Self-Directed IRA Investing: Prosper With IOUs

Investing in retirement notes can be an important tool in your retirement planning. Investments in IOUs have been around for a long, long time. In fact, investing in IOUs existed long before banks were invented.

Before banks were invented, if a trader or farmer wanted to sell his asset or product, he had to be paid in full in cash, or the buyer had to pay him with a combination of cash and the buyer’s promise to pay. the balance later. Before banks were invented, private traders, private farmers, and private investors accepted IOUs in payment for assets.

Today, banks handle most of the promissory note business. But they don’t handle everything, they don’t handle it 100%. Private party notes are still used in specific business and financial transactions. Some examples of private party note financing that are commonly used today are:

  • A house transaction
  • A farm or ranch transaction
  • A sale of a business transaction
  • A divorce property agreement
  • A dissolution of ownership of the partnership

All of these transactions offer potentially above average investment opportunities, if properly structured. They can offer a monthly cash flow that is above what is available from other sources. They can offer short-term earning opportunities or long-term retirement investment opportunities. They can offer a higher-than-average interest rate return. Essentially, each private party note can be tailored to fit special and specific situations, if properly structured.

In order for you to benefit from this area of ​​self-directed retirement investing, you must “do your homework.”

To the best of your ability, determine the following facts that apply to your personal situation:

  • How much cash do you have now to invest in retirement?
  • How much cash will you have in the future to invest for retirement?
  • When will future cash be available to invest in retirement?
  • Do you have a target retirement income amount?
  • Do you want to be an active investor or a passive investor?
  • Want to get involved in investment classes and training?
  • How much risk and volatility are you comfortable with?
  • Do you want to invest alone or with one or more partners?
  • Do you have investment experience?

Think long and hard about each of the above questions. Take your time and really “get the hang of it” with your investor self. Do not rush into any investment until you have answered these questions truthfully and honestly. In investing, as in many other areas, “hast splurges.”

You have to learn to crawl before you can walk; walk before you can jog; jog before you can run.

Your goal should be gradually, over time, to ensure a steady monthly cash income so that you can live when full-time or even part-time employment is not an option. Your long-term goal should be “financial freedom.”

A cautionary note: Eighty to ninety percent of people believe they are above average. Assume you are fallible. Be careful!

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