by
Carl Hampton
08/04/2006
"In America there are two tax systems,
one for the informed and one for the
uninformed. Both systems are legal."
One of America's most famous jurists,
Justice Learned Hand made this statement
over forty years ago. When used today, one
would certainly have to include the little
understood world of Individual Retirement
Accounts (IRA’s). The point I am making
here is that we all need to keep ourselves
informed about what IRA alternatives are
available to us. Being uniformed about these
IRA alternatives almost certainly means we
are not taking full advantage of the
opportunity to secure better returns on our
retirement dollars.
The vast majority of Americans have since
their (IRA's) introduction in 1974 allowed
our IRAs and 401Ks to be directed by someone
else, such as the friendly Broker and their
Wall Street affiliates. This easygoing very
passive approach "let someone else do
the work for me" attitude may well have
continued forever had it not been for the
Wall Street crash of 2000. With more than a
trillion dollars lost in IRA and 401K equity
alone, it challenged the very way we viewed
Wall Street.
The clear fact is if we Americans had known
or understood back in 1974 that our IRAs and
401K's could be used to purchase real estate
related items like Tax Lien Certificates,
Tax Deeds and Mortgage Notes, millions of
American baby boomers would today be
retiring with vast sums of cash and assets
inside of their IRAs and 401Ks.
NASDAQ reported on March 10, 2005 that it
had risen to 59% of what it was five years
earlier! This means $100,000.00 invested in
NASDAQ listed companies in 1999 would be
worth something like $59,000.00. That's very
sad, but it’s where most Americans are
today. Magazine, newspaper and television
advertising campaigns have created the
illusion to millions of Americans that those
Wall Street products were the only financial
products you could buy. This is not the fact
and as outlined above Wall Street has not
preformed too well over the last 30 years.
Real Estate on the other hand has out
performed everything over the last 30 years
by a very long way. IRAs and 401K's in
general have over ninety percent of their
funds in financial products. This may well
lead you to ask "Why?” Are those Wall
Street financial products superior in any
way to real estate investments?" No!
Here are some quotes taken from two very
repected publications:
"... since the major housing
organizations began keeping records in the
1960s, there has never been a year in which
the average existing U.S. residence lost
value. Not a one. "FORTUNE Magazine,
August 12, 2002
"It is striking that after the longest,
strongest bull market in history, the
average American built more wealth owning a
home than investing in the stock market
."DENVER Post, March 14, 2002
After reading these quotes, it really is
hard to understand why our IRAs and 401K's
are not 90% real estate versus 10% Wall
Street products. Maybe it’s time for all
of us to get just a little more informed
about those hard earned dollars before
it’s too late!
