Amazing Power

Imagine discovering that your dog can fly. As soon as you’d gotten over the surprise, you’d start wondering why you hadn’t noticed years before. Then you’d start thinking about the money you could make with such a talented canine.

That’s the experience I had with IRAs.

IRAs seemed so plain and ordinary. Good to have, comforting at times, but dull, like chicken noodle soup. Nothing special and nothing to get excited about. IRAs ran on AAA batteries and had about as much power… or so I thought.

Then what a surprise! I learned how an IRA can be a powerhouse for accumulating tax-free wealth. I don’t mind admitting I’d been blind to the potential that was right in front of me for so long – I had so much company in not noticing. Even today 67 million Americans have an IRA, but not one in a thousand understands all the good things he can do with it or how powerful it can be for building and protecting wealth.

Here’s a sample of what the rules allow you to do with your IRA (and that most investors haven’t a clue is possible).

Gold. Buy gold coins for your IRA and store them privately at home. You can even hide the coins in a jar of canned peaches and keep them in your refrigerator if you think that’s the safest way to handle them. It’s all within the rules.

Rentals. Your IRA can own an apartment house and be a landlord. And you can be the rent-collector and pick up those checks every month – tax-deferred income for your IRA.

Bigger rentals. Want a bigger apartment house? If you decide the terms are right, your IRA can use mortgage financing for a rental property.

Operating business. Follow the rules carefully and you can run a motel, restaurant, bio-science lab, specialty store or any other business and let your IRA pick up most of the earnings. Running a business is demanding, but the work is a lot more enjoyable when a big chunk of the income is tax deferred – or even tax free.

Foreign real estate. Your IRA can buy an apartment in Buenos Aires or farmland in New Zealand. It’ll be waiting for you if you ever need to go there.

Equipment leasing. Do you have experience selling or servicing heavy equipment, trucks, airplanes, medical equipment or anything else that users often want to lease? Your IRA can be the lessor while you put your knowledge to work helping your IRA earn the lease payments – income for your IRA to add to its growing pile of tax-deferred cash.

Private lending. Your IRA can earn high returns lending money on well-secured first and second mortgages. That’s what the smart banks do, and they collect far more than the sad returns they pay to IRA investors who buy their CDs.

Rehabilitate property. You can buy and manage the rehabilitation of a run-down dwelling, apartment house or office building and let your IRA reap the financial benefit.

Seize bargains. You can show up at foreclosure sales (there are plenty of them these days) and buy property for your IRA at distress prices. You might do the same thing on your own, but you’ll enjoy the profits more if they’re protected from tax by your IRA.

And those are just examples. Whatever investment you’d like to make and whatever business opportunity you’d like to pursue, there is a proper way for your IRA to collect most of the benefit. That means more of your earnings are tax-deferred – and with a Roth IRA the earnings can be tax-free.


Maybe you’re wondering how a secret that big could be a secret at all. The answer is pretty simple.

As a matter of law, an IRA must have a custodian. It’s the custodian that holds legal title to whatever is in your IRA. But the custodian doesn’t have to accept any investment it doesn’t like. It can just say “No.”

Most custodians are attached to a bank, stockbroker, mutual fund complex or insurance company. Not surprisingly, those captive custodians are ready to let your IRA buy whatever the bank, stockbroker, mutual fund complex or insurance company is selling – and nothing else. That’s what keeps the handcuffs on most IRA investors and why most financial institutions like to tell just part of the IRA story. (The rest of the story is in this Report.)

Better Than “Self-Directed”

A sizeable minority of investors have slipped out of the ordinary-IRA handcuffs and moved to a so-called self-directed IRA. They’ve placed their IRA with a custodian that doesn’t sell investments and that will consider accepting any investment.

That’s better than what most IRA investors have, but not nearly as good what you could have.

The key word is consider. With a self-directed IRA, the investor must get the custodian’s approval at each step of every transaction. That means extra work and trouble for the investor. It means delay, which means the risk of missing an opportunity. It also means uncertainty, since the custodian can always say “No, we don’t do that.” And when the custodian of a self-directed IRA finally does sign off on an investment, the starting bell rings for heavy fees that will keep draining the IRA’s value.

The arrangement just isn’t as self-directed as it looks. It would be more accurate to call it a May-I-Please IRA. Or a May-I-Please-Pay-More-Fees IRA.

That’s why I created a report called How to Rescue Your Retirement from Three Dangerous Threats. In it, I reveal a little known IRS loophole that can help you triple the returns in your IRA.

No your dog can’t fly. But your IRA can learn to.

Good luck out there.

Terry Coxon,
for The Daily Reckoning