Unsettling to have your entire IRA invested in the Stock Market?
Though our stock and bond markets have experienced a fairly healthy recovery from their precipitous drops in late 2008 through the first quarter or so of 2009, you may still be getting those persistent feelings of sadness while reviewing your monthly IRA statements. Yep, staring right back at you from inside the torn envelope is the realization that, over the past ten years or so you're retirement accounts may have not had the major moves into the black for which you hoped. And really, it’s challenging to hit your retirement goals when most stock portfolios sit today at a value fairly close to that which they were in 2005.
So is time to consider something other than stocks and bonds in your IRA portfolio? Well, how about a nice money market account paying something less than a percent annually in interest? Nope, that wouldn’t seem to be the answer either. Anything else out there to consider you ask?
YES! Drum roll maestro please!
Historically real estate has been a good investment and though it may trail the overall return of the stock market, when you add the income you can drive above and beyond the asset appreciation ... well I LIKE IT! So may its time to buy something with doors, windows and a roof if you have a ten year horizon or so. And the mechanism known as the IRA real estate trust or Self Directed IRA offers the perfect vehicle to effectuate the purchase. Just like you can keep cash, stocks or bonds in an Investment Retirement Account, either Traditional or Roth, your IRA real estate trust account can actually own any type of real estate whether residential, commercial or land and other categories. The trust will actually own the property and all expenses are paid by and all profits are returned to the trust. Why not buy a rent house with your IRA. The trust pays for the purchase in cash so without the costs of finance the rent earned is pure profit above your taxes and insurance.
Consider a house purchased for $150K and rented for $1100.00 a month. Subtract insurance and taxes combined at approximately $2500.00 and outside of maintenance costs paid by the trust, this investment would gather a 7 percent annual gain. And considering this projected return does not consider any property appreciation, the time may just be right to consider Ruidoso real estate in your IRA.