All Forum Posts by: Wade Alderson

With respect @Dan Carver did you read about how the Co President of JP Morgan said to expect  40% drop in the over all stock market in the next few years? Would you still suggest someone stay in the market knowing that like around 3 of the big wigs are saying to expect a crash of 20 to 40%? 

Thank you for your feed back @Jack Martin I see the wisdom in what @Mike Dymski said, only as soon as I come into the money from my inheritance I am not staying here I am at for all the money in the world. I am moving to Florida. So would it be a good idea to go to a local real estate investment group meet up here in Oklahoma if I don't want to own property here, and  if where I am moving the market would be different? 

Because I can't help but poke a sleeping bear to see the surprise on it's face... for all of the people who were saying it's better to keep the money in a retirement account. Did you happen to see the news this morning on the CNBC webpage that the JP Morgan co President warns of deep correction for stocks totaling as much as 40%? He said we could get by for a year or two but after that it's bound to happen. It's a really good article I highly recommend you read it. 

@Will G. I think you put the final nail in this coffin if what you say is true. I will just buy SFH if that's the case.

@John P. Thanks for the feed back I forgot to tell you that my fathers 401K is a real stickler, it has rules that say the pay outs have to be based on the expected life time of the original contributor. Since my father was 71 when he died and the paperwork for the 401K said he would be lucky to make it to 88 since he was a smoker, the RMD is based on their rules even if I roll it into an IRA. Not kidding... that's the rule Or I can do a 100% pay out. My fathers company was one of the first to start a 401K, it' also has made the news numerous times for it's outlandish and ridiculous 401K rules been sued many times and won every court case because the rules are in the paper work that the original contributor signed. Now yeah... my fathers RMD calculated withdrawal factor is something like 22.3 to 24.8 depending, I can't remember and I don't know what it means because Yeah.. I worked in the stock market... but no I was not in the 401K division (Good thing to, because I was probably the only person on the floor who read every prospectus in the mutual series cover to cover. It's just Amazing what they hide in between the boring stuff, it's worse than the US Government putting business tax codes that give breaks to big business pharma in the farm bill).

Now again... I don't understand the way you get your rental cash flow out of your self directed IRA, and if anyone can explain that to me (from my understanding, the positive cash flow from rent goes right back into your self directed IRA so how does that improve your quality of life BEFORE you retire?

Now granted... if my inheritance was a much smaller amount and I already was doing the "Flip I high End Car, put a down payment on a cash flowing property" thing going on. Yeah maybe a self directed IRA used to accumulate additional properties if that was my only choice would be the way to go.

But the way I see it... even with a HUGE tax hit it's STILL a whole lot of money. 

I mean thing about it this way.... there you are one day in your life, you have read @Brandon Turner's "7 Years to 7 Figures" like 100 times and you don't care if it takes 20 years it's your life dream to prove if this can work or not. And some how, some way you get a check for $600,000 after taxes. Are you seriously telling me that if you had a chance to take a short cut to no longer having to work by investing $500,000 as the down payment on a 75 to 100+ unit apartment with after all taxes and cost of business cash flowing $200 per door, that you would say... "On but if I wait I can take out $30,000 a year til I die?" 

Is that what you are seriously saying? 

You would rather make $40,000 a year than $15,000 a month? 

I told you guys I did the math.... (here is a hint.... $15,000 a month comes to $180,000 a year before taxes... $40,000 a year... $180,000 a year) 

Now thankfully this is all a mute point my step mother spent the night in hospital and they let her go  this after noon with a clean bill of health. 

So I am not in a panic any more, but one day this will happen (hopefully after the recovery of the next stock market crash that is about due, if you google something like "how often does the stock market drop" you see a LOT of different reasons why the stock market dropped, but looking at the graphs it looks like the longest time between crashes is about 10 years... scary!) and by that time I hope I can decide if I want to take @Jason Hartman's way of doing things and just go head first into SFH or if I am going to go the way of Brandon Turner and go the small apartments.

Hopefully I will have a LONG TIME to make up my mind and the next stock market crash does not wipe out my fathers 401K (He lost over $1,000,000 in the last crash and only JUST now has the account recovered back to it's balance before the 2008 crash. )

@John P. Maybe I am confused, but how I understand self directed IRA's the only benefit is that you have more control over what your money is invested in, So just like how your monthly dividend stocks monthly pay outs are reinvested in your retirement funds rents from properties go back into your retirement fund.

If I am wrong about that let me know, I am all ears. 

So here is what I did, I did ALL THE MATH of leave the money in an IRA and do the self directed thing with most of the money, talking out the RMD that is predicated on my fathers age, or take a lump sum and pay taxes.

Because the rents in self directed IRA's have to be allocated to the IRA, the properties don't do anything to improve my quality of life in the hear and now.

Now if I am right about the rents .... pull out an inflation (AKA devaluation of the US Dollar) calculator and go back 40 years and put in what ever lump sum retirement account you want (in my case I did the $600,000) and look at how much you would have to have today to make up for the loss of buying power over the number of years you have to wait until you can legally take the money out of an IRA with out the penalty.

Another thing for all of us to think about (and some people are just greedy so they can never rap their head around is point), 

"What Is Your Exit Strategy" 

Meaning as cash flow investors how much do you need coming in a month in real honest to GOD spendable money  to be satisfied?

For me personally It's $20,000 a month, but I would be fine with $10,000 a month if I knew in like 10 years the cash flow would dubble. 

But that is just me... my exit strategy has been $10,000 a month will do but shoot for $20,000 if you can, but stop there... because the study about the tipping point for when having money makes you think you deserve more respect than you earned is like around $23,000 to $25,000 adjusted for inflation. 

Here is my personal view of how I see things... no matter how much money I have, I always follow the blue print laid out in the millionaire next door. That life styles of the rich and famous thing is not for me. So if all I have to do is project a upper middle class life style that allows me to do what I want, when I want, go where I want. Why would I try to make more than that?

I mean I am so set in my ways when my wonderful step mother told me I should take my inheritance and buy a home in Golden Oaks the Disney HOA in Florida , I told her thanks but no thanks because of the $5,000 month HOA.

You want to know what part of my exit strategy is? As much as @Jason Hartman hates them I want to buy a 3 bed 3 bath luxury condo in either Orlando or Jacksonville Florida. For all the garbage you go through with HOA's and the really self important people in charge of it... I just like the idea that if the roof and siding come off in a hurricane someone else is responsible for it, a lot of people might not like it when the maintenance fee for the year goes up, but the way I see it... I am not the only one footing the bill. Maybe when I move there I will change my mind and regret it like crazy because Condo's are so hard to sell on the secondary market (and HOA's are notorious for making a "No Renters" policy out of the blue... I wonder if you can get around that with a "Rent To Own" kind of thing?) but for a guy who wants to do the 12 cruises in 12 months kind of thing... I think that a place where it's not noticeable when I am gone is a good place to live.

@Steve Vaughan hypothetical question for you after a bit of background.

My question to you is.... "How why do you think people buy into the lie that deferring a tax hit is the best option?"

The creator of the 401K, Ted Benna, himself called the 401K a horrible idea and he regrets having anything to do with it. 

If the creator of the 401K HATES it and called it a monster why do people think it's so great?

With respect to everyone who keeps saying "Don't rush in... take a while... ect, ect, ect, ect" did  I not make it very clear that I don't take the loss of a loved one very well and I go into a very dark place shortly after and let my world fall apart until I come out of the other side? 

Also for everyone of you who say to leave the money in the stock market... AGAIN how many of you have been though a down market of 30%, How many of you can say in the last 39 years a loss of 10% or greater has happened, How many of you know what the tax rate will be next year let alone 40 years from now and how many of you know that the cost of a snickers bar and a 16 oz pepsi went up 647% in the last 40 years. 

For the people who said... "Keep the money in, it's stupid to pay the tax up front" google "The Volicity of Money" and see why real financial advisors (remember I had my series 6, series 7, and series 63... I KNOW what I am talking about when I tell people the stock market is NOT what your broker tells you it is.. I Lived It! ) tell you if you win the lottery to take the up front payment with the tax hit and then invest the balance in cash producing assets. 

The US Dollar looses value EVERY YEAR... what use to cost $3,000 40 years ago cost $11,000 today. That is HOW MUCH BUYING POWER the US Dollar lost in 40 years. It could cost me $2,000,000 40 years from now to buy the same things it would cost me $600,000 to buy today.

So does leaving one million devaluing every year US Dollars locked up in a retirement account make sense to you? 

The cost of REAL FOOD went up 23% over the last 3 years... I will bet my very last oreo cookie that over the last three years most people with a "Lump Sum" retirement account seeing that the cost of auto gas, the cost of food, and the cost of energy to run their house was going up like crazy did not stop once to think "Gee.... I better max out my contributions to my retirement account" 

If the cost of REAL FOOD went  up 647% in the last 40 years (you can google how much a snickers bar and a pepsi was back in 1978, and then what it is today, a little trivia for you though... the snickers bars now are much smaller, so you have to get the "giant" one that is the same size as a regular bar 40 years ago, and the pepsi comes in a smaller bottle too) what makes you think that the cost of REAL FOOD is going to go up any less in the next 40

Let me be very clear... I think "Lump Sum" retirement with US money losing buying value EVERY YEAR is a VERY BAD IDEA 

Here is another trivia fact for you to think about. 

When Richard Nixon took America off the gold standard (and it's no surprise that he had to, if you look at the estimated total amount of gold on earth there is not enough even for America to cover the amount of actual printed money, let alone all the "Digital Money" so Richard Nixon saw the writing on the wall... there would be a run on the banks when there wasn't enough gold to cover the money)  created at the click of a moust) August 15th of 1971 the rules of how the US Dollar works in America changed but the thinking of how to plan for retirement did not. 90% of the retirement planners out there are not telling their clients... "The cost of food is going to go up, the cost of health care is going to go up, the cost of housing is going to go up, the cost of nearly everything is going to go up, so unless you are going to work 3 jobs and just shovel money in your retirement account you are not going to have nearly enough, so expect to work until your dying day just like the serfs in Europe in the 1300's." 

It just doesn't happen. 

Biggest joke on the retirement investor was an article that said the average 401K investor today would need to have 1.5 million to be able to retire. Do you know what the monthly cash pay out is after taxes on 1.5 million? Its around $3,000 a month. Is it fair to work your *** off for 40 years and then to have the cost of living go up over 600 percent and then you are expected to live off of less than half of what you were making the first year you started work? 

How does that make sense to ANYONE?

Let me give you an example of how the word does not make sense to people who will not look out side the little box they sealed themselves into. 

I Love my step mother, I adore her, but if anyone has sealed her self up in a box it's her. Anything she has to think to hard about she wants nothing to do with. 

My step mother does not understand why people will buy stuff on Amazon that they can buy at a local store for less. 

She just can't figure it out she thinks people are nuts for buying groceries from Amazon. 

I think the people who want me to leave my inheritance in the stock market are just like my step mother, they are sealed up in a box and no matter what they don't want to learn if anything I am saying is true so because it's so important for me to be wrong they just ignore every thing I say and never check out anything. 

My father retired in 2001 with a yearly income from his 401K of $90,000 using the 3% rule, and when the stock market was done falling down his income from his 401K dropped to $60,000 still using the 3% rule. My fathers 401K only recover it's pay out to $90,000 a year using the 3% rule last year, a year after he had died. It took 14 years for my fathers 401K to recover it's value before the drop. As I said before...  how many cash flowing real estate investors had to wait 14 years for the drops in rent to recover after the housing bubble? 

The stock market is a scam, 401K's and IRA's are a cheat scheme and if you keep ignoring the things I say then you only have yourself to blame if you are invested in a "Lump Sum" account.

Google "John Bogle The Problem With 401Ks" and  read that if you think I am full of garbage

@George Skidis like I have posted in another long winded post... my step mother is a wonderful woman but she has absolutely no financial intelligence at all. Ever since my father lost over a million dollars in the 2003 crash I have been telling my parents their broker is a moron and they need to dump the 401K, put the money into a Self Directed IRA, and to use the Self Directed IRA to invest in cash flowing real estate. I knew that with the over 2 million dollars that was left in the 401K if they put all that into an apartment building and make more a month then that 401K could EVER give them also with real estate doing it's little hookey pookey with prices going up and going down it was a good bet that in like 10 years they could take the equity out of that apartment and put a really good sized down payment on another apartment building about half the size of the first one and have an even bigger cash flow combined.

At the time I KNEW that my fathers 401K was only paying out $60,000 a year using the 3% rule and fear of them touching the principal. I explained to my father and step mother that odds were they would be making around $10,000 a month and with a flat tax of 15% they would be pocketing a HUGE amount more than their 401K. 

My father being an engineer before he went into sales said he would have to look into it and then went and bounced the idea off his broker who told him all kinds of crap about how bad the real estate market is and how you can never get back the money that you put into it...  Now this guy LIKE ALL OF THEM makes his money off of what people put into what he recommends... LIKE all brokers he he realized that my fathers account was a great big huge chunk of his paycheck for his tiny brokerage office for AG Edwards ... and he LIED HIS REAR END OFF.

My father came back from his brokers office and told my step mother he would come back from the grave if she ever took the money out of the 401K because it would be one of the dumbest things anyone could ever do.

And since 2003 my step mother became a convert to the ponzi scheme the 401K. 

@ Dave Foster, thanks for the heads up, I am all about excitement with the 1031 exchange, and luckily we dodged a bullet with the tax change, but that is just for now, there is no telling what will happen in the future. So the way I look at such things is IF I DID have a property right now and I wished to sell the 1031 thing would be a great thing to do, but in my exit window for leaving Oklahoma what if the 1031 exchange is no longer in existence?  

I can't remember who taught me this, but one of the things I know for sure is that the future is not written in concrete so we can not count on what is law or tax that will be the same in 5 years. 

With Politics in America now looking so much like the Italian politics in the late 80's and the early 90's the circus of the absurd is only just starting and what mayhem Trump brought to the markets is only the beginning of a 10 year cycle of uncertainty