Novel Strategy Puts Investors in Control

By McGuire, Kara | Tribune-Review/Pittsburgh Tribune-Review, April 12, 2009 | Go to article overview

Novel Strategy Puts Investors in Control


McGuire, Kara, Tribune-Review/Pittsburgh Tribune-Review


After Tom Fafinski lost money in tech stocks, he began searching for alternative places to invest. Fafinski, 44, of Farmington, Minn., discovered self-directed IRAs and used money earmarked for his retirement and his children's college to buy a townhouse as an investment property.

Sick of being stuck with a dozen mutual funds in his workplace retirement plan, Tim Olson rolled over his 401(k) to a self- directed IRA and is building townhouses in Wells, Minn. A self- described "hands-on" kind of guy, Olson likes to keep his IRA money in town, using local contractors and investing in CDs from a local bank. A self-directed IRA lets him do that. "The biggest appeal is the options; I'm not limited to mutual funds."

Both Fafinski and Olson are part of a growing number of investors turning to self-directed IRAs. "The worse the stock market does, the more business I get," said Todd Grill, principal of Entrust Midwest, a company that administers self-directed IRAs.

Investors with self-directed IRAs go out and find the asset to invest in rather than relying on the universe of mutual funds and other investments available through companies such as Charles Schwab or T. Rowe Price.

Like traditional individual retirement accounts, self-directed IRAs have the same contribution limits and rules for withdrawing money. The difference is what's inside these accounts -- real estate, gold or shares of a privately held business, to name some examples.

Grill tells clients they can be like Buffett. "Warren Buffett invests in private companies. Warren Buffett invests in real estate. Warren Buffett invests in precious metals. Warren Buffett does foreign currency trading. Now you can do exactly that same thing, but on a smaller scale."

In a nutshell, here's how a self-directed IRA works. You open an IRA through a company such as Entrust, Equity Trust, Guidant Financial or Pensco Trust. The company then acts as the trustee of your account and facilitates investments on your behalf. But you find the investment opportunity and do the due diligence.

Grill has clients invested in ethanol, wind energy, real estate in Mexico, even movies. Clients can also use money to finance a business start-up, which Grill thinks could be a popular option for laid-off workers.

Grill's average client is 50 years old and financially sophisticated with assets available to put to work. Many are buying foreclosed properties in north Minneapolis, using IRA money to make improvements, and selling the properties for a profit. The profit goes back into the IRA to be taxed as ordinary income once the client makes distributions in retirement.

But these IRAs aren't for everyone. You need expertise as well as money.

Todd Terhorst, a certified financial planner with Diversified Wealth Management in St. Louis Park, Minn. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Novel Strategy Puts Investors in Control
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.