Stock Market Crash?

Yeah I remember the ice age. My friends family went out and bought these huge plastic drums to store enough food for something like 6 months. We lived in the desert, it was 115 degrees in the shade.
 
As I'm reading all these posts and noting concerns made by Dave S and others, I really feel for those of us that are stuck helplessly as the market that our retirement depends on rocks our lives.

I'm 51 and the way time flies, I'll be looking at retirement before I know it. The stock market scares the crap out of me. Yeah I always subscribed to the "hold on for the long term" but hey, if the market goes down 20%, it will have to go back up 25% just to break even. The line about riding the escalator up and the express elevator down describes that fairly well.

I count myself lucky. Last year I learned about self-directed IRAs and I moved all my IRA retirement fund into a self-directed IRA. Yes, you can tell your IRA where to invest; you don't have to settle for choosing between a CD and stocks. Most investment advisors refuse to talk about that option (or tell you that you cannot do it) because they won't make any money off of you if you do your own investing.

This timed perfectly with the mortgage crisis this year (we don't have a real estate crisis; we have a mortgage crisis - there is a difference) that has brought newer homes less than five years old into foreclosure courts. I bought a foreclosed home and used my Roth IRA as the mortgagor. I got the home at about 65% of value, spent another 10% fixing it up, and sold it at a discount to someone who got a great deal and instant equity on their home (I sold it at a little over 90% of after-repaired value).

Here's the kicker: I set up my "mortgage" at 15% interest. So my IRA earned 15% return tax free, and even if the investment went south, my IRA had as collateral a real asset worth 54% more than the amount of the investment ($65k to buy a $100k asset equals 65k times 154%).

Do THAT with the stock market. Another example: I just used my IRA money to put down an earnest deposit on another home and once I close on it, I'll have bought a home (that I have a written current "as-is" appraisal of $265k) for $180k and I already have a buyer waiting for the home who I'm selling to for $205k. He gets a great deal, I make money, and my IRA just keeps growing.

I'll never put another dime in the stock market.
 
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GJarrett said:
As I'm reading all these posts and noting concerns made by Dave S and others, I really feel for those of us that are stuck helplessly as the market that our retirement depends on rocks our lives.

I'm 51 and the way time flies, I'll be looking at retirement before I know it. The stock market scares the crap out of me. Yeah I always subscribed to the "hold on for the long term" but hey, if the market goes down 20%, it will have to go back up 25% just to break even. The line about riding the escalator up and the express elevator down describes that fairly well.

I count myself lucky. Last year I learned about self-directed IRAs and I moved all my IRA retirement fund into a self-directed IRA. Yes, you can tell your IRA where to invest; you don't have to settle for choosing between a CD and stocks. Most investment advisors refuse to talk about that option (or tell you that you cannot do it) because they won't make any money off of you if you do your own investing.

This timed perfectly with the mortgage crisis this year (we don't have a real estate crisis; we have a mortgage crisis - there is a difference) that has brought newer homes less than five years old into foreclosure courts. I bought a foreclosed home and used my Roth IRA as the mortgagor. I got the home at about 65% of value, spent another 10% fixing it up, and sold it at a discount to someone who got a great deal and instant equity on their home (I sold it at a little over 90% of after-repaired value).

Here's the kicker: I set up my "mortgage" at 15% interest. So my IRA earned 15% return tax free, and even if the investment went south, my IRA had as collateral a real asset worth 54% more than the amount of the investment ($65k to buy a $100k asset equals 65k times 154%).

Do THAT with the stock market. Another example: I just used my IRA money to put down an earnest deposit on another home and once I close on it, I'll have bought a home (that I have a written current "as-is" appraisal of $265k) for $180k and I already have a buyer waiting for the home who I'm selling to for $205k. He gets a great deal, I make money, and my IRA just keeps growing.

I'll never put another dime in the stock market.
Click to expand...

"I count myself lucky. Last year I learned about self-directed IRAs "

So you have my attention. What's the best resource to learn about this and to get started? I could move a chunk of retirement money to one of these and finance our next boat purchase, paying ourselves interest if I understand you correctly.
 
Google "self directed ira" and you'll get a good start. I set up my account with Equity Trust Company.

There's still a whole lot of rules on what you can an cannot invest in. I doubt that you could frame it so that you could buy your next boat with it. As a general rule of thumb, you cannot use your retirement money as your own personal bank in any way. Buying your own boat would certainly apply. For example, I could not use mine to buy my own house.

As a matter of fact, when I use the IRA funds to purchase a real estate investment property, I cannot touch the property. Usually I perform some of the rehab work myself but when I use the IRA I have to subcontract all of the work - I cannot lift a screwdriver. That way I cannot buy an investment property and then use my IRA to pay my salary for carpentry or flooring work. I have to stay at arm's length. This same rule applies to what they call your vertical relationships - you can't buy a home to flip and have your immediately family or your parents or your kids or grandkids be the contractors to fix it up.

The general idea to keep in mind is that when they set up the rules on how you can use your retirement funds, they made sure that you have to use your retirement funds as retirement funds. In this way it prevents people from taking advantage of retirement to use to current personal advantage, the same way that if you took out of your current retirement account to use personally and you're not retirement age yet, they'll hit you with a penalty. I'm no expert and by no means should you depend on what I post, but as I understand it, that's the way it works.

That doesn't negate the fact that it is STILL a great way to diversify your retirement investment portfolio.
 
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Woody said:
I'm sure they could come up with a couple scapegoats while the real culprits relax in S.America. You gotta take some deep breaths right now, sounds like you'd be the one going to jail if a Lehman Exec was within reach.
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To the poster that dinged me on this post: I don't care about the green but you obviously don't understand what I meant. PM me and I'll dumb it down for you.
 
TurtleTone said:
I live in the Land of Lazy. The Land of the handout. The land of "I gotta gets what is mine", except it's not theirs, it's mine. The only place on earth where you can be on welfare, have subsidized housing, free healthcare, food stamps, free transportation, a gold watch, the latest nike, an iphone with unlimited calling plan, a diamond pinky ring, guchi sunglasses, and $1k cash in your pocket.
Click to expand...

You forgot "...and still be called poor."

Best regards,
Frank
 
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