Checkbook IRA and Trickle Up Economics

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Most people understand the difference between income and wealth. As a refresher, income is the flow of money over time (e.g. annual salary, hourly wage, etc.) Wealth is the control of assets. Specifically, wealth equals total assets minus total liabilities.

Of course, assets have a close relationship to income because some assets generate income. But not all assets generate income. Speedboats, cars, and motorcycles are all assets but seldom generate income. Instead, these depreciate over time, which effectively decreases net worth. You want assets that make you wealthy.

What Trickle Up Can Do For You

Some people say they want to be rich but what you really want is to accumulate wealth. Wealth is what legacies are made of that are passed from generation to generation.

According to The Brookings Institution:

“The top 20 percent held 77 percent of total household wealth in 2016, more than triple what the middle class held, defined as the middle 60 percent of the usual income distribution.”

Although 2016 is a few years ago, it is the most recent accurate data available. More relevant than up to the minute data is that the wealth distribution has been shifting more and more in favor of the wealthiest for several decades. Once you obtain a foothold on wealth, it becomes much easier creating more and more and more.

What you need is a tool that lifts you up to that 20% rung on the ladder. That tool may a Checkbook IRA, also known as an IRA LLC, which provides for a very broad selection of investment options. The limited liability company (LLC) is an important part of the solution. The LLC part of a Checkbook IRA is specifically designed to be compliant with IRA laws and regulations.

The Checkbook IRA is an alternative to the Solo 401k.

The Checkbook IRA is Far Superior to Wall Street

If you want to become wealthy, you need a trickle up method. You want assets that generate income and much more. As you accumulate assets, you can borrow against them at the same time they are generating income. Income generating assets appreciate in value rather than depreciate. The combination of asset ownership, income generation, and appreciation can be as powerful a tool as compound interest.

The Checkbook IRA is how you take control of your retirement account to make individual investment decisions. If you paid much attention to your financial advisor or broker when you opened your retirement account, you may have noticed he/she had a limited number of offerings. Almost always categorized by the amount of risk you want to take.

If you’re very risk adverse, they put you heavily into CDs. Low to moderate risk takers are placed in a mutual fund heavy in corporate bonds with a few low risk stocks thrown in. Those with a moderate risk tolerance are sold a portfolio balanced between low risk mutual funds and slightly riskier stocks. Those with the highest risk threshold might be sold a few riskier individual stocks.

Those financial experts don’t offer much else for your investment selection. Your chances of recovering what Wall Street stole are much better when you take control away from them!

A Checkbook IRA Invests in Wealth Building Assets

More and more Americans are discovering how much better they can retire and how many other investment vehicles exist by taking control through a Checkbook IRA. This is how you invest in true assets. Assets like apartment buildings, single family homes, and businesses. Assets that generate income, appreciate in value, and are tangible assets that you can borrow against for even more asset based investing.

But that’s an extremely abbreviated list of what you can invest in….

The fact is that you can invest in almost anything of your choosing. It’s true that real estate and businesses are the most common choices but you really can invest anywhere that you think you’ll grow the most wealth. Your investment diversification choices are so boundless that it’s much easier defining what you cannot invest in. What you can’t invest in is a short list of three items. Specifically:

  1. Collectibles (gems, antiques, rare wines, most coins, etc.).
  2. Life Insurance Contracts (there’s an exception to this).
  3. Prohibited transactions with yourself and family members.

There is a fourth one; an IRA can’t buy stock in a “S” corporation. But it’s not a Checkbook IRA rule. It’s a rule about “S” corporations not being able to be funded from IRA accounts.

More Benefits with Few Restrictions

Your Checkbook IRA gets the same tax-advantaged benefits as a traditional IRA but without being limited to earning more for Wall Street than it earns for you. Instead, you invest in assets you understand based on experience or industry knowledge or take a chance on cashing in big with a new startup. Maybe you know a trusted entrepreneur with a long proven track record.

Or maybe you want to buy a 500 acre tract of land on the edge of town where a new bridge is going to be built across the river. You may even have a hobby that you are passionate about that has the potential to make a lot of money. There are ways that you can make that happen too. For instance, your Checkbook IRA could invest in a racehorse ranch.

There’s good reason the wealthy are called the elite. You have to act elite to become elite. Only approximately 3% of retirement accounts are self-controlled but it’s a swiftly growing practice because of the ongoing scandals and negative results for retirement accounts invested with Wall Street. The fact is, people need and want this strategy to take control of their own funds to invest where they know they will have solid earnings regardless of the economic times. The elite are unaffected by economic hard times – it’s their legacy.

Have questions about your Checkbook IRA and retirement? Checkbook IRA experts at Nabers Group will help you get your retirement funds into your control, where they belong.

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