Dec 24, 2015
Alternative Investments and Non-correlated Investments: How
to Use IRA, 401(k),
and other Qualified
Funds
Aubrey Morrow, CFP
Financial Designs, Ltd.
San Diego
Larry Steinberg
The Steinberg Financial Group
Scottsdale, AZ
Neal Greene
Newbridge Securities
Playa Del Rey, CA.
In my 5 minutes, I don’t need to remind anyone that: RETIREMENTS ARE CHANGING
People are retiring later but living even longer People are retiring earlier and living longer Sources of income are changing Retirement investments are changing The 4% Rule No Longer Works for Retirees
These changes have implications for the presence of alternative investments in retirement accounts. The reasons are obvious – the risk is too great of having all retirement assets in traditional cash, stock and bond portfolios
WHAT ARE INSTITUTIONAL INVESTORS SAYING ABOUT PORTFOLIO ASSET ALLOCATION INTO ALTERNATIVES?
• 76% consider the use of alternative investments essential to diversify portfolio risk.
• 25% say they are increasing their allocations to alternative/non-correlated assets
• 91% say that alternatives are key to risk reduction Natixis Global Asset Management survey July 2012
• Institutional investors will increase their allocations to real estate and infrastructure from 5-10% to 25% within the next decade. JP Morgan report
WHAT WE DO AT OUR FIRM
Our firm has always recommend a blend of real estate – generally not to exceed 20% - 25% max in qualified plans – mainly for diversification, income, appreciation potential and not correlated with the traditional stock market.
Investor Profile Questionnaire to determine: Investor Goals, Objectives, Risk & Time Horizon
NON-ACCREDITED 70% - 80% Fee-Based Assets Under Management20% - 30% Mix of REITs and Business Development Companies
ACCREDITED60% - 70% Fee-Based Globally Diversified Assets Under Management20% - 30% Mix of REITs and Business Development Companies10% - 20% Reg. D Private Real Estate Equity and Debt (Bond Substitute) and Oil and Gas Royalties - Energy Linked Income Annuity like investments
For Current Retirement Income
“A new Money For Life Strategy Creates Guaranteed Income and Growth Potential”
Featured in Kiplinger Personal Finance Bottom Line Magazine
Income for Life Model software from www.Wealth2k.com
RR RESPONSIBILITIES1. Due diligence
a. Beyond that of broker dealerb. Issues unique to qualified plans
2. Product selection
a. Importance of diversificationb. Cash flow (yield) to satisfy RMD’s (older clients)
3. Monitoring
a. Reports from sponsorb. Analysis by Broker Dealer
c. Communication by the RR
Unrelated Business Taxable Income
1. Corporate rates & NOW (deductions are allowed ) 2. Debt financed property (any time during the taxable year)
3. Not required to be direct nor recourse (acquisition or improvement ) 4. Total TAXABLE income x (average acquisition indebtedness / adjusted basis).
5. At sale, use the highest average indebtedness within the preceding 12 months before the sale.