Other options include real estate investment trusts (REITs), exchange-traded funds (ETFs), and passively managed portfolios. Often overlooked are tax-managed funds, which offer a mix of passive and active real estate tactics. Note, however, that they are managed by a separate entity. The separation of management and investment tactics makes for more predictable returns and tighter … [Read more…]
So you’re thinking it’s time to open an IRA? That’s great news! An individual retirement account (IRA) is an excellent option. It will give you tax benefits as you save for retirement.
Opening an IRA can seem like an intimidating process. But it’s really pretty simple. Here, we’ll detail the six steps you need to follow to get it done.
Before you can open an IRA, you need to make one major decision: Roth or traditional.
A traditional IRA is one that lets you put in pre-tax dollars. You take a tax write-off in the year of contribution (assuming you’re eligible). You don’t pay taxes on the returns that accrue in your account. But you’ll pay income taxes on withdrawals during retirement.
With a Roth IRA, you contribute after-tax dollars to the account. But when you withdraw the money, you don’t pay any taxes.
Not everyone is eligible for a Roth IRA. So check out the eligibility requirements before you put a lot of time into this choice.
Deciding between these two options can take some time. You’ll need to do some math based on your current marginal tax bracket, state and local income taxes, and projected taxes during retirement. We won’t go into all the calculations here. If you’re not yet sure whether to go Roth or traditional, read this article for a primer on how to do the math.
You can narrow down the list of potential IRAs by deciding ahead of time what you want to invest in. For instance, you could invest in a combination of individual stocks and bonds. Or you could invest in mutual funds or ETFs. Another option is to invest in certificates of deposit.
Here a Dough Roller, we often suggest investing in mutual funds or ETFs. These can give you access to a wide, balanced range of investment options. They may be less volatile than individual stocks. And they are often less expensive.
Need more information before you can decide? Check out these articles on different types of investments:
How to Invest in Index Funds
What are ETFs (and Are They a Strong Investment Option)?
Mutual Funds vs. ETFs–Does it Really Matter?
Stocks vs. Bonds
How to Build a Bond Ladder – Create a Regular Cash Flow
The next decision you need to make is how you’ll manage your investments. Do you want to manage them all yourself as a hands-on investor? Do you want someone else to manage them for you? Perhaps you want something in between these extremes?
This decision is somewhat less crucial than your first choice. You can change your mind later if you decide differently.
Here are some of the main options to consider:
Once you’ve narrowed down your choices by answering questions two and three, you’re ready to choose where you’ll open your IRA. There are some great options available these days. Some of our favorites are TD Ameritrade, E*TRADE, and Betterment. Click the links to check out our reviews on each of those options.
What, exactly, should you look for when reviewing your investing options? Here are some questions to answer before you decide where to open your IRA:
Actually opening an account is pretty simple once you’ve worked through the decisions. With most IRA offerings, you can apply online. You’ll need to provide some personal information, such as your name, address, and Social Security number. If you’re choosing a robo advisor, you’ll also walk through a questionnaire to help the advisor set up your portfolio.
Then, you’ll most likely be able to link your funding account to your IRA. Oftentimes, you’ll need to wait for one or two micro-deposits to hit your funding account. Once you confirm these micro-deposits, the accounts will be linked. You can then fund your IRA and get started investing.
Now that you’ve opened your first IRA, you just need to keep funding it and keep tabs on it. You can contribute just a few bucks a month. Or you can contribute all the way up to the federal maximum limit for that year. (Check here for the latest federal limits.)
If you decided to start out in a managed account whether a target-date fund or a robo advisor account–do some more research. Learn more about investing. This way, you can at least be sure you’re happy with the choices the system is making for your investments. And if you aren’t happy, you’ll be empowered to make different choices for yourself.
This article has mainly focused on the simpler topic of traditional and Roth IRAs for those in traditional employment. If you’re self-employed, though, you have a wider variety of options available to you. Your steps will be similar to those above. But you’ll first need to decide what type of IRA to open.
You can get more information on self-employment retirement options in this article. Start there. Then come back here to complete the standard five steps for opening an IRA.
Track and Analyze your Investments for Free: Managing investments can be a hassle. You may have multiple IRAs, multiple 401ks, as well as taxable accounts. And then there are bank accounts. The easiest way to track and analyze all your investments, regardless of where they are located, is with Empower’s free financial dashboard.
Empower enables you to connect all of your 401(k), 403(b), IRAs, and other investment accounts in one place. Once connected, you can see the performance of all of your investments and evaluate your asset allocation.
With Empower’s Retirement Fee Analyzer you can see just how much your 401k and other investments are costing you. I was shocked to learn that the fees in my 401(k) could cost me over $200,000!
Empower also offers a free Retirement Planner. This tool will show you if you are on track to retire on your terms.
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Source: doughroller.net
In our latest real estate tech entrepreneur interview, we’re speaking with Nelson Lau from PropertyQuants.
Who are you, and what do you do?
I’m Nelson Lau, co-founder and CEO of PropertyQuants. I have a PhD in Decision Sciences and worked in quantitative hedge funds and high frequency trading firms. In quantitative trading, we used computer algorithms to analyze large amounts of data on a wide universe of potential investments to find the best opportunities globally. PropertyQuants is bringing quantitative investment strategies to real estate. We harness data at scale to find the best investments – globally.
What problem does your product/service solve?
It’s difficult to figure out the best real estate investments globally. Real estate practitioners only know the best investments within a limited local area and sector.
This is not because of a shortage of data. The issue is that the amount of data needed to find the best investments globally is beyond human capacity. Computerized statistical methods need to be applied to harness data at scale. But, most real estate companies lack the toolsets and expertise to do this.
This is where PropertyQuants comes in. We crunch large amounts of data to produce a granular understanding of property market performance. We produce location-based scores based on factors such as commute times, and relate these to prices and yield. We also use these to understand how changes – such as the opening of a new train line – can impact future investment returns. We predict investment returns years into the future.
All our products are customizable to match users’ investment mandates and objectives, as well as incorporating any proprietary data they have. We help buy side institutions identify the best locations to invest, know when to buy and sell, and justify their decisions based on hundreds of factors. Investors can rapidly screen and prioritize deals, responding faster to good opportunities and avoiding wasted effort on bad ones. Limited partners in real estate funds can understand fund managers’ market exposures versus manager skill, and determine the best portfolio of funds to invest in.
What are you most excited about right now?
PropertyQuants has just completed the Colliers Techstars Proptech accelerator program. We’ve struck data partnerships, and also developed business and mentorship relationships with hundreds of individuals. I’m excited about where these new connections will take us – already there is a long list of interesting opportunities that we are discussing and prioritizing within our busy work plan for the year ahead.
What’s next for you?
I’m working on scaling the company, by taking the following concrete actions. First, building our consortium of data partners, who may earn revenue as we use their inputs for our clients. Second, leveraging the company’s network of real estate contacts to connect with potential clients. Third, thought leadership efforts. PropertyQuants has been awarded a significant grant from a government agency in Singapore to develop our products – and will present these at conferences and seminars.
I’m most excited about the step after that. The company will use what we learn to build trading systems, supported by historical simulations, investing in publicly listed Real Estate Investment Trusts. This REIT-trading strategy will fill a market void – producing the world’s first quantitative real estate fund.
What’s a cause you’re passionate about and why?
I’m passionate about people having the opportunities to move towards self-actualization. This doesn’t always have to be achieved by finding a job that matches your interests, or starting a company. In fact, many people are very serious hobbyists at one or more pursuits. I’m enthusiastic about seeing individuals have outlets to exercise these drives.
I’ve founded a group called LiquidSupperClub. It’s centered around drinking gatherings – which are a great way to make friends. But, we’ve also had home bartenders serve craft cocktails, home craft beer brewers test out their latest creations, aspiring sommeliers lecture and serve some really select wines, and much more. It’s always great fun, and for the host of the night – a really fulfilling experience.
Thanks to Nelson for sharing his story. If you’d like to connect, find him on LinkedIn here.
We’re constantly looking for great real estate tech entrepreneurs to feature. If that’s you, please read this post — then drop me a line (drew @ geekestatelabs dot com).
Source: geekestateblog.com
It may seem like you’ll never have $1 million to invest, but if you invest consistently over decades, you might build up that much wealth more quickly than you’d think. And if you manage to get a windfall with that many zeros behind it, it’s best to figure out ahead of time how you’ll invest it to keep it growing.
So let’s say you find yourself with a $1 million windfall tomorrow. What will you do with it? Well, hopefully, you’d consult with a professional who can give you advice on the best way to allocate your funds. But once you’ve decided to do that, your best bet is to choose low-cost, high-reward investment options. And, of course, you’ll want to diversify your investment portfolio. So to do that, here are the best options you can invest in if you have a million dollars.
Before you start investing, there are a few things that you should do.
Before you start investing, you need to know why you’re investing. Your goals will play a significant role in determining how you invest.
For example, if you’re young and investing for retirement age, you can afford to own volatile stocks. You’ll probably want to build a portfolio that’s heavy on stocks and light on less risky investments like bonds. This can give your portfolio the highest potential returns.
If you’re investing for a more short-term goal, you’ll likely want to build a more conservative portfolio so that you don’t lose your savings right before you need them.
Your goals can also determine the account you use to invest. If you’re saving for retirement, you’ll want to use a 401(k) or IRA. If you want to help a child pay for college, you might use a 529.
Related: The 10 Best Investment Strategies for Short-Term Savings Goals
Are you the type of person who enjoys managing their money, or do you want to take a hands-off approach to investing?
If you’re an active investor, look for a brokerage that offers low or no commissions on trades and has tools you can use to research stocks and other securities.
If you’re looking for more passive, buy-and-hold investments, consider working with a company with low-cost mutual funds, such as index funds.
Related: The 5 Best S&P 500 Index Funds (and the Worst Ones)
Some people want to put their money where their mouth is when it comes to investing. Before you start investing, you might want to consider ESG investing, which focuses on Environmental, Social, and Governance factors in companies.
For example, you might want to focus on investing in companies that work to benefit the environment or take steps to ensure they treat their workers fairly and pay them well.
ESG investing has grown popular in recent years, and some argue that it can improve performance compared to investing without focusing on these factors. However, ESG investing is often more difficult or expensive because you have to do the work to assess companies’ commitment to ESG concepts or pay a mutual fund manager to do that for you.
Related: The Pros and Cons of Socially Responsible Investing
| Type of Investment | Best For |
| Robo-Advisors | Lowest Fee Structure |
| Stocks and Mutual Funds | Autonomy |
| Real Estate | Physical Asset Value |
| Bonds | Proper Risk Balance |
| P2P Lending | Higher Risk / Return |
First, if you have any major debts, you’ll want to pay those off. There’s some debate about whether or not you should pay off your house, so put some thought into that one. But, at a minimum, you should knock out all high-interest debt. Most of the investments below will not come anywhere near beating the 20%+ interest you’re paying for credit cards and personal loans. So get rid of those first so you have a great financial base to launch your investments from.
Again, before we talk about investments, let’s be sure you’ve got your financial base in place. A fully-funded emergency fund of six months or more worth of expenses is your next step. For this, you’ll want to put the money somewhere liquid and insured, so look for an FDIC-insured savings account with a high yield.
One of the best options today comes from the CIT Bank Savings Connect Account. You’ll earn a cool 4.65% APY on your money which should keep you in line (or ahead) of inflation. The money is always liquid so if there’s an emergency, you’ll have full access to the account.
Also Read: Best Online Savings Accounts with High Interest
With a million dollars to invest, you can max out your retirement savings vehicles first, and using these tax-advantaged accounts should be your priority each year that you possibly can. If you already have money going into a company 401(k), consider a service that can analyze the fee structure of your account to make sure you’re maximizing your return.
And if you don’t already have an IRA, open one to use with some of the following investing options. Then max out those accounts before you direct money to your taxable accounts.
Any time you’re looking to make a big investment, big fees will have an amplified effect. So you’ll want to look for the lowest-fee options with a good yield when you’re looking to invest this much money. One option for that is to invest with a robo advisor. Using algorithms instead of individuals, these services make historically solid investing decisions but cost far less than traditional investment advisors.
Wealthfront is one of the best robo advisors out there and they’ll give you $50 on the house for creating an account with a $500 deposit. Wealthfront has dozens of features that will allow you to set a personal risk tolerance and create a portfolio that suits you. After you’ve created your profile, it’s largely hands-off from there.
The advisory fee to use Wealthfront is 0.25%. So for example, if you invested $500,000 with them, you would pay an annual fee of $1,250. That may sound pretty steep, but if you’re generating returns of 7%+, it represents a very small fraction of what you’ll gain. In this example, a 7% return means your end of year balance after one year would be ~$533,750 after the fee was taken.
If you’re interested in using that million dollars to spread some good in the world, you can do that while earning money through a company like Stash. Investing in socially responsible companies is easier than ever now. You can invest in these types of stocks (or any other stock) with as little as $5 from the palm of your hand with Stash. It’s an app that simplifies and democratizes investing so everyone, from first-time investors to pros, can reach their financial goals regardless of income or experience level.
With detailed stock market data and educational materials, personalized portfolio tracking, easy-to-read reports, and personalized notifications on your personal moments of success, this app not only lets you invest without any brokerage fees but also equips you with the tools to make more informed decisions about when it’s time to sell up or down.
Read our Stash Review
Even with a million dollars to invest, you may not be able to buy a property outright in some areas of the country. And if you do own property on your own, you’re stuck with the headache of managing it. If you want to avoid that but still want to add real estate to your portfolio, Fundrise is a company that can get you invested.
Through crowdfunding, your investment is pooled with others to purchase property. There are different investment strategies and goals within every Fundrise account so you can play it safe, or take on more risk for a higher return. Fundrise even offers a self-directed IRA option so your contributions can reduce your annual tax burden.
If you’d rather not invest directly in a single property, CrowdStreet also offers real estate funds that let you diversify your investment. You can also sign up for the site’s advisory service, which lets you work with a professional to build a real estate portfolio that can help you achieve your investing goals.
In order to become a CrowdStreet investor, you will need to have an income that exceeds more than $200,000 annually and a total net worth of at least $1 million (not a problem if you’re reading this post). And unlike Fundrise, you won’t be able to invest in single family units. CrowdStreet is for retial and commercial real estate only.
Another way to be choosy and to get a potentially hefty return on your investment is with a peer-to-peer lending platform. Prosper is great for lending your money to individuals who need to consolidate debt, fix up their homes, or need a cash infusion to start a business.
When you invest in this platforms, you can create a portfolio of loans that you partially help fund so that you can spread your risk across multiple loans quite easily. The historical returns are generally well above that of savings and CD’s but the more risk you take, the greater the chance that the customer you lend to could default, which will offer negative returns.
P2P lending was a very hot idea 15 years ago and has cooled considerably since. Still, when you choose a blended loan portfolio, the returns through Prosper can be quite generous. And perhaps the greatest upside to Prosper is that your investment helps others achieve their financial futures.
Of course, even millionaires have to worry about keeping a balanced portfolio and ensuring that not all of their capital is in riskier investments. That’s where options like CDs and securities come in. These have traditionally been a way to out-earn inflation, so you aren’t losing money with it sitting around.
But they’re also much safer than any other type of investment. So be sure you talk to your financial advisor about the best way to utilize tools like these to bring balance to your portfolio.
Creating a CD ladder is a great way to lock in guaranteed returns and diversify. Short-term CD interest rates are the highest they’ve been in decades and you can lock in a 4-month no penalty CD with Ponce Bank right now and earn 5.15% APY.
A no-penalty CD means you can withdraw the funds at anytime and even thought it’s a CD, there won’t be an interest penalty for early withdrawal. Your investment is always protected and always available.
When creating a list of ways to invest $1 million responsibly, we looked for investment strategies available to most people that will help them build a diverse portfolio and earn solid returns. We also considered the cost of the investment strategy, as costs play a direct role in your returns. Every penny you pay in fees can have a compounding effect on your future returns.
We also tried to come up with a list of investment strategies that meet different risk tolerances and investing goals. People who are less risk-tolerant may not want to invest in real estate because real estate investing often involves high risk and leverage. Instead, they might want to focus on safer investments like mutual funds or even CDs.
When looking for financial help online, it’s hard to know whether you can trust the information you find. Anyone can publish on the internet, and they may have an ulterior motive.
One essential thing, no matter how you choose to invest, is to make sure you diversify your investment portfolio.
Diversifying your investments, in essence, means not putting all of your eggs in one basket. If you decide to invest in stocks, don’t put all your money into a single company. If you’re purchasing real estate, try to buy more than one property.
Think about what would happen if the company you invested in goes bankrupt or the property you buy burns down. You’d lose all of your money. If you diversify your portfolio, even the worst-case scenario for one of your investments wouldn’t completely doom your portfolio.
Mutual funds, real estate investment trusts (REITs) that own multiple properties, and robo advisors that build balanced portfolios are all great ways to easily diversify your investment portfolio.
If you have $1 million to invest, you have to be incredibly smart about managing that money. As we’ve written before, $1 million isn’t as much as it used to be. In fact, the argument can be made that you need at least $2 million to retire. So this would only get you halfway home.
So, it’s important that you not only preserve the $1 million the best you can but also help it grow. Investing is one thing you have to do, but only if you are comfortable managing that large of a portfolio. If you’re not (and even if you are), I would STRONGLY consider looking at working with a professional.
I get that you’d want to manage $1 million on your own (heck, even getting to this point is an accomplishment), but don’t be silly and mismanage it.
As you begin pulling together your various investments, it’s important to figure out how you will keep track of them. Sure, you could pay someone to do it all for you. But that would just eat into your returns and your ability to grow your money. If you’d prefer to keep an eye on your investments yourself, check out services like Empower, which help you pull together all the various threads of your financial life, from your budget to your investments on different platforms.
Empower can help you track your investment performance, spot potential problems, and keep an eye on your overall portfolio balance. It can also run your day-to-day budget, so it’s a very flexible platform worth using once you’re ready to start keeping track of all this money.
The most important thing to remember is once you hit that million-dollar goal mark you’ve been saving for, the work isn’t over. You could easily lose it with celebratory spending. Have a plan in place for how you want to make this money work for you. With the right investment vehicle, you’ll be cruising down the road toward financial freedom.
To use a basic example, say you had an account with $1 million that paid 4% annually–in such a case, you’d earn $40,000 per year. What’s great about compounding interest, though, is by leaving your money in the account, interest would accumulate on the new balance. So after the second year, assuming no other changes, you’d have $41,600.
You can retire with $1 million dollars if you manage your withdrawals appropriately (it’s pretty tight, but do-able). The Rule of 4 says that you should withdraw no more than 4% of your total portfolio each year. Assuming you’re earning at least 4% in returns, you can effectively live off of interest earned without touching your principal balance. With a $1 million portfolio, this is $40,000 per year.
The best short-term investment for $1 million is a low-cost index fund that broadly diversifies your investments in stocks across a variety of industries. Alternatively, you can invest your $1 million in a robo advisor which will pick low-cost investments across different areas for you.
Read More: Best Investments for Passive Income
As you can see, there are many ways you can invest $1 million. The first thing to recognize is that you’ve amassed this much money, which is more than many people can say for themselves. Next, though, you need to determine a strategy and focus on executing that strategy (and stick to the plan!), so you can make that $1 million last and grow even more.
Source: doughroller.net
Every spring marks the start of homebuying season – a period where home sales spike. For title professionals, homebuying season is our “busy season,” with professionals working tirelessly to ensure that property titles are clear of any liens or other defects ahead of closing day.
For many buyers, closing day represents the beginning of the next chapter in their lives – having a new place to celebrate important milestones and create new memories. For others, it represents the culmination of years of sacrifice that allowed them to save enough money for down payment.
Unfortunately, as buyers are preparing for this momentous day, wire fraud – a scam in which cybercriminals attempt to steal buyers’ hard-earned money – poses a serious threat. This homebuying season – and year-round – industry professionals must do their part to ensure home buyers understand the threat of real estate wire fraud and how they can protect themselves.
According to the National Association of Realtors’ 2023 Home Buyers and Sellers Generational Trends Report, approximately one in four homebuyers today are first-time buyers. These consumers often face a steep learning curve when beginning the homebuying process, which makes them especially vulnerable to scams.
But for even the most digitally savvy and seasoned homebuyer, wire fraud continues to pose a serious threat. Cybercriminals have become more sophisticated over the last decade and more skilled at tricking unsuspecting homebuyers into wiring their funds into a fraudulent account.
Wire fraud typically starts with a technique called phishing, where future buyers are tricked into inputting their private information or clicking a link that allows cybercriminals to steal their login information. Once hackers gain access to an email account, they will monitor messages to see if the person is a homebuyer and then use the stolen information to email fraudulent wire transfer instructions disguised to appear as if they came from a trusted real estate professional.
According to the Internet Crime Complaint Center (IC3)’s 2022 Internet Crime Report, business email compromise (BEC) – which includes real estate wire transfer fraud – has grown from $676 million in reported losses in 2017 to $2.7 billion in reported losses in 2022. As home values rise, so do the loss amounts from these scams. Additionally, the number of reported victims has slowly risen from 19,954 in 2021 to 21,832 in 2022. These numbers are probably even higher as not all fraud is reported. Consumers should report any fraud to the FBI at www.ic3.gov.
As real estate professionals, we have a responsibility to make sure our customers are aware of these scams and have the tools they need to protect themselves. Through increased consumer awareness and educational efforts, we know that there will be fewer victims.
That is why it has been a longstanding strategic priority of the American Land Title Association (ALTA) and our members to increase awareness of real estate wire fraud and educate consumers on how to best protect themselves against these sophisticated criminals. Across the country, title companies are putting consumer warnings on websites and communications and sending notices to consumers and real estate agents informing them of the scams.
At ALTA, we regularly host webinars and education sessions for real estate professionals and consumers, and we have a consumer education website, homeclosing101.org, with a multitude of resources – from instructional videos to infographics to help homebuyers protect themselves. ALTA has worked in close collaboration with industry partners, federal agencies such as the Department of Housing and Urban Development and its housing counseling network, and law enforcement to elevate the issue and share data about the scope and sophistication of the threat.
In November, the FBI released a report that summarizes its efforts to combat business email compromise (BEC) scams and real estate wire fraud by working with partners to identify perpetrators and dismantle their organizations. The report was spurred by ALTA’s efforts the past two years to get language included in various House and Senate appropriations reports directing respective agencies to report on efforts to combat and raise awareness of BEC and wire fraud, and collaborate with industry partners to address threats.
Through continued industry collaboration, we believe we can significantly reduce the number of victims each year. Our industry is proud of our leadership to raise awareness about wire transfer fraud, educate real estate industry professionals and consumers, and implement procedures to safeguard real estate funds, but we know that our work is not finished.
In the meantime, we encourage homebuyers, sellers, and real estate professionals to remain vigilant.
Diane Tomb is CEO of the American Land Title Association, the national trade association representing the land title insurance and settlement services industry, which employs more than 120,000 people working in every county in the United States.
Source: housingwire.com
When it comes to investing for retirement, there are more than a few strategies to consider. Many investors play it safe by leaning heavily on their work-sponsored 401(k) accounts while others diversify with a Roth IRA or traditional IRA. Some investors who want to get fancy with their retirement buy annuities or invest in peer-to-peer […]
The post Using a Self Directed IRA to Invest in Real Estate: Is Fundrise the Answer? appeared first on Good Financial Cents®.
Back during the dotcom collapse of 2000, I was losing money in the stock market like a champ. I was a second-year financial analyst who had a serious case of confusing brains with a bull market. When I turned to my VP and told him I was still bullish about the stock market, he almost slapped me upside the head. “We’re in a bear market, son. Get used to it and stop dreaming!”
After losing about 30 percent in my after-tax portfolio, my dreams of stock market riches finally faded. I cried “uncle” and moved my money into more conservative investments. The funny part was that my 401k was actually up in 2000 and in 2001 because I had allocated 50 percent of my assets into a hedge fund called Andor Capital Management that went short the market.
Normally, only accredited investors — those who earn $200,000 a year or more or who have a net worth of over $1 million or more (excluding their primary residence) — can invest in hedge funds. But my firm had a partnership with Andor that gave us peons access to invest as well.
CDs, bonds, ETFs, and TIPS are among some of the best low-risk investment options for building your portfolio.CDs, bonds, ETFs, and TIPS are among some of the best low-risk investment options for building your portfolio.
The post 6 Low-Risk Investments for First-Time Investors (or Anyone Risk-Averse) appeared first on Money Under 30.
Gold Gate real estate investment management just announces Fund I of $100 million taking aim at the luxury segment and investors seeking second homes.
The post Gold Gate Launches $100 Million Luxury Real Estate Investment Fund appeared first on RealtyBizNews: Real Estate Marketing & Beyond.