The other day I was talking to my Uncle who was telling me how great his CD (Certificate of Deposit) was performing. So of course having done my research about CDs, Savings Accounts and the like, I wanted to hear more because he is a smart man and he obviously must know something I don’t. Being an older gentleman, he is a little scared of the stock market having lost money before so he thought the safest investment was a CD. Now don’t get me wrong if you currently have a CD, you are at least saving money, but did you know there might be a better way? He was so proud to tell me he was making 1.6% on his 3-year CD. So, puzzled as to what to say next so as not to offend my favorite Uncle’s feelings and not wanting to sound like a know it all, “young whipper snapper”, I just said “Wow” knowing in my head that I am earning double digit returns with my Self Directed IRA (SDIRA) and other investment capital investing in promissory notes backed by real estate.
Now he has his money with one of those big banks with a great slogan, you know the One that goes something like this: “What’s in your Wallet?” Well if I had my money in one of their savings account or a CD, I would have to say “Not Much.” You see, I got off the phone with my Uncle and did some additional research just because I love statistics and numbers and so that I can convince him to get his money working better for him.
According to BankRate.com’s website for the week ending January 13, 2017, the highest Savings and Money market accounts were paying a disappointing 1.09%. Now that is the highest which leaves me just shaking my head. But again, even if you have money in a savings account you are doing better than the average American.
So, going back to that What’s in Your Wallet company, their CD’s have a no minimum deposit requirement and advertise terms from 6 months to 5 years to “best fit your plans.“ Of course the longer you keep your money in the CD, the more they will pay which is a whopping 2% on a 5 year term. Their savings account which comes with the slogan on their website of “Oh, what the possibilities a savings account can bring” yields a whopping Annual Percentage Yield (APY) of .75%. Now, if I invested $20,000 in a savings account with this particular bank with interest compounded daily, I would have $20,150.56 in 12 months. Now, I am not sure what I might do with that extra $150 bucks at the end of the year, but my possibilities would take much more than that. Now, if I took that same money and put it in a CD with this bank, for the same 12 month period, I would earn .9% accrued daily and compounded monthly according to their website. Still, what a disappointment. For now I will keep “what’s in my wallet” in my Self Directed IRA and investment capital where I am earning double digit returns on my promissory notes backed by real estate.
If you have your money in a traditional IRA, you are doing better than a CD or Savings account, but according to a recent article in Bloomberg, “Over the next decade, according to the report, “the ubiquitous 60/40 U.S. portfolio has a 0% probability of achieving a 5% or greater annualized real return.” In case you are wondering the 60/40 split is stocks and bonds. You can read the article “here.” (https://www.bloomberg.com/news/articles/2016-10-26/the-next-10-years-will-be-ugly-for-your-401-k)
Now you might wonder a little because earlier I said there might be a better way. Well, in my opinion there is. You could use a Self Directed IRA (SDIRA) or other investment capital such as that CD that is coming due to invest in promissory notes backed by real estate. We have had previous talks on Self Directed IRAs, but we are willing to help you get started having your money earn the types of returns that you should be getting.
The number of distressed assets in the US is startling so there is plenty to invest in with a SDIRA or other investment capital. According to the same website, ranking states for foreclosures in the month of November 2016, the top 10 states have over 35 Million, that’s right Million foreclosures. The top state for the month was New Jersey where 1 in every 598 homes is in foreclosure. Holding the number 10 spot was Pennsylvania where 1 in every 1,246 homes in in foreclosure in that state.
These numbers are startling, but that’s where we come in. You see, we have direct access to banks who are willing to sell these distressed assets to us at a fraction of the Fair Market Value. We are able to pick up some assets at .30 to .50 on the dollar. Our goal is to help the borrower, if they choose to stay in their home. We have had other Table talks on our exit strategies that you can check out.
But suffice it to say, that with promissory notes backed by real estate, we can safely average double digit returns. Now I don’t know about you, but I like the sound of that over a CD, savings account or traditional IRA.
We have opportunities to put your money to work right now. Take the following example of a property in Maryland:
Note Purchase Price: $90K
P&I Mod: $1,300
1st Year Return: 17%
REO Return: 57%
So, we have double digit returns in our wallet, What’s in Yours? If you would like to learn more about how you can make your IRA or other investment capital work better for you, so that you have double digit returns in your wallet, please drop us a line at Stacey@bikehomes.com.