The Secret Trick All Real Estate Experts Use to Invest Tax-Free! - John Bowens
Summary
TLDRJohn Bowen, a respected educator in the self-directed IRA industry, shares his journey and insights on using retirement accounts to invest in real estate and other alternative assets. He emphasizes the importance of taking control of one's retirement funds and the tax advantages of self-directed IRAs, including tax-deferred and tax-free growth, to build wealth and leave a lasting legacy.
Takeaways
- 🏦 The 2007-2008 financial crisis had a significant impact on many Americans' retirement portfolios, particularly those nearing or in retirement who had to withdraw from their accounts during a time of greatly reduced value.
- 🤔 John Bowen, the guest, questioned why his real estate-focused company founders did not have traditional retirement accounts like IRAs or 401ks, learning that they preferred investing in real estate and businesses over the stock market.
- 🏢 John Bowen is a respected educator in the self-directed IRA industry, with extensive experience in real estate and a passion for teaching about alternative investment strategies.
- 📚 Bowen has contributed to the book 'Self-Directed IRAs: Building Retirement Wealth Through Alternative Investing' and has appeared on various finance and real estate radio shows.
- 🎓 He holds a bachelor's degree in finance and is a Certified IRA Services Professional, emphasizing his educational and professional background in finance.
- 💡 The concept of a self-directed IRA was introduced by the guest as a way for individuals to take control of their retirement funds and invest in a wider range of assets beyond traditional stocks and bonds.
- 🚫 Self-directed IRAs come with certain restrictions, such as prohibitions on investing in artwork, collectibles, alcoholic beverages, and certain types of business transactions.
- 💡 The tax advantages of self-directed IRAs were highlighted, including the potential for tax-deferred or tax-free growth, which can significantly increase the account's value over time.
- 💰 The script provided a detailed explanation of the differences between traditional IRAs, Roth IRAs, and taxable accounts, emphasizing the potential for substantial tax savings with the right strategy.
- 🌱 The power of compounding interest without taxation was underscored as a key benefit of self-directed IRAs, allowing for wealth accumulation through reinvestment of earnings.
- 👨👩👧👦 The script shared a case study of a couple who successfully grew their retirement funds through self-directed IRA investments in real estate, demonstrating the potential for significant wealth creation and legacy planning.
Q & A
What significant event did John witness in 2007-2008 that affected many Americans' retirement portfolios?
-John witnessed the great financial crisis of 2007-2008, which had a devastating impact on many Americans' retirement portfolios, causing significant losses especially for those nearing or already in retirement.
Why did the founders of the company John worked for not have traditional retirement accounts like IRAs or 401ks?
-The founders did not have traditional retirement accounts because they did not believe in the stock market. They believed in real estate as a wealth creation tool and investing in businesses, which was their background and experience.
What is the primary role of John Bowen at Equity Trust Company?
-John Bowen serves as the Director of Education and Head of Investor Success at Equity Trust Company, where he educates and informs the public about self-directed IRAs and the benefits of investing in alternative assets.
How has John contributed to the industry beyond his role at Equity Trust Company?
-John has contributed to the industry by co-authoring the book 'Self-Directed IRAs: Building Retirement Wealth Through Alternative Investing with Equity Trust Company', and by appearing on several national real estate and finance-related radio shows.
What is the main difference between a self-directed IRA and a traditional retirement account?
-A self-directed IRA allows investors to have more control over their retirement funds and invest in a wider range of assets, including alternative investments like real estate, while traditional retirement accounts are typically limited to stocks, bonds, and mutual funds.
What are some of the tax advantages of using a self-directed IRA for investing?
-Self-directed IRAs offer tax advantages such as tax-deferred or tax-free growth, which means that the investments can grow without being taxed until withdrawal, potentially leading to significant tax savings over time.
Why did John decide to pursue higher education in finance?
-John decided to pursue higher education in finance because his father encouraged him to do so, not wanting him to have to work as hard as he did, and to gain the knowledge and skills to create wealth through real estate investing and small business ownership.
What is the concept of 'compounding interest in the absence of taxation' that John mentions?
-This concept refers to the ability to grow investments within a tax-advantaged account like a self-directed IRA, where the earnings can compound over time without being eroded by taxes, leading to potentially greater wealth accumulation.
What is the significance of the Roth IRA in terms of tax treatment compared to a traditional IRA?
-A Roth IRA is significant because contributions are made after-tax, but the growth is tax-free, and qualified withdrawals are also tax-free, unlike a traditional IRA where contributions are tax-deductible, growth is tax-deferred, and withdrawals are taxed.
Can you explain the term 'backdoor Roth' mentioned in the script?
-A 'backdoor Roth' refers to a strategy where an individual contributes to a traditional IRA (which they might not be eligible to do directly due to income limits) and then converts that traditional IRA to a Roth IRA, allowing high earners to get the benefits of Roth IRA tax treatment.
How did Kevin and Cynthia, the couple mentioned in the script, grow their initial investment using a self-directed IRA?
-Kevin and Cynthia grew their initial investment of $117,000 to over $2 million in properties and cash flow over 10-11 years by using a self-directed IRA to invest in real estate, applying value-adding investment strategies and private money lending.
Outlines
🏦 Financial Crisis Impact and Real Estate Investment Beliefs
The speaker reflects on the 2007-2008 financial crisis, noting the devastating effects on many Americans' retirement portfolios. The crisis prompted questions about the reliance on traditional stock market investments for retirement. The speaker's experience in the real estate industry and discussions with company founders led to a realization that real estate and business investments were viewed as more reliable wealth creation tools than the stock market. The narrative transitions into an introduction of John Bowen, an educator in the self-directed IRA industry, who has trained thousands of investors and contributed to the book on self-directed IRAs. The introduction highlights John's background, expertise, and his role in promoting alternative investment strategies for retirement planning.
🤔 The Shift from Traditional to Self-Directed Retirement Accounts
This paragraph delves into the speaker's journey from considering a career in financial advising to discovering the self-directed IRA industry. The speaker recounts the revelation that traditional retirement accounts like IRAs and 401ks were not the only options and that self-directed IRAs offered a way to invest in alternative assets such as real estate. The narrative focuses on the influence of Equity Trust's founder, Dick Desage, who is credited with pioneering the self-directed IRA industry. The speaker emphasizes the appeal of tax-deferred or tax-free growth through self-directed IRAs and the potential for higher returns through direct investment in tangible assets like real estate, as opposed to traditional stock market investments.
🏘️ Self-Directed IRAs: Empowering Investors with Diverse Investment Options
The speaker explains the concept of self-directed IRAs, emphasizing the investor's ability to choose investment assets beyond traditional stocks and bonds. It clarifies that while self-directed IRAs offer broad investment freedom, certain assets like artwork, collectibles, and alcoholic beverages are prohibited. The explanation includes the process of transferring funds from a traditional retirement account to a self-directed IRA without incurring taxes or penalties. The speaker advocates for the empowerment of investors to make their own investment decisions, highlighting the tax advantages of self-directed IRAs, including the elimination of taxes on rental income and capital gains when selling properties held within the IRA.
📈 Tax Implications of Traditional vs. Roth IRAs and the Power of Tax-Free Growth
This section provides an in-depth comparison of traditional IRAs and Roth IRAs, focusing on their tax implications. The speaker uses the analogy of paying taxes 'on the seed or the crop' to illustrate the difference between tax-deferred growth (traditional IRAs) and tax-free growth (Roth IRAs). The narrative includes a hypothetical scenario to demonstrate the significant tax savings achievable with a Roth IRA compared to a traditional IRA or a taxable account. The speaker also touches on the 'backdoor Roth' strategy, which allows high earners to convert traditional IRAs to Roth IRAs, and presents a case study of a couple who successfully grew their retirement funds using self-directed IRAs, emphasizing the potential for substantial wealth accumulation and tax savings.
💼 Self-Directed IRAs as a Tool for Investment Control and Legacy Planning
The final paragraph discusses the empowerment that comes with self-directed IRAs, allowing investors to take control of their retirement funds and invest in assets they believe in, such as real estate or private equity. The speaker dispels the misconception that self-directed IRAs are only beneficial for Roth IRAs and highlights the potential for higher returns and better control over one's financial future. The narrative concludes with a real-life example of investors who have successfully used self-directed IRAs to not only grow their wealth but also plan for their legacy, intending to pass on their tax-free, cash-flowing properties to their children and grandchildren.
Mindmap
Keywords
💡Financial Crisis
💡Retirement Portfolios
💡Self-Directed IRA
💡Tax-Free Wealth
💡Real Estate Investing
💡Traditional Stocks and Bonds
💡Tax Deferral
💡Roth IRA
💡Prohibited Transactions
💡Legacy Planning
💡Private Market Investments
Highlights
John Bowen discusses the impact of the 2007-2008 financial crisis on retirement portfolios and the challenges faced by those nearing or in retirement.
The founders of the company John worked for preferred real estate as a wealth creation tool over traditional stock market investments.
John's background in real estate and finance, and his journey from considering a career in financial advising to becoming an educator in the self-directed IRA industry.
Introduction of John Bowen as a respected educator in the self-directed IRA industry, with extensive experience in real estate investing and workshops.
John emphasizes the power of building tax-free wealth and leaving a lasting legacy through alternative investments.
Explanation of the concept of self-directed IRAs and the ability for investors to take control of their retirement funds.
The difference between self-directed IRAs and traditional retirement accounts, focusing on the freedom to invest in a wider range of assets.
Clarification on the tax advantages of self-directed IRAs, including tax-deferred and tax-free growth.
John explains the process of moving funds from traditional retirement accounts to self-directed IRAs without incurring taxes or penalties.
The potential for significant tax savings through self-directed IRAs compared to taxable investments.
The story of Kevin and Cynthia, who successfully grew their retirement funds through self-directed IRA investments in real estate.
The use of self-directed IRAs for legacy planning and estate planning, allowing for wealth to be passed down tax-free to future generations.
John's emphasis on the importance of investor control and decision-making in self-directed IRAs, as opposed to reliance on traditional financial markets.
The flexibility of self-directed IRAs to invest in various alternative assets, such as real estate, private equity, and precious metals.
The potential for higher returns through self-directed IRAs, contingent on the investor's strategy and market conditions.
John's role in educating the public on self-directed IRAs and empowering them to make informed investment decisions.
Transcripts
I live through the great financial
crisis and I saw in 2007 2008 a lot of
Americans their retirement portfolios
completely wiped out but there were
major challenges for those individuals
at that time especially those that were
setting themselves up for near
retirement or were actually in
retirement where they had to take draws
from their retirement accounts when
those plans were at 60 70% value of
where they were at prior to the great
financial crisis and so the founders of
this company that I was working for that
were in the real estate business I
started asking them questions about why
don't you have IAS or 401ks or other
retirement plans and they said well John
we don't have those types of accounts
because we don't believe in the stock
market we believe in real estate as a
wealth creation tool we believe in
investing in businesses starting
businesses that's all they had ever
[Music]
done
[Music]
you're tuned in to the freedom show we
are in the studio having a conversation
we're really excited to share with you
today today's guest is John
Bowen we're so excited to have you John
and before we dive into the freedom show
and your freedom story we would love to
uh let the audience get to know you a
little bit so flip you want to um
introduce John I got on my my Santa
glasses all
right joh Bowens is one of the most
sought-after and respected Educators in
the self-directed ira industry as
director head of education and investor
success at Equity Trust Company John
draws from his 20 years in the real
estate industry and his experience as an
active real estate investor in his
travels across the US and virtually he
has trained 60,000 investors during the
more than 400 workshops and classes
spreading the message about the power of
building tax-free wealth and leaving a
lasting Legacy by investing in what
other investors know best in addition to
thought leadership in the industry John
has also directed teams in both the
front office and back office operations
with Equity Trust focusing on the
custody of various alternative assets
including but not limited to real estate
notes private Equity precious metals and
much more John contributed to the book
self-directed IAS building retirement
wealth through alternative investing
with Equity Trust Company fund found ER
Richard desich senior and has appeared
on several National real estate and
finance related radio shows including
their Rich Dad Radio Show he received
his bachelor's degree in finance from
Ohio University John holds the certified
Ira Services professional designation
through the American Bankers Association
welcome to the show John hey thank you
so much flip and Danny really appreciate
you having me on today we are so
grateful to have you here and so um for
our audience you guys know that the
freedom show um we love talking about
Freedom we love inviting people who are
in our Network already so that we can
introduce you to them John is somebody
who we um met personally actually in the
power room um and we've seen them quite
a few times at those events and they are
putting on workshops across the the
country and we are starting to do more
things with them ourselves I was just
telling John right before the show that
the very first self-directed Ira company
that we worked with personally um with
our investors was Equity Trust and we
built our entire process document of how
how to use self self-directed IAS in our
investment opportunities based on their
model and so we're super excited to have
John here he has been on we like we
looked at his Media Kit John's been
everywhere so now he's on the freedom
show and we're super excited um to start
really off um the way that we start off
with every guest John we want to start
this off getting to know you on a
personal level um and you sharing with
us what does freedom mean to you and uh
tell us about your journey and how you
feel like you've achieved some type of
freedom in your life yeah well I
appreciate the question and you know in
terms of you know where my journey began
uh 20 years ago I got involved in real
estate and I didn't get involved in real
estate you know going out on my own and
flipping houses I was very young I
worked for a small real estate company
in Cleveland Ohio and it was just a
small family-owned operation they owned
a lot of industrial commercial building
some single family properties uh that's
what got me exposed to real estate and
uh even before then growing up you know
I always had sort of my own little
landscaping business so I always had
sort of this entrepreneurial type sort
of drive to me and uh I was working for
a small mom and pop hardware store uh so
I got exposure to what it means to run a
small business and work very closely
with the owners and then working for
this real estate company that got me
exposure to how to create wealth and
leave wealth to other family members
through real estate investing and small
business ownership and so I decided to
pursue um higher education that was just
something my father uh said hey that
wasn't something that I ever had an
opportunity to do I don't want you to
have to work like I do so I want you to
to pursue this so I went ahead and did
that I'm very grateful that I did that I
studied Finance real estate finance and
then out of school uh I had this this
thought of becoming a financial adviser
because I spent a lot of time on that
and through school all I learned about
as a lot of people that have gone
through the same Journey as I've gone
through uh I I thought that all I could
use my retirement money for my Ira's
401ks and other retirement accounts is
to invest in traditional stocks bonds
and mutual funds and as you did I live
through the great financial crisis and I
saw in 2007 2008 a lot of Americans
their retirement portfolios I'm not
going to say were completely wiped out
but there there were major challenges
for those individuals at that time
especially those that were setting
themselves up for near retirement or
were actually in retirement where they
had to take draws from their retirement
accounts when those plans were at 60 70%
value of where they were at prior to the
great financial crisis and so the
founders of this company that I was
working for that were in the real estate
business I started asking them questions
about you know why don't you have IAS or
401ks or other retirement plans and they
said well John we we don't have those
types of accounts because we don't
believe in the stock market we we
believe in real estate as a wealth
creation tool we believe in investing in
businesses starting businesses that's
all they had ever done and so through
that exposure I then stumbled across
Equity Trust and our company founder his
name is Dick desage and he's widely
known as the pioneer of the
self-directed IRA industry he put
together one of the very first real
estate transactions with self-directed
Ira investors back in the early 80s and
it was 22 Ira investors in a commercial
real estate syndication and each of
those 22 Ira investors made nearly
$200,000 tax deferred in their
self-directed IRAs over 19 years under
the triple net lease and so it was it
was just a a really great success story
and so this started to this started to
gain momentum in the 80s and 90s and
then in the 2000s with the internet it
really started to take off and so I I
met Mr desich about nearly two decades
ago he became my mentor uh t me a lot
about the ability to be able to use a
retirement account to invest in real
estate private Equity cryptocurrency now
at that time it didn't exist but now it
does gold and silver but but very much
concentrated around real estate and I
was absolutely fascinated with the
concept of being able to own a single
family rental property or invest in
apartment building or a commercial
shopping strip or whatever type of asset
class or private money lending and be
able to do that in a tax defer or
taxfree environment I I like to say
compounding interest in the absence of
Taxation you know my my journey was
really I was down this path of becoming
a a financial advisor and Advising
people on moving all their money to me
and investing solely in the traditional
stock market and and nearly two decades
ago I met our company founder and I I
thought there's got to be a better way
to do this and I don't necessarily think
I want to continue on that trajectory in
disclosure I don't give Financial advice
I don't provide recommendations uh what
I do is I educate and inform the public
on how they can take control of their
IRAs 401ks and other retirement plans
how they can unlock them from the
current structure they're in now and how
they can actually self-direct those
funds into what I call Private Market
Investments so real estate single family
rental properties whether they're buying
them TurnKey or they're investing in a
real estate fund or they're lending
money secured by real estate or maybe
they're investing in a private credit
fund like a hard money loan fund that
those are all the types of Investments
that our clients they'll move their
Monies to us and then ultimately they'll
use us as the conduit at their custodian
to be able to direct their funds into
those types of opportunities and they're
doing it because they have more
confidence over those types of
Investments they have more trust in
those types of Investments which they
consider to be more hard assets compared
to the traditional financial markets wow
yes you unpacked act a ton right there
there was about three or four times I
was like oh we could go off on that
tangent and that tangent and that
tangent so let's um start from the
beginning John talk about a
self-directed IRA explain the difference
between self-directed IRA and a
retirement account so for those where
this is they've heard us talk about it a
few times but not nearly um to the
extent of which we're going to talk
about it today so can you unpack it very
simply for those who have retirement
accounts and they're not exactly sure
the difference between what they have
now and a self-directed account yeah
yeah so the best way to think about it
for the audience is self-directed is an
industry term it just tells the investor
that they have the ability to
self-direct their retirement funds into
any type of asset that they deem as a
best fit for their portfolio now it is
important to cavey out that with the
notion that there are assets that you
cannot invest in with your self-directed
IRA so no artwork no collectibles no
beanie babies or pogs uh you can't
invest in alcoholic beverages and be a
member of an S corporation with your IRA
there are certain individuals that you
cannot transact with these are called
prohibited transactions ultimately the
tax code going back to 1974 the orisa
Act was exclusive rather than being
inclusive so there's a lot more that you
can do than you can't do so the idea is
is investors are only limited by their
own creativity so self-directed is just
an IND industry term the best way to
think about it is let's say you have an
IRA 401K 403b thft Savings Plan 457 so
you have an existing retirement account
and it's it's with a custodian now some
people don't know who their custodian is
they're not sure that's okay it's easy
to figure out who that is but it's it's
with a custodian it has to be with a
custodian and assuming that you've left
that employer or if it's just an IRA
like a traditional IRA or Roth IRA or
sep CP Ira or simple IRA ultimately you
move that into an Equity Trust
self-directed IRA and by moving that
money from One financial institution to
another there's no taxes or penalties
and and I say that because a lot of
people get caught up in thinking that if
they move their money from One financial
institution to another that there's no
taxes or penalties what what I'll say
and I'll be pretty candid about this
financial institutions have gotten very
creative at figuring out ways to get
people's money into their ecosystem and
then it never leaves right the reality
is is that's what financial services
does and it's not good bad or
indifferent right everybody's got to
make money everybody's got a business
model and and and I will say there's
nothing wrong with that but you just
have to understand as a consumer
investor that you have choices you have
the ability to empower yourself to make
your own decisions you don't have to put
all of your money with this particular
Institution
and leave it in a traditional
stock-based portfolio or fixed income
based portfolio you have the ability to
take control and there's not going to be
any type of onerous taxes or penalties
you simply just move your money over
from One financial institution into the
Equity Trust self-directed Ira once
you're there you then have the ability
to direct your funds out to private
Market Investments specifically we're
talking about real estate here I'm
passionate about real estate I invest in
in real estate with my self- dried
accounts I make private money loans with
my self- dried accounts uh that's what
I've been doing for a lot of years
that's what I've been teaching other
people how to do and so let's say
somebody moves their
$150,000 from their 401K over into a
self-directed ra and then they want to
buy a house for 110,000 put $110,000 wor
a rehab into it and rent it out for
$1,400 a month they move their money
over they move their money out for that
investment and then all their rental
income comes back into their
self-directed account and the beauty of
it is that they eliminate taxation on
those returns as long as they follow the
rules and guidelines there's no taxes on
the rental income and then when they
sell that rental property there's no
long-term capital gains tax there's no
recapture depreciation there's no
schedule ease there's no reporting on a
1040 so what's nice about the
self-directed IRA is it allows an
individual to be able to a like we've
been talking about invest in hard assets
like real estate and B there's some
pretty powerful tax advantages like I
always say compounding interest in the
absence of Taxation yeah so why don't we
just go down that rabbit hole um talk
about the tax advantages and what you
mean by the compounding interest in
absence of Taxation yeah so inherently a
self-directed IRA and really any Ira
just remember self-directed is an
industry term the growth in that account
will either be what's called tax
deferred or tax-free
so the difference between the two are
the account types and I think it is
important for viewers to understand that
there are two different types or styles
of accounts you have a traditional IRA
and you have a Roth IRA so a traditional
IRA which is where most of the
retirement wealth is in this country by
the way because people have been
conditioned to put money into an account
to get a tax deduction grow it tax
deferred and then when they take the
money out after the qualifier retirement
age of 59 and a half that's when they
pay taxes the analogy we like to use in
the industry is you either pay taxes on
the seed or you pay taxes on the crop so
most people have put money into tax
deferred accounts 401ks 403bs Thrift
Savings plans these are all employer
plans or maybe someone just has a
traditional IRA or SE Ira or simple iray
the monies are going in they're getting
deductions for that it grows tax
deferred again when they take the money
out they pay taxes now tax deferred
growth is still pretty powerful if we
actually put some numbers behind this if
we put $6,000 away into an account for
25 years and we apply a 12% compounding
return taxes of 30% during our working
years of 25 years and taxes of 20% when
we take the money out if we compare a
traditional IRA to just taxable meaning
every year you got to pay taxes compared
to tax deferred you'd have over $300,000
in tax savings if you punch that into
your financial calculator you got
$300,000 in tax savings so economically
financially you can argue that a
traditional IRA can be powerful in
contrast to just saving taxable right
then you go to the Roth IRA which is the
second call it style of account the Roth
IRA didn't come about until 1997 1998
williiam Roth Jr he was the senator from
Delaware that really pushed this
legislation took them about nine times
got it passed 1998 Americans now have
access to a Roth IRA now you will learn
that high net worth individuals or
rather I should say higher income
earners in 1998 weren't allowed to have
a Roth
IRA and so the way the Roth IRA works is
the money that goes in is after tax it
grows taxfree and then when you take the
money out you pay zero percent tax so as
long as you follow the rules the
guidelines you're 59 a half or older you
pay 0% tax so if we apply that same
compounding interest formula that I
mentioned in a Roth IRA you would have
$1.17 million so if you compare the Roth
to the traditional you got over $200,000
in savings if you compare the Roth to
the taxable environment it's over
$500,000 in savings so the Roth IRA is
is really really powerful now I
mentioned that high income earners in
1998 didn't qualify but fast forward to
2010 they changed the legislation and
they said okay all income earners can
convert from a traditional to a Roth we
like to call this a backdoor Roth so
what you do is you take your pre-tax
money or you just make a contribution to
a traditional and then convert over to a
Roth Now I I'll button this up with a
quick sort of example or case study that
I think might help some folks comprehend
how this works I have a a husband and
wife couple I've known for a lot of
years Kevin and Cynthia uh in fact you
guys may have come across them at one
point or another at a real estate event
uh it's a small world right it seems
like everybody knows everybody and so
Kevin and Cynthia they're from uh
Collinsville Illinois area and they have
uh they had I should say
401ks and they left their jobs like most
people they leave their jobs eventually
and they rolled their 401ks which were
all pre-taxed into traditional IRAs and
they knew that they were this was back
in 2011 2012 they called themselves
stock market refugees that was their
words not mine so they took losses in
the market they recovered a bit they
rolled their money over into traditional
IRA self-directed of course again don't
get caught up with the confusion of
self-directed it's just an industry term
and so at that time they said hey we got
about 117,000 to start with and we we
feel strongly through our real estate
investment strategies because they're
they're value ad investors right they
find properties they add value
they sell them on owner financing lease
option to purchase rent to own they have
rentals they do private money lending
and so over the course of the last 10
years 10 to 11 years they've grown that
117,000 to over two million in
properties in cash flow they've done
well over 30 real estate transactions
they still have 14 cash flowing
properties in their Roth IRAs and they
have
$200,000 roughly 200,000 in net cash
flow coming in every year into the Roth
IR raise and they pay 0% tax no
long-term capital gains tax no recapture
depreciation no taxes on the
distributions because they're over 59
and a half they're doing private money
lending is well in that account rewind
the tape back to
201122 their monies were in pre-tax
accounts but I just said Roth in
201122 over the course of two years they
converted it's called a Roth conversion
they converted their pre-tax money into
Roth they paid taxes on the
17,000 so they don't have to pay it on
the much larger Nest Egg of over two
million in properties in cash flow and
when I asked Kevin and cynthy I
interviewed them just like we're kind of
doing an interview here and I said what
do you plan on doing with your Roth IRAs
and I figured they were going to buy as
secondary residents they're up north
like I am here in Cleveland they're in
Collinsville so the the winners are
pretty brutal and I figured they were
going to buy a secondary residence
somewhere else you know in a warmer
climate Florida somewhere Texas wherever
and they said no we we plan on leaving
this Roth IRA these Roth IRAs because
they both have roths husband and wife
both of them they said we plan on
leaving these accounts to our children
and if our children have children we'll
leave it to our
grandchildren because when they leave
those accounts with those cash flowing
assets to their children or
grandchildren the children and
grandchildren will pay 0% tax so what
you start to pick up on is that this
Roth IRA can be also a very effective
Legacy planning or estate planning tool
now if all they have is traditional
moneyy there's nothing wrong with that
tax deferred growth and investing could
still be better than taxable investing
maybe Roth IRA investing is even better
you could make the argument but to each
is it really depends on the individual
situation and so I say that because I
don't want anybody to walk away from
this podcast thinking that the only way
to self-direct is with a Roth IRA I've
had so many people that think that way
the concept of it is if you have a 401k
or traditional IRA and you don't want
all of your money invested in the
traditional financial markets and you
feel you can make a better rate of
return investing in real estate private
Equity private placement deals private
money lending private credit funds
whatever you want to invest in if you
think you can make a better rate of
return then you might want to consider
the self-directed IRA option now like I
said I can't advise and tell someone
that just by opening a self-directed IRA
you're going to make a better rate of
return ultimately the rate of return
is going to be dictated by you as the
investor and that's really what's so
powerful here is that you get to take
control and ALS ultimately chart your
own destiny and you're not beholding or
Reliant upon the traditional financial
markets yes I love that chart your own
destiny we talk about that a lot that's
why we vertically integrated our
companies because at some point
everything came down to how much control
do we have over the decisions we're
making where we're investing our time
where where where we are investing our
money
nothing on the show should be considered
specific personal or professional advice
please consult an appropriate tax legal
real estate Financial or business
professional for individualized advice
opinions and information on the show are
not guaranteed all investment strategies
have the potential for profit or loss
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