Risks associated with a self-directed IRA
Class-action suits on the rise
- Duration 4:20
- Date Apr 22, 2012
Class-action suits on the rise
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-- returns on your individual retirement -- did you even have the nerve on -- 401K statement or your hired a check your statement.
It can be down right to supporting these days we admit that and that is actually why some folks are turning to self directed iris.
IRAs hoping to find these alternative ways to earn a little bit more -- even make up for the losses they've seen or maybe just diversify what they half.
In today's take charge consumer protection segment what you need to know about the risks associated with self directed iris.
As there are class action suits around the country by defrauded investors.
And they are on the rise.
-- -- tasking managing partner at -- would capital investment management my guess now on this.
We want to help votes take charge Ed first of all what is a self directed IRA wire people investing in the.
For those reasons alone.
Well my personal thanks for having me on this Jamie because this is a subject that's very important for everyone to really get their hands around.
A self directed IRA is just like any other account but what makes it different.
Is that the money -- -- grows tax deferred with a lot of -- also around the country people have moved their 401K plans which are.
Growth would grow tax deferred.
In to self directed IRAs.
And there's a lot of flexibility on how they invest that money so the key to remember is a self directed irate that money grows tax deferred and it's very difficult to get money into a tax deferred vehicle he got -- handle that very carefully.
And you hit it's different than a for a one -- -- it's not through an employer this is something you do want -- around but and you just another things like you can invest in precious metals like gold trend can invest in real estate.
That in and of itself could be risky.
But that's not what these consumer fraud suits -- all about and I want to let people know that they're going on it's about the people who manage them.
Are they not regulated -- regular financial advisors are.
Sure -- good question and there's a there's a a big separation almost like they're single league baseball players and Major League all stars the same thing in the custodian world.
You have very well known custodians that have very strong practices and lots of oversight.
Then you have these others that are actually custodians that are somewhat shady so everyone needs to know my deal with the Major League all star custodians are made dealing with a single -- All star and the ceiling all stars could be OK but there's a lot of -- fraud that goes on there and this is where the where the crime really -- -- is usually a little smaller -- known custodians they allow investments that are not that heavily scrutinized and that's where the problem has come in these recent lawsuit and will probably see more.
All of them but so -- well -- take that risk and some people want to play the odds.
So how do you know when you make even a dollar investment with someone that's not at one of those big companies we've heard of -- -- check amount.
Well they you know that's that's a very difficult thing for most people and a lot of people you're right -- -- are trying to take additional risk because over the last ten years their traditional returns -- their traditional investments.
Haven't really you know gotten them what they wanted so what would one of the things to do is let's break it down.
In real estate -- -- lot of the fraud is happening.
In these -- their -- for real estate investment trust and there's public ones that trade on the New York Stock Exchange and they over the counter market.
Those I'm actually fine with because there's over site.
But these private -- there's a tremendous amount of crimes occurring right there -- lot of fraud because there's lack of transparency and what's in there.
And it's very very difficult to get out of them so any investment Jamie that's hard to get out of that's the first.
Pink flag that you need to look at and before becomes a red flag.
So lack of transparency -- lack of liquidity should be the number one thing -- looking for in any investment.
-- let me add one thing here and I don't have your experience -- investments but if you ask questions like that.
And you are not getting answers -- they're hedging or they have an AOL account for an email.
-- -- -- folks ask someone like an anti tasking thank you so much -- for being here take charge folks you retirement money you worked hard for.
I appreciate it.