This is the second email in a series explaining my passion when it comes to using self-directed retirement accounts, particularly Roth IRAs and Roth 401(k)s, to invest in alternative assets. I frequently refer to something I call my “Roth Theorem”, which is my formula for how to generate tax-free wealth on a long-term basis.
In my last post, I discussed the first part of the formula: R$ – Roth Money. Let’s talk about the next part of the formula.
FA – Focused Action
I recently participated in back-to-back conferences held by two of the most well-known custodial companies in the self-directed, alternative-investing space. Both companies have shared publicly that a significant portion of the funds over which they have custody is sitting as idle cash because even though individuals understand the power of self-directing, they have not yet found an opportunity to take the focused action required to make that money grow. Merely letting money sit in a retirement account is not enough. You have to apply focused action to those funds. You need to put that money to work in a deal you fully and completely understand, and one in which you have done the appropriate level of due diligence as to the deal, counterparties, and any collateral securing the investment.
Focused action requires commitment by you to learn and understand these investments, and then take appropriate action with them. Many in the real estate investing space have an interest for self-direction because they understand real estate investing and want to use their retirement dollars to do the same or similar things that they do in their ordinary day-to-day investing business. This is an excellent idea. There are others, however, who, like me, are part-time investors with a full-time, professional career. Those people need to devote time from their busy schedules to acquire the necessary education and training, much of which is available for free online via videos put on YouTube by Quest IRA, Equity Trust Company, Kingdom Trust Company, CamaPlan and NuView, to name a few. “Focus” is the learning; “action” is the application of that learning.
The first step is getting to a Roth retirement account. The second step is leaning how to take focused action to grow that Roth account. In my next post, I will share with you what should be the result of taking focused action.