack of silver coinsThe fourth advantage of a truly self-directed IRA is you can invest in what you know best. Maybe you have experience with real estate, mortgages, or other kind of business; but don’t know much about stocks or mutual funds. And you don’t have time to put in hours of research every week.

With a self-directed IRA you can invest in short-term fix-and-flip properties… or longer-term rental real estate. You can receive more positive cash flow every month than even the highest dividend-paying stock. But that’s not all… you can lend “hard money” for real estate, invest in agricultural farmland or livestock, and even invest IRA funds into a business that you’ve had experience and success with.

The fifth advantage: You can invest through a self-directed IRA outside of the United States. You can buy less expensive rental and vacation real estate in Central or South America, and get a higher rate of return than you could in the United States.

While America has budget deficit, debt, and economic problems… other countries around the world are in better economic health. Australia and Chile are resource-driven economies (and currencies) while Singapore has a lot of financial activity and less national debt. You can convert your greenbacks into Australian dollars, Chilean pesos, or Singapore dollars and possibly benefit from the strength of these foreign currencies.

Other Great Features
of Self-Directed IRAs to Consider

Before you select a self-directed IRA trustee, ask plenty of questions about that trustee’s services, costs, and the investment areas they specialize in. If you don’t understand something or don’t feel comfortable with any part of a trustee’s services, keep asking questions until you thoroughly understand the answer(s).

This is a long-term financial relationship you’re entering into. Take your time and do plenty of research before you select a trustee.