Financial Fortress Radio May 2 with Richard Jordan and Patrick Dougher on the 10 ROTH IRA Myths
Patrick: Welcome to Financial Fortress radio. This is Pat Dougher and Richard Jordan in the studio. We’re talking today about your retirement, your investments. Richard is a Registered Investment Adviser which usually puts him in the category of someone’s personal adviser for the wealthy. He’s the smart money investor. He really is the guy that can help you with higher rates of return with lower investment risks and solutions.
One of the things that I’m really pleased about Richard is the he is constantly studying the market to help you in your investments. Richard, welcome to the show.
Richard: Thank you, Pat.
Patrick: I want to get right into the Roth IRA. We had so many questions and so much interest last week on the whole concept of taking someone’s IRA that they built over the last however many years. You’re actually encouraging people to liquidate that and pay the tax on it to put something in a Roth IRA. Is that correct?
Richard: Well, not liquidate it, but roll it over into a Roth Designation. So, if you roll it over into a Roth designation IRA, you have until next October to decide whether to keep it a Roth.
Now, if you’re in the market, and especially if you’re with an experienced, successful adviser like us, chances are you’re going to make the 30 or 33% it’s going to take to pay the tax on that Roth and then you’re going to have a legitimately completely tax free fund for your retirement, and if you’re not going to use it all in your lifetime, for your heirs for up to several generations.
Typically, it can be extended for five, but there are ways with trusts to extend it past that. It depends on how much money we’re talking about here. But, it is a tremendous opportunity and one I don’t think anybody should miss.
The problem is the magazine writers, the newspaper writers don’t really understand the law. They read a couple of press releases that they get from a brokerage house and they create an article that just talks about part of the problem. They get so confused, they end up with more questions than answers in the article.
Patrick: That strikes a chord with me that there are bunch of myths on these things is what you’re saying.
Richard: Absolutely. There’s a ton of myths and if you try and over-analyze this, you’re not going to make the right decision because let’s say you go to a certified planner of some sort like we are and you find out that there are hundreds of potential scenarios that the market could do in the next year and a half; hence you can create hundreds of spreadsheets on those potential scenarios.
Well, which one is most likely to occur? You can do Monte Carlo simulations and you can just basically fall asleep at the computer night after night trying to figure out what to do.
Patrick: Well, aren’t there basically just three things that can happen?
Richard: Exactly. The market can go up enough for you to pay the tax. The market can go up enough that you still think you ought to pay the tax and roll the account over, or the market is going to go down and you’re going to re-designate it again as a traditional IRA and you then will not have to pay the Roth IRA tax.
So, you’ve got the opportunity to roll the dice and wait to see what happens with the market. And since we’re in a bull market, 50% of the gains occur in the first year. The next 50% usually occur in the next two years.
So, if this market is up 30% in the next year and a half, and it’s likely it will be, even if you’re just an average investor, chances are, you’re going to be able to pay this.
Now, if you’re with us, we’re producing returns that are typically 1.5 – 2x what people are getting in the S&P 500 index. And remember, the mutual funds don’t beat the S&P 500 index about 80% of the time.
Patrick: Right. Well, I know that when I think about the whole Roth IRA thing, what I’m hearing is if you wait, you’re probably going to pay extreme taxes because Obama and his taxation policies – this tax tsunami as I like to describe it – is coming in the next three, four years.
If you push it off and you don’t take this window of opportunity, you may actually be paying what kind of rates? 50–60% like we saw in the 60s?
Richard: Exactly. The Tax Foundation report that I read last month said that we would have to effectively close to double the tax rates for the next ten years just to pay the deficits we’ve accumulated so far, and the White House was on TV last week talking about adding another $8 or $9 trillion to that – they’re not sure – putting us effectively with a balance sheet that’s bankrupt as a government.
In other words, we would owe more as a country than our annual gross domestic product. That’s what put Greece in the trouble they’re in now. That’s why they’re worried about Portugal, Spain, Italy, and it goes on and on in Europe.
Patrick: Well, I imagine that that would put even the euro currency at risk in the future, doesn’t it?
Richard: Well, it has already put it at risk. That’s the reason the dollar has been rising against the euro is not that we’re doing a great job with the dollar. They’re doing a worse job with the euro.
Patrick: Interesting. Well, it’s management by committee. It will always kill you.
Richard: Yeah. That’s right.
Patrick: So, what are some of the other pitfalls or even myths that you hear with the Roth IRA? Because there is a reason why we’re hammering this and that is that most people don’t know anything about the Roth IRA.
Richard: Well, that’s true.
Patrick: They hear about it, but they just don’t get it.
Richard: It’s an unprecedented opportunity. It used to be if you made over $100,000, you couldn’t convert to a Roth. You can only convert small portions; maybe $4,000 or $5,000 a year. Now, you can convert the whole thing and you’ve got two years to pay the taxes on it. Two years. When was the last time IRS gave you a tax free loan for two years? Call them up and ask them if they’re going to do that for you on anything else.
Patrick: Well, last I heard, IRS and KGB were the same letter system. Well, you get it.
Richard: Yeah.
Patrick: So, what are some of the other things you want to share about that?
Richard: Most typical I hear that you can’t touch it for five years after you convert it and that’s just not true. You can touch the money. You can touch it the next day. So, if you’re under 59 1/2, obviously it’s a qualified fund and all qualified funds you can’t touch until after you’re 59 1/2 without paying a penalty, but assuming that you’re over 59 1/2, you can touch it.
But, more importantly, if you’re 70 1/2 or about to be and you’re thinking about, “I don’t need to take this money for a required minimum distribution on my standard IRA, but I have to take it or pay a double tax.” There’s a double penalty on that. It’s a huge penalty if you don’t take your required minimum distribution.
Now, with a Roth, you don’t have to take a required distribution. In fact, you can pass it on completely to the next generation if you like.
Patrick: So, what they’re saying is once you pay the tax on these dollars that are in your IRA right now, then if you take that money and you put it back into this container or this Roth IRA, that it’s exempt from taxes then on.
Richard: Forever. For you, your family, multiple generations, and with the correct use of legal entities like trusts, IRA trusts, you can extend it past multiple generations. So, it’s pretty much limitless and it’s just a tremendous opportunity. I hate to see people pass it by because of all of the myths. I read them all the time in the magazines and newspapers.
Patrick: Well, the thing that I keep hammering and the reason I want to do this is that I see this great opportunity for people to totally essentially take an IRA and squeeze out the taxes that would be in there and then now, grow something magnificent that could be passed on from generation to generation. That’s amazing. What a great opportunity.
Richard: It is. So, don’t pass up the chance and if you want to hear more or you want the Tax Foundation report, you can call my direct line 972-758-4484 begin_of_the_skype_highlighting 972-758-4484 end_of_the_skype_highlighting. And if you just want to hear more about the strategies that we have at Fortress, you can come to my next seminar.
Patrick: When is the next seminar, Richard?
Richard: It will be this Tuesday at Brookhaven Country Club in north Dallas at 6:30 PM and if you can’t make that, on the last Wednesday of this month, we’ll be out in South Lake at Timarron Country Club, also at 6:30 PM.
Patrick: Very good. So, they come, they hear you talk about all these different aspects of smart money and how to maximize your estate and maximize what you pass to your heirs and protect your investment along the way.
Richard: Exactly and we’ll talk about lots of high return, low fee investment solutions, how to get high returns without stock market risk, how to find the opportunities that are not at the big brand name brokers.
And I don’t care if you’re in a no load fund or whatever you think you’re doing to cut your costs, I can show you how you can net more on the bottom line with our selections then you ever will by using any of the big brand name brokers.
Patrick: Well, isn’t that because the brokers really have a conflict of interest?
Richard: Well, that’s right. The Registered Investment Adviser Act was passed in 1940 to create a category of adviser for the wealthy that had a fiduciary duty to the investor and since that law was passed so long ago, the SEC assumes that you were told by your grandfather what the difference is and as a result the broker doesn’t have to tell you that there is a better way to invest your money.
The broker’s primary job is to generate commissions for himself and the brokerage firm. He only has to provide you with a suitable product and many brokers think that all people over 50 belong in all these suitable products that they get the highest commission rates on.
So, that’s the way the market works and that’s why the Goldman Sachs conflict of interest charges were made and that’s why they’re talking about potential criminal fraud charges, and it’s going to go on and on.
They’re not the only large broker that’s going to get caught in this deal. All the large brokers operate this way.
Patrick: Well, it’s because they’re sales agents, isn’t it?
Richard: Exactly. They’re the same as a guy at a Chevy store. They’ve just got a fancier office and they probably belong to the country club whereas the guy at the Chevy store doesn’t.
Patrick: Well, I think of a couple of movies that really illustrate this. These guys are dialing for dollars all day long whether it was Will Smith or back with Michael Douglas. I think he did one back in the 80. The thing is that they were all about just dialing for dollars, turning the money, turning the money, turning the money. What an offense.
Richard: And you could have a fiduciary, someone that is interested in you and your family’s goals and needs instead. Isn’t that smart way to invest?
Patrick: Right. Well, I know that folks can get a hold of you at 972-758-4484 and also register for the upcoming seminar 972-325-1700. We’ve got more of the show to come. We’re going to be talking about your investments and how to maximize your return. We’ll be right back.
[commercial]
Patrick: Welcome back to Financial Fortress radio. This is Pat Dougher. Richard Jordan, a Registered Investment Adviser and investment strategist in the Dallas, Fort Worth area bringing you answers to your questions and your concerns about investments and strategies that make money in the future.
One of the things we’ve been talking about is the Roth IRA and a lot of you might be a little bit confused with that. It just sounds like another way for the government to entrap us into something, but the fact is that there’s a conversion opportunity that is in front of us and I really would hate for people to miss out on that.
You can pay the lowest taxes that you’re going to pay by transferring your IRA investments into a Roth IRA. That’s one of the things we’ve been talking about, right Richard?
Richard: Absolutely. Now is the time.
Patrick: Now is the time. One of the things that I hear a lot of people concerned about is that the market has not done us any favors this last ten years.
Richard: No.
Patrick: And so, they’re concerned about, “How do I make up what I’ve lost?” And especially if we’re talking about possibly paying tax on this too. What’s the solution?
Richard: Well, the solution is that you don’t have to decide to stay in a Roth IRA until next October of 2011. You can change the fund over, put a Roth designation on it, put that label on it, get a smart adviser like us to maximize your returns. And if we can get you a 30% or more, you’ll have enough money to pay those taxes.
Looking at historically how we’ve done against the S&P 500 index, we believe we can get that done for you.
Patrick: So, you’re talking 16, 18 – almost 18 months before you have to really make the decision to switch it back?
Richard: 17 1/2 months right now.
Patrick: So, you’ve got the opportunity to change it, move it over almost a year and a half from now.
Richard: Exactly.
Patrick: Make a decision whether you keep it there or switch it back.
Richard: Absolutely.
Patrick: So, if you keep it there, you start paying the tax.
Richard: You’ve got two years to pay it.
Patrick: You’ve got two years to pay it and then, after that, never taxed again.
Richard: Never taxed again. So, the only people I do an analysis for that can’t make this work are the people that want to keep their money only in CDs earning 2% a year. If you’re making 2% a year and you’ve got a 25% marginal tax rate, guess what?
It’s going to take you ten years to pay it off, but if you will believe that we’re in a bull and the statistics say that half of the bull market run up occurs the first year, the other half occurs in the next 18 – 30 months, chances are we’re going to make another 50% beyond where we’re at right now over the next 18 to 30 months. So, if that’s 30% in 18 months, guess what? You know have a tax free fund.
Patrick: Right, and it can go on. Now, one of the things that’s really important is that – I know that you use a lot of formulas because even when you talk about the next year or so of it being a bull market or an up trending market in the stock market and such, there’s sectors that do better, but then even beyond that, I see that you don’t leave it to chance in the sense of following the market. If something changes, you make an adjustment, don’t you?
Richard: We do and we call our investors all the time if there’s a change so that they can make a decision. We don’t do anything without advising them what the opportunities are, but we use quantitative analysis and we use a lot of different algorithms and formulas to create strategies that automatically adjust to the moving market conditions on a regular basis.
The strategies are designed to produce positive market baiting returns in bull markets, but also in the worst bear markets and in the sideways markets. And the key thing is if you’ve got a strategy that is designed to do all these things plus tell you when to avoid the market in its entirety, then you’ve got a great advisor and that’s what we try and do for our clients.
Patrick: Well, isn’t it true that most investors usually get damaged in the market or make a very low rate of return?
Richard: Yeah. The actual facts are – and there are all sorts of articles out there. There was one recently last year in Money Magazine talking about the self trading advisor and how often they lie to themselves and their families about their performance, constantly saying they’re beating the market when, in fact, they typically trail the S&P 500 index just like 82% of the mutual funds do every year.
They’re worse than the mutual funds because they often trail by 5% a year up to 15% a year. So, at least the funds will get close in a lot of cases. They’ll be more in that 3 – 5% less than the S&P 500 index because, by the way, that’s about what their fees and commissions are per year typically, but the self-investor is a person that tends to buy on emotion and sell on emotion.
So, they buy when the market’s high and they sell when the market’s low. They’re driven by greed long past the time the market’s already started up and they’re driven by fear long after the time the market’s already turned down.
Patrick: Well, isn’t that because most people want to do – they don’t want to get damaged in the market, and so they’ll wait until the social proof is all around them like everybody and their brother has made money in a certain investment.
Richard: Right.
Patrick: And when that happens…
Richard: It’s already too late.
Patrick: It’s already too late. I’ve said before that one of the better indicators I’ve seen, just watch the cover of Money Magazine. Goodness gracious. They usually put whatever is best to get fried in on the front cover because that’s where the lemmings are.
Richard: Exactly. By the time that a guy, that only writes an article once a month, notices that a sector or a particular stock has done well for a year or two, the game’s over. The run has already occurred. You’re getting in way too late.
Patrick: Well, and it’s that whole security thing. People think there’s security in a herd, but last time I checked, herds run off cliffs.
Richard: All the time.
Patrick: What are some of the markets that – without getting specific or too specific. I know there are some things that have done okay in this last year that you monitor.
Richard: Actually, most of the sectors have done well.
Patrick: That you’ve been following?
Richard: Yeah. Most of the major sectors have done well. A lot of people that we talk to that come to our seminars or call us and show up in our office are still scared to come back in the market even though it’s up roughly 50% in the last year, but consumer discretionaries, for instance.
I’ve got a fund that I selected in the last year there is up 93%. An energy fund – it’s up 82. Now, that’s lagged in the last three months, so that may be an opportunity. That’s lagged the S&P. Financials are up in the last year. Healthcare, industrials, materials, even technology which tends to be a lagger is up.
Patrick: Well, I know that you’re going to cover a lot of this information at your workshop. Aren’t you?
Richard: Absolutely.
Patrick: Now, when are the workshops again?
Richard: We’ve got one coming up this Tuesday at Brookhaven Country Club at 6:30 PM and another one at Timarron Country Club in South Lake on May 26th at 6:30 PM.
Patrick: And how would they get registered for that?
Richard: Call 972-325-1700.
Patrick: Now, I know a lot of people want to ask you questions and we haven’t even pushed the phone lines today and I do want to make sure that you have the opportunity. If you want to ask Richard a question, it’s 972-299-5759. That’s a metro number, so Dallas or Fort Worth you can call there or if you’re outside the DFW area, it’s 866-660-5759 which is KSKY if you’re looking at the numbers.
But, the other thing I do want to make sure is that if people want to ask you a question, you’ll take calls typically – well, Monday through Friday on the number 972-758-4484.
Richard: That’s right, Pat. And if I’m with a client or I’m in the market trading, just leave a voicemail. I’ll get back to you typically the same day.
Patrick: Very good. I know there’s so many people that need to know this information when it’s coming to investments and taxes and all of these things we’re looking at in the market today. There’s some real opportunities and some real minefields out there because if you take a wrong step right now and you don’t pay attention to what’s going on, you can get your head handed to you and we don’t want that.
We want you to do well, invest wisely and retain your money and, in fact, build your wealth and hand it down to your heirs in the appropriate time the way that will make the most sense, pay the least taxes, and do the best for your family.
Again, you can get a hold of Richard at 972-758-4484. Register for his workshop at 972-325-1700 or join call today, join the show today at 972-299-5759. We’ll be right back.
[commercial]
Patrick: Welcome back to Financial Fortress radio. This is Pat Dougher. Richard Jordan is in the studio. Richard is a Registered Investment Advisor. He is an investment strategist in the DFW area. He does workshops on wealth; how the smart money build their wealth, keep their wealth, pass their wealth, and we just want to make sure that you understand some of the key ingredients to the ways that you too can invest like they do and keep more of what you make. I know it’s the old saying.
Richard: It’s not what you make. It’s what you keep.
Patrick: It’s not what you make. It’s what you keep. The more you know, the more you get to keep. So, with that, Richard, I want to talk a little bit more. We were talking about some of the investments that had done really well and I know you use formula base. Was there any in there that you were really surprised that had done well?
Richard: Well, one of the REE funds that we looked at last year, we didn’t really think would do well because of the downturn in residential real estate. We were expecting commercial real estate to drop like a rock right behind it and indeed, that’s what most of the headlines were in the last 12 months.
Locally, we’ve got record numbers of foreclosures in commercial properties, but this REE fund did 110% in the last year and it’s up 10% the first three months of this year.
Patrick: That’s amazing. I would not – personally, I just think about the whole investment in real estate right now and think, “Ow.”
Richard: But, if you’re picking the best of the winners by using an unemotional formula to slice and dice the data down to the finest point and picking the very best of the very best, you can win even in a down market.
Patrick: Well, I do believe that, that even in a market where they’re sideways or down, there’s always opportunities. They’ve said many times in the last few years that some of the best companies of today came out of recessions of yesterday.
Richard: Absolutely.
Patrick: So, with that, I just want to encourage you guys to come hear Richard speak. Your next workshops are coming up. You’ve got one this next week and one later in the month.
Richard: Yeah. One this coming Tuesday at Brookhaven Country Club in North Dallas at 6:30 PM and another one at South Lake Timarron Country Club the last Wednesday of the month; the 26th of May at 6:30 PM. We’ll talk for one hour and then we’ll shut up and let you eat dinner. Is that a pretty good deal?
Patrick: Well, I’ve been to your workshops. I appreciate the fact that you load a lot on their plate before you load their plate.
Richard: Exactly.
Patrick: You give them value upon value as far as information. By the way, a lot of people think, “I’m going come and I’m going to hear a sales pitch.” You know what? I was blown away. Richard gave an hour presentation and it had everything to do with how I could do the best.
Richard: Absolutely.
Patrick: And it wasn’t a sales pitch. It was just, “Here’s the information. We want to help you if we can. We’d love to work with you, but the fact is you’re going to do what you want to do and that’s okay. Enjoy your dinner.” And I was really thankful for that.
So, if you want to register for that, just call the registration line at 972-325-1700 or they could call you and ask you a question. Right, Richard?
Richard: Sure. They could call me anytime at my desk 972-758-4484 and if I’m not with a client or trading in the market, I’ll give them a call back right away if I am. Leave a voicemail. The market shuts down at 3:00. I’ll be happy to get back to you after that.
Patrick: Very good. Well, I know that one of the things that a lot of people do not understand is the idea of a personal advisor. I know that people are used to brokers. We were talking about even the TV shows that have come out where it’s dialing for dollars and hammering stuff. But, a personal advisor spends most of their time in research, don’t they?
Richard: That’s true. The broker is a salesperson that is compensated primarily by commissions. So, they have to spend over 90% of their time in a selling mode on the phone or in a meeting with a client. Their idea of gathering intelligence is going to the branch meeting and finding out which products they’re pushing because it’s paying extra commissions. That’s their idea of doing research.
I spend the majority of my time in research and less than half my time sitting down with clients. That doesn’t mean I don’t love my clients and I don’t try and do the best I can do for them. I have a fiduciary duty and I have a very Christian attitude about how I treat my clients.
I am very interested in producing the best possible rates of return for them with the lowest possible fees because it’s a lot less expensive to get a reference from a customer than it is to spend the marketing money to go get another one. It’s common business sense.
Patrick: Well, that’s the thing is that you want to do it right. You want to do your client right, not do them in. Now, when you think about non-traditional asset allocation, I know you do a lot of things that – let’s just say the average investor just wouldn’t get. You have opportunities in front of you and funds that you use that the average investor would never see.
Richard: Right. For instance, we’ve recommended a material fund quite a bit lately. That is selected, again, by these complicated formulas. That fund’s up over 103% in the last year and almost 11% the first three months of this year.
But, if you want to go specifically to a particular type of precious metal, like you want to invest in platinum, we’ve got some platinum indexes out there that, again, invest in certain platinum-producing companies based on complicated formulas – or copper. Copper has to be used when there is an economic expansion.
China is buying record amounts of copper and that’s why we quit printing the penny. We quit minting it with pure copper or mostly copper. Now, it’s just copper-clad.
Patrick: Yeah. I heard that it costs like $180,000 to create $80,000 worth of pennies.
Richard: Yeah. It’s gotten out of control and people have been melting them down like crazy, so the mint just gave up and finally decided that there’s going to be long-term shortage of copper. Copper is a good investment in an economic expansion cycle and we’re definitely in an economic expansion.
A lot of people would like it to come back roaring as fast as it did the last couple of recessions. It’s going to take a little longer, but that still means that the upside is good and it’s not overbought yet. Copper is not overbought yet. There’s still great opportunities there. Gold might be overbought temporarily for a short period of time here. Over the next three years, I still think there’s money to be made there. Platinum is not overbought.
So, there’s certain precious metals and what I call nontraditional asset allocation that makes sense right now.
Patrick: I agree. I know that when I look at China, a lot of people don’t get that they are the workbox of the world. They are the economy that will rip and roar no matter what right now because you’ve got a billion people that want to work. They built cities with no one in them. That’s the thing. The city would hold over a million people, but there’s no one there.
Richard: Not yet.
Patrick: Not yet.
Richard: But, it’s coming. And India has also got the fastest growing middle-class in the world and that means record demand for all the stuff that we take for granted. Our average household has five televisions. The average Indian household has none. Our average garage has 2 1/2 cars in it. Theirs has .2.
Patrick: Does that mean it’s a bicycle?
Richard: That means only one out of five households has a car. So, think about the expansion opportunity there. And China is even worse. The numbers are even lower there.
Patrick: Yeah. Again, you’re looking at over two billion people that are in an expansion. The reality is that they kind of have the issue of they want to be like us.
Richard: Exactly.
Patrick: So, that’s awesome. What are some of the other opportunities you see in front of us?
Richard: Well, there’s still a lot of room to run in consumer discretionaries. Healthcare, in spite of all the damage Obama’s tried to do it, is still up over 10% the first three months of this year. We’ve just got a lot of room to grow because we dropped so far last year.
Patrick: Well, I know that the other thing that you look at is the liquidity factor, or maybe illiquidity, that’s been kind of forced on us in the last few years has forced everybody to get creative. They can’t just go get quick money from their credit card, or AMEX, or whatever.
I have guys that I run with that had $50,000 lines with AMEX and it was shut down to like $2,000 overnight.
Richard: Yep. That’s what’s happening.
Patrick: And they were floating their business on that money, so they had to pull it out of their stuff. I want to make sure as we’re coming here to the next break that you have an opportunity to connect with Richard. You can call him at 972-758-4484 or – and more importantly – go to his workshop. 972-325-1700.
He’s got a workshop this Tuesday night out of Brookhaven. It starts at 6:30; an hour of education and then you’ve got a wonderful meal afterwards. I want to make sure that you join us there. 972-325-1700 is the registration line. You want to make sure you leave all your information so that you can get confirmed to have a seat in these valuable workshops. I know you won’t want to miss it. We’re so thankful for you listening. We’ll be right back.
[commercial]
Patrick: Welcome back to Financial Fortress radio. This is Patrick Dougher, Richard Jordan in the house. One of the things that we want to go back to is I really want to make sure that people understand this whole Roth IRA thing and that they see the opportunities and the benefits.
I know that you were looking at the different myths that were out there. I know a lot of people are going, “Well… I may not pay much taxes because I’m going to be in a lower tax bracket.” Is that what people are thinking?
Richard: Well, I hear that all the time and it’s just not likely to be true because the Tax Foundation report – and they can call if they want to get a copy of that – says clearly just what the deficits that we had as of January 1st of this year. We pretty much have to double our tax rates or double the amount of money we print every year.
Now, think about it. If we double the amount of money we print every year, what’s that going to do to our inflation rate? We’ll be like Argentina.
Patrick: [48:13 inaudible] roof.
Richard: Yeah. It’ll be crazy.
Patrick: Greece, Argentina.
Richard: It just won’t work. So, we’re going to have to hike our tax rates tremendously and we’re still going to have to cut spending. You know how hard it is for politicians to cut spending. That’s how they get reelected. What are the two things politicians care about? Getting elected and getting reelected.
And I don’t care which party you’re for. This is not a political commercial. Politicians are all about power and elections. And the money that flows into those campaigns comes from two sources. It comes from large corporate funds and it comes from wealthy individuals.
The wealthy individuals have already converted their money as much as they can that a Roth because they know this is the best deal they’re ever going to see in their lifetime. It is the people that are overanalyzing that have failed to jump in.
Patrick: Well, I know some people might think, “Well, this sounds like a really good opportunity for government to collect a whole bunch in taxes.” I suppose it probably is if you look at all the money that’s in the IRAs. If people were to take them out of that doorway and put them into a Roth, they have to pay the taxes over a two year period as I understand it, Richard, right?
Richard: Correct.
Patrick: Okay. And no interest or penalty. Just pay the tax over two years and they’ve got lots of opportunities to even jump back. But, the fact is, yes, it’s going to generate some tax revenue. However, compared to where the rates will be – oh, my goodness.
Richard: Right.
Patrick: You’ve got so much less that you can pay right now. Isn’t that right?
Richard: Absolutely. A lot of the people that are betting on being in a 15% tax bracket when they retire are going to be in a 28 or a 30% bracket. There’s no way around this.
Patrick: Well, I heard something earlier today about even the dividend income that people had been historically only paying 15%, they’re talking about popping that up to like 43%.
Richard: Exactly.
Patrick: With all the extra bells and whistles added on. But, it’s like “Oh, my goodness.” They’re going triple – almost triple – taxes to folks that produce an income off their investments in the way of dividends. I’m stunned.
Richard: It is. And we’re just going to see some very high tax rates in the next 10 – 20 years to make up for the fact that you’ve got so many people retiring and just not enough tax money coming into carry the lull.
I’ve looked at this thing six different ways. I read reports on taxation all the time, so I can advise people on when to invest and how to invest so that they take the most home and Uncle Sam gets only his fair share. I’m sure you want him to get his fair share – well, maybe not.
Patrick: Well, like I said, IRS, KGB – what’s the difference? But, I do have a question for you. If somebody wanted to move forward with the transition you’re talking about; taking the money out of their IRA, put it into a Roth IRA, they wanted to do it with you, how would that process work?
Richard: Well, you would sit down with me. We would analyze their situation first to determine what their budget is, what their rate of return is on their current investments, what their inflation rate is and then we would start looking at ways to earn the minimum amount of money necessary to make that money last until they’re 95 or 100 years old because the last thing you want to do is run out of life before you run out of money.
Patrick: Right. You mean run out of money before you run out of life? Yeah. That one confused me. I’m an Aggie; whatever. The biggest thing is folks can connect with you several ways. I know you invite people to your workshops.
Richard: Right. And that’s a good place to get the overview on how the wealthy and the smart investors invest their money. We’ll talk about high return, low fee investment solutions. We’ll talk about things that do better than ETFs at the same kind of costs as ETFs and much higher rates of returns than anything else out there.
Patrick: What’s an ETF?
Richard: An exchange traded fund which is the current rate in the market and, basically, they’re compromises of different sectors, or multi-caps, or whatever and I don’t want to get into all those definitions.
Patrick: Yeah. It’s all good. I just wanted to make sure I understood what you were saying. So, you’ll take care of somebody, walk them through the process. They can get a hold of you just calling your line, right?
Richard: 072-758-4474 or if you want to come to the seminar, 972-325-1700. The next one is at Brookhaven this coming Tuesday night – that’s in two days – at 6:30 PM. Or you can come out to South Lake Timarron Country Club on the 26th of May at 6:30 PM and you’ll hear about not just high returns, but low fees. You’ll hear about ways to get consistently high returns without any stock market risk.
We actually run into a lot of people lately that don’t want any risk on a portion of their money so that they are sure they’ve got the money to pay all their bills for their utilities and to buy the kids and grandkids their presents every year and take their travel every year, and then the money they put in the market, who cares. Is it going to go up? Is it going to go down? What’s it going to be at when they pass? Who cares. It’s all for the kids anyway.
You’ll hear about opportunities you won’t find at big brand name brokers because they don’t pay any commissions, so they aren’t interested in selling them. You’ll hear about nontraditional asset allocation including hard assets like precious metals and finally, again, whether or not you should convert your 401K or an IRA to a Roth IRA.
Now, a lot of people don’t believe or know that you can actually take your 401K and roll it over into an IRA now, but the Enron Act which was the Pension Protection Act of 2006 went into effect at the beginning of 2007 and a lot of these big companies have not been forthright in explaining to their employees that they’ve got the right to convert out of that 401K – which the company essentially owns. That’s why when Enron went bankrupt, those people lost all their money.
So, to protect their pension, essentially their 401k, you’ve got the right to roll that over and it makes sense to do that if you have already met the minimum amount of time to get that portion that the company is also adding on for you.
So, if you’ve passed that period of time – for instance, you’ve been there five years or longer; that’s typically the case – then it makes sense to look at it because in order to keep the costs on 401Ks low, they limit you to a selection of only 20 or 30 mutual funds – and they aren’t the best funds in the market by the way. As a result of that, you can’t get the kinds of returns that we can get for you.
Patrick: Really? One of the things that I wanted to make sure is that people can get a hold of you and hear you talk. I know that you’ve got the workshop. You said there’s one this Tuesday night. 972-325-1700 to register.
Richard: Brookhaven Country Club this Tuesday night.
Patrick: Now, what’s the cost on that one?
Richard: No charge. We’ll throw in a dinner if you’re willing to sit and listen to me for an hour.
Patrick: Who should make sure they’re there?
Richard: Anybody that has investments that total $250,000 or more will find it valuable to learn how the wealthy invest their money differently than the average investor.
Patrick: Okay. So, you’ve got strategies for folks that have $250,000 or above that will really help them build their wealth, retain their wealth, and even transfer their wealth the right way.
I know that, folks, you want to be there. It’s free. You’re going to hear Richard talk. You’re going to get a feel for what his heart is and I will tell you, you will enjoy it. You’ll get a lot of information. It’s 972-325-1700.
Like we said earlier, he’ll fill your intellectual plate before he fills your physical plate with the tools and the keys to saving you money and building your wealth. We’ll talk to you next week.