My nephew Louie is a graduate student at the university. He's a business and finance major in his last year. He had an assignment this semester to illustrate an example of contrarian investing or an investing strategy that goes against accepted or conventional investing. Knowing that I'm fond of thinking outside the box and that I've been a financial planner for more than 20 years, he came to me for advice. And it just so happens that I'd recently discovered a great contrarian play.
The strategy works well for smaller investors and is great for individual retirement accounts, or IRAs. In fact, the way this strategy works is almost like one contrarian concept within another. Allow me to explain.
An IRA is a great way to accumulate wealth. Why? Because gains realized within an IRA are not taxed until the account holder actually begins to withdraw the funds. Then, the money is taxed as regular income. The other major advantage to using an IRA is that because there is no tax liability until distributions begin, the principle accumulates or compounds much faster. It's a great arrangement. Traditional IRAs are often managed by banks, stock brokers or other financial companies.
What makes this part of the plan a bit of a contrarian play is that an individual first needs to roll the money from a traditional IRA to a self-directed IRA. And that works exactly the way it sounds. A self-directed IRA is an account where the account holder manages his or her own investments. But that's not what makes this a contrarian play.
I recently discovered a relatively new and unique program of a socially conscious nature that has been earning investors a very nice return on investment or ROI as we say in financial circles. And it can be employed using a self-directed IRA. Usually, the first question I get when speaking of this strategy is, where do you invest the money? The answer is what makes this such an unconventional approach. The answer is: real estate.
Right now you'd probably be hard pressed to locate a market anywhere in the United States where real estate looks attractive. People are avoiding real estate investments like a politician would avoid a lie detector. But here's a little secret: there's always a way to get good returns regardless of the vehicle. You just have to be savvy enough to recognize the way. Well, I've found a doozy!
I've discovered a program that not only allows investors to receive a great return on dollars invested, it helps people and communities at the same time. There are a group of people devoted to restoring certain working communities while providing safe and sound housing for people wanting to realize the American Dream of home ownership. The people operating the program look for communities that would be suitable for the program. Then they send members to the community to discuss the possibilities of a restoration project within the community. Once the project is started investors come in and purchase residential properties that have fallen in value due to the overall downturn in real estate.
From here, building supplies and personnel are needed to rehab the properties. This bolsters commerce within the community and puts people to work. Once the properties are restored, there are families actually waiting to purchase the homes at very affordable prices. Can you see how this works? Communities are restored, people and businesses benefit with jobs and commerce, individuals get to purchase homes for perhaps the first time and investors receive great returns on their capital - all tax deferred.
The contrarian aspect of the program is that virtually no one is investing in real estate these days because they believe the national market is dead. But we contrarians know there are always signs of life out there. You've just got to know how to recognize them.
Phillip Jones is a highly successful entrepreneur and educator who helps to connect people with a desire to earn significantly more income by working smart rather than hard. To learn more about Phillip visit http://www.creativerealestateinvestingtoday.com