You heard it right: a FREE Solo 401k from Nabers Group. This is a contest, and you have a good chance of winning. I estimate that 98% of my readers will not even try to win. It’s a phenomenon: people think “Oh too many others will enter the contest and my odds won’t be good” and that leaves you will excellent odds if you enter the contest. Here’s what you have to do:
- Be eligible for a Solo 401k in the first place. This means that you have to have self employment activity (such as Schedule C income on your 1040 or own a business), and you have to have no employees at any businesses in which you or your spouse have significant ownership. (An “employee” is somebody who works over 1000 hours per year for your business and receives a W-2).
- Add me on Facebook. Go to my Facebook profile to add me to your friends. If you don’t have a Facebook account, just create one. It’s very simple and easy, and it will help you stay connected for updates, news, events, etc.
- Write a brief explanation of the most powerful business or investment opportunities in our current recession. Explain the “how” and the “why” as much as you can, but be direct and to the point at the same time. Submit it in a comment on this blog post (the one you’re currently reading) OR post it to the “wall” at the bottom of the Facebook Solo 401k Contest page. I’ll review all entries, and the person with the best idea will get a Solo 401k setup for them by Nabers Group with the entire establishment fee waived.
Submission Deadline: March 15, 2009
Value: $210,585
The math: Over the past 10 years, most stock indexes have produced a return of approximately 0%. With a Self-Directed Solo 401(k) plan, the accountholder can buy real estate, gold, stock in private companies, and loan money to individuals or corporations. Surveys have shown us that over 80% of our Solo 401(k) clients have a target return of investment of 12% per year or more. An investor with $100,000 of existing funds who earns 12% per year for 10 years will generate a profit of $210,585.
We’ve never done this before, and I don’t know if we will ever do this again. Now’s your chance – start working on your entry today!
* The value is based on the potential profit you could earn and will vary based on your investment decisions. With a Self-Directed Solo 401(k), it’s up to you to find and choose investments, and only you will decide how profitable and valuable this investment vehicle will be.
We’ve never done this before, and I don’t know if we will ever do this again. Now’s your chance – start working on your entry today!
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Great, now you tell me – I recently had a Solo 401K set up
What’ll ya give me for my great business idea?
I think that frowny face should be a smiley face!
Great business ideas get themselves tremendous profits
I will give you the green light to make the most of your business idea, and feel free to use our client network (inside http://www.nabers.com logged in client area) to seek partners or capital or to sell your idea.
Also, if you know another entrepreneur who doesn’t yet have our Solo 401k (but would be eligible), feel free to submit your idea into this contest for the benefit of your friend.
Jeff
(The max length on the Facebook Wall cut me off, so here it is… )
For my money, the best investment opportunities are in small (often very small) businesses with niche services and products. I’ll share three examples, then highlight the characteristics that make these good investments.
Specialty Spot Welders
A few years ago, an extended family member of mine completed his Ph.D. in Aerospace Engineering, and started his own business rather than pursuing his plans to work for NASA. SunstoneSpotWelders creates resistance welders for manufacturers, jewelers, and now dentists. For start-up capital, he asked family members to invest, and offered a 9% return on the loan. A few of them took the deal, and they’ve banked the rewards. Despite the recession, Sunstone is growing; Dec08 sales were up 31% over Dec07, they recently expanded into a new facility, and even hired more employees.
Living Trusts
My friend Jim is the quintessential “people person,” which is partly why he’s so successful at what he does–helping people create Living Trust documents. With 8 years of experience, he really knows his stuff. His only competitors are expensive attorneys and impersonal services like LegalZoom. The economic crisis has actually increased his client base, as more people get serious about protecting their assets. He’s swamped, and needs to create a web services division.
Simple Online Bookkeeping
Eighteen months ago I scoured the internet, but couldn’t find my ideal web-based accounting system. Now, Outright (formerly GoBootstrap) has filled that niche. The founders (two former Intuit employees) recently raised $2 million. Unlike the “old days” of dot-com funding, these guys are frugal. I have no doubt that the funding will go a long way.
Common Threads
Big, old, slow moving companies, from software makers to automakers, are sputtering. How can a company like Intuit compete with a free service like Mint.com (which Intuit seems to be worried about)? The big companies are losing customers to smaller, newer offerings that are often better and cheaper. This trend isn’t new, but it’s accelerating in the recession.
When big companies lose B2C customers, more of them lose big B2B customers as well. If budgets are high, companies don’t take the time nor the risk of moving to smaller, less-established vendors. But when the squeeze is on and fat needs to be trimmed, moving to Google Apps or Amazon Web Services suddenly looks appealing, if not necessary to stay profitable.
Much of the fat-trimming happens on the inside–employee layoffs, decreased health benefits, dropped bonuses, and salary cuts. The promise that working “for the man” provides security and stability doesn’t hold true. Many will instead work for these small companies, or start businesses of their own. In Sunstone’s case, they recently posted an open position on the state unemployment site and received 100 applications within 4 hours! There were so many qualified applicants that they hired two.
How can you find these promising ventures? Spend less time reading the WSJ and more time talking to friends and colleagues. Watch the companies behind web apps you love to use, many of whom don’t want traditional VC funding anyway. Give priority to ventures that:
* Are run by passionate people that work hard.
* You trust will be careful stewards of capital.
* Have some traction from a working first version. Everyone has ideas, but only a handful of them get beyond the napkin sketch.
* Provide cheaper, better experiences than entrenched, outdated alternatives.
* Have products or services that are appealing to businesses and consumers that feel the pain of the recession.
Here’s the catch: You can’t generally invest your retirement account funds in ventures like these if you have a traditional arrangement. That’s the whole reason I discovered this contest; I’m anxious to set up a self-directed Solo 401k and invest where I please.
Invest in trust deeds that have a loan to value (LTV) of less than 70% of todays’ distressed real estate.
Opportunities right now which could help fund my retirement pan and pay for law school.
1-Real Estate- My own personal plan is to purchase properties and place them inside land trusts and offer rent to own via annually increasing beneficiary interest in the trust while renting from the trust on a NNN agreement, max 20 year term. There are tax advantages, no due on sale violations, both parties can walk away (or process eviction rather than foreclosure) and the renter can refinance, if they so choose, and buy at the agreed price, thereby dissolving the trust . Ideally, they avoid banks and loans, but still have the immediate advantages of home ownership, and keep their options open.
2-Web-based business – I am personally investigating a membership/networking site for prophetic writers to journal, archive, catalog and share their encounters and insights. I plan to keep the cost extremely low for membership, likely somewhere around $5-$7 per month. The list of benefits will be great
Real Estate by far is the best investment vehicle at this time. Why, because you can buy these properties at lets say $60,000 and turn around and rent for $1,200 per month. Also because these properties just 3 years ago were selling at over $300,000 and in five years or so will be close to that again,talk about ROI.
How I’m going to take advantage of this great opportunity is to buy and hold as many rentals as I can with my soon to be acquired Solo 401K, no custodion required. I will also be flipping properties, which I am already doing succesfully in this market.
PROLOGUE:
It is tempting to look at specific strategies tactics for profiting from the current economy—and there are many—but, to paraphrase that timeless advice “you’re never fully dressed without a smile,” may I offer that “you’re never ready to profit without the right attitude?” Instead of specifics, I offer a sweeping generality, one of attitude.
Today bad news abounds. Unemployment is up, inflation beckons, foreclosures have infected every market, and our culture of negativity is flourishing like it hasn’t in decades. Gloom lurks behind every corner. Yet there are still plenty of reasons for hope, and it’s important to talk about them.
I spent most of the 1980s in universities, earning degrees in economics. I then retired (sort of) while I could still enjoy it, and spent most of the 1990s living out of my backpack; traveling and living abroad, writing as a freelance journalist for US and Europe-based publications and teaching English. Much of my time was spent in central and eastern Europe. I lived in Prague from 1990 to 1992, and traveled the region extensively, observing both clumsy and masterful transitions from centrally-planned to free enterprise economies.
While so many writers were focusing on the problems of the times, I tried to illuminate as many reasons for hope as I could find. In Albania, Europe’s poorest nation, I discovered an entrepreneur who endured mind-numbing bureaucracy to start her own hair salon. In Afghanistan I watched resourceful workers make their livings by turning old car tires into sandals and handbags. In Slovenia, I found a man who had developed his own currency pegged to the German Mark to replace the inflation-prone Yugoslavian dinar, then facing triple digit inflation. Even in hard-line Cuba bicyclists were taking tourists on bike trips to supplement their small state wages, subverting the parameters of rules and limits in the process. It was my travels that drove home the fact that the only limits to human creativity and enterprise are the ones that we, the people, impose on ourselves.
Like all great nations throughout history, the USA wasn’t built by complainers, it was built by do-ers. Or at least by complainers who took action after airing their grievances. Yes, today we’re facing a downturn. Yes, some people are in pain. This is nothing new, in fact, such business cycles are endemic—if not fundamental—to modern capitalism. And for those who have cultivated their own talents, rather than depending on someone else to decide how, if at all, to value one’s efforts and skills, this is a defining moment of opportunity. To be sure, I’ve become more cautious as a real estate investor, speculator, and landlord. But I find that, “crisis” or not, my own business does better when I approach it from a place of optimism. And I find others become just a little more hopeful and optimistic themselves when I share my own insights about the glass-half-full that currently defines our economy.
Belief that diligent, resourceful efforts will yield rewards requires more than showing up for work on time, or even doing good work. It requires the right attitude and a belief that no matter what one does, keeping an upbeat, optimistic attitude will foster success.
Some of the happiest, wealthiest people have endured bankruptcy once, twice, or more. Yet they keep on plugging, and became household names. I recently read Bono from the band U2, a successful enterprise to be sure, quoted as saying that there is no such thing as failure, there is only giving up.
Prosperous people for centuries—and long before Dale Carnegie’s defining and timeless book “How to Win Friends and Influence People”—have understood the power of positive thinking, so it is not in itself revolutionary. But it is fundamentally necessary for us, and for capitalism, to succeed. Optimism feeds an exquisitely self-fulfilling prophecy and, ultimately, it is profoundly American. And if I don’t achieve my goals regarding income and wealth creation, I will continue smiling, learning new methods, and fine-tuning the old ones. And I will continue believing that somewhere ahead prosperity is not only possible, but inevitable.
Hello Jeff!!
Well you said to keep it brief so here goes!
My current favorite investment ideas:
(The top three areas I believe will be extremely profitable during these times)
1. What/How: Build a network marketing business, around a product or service that will continue to have demand during these times such as: Foods, health products, and financial products. Why: I like network marketing because it’s people helping people, accomplish their dreams. With the current bad job market, many people are turning to starting and owning their own business.
2. Purchasing Real Estate(what). Now is a good time to invest in Real Estate, as it’s a buyers market! Especially foreclosures, of which there is an abundance(Why). There is are specific ways to invest in foreclosures that actually helps the current struggling owners keep their house(How). (Another profitable way to invest while helping people.)
3. What: Hard Money lending.
How: connect with contractors/investors, and loan them capital to purchase and rehab properties, with your loan secured with the title deed to the property serving as collateral. This will earn about 10 to 12% guaranteed profit. (A welcomed thing during these hard economic times.)
The best investing strategy today is property tax lien auctions, recession or not! Investing in tax liens certificates is what led us to our recent discovery of the solo 401K through Nabers Group. We have successfully invested in tax liens since 1992 and have found them to be the most beneficial long term investment strategy, with a consistent double-digit return.
Why choose a high interest but risk-laden GM bond when there are 21 states offering some variety of tax lien auction to consider? They are AL, AZ CO, FL, IA, IL, IN, KY, MD, MI, MO, MT, NE, NJ, OH, OK, SC, SD, VT, WV, and WY. Every state’s rules and fees are a little different, as is every county. Most lien sales are held in person, but some auctions are online now.
The premise behind a tax sale, which differs from a Trust Deed sale that other states do, is that it allows a county to raise money from lien investors who in return earn interest. Essentially the lien purchaser becomes a surrogate tax payer for the delinquent property owner, so that the local county government can continue to operate.
Determining the winner of a lien varies, but the most common method is bid-down, where the investor accepting the lowest rate of return is the winner. Iowa is famed for starting bidding at 24%. You decide how low you wish to bid from there. If no one else wants that lien, it would be yours at 24%.
Besides the potential high rate of return, after a certain amount of time (usually 2-3 years) paying the delinquent property taxes, the lien holder receives the right to foreclose on the property. In reality the majority of liens redeem before that occurs. In 17 years we have ended up with only one parcel of land. Tax liens also hold a very senior position relative to other liens in their likelihood of being paid off and not excused.
As in any investment there are pro and cons. Some counties charge the bidder a fee for every parcel bought. Bidding competition can be fierce, especially on prime parcels. Your funds could get tied up for an undetermined time in bankruptcy, but are seldom “lost”. You need to do due diligence before bidding to avoid risky or low-valued properties. Many counties readily offer very detailed parcel information including satellite images, others hardly any. The most crucial drawback to note is that tax liens are very illiquid. With few exceptions, you have to wait until the owner pays the back taxes.
Given the long term nature of tax liens — you can hold a lien up to 10 years in some states — it seems logical to make them the foundation of our Solo 401K. Our plan is to continue investing in lien
certificates, but use our retirement money instead. If only I’d known about this concept before!
This investment opportunity, whether for a Solo 401k/IRA or not, is ideal for everyone as some liens can be purchased for $100, or even less. There’s a learning curve but for us the effort has been very
worthwhile. Tax liens give you real estate exposure without a huge outlay of cash or credit requirements. We’ve found there is really nothing comparable to the risk-return ratio that tax liens offer.
A winning combination for a business in the current economic environment is to get a piece of the stimulus money that is being spread around, while at the same time taking advantage a nearly everyone’s desire to “go green.” As part of the stimulus plan the purchase of energy efficient windows, doors, roofing, insulation, HVAC, heat pumps, solar systems, or water heaters qualifies for a 30% tax credit. More folks these days are willing to spend some money if they think they are helping the planet and can reduce their energy bills, especially knowing that “for a limited time only” Uncle Sam is going to cover almost a third of the cost. Tapping into this market seems a sure winner.
The problem with many prominent businesses that deal in home improvement is that their advertising and sales approach seem a little sleazy and turn people off. I think, however, that someone with business savvy and some marketing skills could partner up with some respected local businesses that deal in these products, put together a team of professional (but currently starving) contractors, and offer people one-stop shopping to fix up their drafty house, lower their utility bills, and get a huge tax credit in the process.
I have another suggestion for a way to profit in these tough economic times that takes advantage of the extreme downturn in the housing market. The old adage that the best time to buy real estate is five years ago is, for the first time in a many years, not true. Everyone knows that now is a golden opportunity to find bargains in investment property but few people have ready cash to make a down payment. At least they think they don’t because they are unaware of the potential of the retirement savings that are shrinking in their brokerage accounts.
Based on my limited research the existence of self-directed solo 401(k)s is still a well-kept secret. Although hardly a professional, I consider myself somewhat knowledgeable about financial matters, yet I had never heard of this investment vehicle before I stumbled across the idea when looking for more information about self-directed IRAs, which I also knew very little about. I’m retired and only make a few thousand $ each year from part-time self-employment work, but I have a substantial 457 plan from my previous employment that I could role into my new plan. This makes me a perfect candidate for the solo 401(k) and I know there are thousands of others in a similar situation. There are also millions of folks who are not currently self-employed but have sizable retirement accounts. These people could be encouraged to sell some cookies over the internet or anything else to earn some Schedule C income and thus be eligible for this investment opportunity. I get mailers each day from hungry realtors reminding us they’re still alive, and I’m sure they would love to learn about solo 401(k)s so they could target their marketing to this vast pool of untapped potential clients. The trick is to bring these three parties together: the self-employed or potentially self-employed person with other retirement savings, the solo 401(k) facilitator, and the real estate broker with access to all the hot investment properties. And I’m sure they can all share in the profits from the sales commissions from desperate sellers.
Hi Jeff,
I didn’t see any restrictions on the number of ideas one can submit and noted some entries with several different ideas proposed in one posting.
As a second submission specifically related to the economic and banking crises unfolding before us, it seems the concept of starting up local micro loan banks would become a viable investment worth exploring through the pooling of many investors. While micro loans have been typically associated with third world countries, with the credit crunch tightening the hands of the traditional bank loaning industry at every turn, I see making quick, easy to attain, small start up loans available one of the most critical tools missing in many communities, small or large. This would provide the seed money for all those entrepreneurs sure to be incubating business concepts with great ideas but find themselves short of cash to grow their start-up. I salute all the great business ventures and niche markets slated to be filled bubbling up from the recession stoked imagination of everyday people. But unless the cash is readily available, those fledgling ideas won’t get their chance see the light of day. There must be fuel to fund that American ingenuity we know is still out there.
Hey there, i discovered your blog multiple times, and I was wondering if it were possible to recieve the latest posts to my email? do you have a subscription form/page of any sort for the site so I can put my email to it?
Hi, Tuan.
If you download the free report on the right, you’ll get onto my email list. I don’t email out every blog update, but I do email out some more valuable stuff to those who are serious enough about their personal wealth to become an email subscriber here
Jeff
The tax laws regarding solo IRAs are relatively simple. Anyone can open an account. Contributions are tax deductible, but after you retire, you will pay income taxes on all disbursements. It doesn’t get any more simple than that, does it?
Your $15,500 is known as an “elective salary deferral.” If your business is incorporated, you can also make a “profit-sharing” contribution of up to 25% of your eligible pay without any deduction for the salary deferral. However, if your business is unincorporated, you would need to deduct the salary deferral from your self-employment income before calculating the potential 25% maximum. If you were eligible for, and made, a catchup contribution that also needs to be deducted since the 25% applies to net self-employment income.
I was just passing through and found your blog very interesting.