Newsletter icon

Join Our Newsletter

It's the best way to stay up to date on what Jeff's thinking and where he'll be next.
  • This field is for validation purposes and should be left unchanged.

Two Big SDIRA Mistakes

There are two big mistakes that I see way too many self-directed IRA account holders make.  Let me remind you of the story about Jack and the Beanstalk.  After Jack engaged in a dubious transaction, he dropped the seeds into a hole in the ground.  Magically, overnight, a massive beanstalk grew.  That’s what many SDIRA investors are looking to do.  They want to put a few “beans” into one investment in their IRA, and watch it magically grow into something massive.

 Let’s face it.  Not all investors are as talented as Hillary Rodham Clinton who, at one point in her life, invested $1,000 with a broker and turned it into $100,000 in cattle futures.  So, let’s talk about the two mistakes I see investors making.

The first mistake I see is investors always swinging for homerun deals instead of focusing on their on-base percentage.  I see way too many investors trying to knock the ball out of the park with every deal they do rather than focusing on doing consistent, regular deals that, over time, will amount to a significant return in their portfolio.  Many of these investors strike out because they are swinging for the fences, or they hit a pop fly that is easily caught and turns into nothing much.  They would be farther ahead if they concentrated on getting on base and working the simple steps.

 The second biggest mistake I see IRA account holders making goes back to Jack and the Beanstalk.  After they put a few beans in the ground, they expect magical results instead of committing themselves to a consistent contribution program.  How about you?  Are you consistently contributing every month to your retirement account?  Is it a conscious decision you have to make, or have you set it up to be automatically done for you?  With all the technological features in the world of banking and investing, it is so easy to set it up so that money is automatically leaving your bank account or paycheck and going straight to your 401(k), IRA, etc.  How you choose to get the money to your retirement account isn’t important.  The contributions just need to be made.

For Roth IRAs, the ideal target is $500 a month because that gets you $6,000 a year.  For 401(k)s, the ideal target would be anywhere between 15-25% of your monthly gross pay.  Remember, with 401(k)s, the contribution has to come from your salary.  If you are self-employed and funding a solo 401(k), you need to be paying yourself a monthly salary, and from that salary, 15-25% should be going into your solo 401(k).            

I realize you probably read information from a lot of people, and many of them may talk about sudden or nearly instantaneous wealth through various forms of investing.  To read information from someone like me who is advocating “slow and steady wins the race” may not sound glamorous or appeal to your greed gland, but I remember hearing a quote from a book written by a famous con artist who said that the hardest people in the world to fool were those who weren’t greedy.  My advice to you, therefore, is to find your lane, devise your plan, and stick to it.

Related Posts

Appointment Booking

If you are looking to book an appointment with Jeff, click the button now.