Self-directed IRAâs have garnered a significant amount of buzz as it was recently made known that republican presidential candidate Mitt Romney has been using cash from his retirement account to invest in untraditional lucrative investments. It was reported that Romney co-invested in Bain Capital using funds from his SEP IRA. Interestingly Bain educated their employees on how they could use cash from their IRA to invest in take-over deals. As a result, Bain employees garnered 50%-80% return on investment per year. Romney has been using a pre-tax IRA, which will require him to pay income tax on a percentage of his IRA distributions each year. In the past, Romney was unable to invest in a post-tax or Roth IRA because of his high income tax bracket. The tax laws have now changed and since 2010, anyone has the ability to open and convert to a Roth IRA http://www.selfdirectedirasforlife.com/mit-romneys-ira-investments-garner-public-interest/
yeah but it kinda sucks to know it all comes out as "income ". If you are willing to take the risk, you can use 45% leverage in a taxable account , make up for the taxes incurred with the leverage plus have the freedom to short. That's why I'm going to take out a portion of my IRA , put it in a taxable account, trade as a business with mark to market accounting, utilize the leverage in 2-3 yrs and ability to short. The advantages are ability to use leverage can completely nullify tax hit, if you have losses as a a mark to market business all of it is deductible plus business expenses are deductible like a normal business expense (vs the lame deduction as an "investor")
I had a tough time in 2009,(first bad year) and saw traders drop like flies in that period, so i was always worried this business would no longer work for me, or that i would blow out. So I bought 2 houses, one cash, mostly cash on the other, owe about 100k, and thats just my insurance policy should the trading business go south. Thanks for the advice, im ready to start leveraging it hard again knowing I have my own "golden parachute" in the case i got to hit the reset button and start from scratch again.
Just be aware that 45% constant leverage is a huge risk. The formula for nullifying tax rate with margin is roughly the reciprocal of (1-your marginal tax rate). So a marginal tax rate of say 28% = 1/.72 = (139% of equity) will allow your gains to make up for the tax hit. If you lose, the leverage will eviscerate you: I suggest a bit of moderation.
I know the risks of leverage, I have been trading on 50-1 leverage on my prop accounts for years, though i rarely, (1-2 times per year) use it. Mostly its just for floating orders. On an average day im sitting at 10:1 fully hedged, over a dozen different positions.
You are making assumptions to support your PURE FANTASY that Romney placed somehow artificially deflated assets into his IRA. here is some stuff for you to consider. 1) No one has posted and we haven't seen the actual 'ins' and 'outs' at Bain during this time, we don't KNOW the actual annual rate of return. 2) you are judging only these 16 years.. that was over 12 fucking years ago. 3) assuming he started his IRA year 1 at Bain (it could have been earlier), and contributed ONLY 2k/ beginning of the year for the last 28 years he needed to avg 41%/year compounded to break $100m.. less than half the 88%. 4) The above obviously doesn't include any rollover he might have had, when we know he had access to a self-directed 401k at Bain. It also doesn't include the larger contributions that were allowed to the IRA later. These alone could have made a significant difference in the avg compounded rate required afterwards to achieve 100m. http://thela25.com/blog/how-create-100m-self-directed-ira 5) You have no idea what he is invested in now or then, if he had a huge couple of years early on, or what he rolled over from Bain. there are many realistic possibilities even under the 41%. 6) We don't know the exact value of his IRA, it could be less than 100m. conclusion: he could have broke 100m in any number of ways, and NONE of them had to be placing artificially deflated assets into his IRA (however that's possible anyway). side note: you are possibly the most annoyingly condescending poster on the board. I find your supreme arrogance on all subjects, especially investing, fucking ridiculous when this is how you claim to trade: http://www.elitetrader.com/vb/showt...5&perpage=6&highlight=piggybank&pagenumber=11 quit posting like a douche bro.. or be right.
The astounding stupidity and incompetence of the liberals on this thread let us know their stupidity is not just limited to the political spectrum as if it were "just a matter of opinions". They are biased and ill informed, worst yet they have no clue how clueless they are.
How can you even begin to understand his trading methodology since you can't even understand man-made global warming, or for that matter even present a coherent argument. Your words......from the thread you referenced. " I don't see the proof. If you are so educated then u would understand that 200 years of data is statistically irrelevant when compared to the total population. So no i don't give a shit that CO2, which hasn't been proven to LEAD temp, has gone up 40% in the last 200 years because we don't know what the historical norm is." 200 years..total population ? WTF ? CO2 hasn't been proven to lead temps ?.......... CO2 is a proven greenhouse gas! Don't know what the historical norm is? ......Yes we do! So within this one small paragraph you managed to be non-sensical or wrong about GW three times, yet you feel qualified mock his methodology. Which along with GW, you also know next to nothing about. Pretty funny.