Longboat Retirement Solutions LLC

Why You Lost Money Today February 12, 2016

When the market as a whole goes down, people who own mutual funds that are “diversified” lose money (in general).  This includes most people who have an IRA or 401k through their employer, due to the fact that most institutional IRA’s or 401k’s are invested in mutual funds.

A true self directed retirement account lets you invest in individual stocks, precious metals, real estate, foreign markets, and more.

Large institutional banks advertise that they offer self directed accounts.  This is a sham.  These supposed self directed accounts only allow you to buy products that the bank that set it up for you sells – so that they can make money off of selling that product.  To me this represents a break in fiduciary responsibilities.

A Chevy dealer does not want to sell you a new Ford, even if the new Ford has better fuel mileage, better reliability, and costs less.  The Chevy dealer will sell you a Chevy, because that’s how he makes money – he makes a commission off of every Chevy he sells.  In fact the Chevy salesman is not allowed to sell a new Ford.

Similarly, a Fidelity guy will only sell products that he makes a commission off of – Fidelity products.  There may be an investment that he knows is a better fit for you, but if he makes no commission off of that sale, he won’t sell it.  In fact the Fidelity salesman (lets call him what he is) is not allowed to sell you a competitor’s product.

You are the only person in the world who has your best interest in mind when making decisions.  You may not always be right, but at least you are not trying to skim a small percentage of your savings, under the guise of “managing” it.

 

Why Asset Allocation Doesn’t Matter In The Long Run June 27, 2015

 

Part Three: Self Directed Retirement Questions May 19, 2015

This is the third installment in the Self Directed Retirement Questions, Answered.

These are questions I’ve been asked, my answers to those questions, and some commentary.

Question:  What is the difference between a Self Directed IRA and a Solo 401k?

Answer:  A Self Directed IRA requires a Custodian.  Custodians are generally banks and investment houses.  These Custodians charge fees to baby sit your money and tell you where you can and cannot invest your savings.  An SDIRA is far better than a standard IRA, but it can still have high management fees, hoops to jump through, and limitations in what you can invest in.

A Solo 401k, which is designed for the self employed, enables you to invest in anything that the IRS allows.  You become the Custodian; therefore you don’t have any filters on your investments (within the framework of the IRS’s allowed investments).  You basically don’t have to ask permission to use your own savings as you see fit.  Since it is a 401k, you can also borrow up to 50% of the value, up to $50,000.  And again, you don’t have to ask permission or fill out piles of paperwork to take out a loan.  You draw up the terms, put the terms in your safe, write a check from your 401k to you, and then just make the monthly payments to your 401k.  Because you are making payments to your 401k, the interest is essentially free – you are paying yourself!  A Solo 401k also enables you to contribute as the employee and the employer; in other words you can contribute over $50,000 a year to your retirement account – or over $100,000 if your spouse is a partner in the business.  This is a BIG deal.

My thoughts on the two different approaches boils down to this:

If you can, go with the Solo 401k.

 

Questions about the Solo 401k May 16, 2015

This is the first in a series of posts, giving responses to questions that I have been asked….and a little commentary.

One of my favorites:

“Could I set up a Solo 401k with Longboat, transfer the money I have in my current IRA to the new Solo 401k, write a check for the full amount, cash it out and flee the country?”

My answer “I wouldn’t be able to stop you, nor would I or anyone else know that you cashed out.  It would be illegal.  The bank may fill out a suspicious transaction form when you cash a large check.  You would be taking a contribution, and it would be a taxable event.  I don’t recommend this.”

I’m sure people have done this and gotten away with it, but I don’t recommend it.  Any time you take money out of your traditional IRA or 401k it is a taxable event – the IRS wants their piece of the pie.

I am not sure what this guy wanted to do with the cash, but if he was thinking of investing it in another country, he could do that legally with a Solo 401k.  It would be harder, but possible with a Self Directed IRA (you would have to ok it with your custodian).

I am not in the business of giving tax or investment advise.  There is no shortage of “gurus” out there who will sell you snake oil and “fail safe” investments.  caveat emptor

 

Sitting on The Fence May 9, 2015

Do you consider yourself a market timer?

Are you a market maker?

Do you know when the next market crash will happen?

Can you call the peak?

Do you have insider information regarding when Goldman Sachs will pull the carpet from under the U.S. stock market?

Is Janet Yellen your cousin?  Does she give you tips?

If your answer is no to all of these questions, then why aren’t you taking this opportunity to divorce yourself from this bubble while it’s still inflated?

It is amazing to me that more people are not taking this amazing opportunity to take profits, and instead are electing to roll the dice on market timing or give the keys to their future to some guy who has no stake in their success.

I know that I should not be surprised, as history seems to repeat itself every 7 to 10 years these days.  People have exceedingly short memories and attention spans that can only be measured in milliseconds.

I really don’t want to be that guy who said “I told you so”…or “I tried to tell you”.  I get no joy in hearing sob stories about how people waited too long and got wiped out by the debt tsunami.

The current market value has no basis in reality.  When it goes pop, it is going to destroy the retirement of millions of Americans who blindly followed the pundits on CNBC.

Please, Americans, spend more time thinking about your future and less time getting re-educated by mass media.

Lars Forsberg
Longboat Retirement Solutions LLC
406-551-4775
www.myselfdirectedretirement.com

Call for a FREE consultation

 

Why do People Continue to Give the Wall Street Criminals Their Money? February 11, 2015

Anytime I talk to people in random social situations and the conversation veers towards finances, I hear the same mantra: “All of the bankers are a bunch of crooks!”  To that I reply: “Why do you continue to give them your money?”

The initial response invariably is that they have no choice, their employer has their 401k managed by Fidelity or TD Ameritrade or Edward Jones, or any of the other big banks.  Of course this is incorrect.  They do not need to leave their money with the big crooks, whoops, I mean banks, in most cases.

The other common thing that I see all the time is people spending more time analyzing the pros and cons of a particular TV set or internet provider than their retirement plan.  This is crazy, but such is the nature of the human mind.  We spend too much time concerned with trivial things and too little with life’s most important decisions.

So, to answer my own question: “Why do people continue to give the Wall Street criminals their money?” – because they lack the knowledge that they have a choice, and they lack the fortitude to face the real issues that affect their future.

I may sound harsh in my analysis, but I can come to no other conclusion.

Certainly the big media propaganda and collusion plays a factor.  After all, big media gets paid big bucks by the big banks to put out investment “news” that paints a rosy picture of the stock market and the associated banks.

The herd mentality doesn’t help, nor does the mindset of “Oh yeah, most investment advisors are nothing more than used car salesmen, but my broker is great!”  That’s the same state of mind that gets us the same representatives in congress elected cycle after cycle, even thought these guys and gals have a 16% approval rate.

How can this be?  Congress has a 16% approval rate, and Wall Street banks continue to get wacked with hundreds of millions in fines for duping investors, yet the same clowns will get re-elected to congress and the same criminals will continue to live in mansions on the hill while stealing from old ladies’ retirement funds.

Please, pull your head out of the sand and explore the options you have, and for Pete’s sake don’t re-elect someone or give them your life’s savings just because their name sounds familiar!