2021 is here and with the new year comes a refreshed batch of financial goals and ambitions. As you ponder your goals, here are some questions you should ask yourself: Are my goals in line with my current and future financial needs? Am I participating in tax advantaged 401k and IRA accounts? If so, am I in control of those accounts?
Now I know what your thinking, why all the questions? The answer is simple, far too many of us are not taking control of our current and future finances and are sorely missing out on short-term and long-term income-producing benefits. However, there is some great news…IT’S NEVER TOO LATE TO START!
As you begin this journey, there are a few things to consider. First, tax planning. Depending upon your annual income you may want to consider either a tax deferred account (Traditional) or a tax-free growth account (Roth). Second, how much capital do you have to seed the account and how much can you set aside throughout the year to further contribute? Last, but certainly not least, where can you get the best yield with safety?
When it comes to tax planning it is ALWAYS best to consult with a licensed tax professional. Although we are industry experts when it comes to Real Estate Investing, we are NOT licensed tax professionals. With that said, here are some basics. A Roth account is a “tax-free” growth account, meaning you contribute post tax dollars, and the growth is tax-free. One thing to keep in mind with Roth accounts is your ability to contribute to this type of account will phase out as your annual income increases. Traditional accounts are tax-deferred, meaning contributions are tax deductible and you do not pay taxes on your invested capital or the growth until you take a distribution. As mentioned earlier, you should contact a licensed professional to assist you in setting up the right account for your financial situation.
Once you’ve chosen an account type, you need to seed the account to begin investing. When seeding a new account, you have two main options, seed it with cash or roll over funds from an existing account, like a 401k housed with an old employer. Keep in mind, every investment account has regulations in place by the SEC to determine the maximum allowed investment per year. For example, both Roth and Traditional IRA’s have a maximum yearly investment of $6,000, unless you are over the age of 50 in which case you can invest up to $7,000 per year. So, if you are seeding this new self-directed IRA with cash, you need to be mindful of the maximum contributions. But if you seed the new IRA by rolling an old 401k you can still contribute the $6,000 in addition to the capital you rolled into the new account.
Feeling excited yet? You have now created and funded a new self-directed account! But keep in mind, it is up to you to deploy the capital to start generating returns. So, the real question is, where should I invest my capital? At Secured Investment Corp, we strongly believe in Yield with Safety, which is why we specialize in Residential Real Estate Investing. With two High Yield Funds under management and dozens of notes for sale, we have investment options for investors of all financial sizes and experience levels.
DISCLAIMER: Neither Secured Investment Corp, nor any of its affiliates are registered investment advisors or broker-dealers and do not provide investment advice. No communication from Secured Investment Corp. through this website or otherwise is intended to be or should be construed as investment, tax, financial, accounting or legal advice. Neither Secured Investment Corp. nor any of its affiliates provide tax advice and do not represent in any manner that the outcomes described herein will result in any particular tax consequence. Prospective investors should confer with their personal tax advisors regarding the tax consequences based on their particular circumstances. Neither Secured Investment Corp. nor any of its affiliates assume responsibility for the tax consequences for any investor of any investment.
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