All US citizens must report any offshore assets cumulatively valued at more than $10,000 to the Federal government.  With two exceptions; real estate and precious metals.  If you are interested in offshore asset protection, these are your only two asset classes that do not require disclosure.  My job is to inform you about these types of situations and introduce you to potential ideas and future business partners.  Today I want to introduce you to Hugo.

Hugo is an interesting guy.  He holds a BS in Computer Science, a JD in General Law, an LLM in International Taxation, a Doctorate in Taxation, a Doctorate in Naturopathy, former CFP, and has traveled to over 100 countries.  Needless to say, he is experienced in international business. 

Recently I heard from Hugo.  Hugo is developing a Wellness Resort and Spa in Costa Rica near the Pan American Highway.  It is surrounded by huge national park and a wildlife refuge.  It is a very interesting concept with medical facilities, spa, hotel, bed and breakfast, and several restaurants.  And right now, Hugo is selling ten of these beautiful lakefront houses for $40,000.

To put the icing on the cake, Hugo has arranged easy, low cost financing for those able to put 30% down.  There will also be property management available for those interested in using this as an income property.  For the entrepreneurs, Hugo is looking for partners for the medical ventures and additional restaurants.  For anyone interested in an absolute bargain in a beautiful location, this deserves serious consideration. 

If you are interested, please send me an email and I will connect you directly with Hugo.  Live well.

As I stated in yesterday’s article, our firms goal is to assist clients in developing their asset protection strategies.  Our belief is that your wealth is at risk from two main threats; government interference and litigation.  Under the heading of government interference lies taxation and we strive to help our clients minimize taxation through various asset protection strategies.

Today I want you to be aware of Self-Directed IRA’s, or SDIRA’s.  Most people are unaware that you can not only manage your own IRA investments, but you can invest in whatevever asset class you chose.  Traditional IRA custodians are generally investment brokers and of course they want to sell you investment where they derive fees.  It is highly unlikely you will find an investment broker offering you commercial real estate, gold, oil field rights, vacation properties, or cattle as investment options.

But what if your very familiar with farming and you have a very good understanding of the cattle market?  This may be a very good investment for you, but your investment broker won’t sell you these types of investments and won’t allow them in your IRA.  But there is an option.

With a SDIRA (there is also a Self-Directed RothIRA but I will just group them together and call them both a SDIRA), you can invest in any asset class you wish.  You have full control of your assets and how they are managed.  Essentially, the way it works is the custodian assists you in forming an LLC which is owned by your IRA.  You become the manager of the IRA, giving you full control of the investment of funds.  You can then chose to invest this money as you see fit.  There are restrictions however, but they are minimal and certainly not a deterrent.

If you chose to buy rental properties, vacation properties, gold bullion or coins, tax lien certificates, private placement loans, or cattle – no problem.  Its your IRA and you are the manager.  There are a few custodians that are out there who can set this up for you.  One of them is a friend of mine, Steve.  He runs a company that helps his clients set up SDIRA’s (and Roth’s) in order for them to take control of their retirement savings.  Who do you think is more interested in your success – a mutual fund manager or you?  Steve can also convert your existing IRA or Roth into a SDIRA.

As I stated in yesterday’s article, 2010 is a great year to convert your  IRA into a Roth IRA.  You can take advantage of an  opportunity that  may not come again in your lifetime.  This can save you a huge amount of money over your lifetime in taxes.  And if you really want to supercharge your retirement savings, convert your IRA into a Self-Directed Roth IRA.  If you are interested in contacting Steve, please send me an email and I will provide the connection.  Live well.

My firm’s job is to help clients with asset protection strategies.  There are two main threats to your wealth; government interference and litigation.  Under the government interference category falls taxation.  One of our objectives is to help clients minimize taxation and therefore we provide you with useful information that can benefit you in your goal of asset protection.

The  federal government’s extreme misuse of taxpayer dollars may very well work out to be a huge opportunity for many.  Because of the astronomical deficits, the IRS has given one year opportunity for anyone to convert their IRA to a ROTH IRA.  I won’t go into details about the differences between them as you are either aware of it, or have access to a computer and can google it yourself.

Up until 2010, if you earned more than $100,000 per year, you were not allowed to convert to a ROTH.  This restriction is lifted for 2010 only.  Why would the government do this you may ask?  Short term tax revenues in a midterm election year, of course.  They are sacrificing long term tax revenue for short term gain.  If you have $100,000 in your IRA and convert to a ROTH, you will pay income taxes on the tax basis, for arguments sake, lets say you will pay $30,000.  Then your $70,000 can grow tax free forever and you can take distributions tax free.

As an added benefit, you don’t even have to pay the $30,000 in taxes in 2010.  You can make payments in 2011 and 2012.  Essentially the IRS is hoping many people convert in order to raise tax revenue over the next 3 years in lieu of the higher taxes they would collect when you reach retirement age.  I would highly suggest you seriously consider this option and talk it over with your CPA.

After reading this recent piece on Bloomberg, I was utterly disgusted.  I just don’t understand how our policy makers can continue to pursue such terrible decisions.  Certainly the country is still in financial turmoil and there is a need to raise funds to support the budgets, but this tax on equity trades may very well be the stupidest idea yet.

Regardless of your philosophical beliefs, the reality is the world revolves around money.  If you don’t believe me, next time you are at the grocery store tell them you want to pay with ‘goodwill toward man’. 

Businesses require investment to operate.  In exchange for this investment, the business pays investors with dividends or capital appreciation.  What happens when every trade is taxed on both the buyer and seller side?  Just like any other activity, when you tax it, you get less of it.  Much of the liquidity in the financial markets are created by short term trades.  Financial institutions have traders working every day getting into and out of trades on a daily basis.

There are also many who day trade.  This can significantly increase their cost of doing business.  A tax of .25% may not seem like much, but if you are a day trader using $50,000 per day will see an additional cost of $625 per week in tax or $32,500 per year in ADDITIONAL  tax he was not already paying.  Day trading is a risky endeavor and this will likely force all but the wealthiest day traders out of the market severly decreasing the daily volume.

When daily volume decreases, the spread between the bid price and ask price will be wide enough to drive a dump truck through, which will have a negative impact on your returns.  It will also significantly increase the cost of doing business for mutual fund managers.  Do you think they will just ‘eat’ the additional cost?  Of course not, it will be passed on to you dear reader.

Let us not forget about your precious 401k’s, IRA’s, ROTH’s, and educational 529’s.  These are almost exclusively mutual fund holdings which will see major declines if this tax is implemented.  We also need to consider, what will happen to all of this capital that will flee the markets.

My guess is that it will flood into the  real estate market, thereby creating our next bubble in RE prices.  Once traders and investors around the world have their cost of doing business hit this hard, the money will not vanish, but like water it will follow the path of least resistance.  Right now, that is real estate.  Do we really want to blow up that bubble again?