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Going Long Podcast Episode 266: Managing Your Investment Portfolio with Vehicles That Give You More Control
( To see the Video Version of today’s conversation just CLICK HERE. )
In the conversation with today’s guest, Mindy Gayer, you’ll learn the following:
Here’s what Mindy shared with us during today’s conversation:
Be sure to reach out and connect with Mindy Gayer by using the info below:
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Billy Keels 00:00
Today's conversation is sponsored by first generation Capital Partners. If you're an accredited investor, and you want to know about how we're helping other accredited investors keep more of their income, go to firstgencpe.com forward slash going long.
There's a lot of paperwork that is involved in the process. Unfortunately, this is a very complex industry. But that's where we come in, we help walk you through that process, we help with the account opening, we will help you with the account funding and letting you know what your different options are for funding the account that we went over earlier. And then finally, the process for submitting the paperwork for the investment purchase.
You're listening to the going long podcast with Billy keels, the number one podcast for long distance real asset investing.
Billy Keels 00:43
Welcome to the go long podcast, we're back once again to continue to help to educate you so you feel much more comfortable as well as confident investing beyond your backyard. And yes, I'm your host, Billy keels. And I am really excited for you to join today's conversation, take it in, it's going to be awesome, especially if you're looking for vehicles that give you more control and be able to take more control over and that you have to get to the lifestyle that you really love to delete. So, at the same time, I want to thank each and every one of you for continuing to screenshot and share across social media, then the podcast, we continue to move up the ratings, feel free to tag us for those of you that are doing that on LinkedIn and on Instagram, on Facebook, like it's really, really cool. So appreciate it and on Twitter, and all that kind of stuff. So tag us because we'd like to be able to respond back to you. Let us know that that you're out there. Also, if you want to leave your honest written review, as well as writing love to read to do that on the Apple podcast platform, as well as Spotify. And if you're looking for any of the previous podcasts, just go to first gen cp.com forward slash podcasts, first gen cp.com forward slash podcast and you can check out every single episode we've ever done. So with that, also, it's as I mentioned many times before, it's not about the perfect vehicle, it's about how do you utilise different vehicles to get to your investing destination. Today is another clear example of that how you can use a very specific vehicle to increase the level of control that you have where you're doing your investing. Today, we're going to have Mindy Garr, she's gonna talk to us about how the self directed IRA can be one of the useful vehicles for you. And we're gonna get to that conversation just after this. Are you a busy high paid professional, someone that in the previous two years has earned $200,000 and is expected to earn $200,000 this year. Or maybe if you file jointly, previously, you've earned $300,000 In previous two years, and you're also expected to do that this year. Or maybe if not, either individually or jointly, you have a million dollars in net worth not including your primary residence. If you meet any of these criteria, then you're someone that the IRS considers to be an accredited investor. That probably means you're someone like an enterprise software sales executive, you may be an executive and a major corporation, you may be a doctor, you may be a lawyer may be a high paid consultant, you may be worked for a major sports franchise, the thing I know you have in common is that you continue to do the hard work like you're doing 100% of the work. And you're only bringing home 50% of the reward because you continue to get crushed by your income taxes. If you are tired of this situation and you're looking for a new solution, then go to first gen cp.com forward slash going long. When you get there, that's going to help you to start the journey so that you can begin to take back control of your taxes take control of your time. And then also that means you're going to be able to spend more of the time that you want with the people that you love the most. And that is the way that you're going to get the personal freedom that you're looking for. So if you're looking to take back control, go ahead and go to first ncp.com forward slash going long and see how we can help you today. So you know what if you want to know how managing your long distance investment portfolio options with vehicles that give you more control would be like think Guess what? Today's a conversation that you're gonna want to listen to until the very last word you know why? Because today's special guest not only started her professional career in the financial services industry, she also follow that up by a number of different sales professional experiences in in the retail industry, and also other professional experiences that drew on her strong sales skills, communication skills, analytical as well as influencing skills, which has led us up to today, where she is the Southeast Regional Business Development Manager at the interest group. It gives me great pleasure to welcome to today's conversation. Mindy Garr Mindy, welcome the show.
Yes, thank you, Billy. I'm really excited to be here today and joining everyone on this podcast to share a little bit more about self directed IRAs and the rules and regulations around to self directed IRAs, and how you can incorporate self directed IRAs into your retirement strategy.
Billy Keels 04:40
Absolutely fantastic. And I know that everyone is going to get so much value from that because this is about also being able to ultimately have more control understanding how this vehicle works and being able to leverage it most appropriately for your specific situation. I guess just as well, I'll say in just a second, but well know as a general statement, things we're going to talk about today. Me He's going to share different concepts and examples with us. So the things that she's talking about, you definitely want to make sure that you speak to your, your tax professional, your legal professional and understand how these concepts will apply to your specific situation. So that kind of stated as an overarching statement, you know, everybody knows that well, in MIDI, you know, now that you're gonna get five questions, you're gonna get two in the beginning, you're gonna get three at the very end. And so I guess I'd like to go ahead and get started with the very first question, which is help us understand maybe, where is it that you call home in the US.
So I call home Nashville, Tennessee, our company is actually headquartered in Oakland, California. So the San Francisco Bay area, but home for me is Nashville, Tennessee. And for those of y'all who are not familiar with Nashville, we are also known as Music City. So this is the heart of country music specifically, but in general music as well.
Billy Keels 05:57
Yeah, it was a really, really long time ago, like I'm dating myself here. But 9096 was the last time that I was there physically. And I was just amazed at the the amount of music, right, because I knew there was a lot of country music there. But yeah, there's just a massive mecca of music in general. Sounds pretty Yep, that was a long time ago, by the way. So
it's crazy. So at the variety of music that is on on Broadway. So Broadway is the strip of bars, essentially, where everyone goes to listen to live music, the talent there is just it's phenomenal. You can go to pretty much any place at any time of the day. And here just some of the most amazing music, though. I love it,
Billy Keels 06:36
which is awesome. So appreciate you sharing that. And then the other thing that Mindy, I'd love for you to share with us. What's the most positive thing that's happened to you in the last 24 hours?
Yes, that's a really great question because I also love positivity. So kind of a quick backstory several months ago, I was wake surfing, and I had a wake surfing accident. And I got the rope tied around my knee, tore my ACL spread minus meniscus and sprained my hamstring. Fast forward. I just had ACL surgery about four weeks ago. So this morning, I went into physical therapy, and I am ahead of schedule of where I should be post op. So I was really excited about that, because I'm a very active person. And being a little bit handicapped has been not so great. But knowing that I'm ahead of where I should be postdoc has been just phenomenal encouragement to me.
Billy Keels 07:29
Fantastic. Well, I'm sure you're doing all of the things that you're supposed to and more so that you can get back out to to be the best version of you. And congratulations, and thanks for sharing that with this. By the way, this is always, always, always love that bit of positivity. I also I need to just kind of admit something to you as well, Mindy, I am a recovering perfectionist, and I have a tendency to kind of keep the bar really, really high. And sometimes it makes me do things that are a little bit. Some people would say they're not even feasible, ie trying to tell your entire backstory in like two and a half seconds in the very beginning. Like that's what I tried to do, but like you've done way too much stuff, to be able to tell it in two and a half seconds. So what I'd love for you to do is actually tell your backstory, in your own words. And you are allowed to take a lot more than two and a half seconds, just kind of give myself that as a goal. So you want to share your backstory with us. And then also if you can share, you know, really some of the major decisions that you've made to get to this point in your journey. And then we'll see where you and I take the conversation from there.
Yeah, absolutely. So my financial background starts from when I was actually 16 years old. I started working at a bank when I was in high school, and then moved away to college, worked at a financial institution all throughout college. I then graduated college and started working for AIG Valak, which is the retirement side of AIG. So I've been working in the retirement space for a very long time. Fast forward, I then started working for a PEO company. So I sold Group Health Benefits workers comp, payroll, 401k, etc. I wanted to get back into specifically the retirement space for a couple of reasons. But number one reason is because I'm very passionate about the retirement industry. A lot of individuals, specifically younger individuals, they're not. They're not familiar with how important having a retirement count is. And that, you know, once you're older, even my age group, we might not be able to really count on Social Security. So we need to have a good plan for living comfortably in retirement. So the retirement space has always kind of been a passion of mine. I just randomly stumbled upon the interest group. So that's the company that I work for, and read the description of what the company does and I found it very interesting. The because I've worked in the retirement space in the financial space for a very long time. And this concept of self directed IRAs was all very new and interesting to me, I'd never heard of it before. And I thought, Well, gosh, how is that even possible, because all of my experience, and all of that I've known in the past is, you have a retirement account, you're investing it in stocks, bonds, mutual funds, that's your options of the types of assets that you can invest in. And so I started researching a little more on this company, and companies like the interest group that's out there that are record keepers for self directed IRAs, and learning about all of the different types of asset classes that you can actually invest in, and the amount of unlimited opportunities that you have when using a self directed IRA. I will say, self directed IRAs are not for everyone, you have to have a good understanding of the risks and returns because you are your own judiciary. So fast forward, I ended up accepting a position with the interest group, and I've been with a company for a little over five years absolutely love it. I hear amazing investment ideas almost on a daily basis, assets that or an ID investment ideas that are very outside of the box, you and I will go into a little more detail on the different asset classes, I'm sure in a little bit, but the unlimited amount of opportunity that you have with self directed, and the amount of control that you can take over your retirement account is just phenomenal to me. So I've very much enjoyed working for this company and working in this space just because of the unlimited amount of opportunities that you have for diversifying your retirement portfolio.
Billy Keels 11:43
So yeah, and when you're when you're able to diversify the portfolio and the different types of assets that make the most sense for you this is once again, it comes back to the concept of being able to have more control, right, being able to control the outcome. There's a lot of positives to that. And also, as you said, there's some things that you need to consider. I just want to take I want to take a step back really quickly, because I want to make sure that they that we that we make sure everybody stays on the on the journey with us. There are two concepts or two to kind of, I guess one was a word and one was an acronym. Can you help us understand when you say P E. O, what does that mean? Just so people understand.
So a PEO is a professional employer organisation. And the way I like to help people understand what that means is it's essentially like a buying group. Think of like a Sam's Club or Costco, right, you have a membership into this organisation. And now you have access to discounted items. PEO gives gives small to midsize companies access to discounted health benefits workers comp, payroll 401k. So it's like a buying group. So you're part of this larger organisation, that gives you the power to have the same types of benefits that you would typically have with being a part of a larger organisation.
Billy Keels 12:56
Right. And so the PEOs are typically for your business owners who are looking to be able to provide benefits for their employee base, and they're able to join this PEO there they are then becoming part of a larger group. So they have access to even more improved benefits than if they were doing that on their own. Yeah. That is correct. Yes. So now we are understanding what the PEO is appreciate you doing that. And then also to Mindy, you mentioned something else. You said, Hey, listen, you know, you also there's there's upside to this. And at the same time, you have to also be aware as you are in a self directed IRA, and you use the word called fiduciary. Can you help for those of us who may not be familiar with that word? What does that actually mean? And why or what does it mean, and why is that important?
Yes, it's extremely important to understand what a fiduciary is and who a fiduciary is. So typically, when you have a retirement account, and you're working with a financial advisor, and I say this typically because it's not always the case, but but it typically is the case if you're hiring a financial advisor, then they become the judiciary over your account, meaning they are selecting the types of assets that your account is invested in, and they're taking responsibility for the performance of that account, that is a fiduciary and self directed IRA space. You the account holder are your own fiduciary because you are selecting the assets unless you hire a financial advisor, which is perfectly fine. You can hire a financial advisor and your financial advisor can assist you with the self directed account. But in in our instance, a majority of our clients are their own fiduciary. They're selecting the investments that they're investing in, whether it's real estate or a startup company or precious metals or any of those assets that are allowed inside of a self directed IRA. you're selecting the assets so that means that if you select to invest in a company that fails, that's not on the custodian that's not on the record keeper that's on you as the account holder. So that means that you take full responsibility for The outcome of the investments that you're investing in inside of that retirement account,
Billy Keels 15:05
there's that word responsibility. So, yes, this is about having more control and more responsibility. So we're gonna, we're gonna kind of go back to basics, we're going to do a one on one kind of thing here Monday, because I know that you will be able to help us in this regard. So you've talked about the self directed IRA, you talked a little bit about it, maybe if you could, or you started talking about it. But if you could help to clarify, what is it? And who are the typical players, you've used a couple of names, because we want to also help understand, where's the self directed IRA within the different custodians of the record keepers and the fiduciary, et cetera, et cetera? So what is it? And who are the players in this space? And then we'll get to when should you use it? Yep, absolutely.
So a self directed IRA is a retirement account in which the investor has complete control over the types of assets that they're investing in. Now, when I say the different assets that you're investing in, I'm not talking about stocks, bonds, mutual funds, I'm referencing this world of alternatives that you can actually invest in inside of a self directed IRA. It's that, and this is a big misconception in this space, it's not the type of account that dictates what types of assets you can and cannot invest in. It's the custodian that you have your money with. So the the record keeper, the custodian that you have your money with, is what dictates the types of assets that you can invest in. And what I mean by that, for example, let's say, you know, you learned today that you can invest in real estate inside of your self directed IRA account, you want to invest in a single family home, because it's in and the caveat to this is it has to be for investment purposes. So whatever assets that you're investing in, it must be for investment purposes, it can't be assets that you are personally going to be using, that you're going to gain personal benefit from, etc. It has to be strictly for investment purposes. So you learned today that you can invest in real estate, you're going to buy a single family home, you're going to rent it out. This is for investment purposes. And you have an IRA account at let's say, TD Ameritrade or Charles Schwab. So you go to TD Ameritrade or Charles Schwab, and say, I learned today that I can invest in real estate inside of my IRA, I'm ready to get started. They're going to say either one, no, you can't. Or they're going to say pay the penalties and taxes, here's your money go invest. And the reason for that is because they don't hold alternatives. They hold the stocks, bonds, mutual funds, the traditional type assets that a majority of people think that your retirement accounts need to be invested in self directed IRAs, a true self directed IRA, with a custodian that holds alternatives allows you to invest in this whole world of alternatives. And there's really only three things that you cannot invest in inside of a self directed IRA. That's life insurance, collectibles, and S corporations. So if you think about it, that's your three limitations. So the spectrum of what you can actually invest in is so broad and so robust, you have so many options. So the self directed IRA space allows you as the investor to pick the different types of assets that you want to invest in so that you can further diversify your retirement portfolio, so that you can invest in assets that you know, and understand the risks and returns that are associated with it. Again, you're your own fiduciary, you're picking the types of assets that you want to invest in, again, self directed is not for everyone. If you have no idea about what you're investing in, you might want to think twice about investing because you are your own fiduciaries. So it's important for you to understand the types of assets that you are investing in, because you take on full liability for those assets that you're investing inside of your retirement account. Again, unless you hire a financial advisor, then they could take on that fiduciary responsibility. But the key is self directed allows you to take control over the types of assets that you're investing in. Okay,
Billy Keels 19:15
fantastic. So now we understand what it is gives you more control it provides you with the options with the exception of the life insurance collectibles and s corpse is pretty much seems like a pretty wide gamut. Who are the different players that someone would need to be in involved with if you want to have a self directed IRA?
Yep, great question. And I did just want to mention, so we talked about the spectrum of what you can invest in is very, very broad with those three limitations. There are a group of individuals and entities that your IRA is not allowed to do business with and the IRS has called these individuals disqualified persons. A disqualified person is going to be yourself, your spouse, your lineal descendants, descendants, their spouses, financial advisors, managers, beneficiaries, or any entity where you or a disqualified person have 50% or more ownership. So what that means is your IRA is not allowed to do business with any of those disqualified persons. So that means no buying, no selling, no transferring ownership, no providing goods or services between your IRAs, investment, and a disqualified person. And I'll just real quickly give an example of what I mean by that. Let's say for example, that you want to buy a house, you learn today that you can buy a piece of real estate inside of your IRA, it happens to be a house that your mother owns, she is a disqualified person to your IRA, you cannot buy that house from your mother. But let's say that it's a house from a third party, you don't know them, you're not related to them perfectly fine, your IRA can buy that house. Now, while I said that you cannot do business with a disqualified person. There is one caveat to that. The caveat is you can do business with a disqualified person at the initiation of a purchase via what we call a partnership. So you can partner with absolutely anyone, including a disqualified person, if it's at the initiation of the purchase. So for example, you're going to buy let's say there's a piece of property, it's $100,000. But you only have, let's say, 70,000 in your IRA, but then your mother has an IRA, and she has 30,000. And that IRA, those IRAs can partner together, the percentage of ownership is established on the front end, your IRA 70%, her Ira 30%, you're buying those properties together now via a partnership, all expenses are paid at that percentage of ownership, all income goes back into those IRAs at that percentage of ownership. And it doesn't have to be partnering with another IRA, you can literally partner with absolutely anyone at the initiation of the purchase, it just has to make sure that your percentage of ownership is established on the front end, all expenses are paid at that percentage of ownership, all income goes back to each of those individuals or entities at that percentage of ownership. Now, other than that your IRA can literally do business with anyone other than the disqualified person with the caveat of the partnership being the exception.
Billy Keels 22:27
Okay, perfect. So we have that. Trusting that you enjoyed today's conversation. And you know, if you're tired of getting crushed by taxes, and you're looking for greater freedom, to be able to choose what you want to do when you want to do it, make sure that you go to first ncp.com forward slash going long and see how we can help you today. Let's get back to the conversation. So you mentioned this one scenario. And I'm just thinking to myself, Okay, I'm someone who's in a corporate role. I've got my IRA, I've had this stuff that's going on. And now I want to move to a self directed IRA. This scenario is that we're talking about is that typically where you're going to reach out to someone like you and the interest group that can talk us through what is possible, what is not possible? Or I like to usually say, how can it be possible? And if it's not possible, then you tell us No. But is that where the interest group comes in with the combination of sitting down with our own tax professional as well as our legal professional to understand those scenarios? Or maybe if you can help that person that's trying to understand, Okay, well, where exactly who does what and how are they helping me to understand what I can actually do?
Yes, that's a really great question. So there's different ways. So the main thing is how do you fund your self directed IRA? Right, right, where's your money coming from? How can what money can you use to put into a self directed IRA, so individuals who have old 401 K's, so company where you're no longer employed, let's say you left a company five years ago, that money's just been sitting there, you haven't rolled it into a new plan, you can move money from any old 401 K plan into a self directed IRA. If you're still employed with a company where you have a 401 K, or it's it's not, it doesn't even have to be a 401 K, let's say call qualified plan. So 401 k 403, B 457. TSP, anytime a qualified money can be moved into a self directed IRA if you're no longer employed there. If you're self employed there, you want to contact your plan administrator to see what your options are for rolling money into a self directed IRA. Because a lot of times plan administrators do not allow you to access that money until there's been a qualifying event like separation of employment. If you've rolled money into that plan, you might have access to roll that money out. But typically, again, it's always a good idea to contact your plan administrator. Now, if you have money in any IRA, so that can be a traditional IRA, a Roth IRA, a SEP IRA, a simple IRA, even ESA s HSAs, and solo 401 K's all of them OHS can be self directed. So there's seven different types of accounts that can be self directed. But if you have any IRA at any institution, you can typically transfer that money into a self directed IRA. Because we are the same as let's say a TD Ameritrade, Charles Schwab in regards to we're doing the record keeping and reporting to the IRS. So when you move money to a self directed IRA, it does not create a taxable event, right, because you are still keeping your money within an institution that's doing the record keeping and reporting to the IRS. So any IRA can be transferred into a self directed IRA, any old qualified plan can be rolled over into a self directed IRA, you'll also have the option of making contributions as long as you're eligible, you'd need to talk to your tax advisor to see if you're eligible to make contributions. But you can also move money into a self directed IRA, the contribution, you can also do a combination of those three. So let's say you have a small IRA, you have an old 401 K, and you're also eligible to make a contribution, you can consolidate all three of those into one self directed IRA, and fund your account that way. You can also partner your IRAs together to buy assets as well. So that's also an option. So let's say you have money in a traditional IRA and money in a Roth IRA. But you don't have enough money in just one account to purchase your investment, you can partner those two accounts together, as long as again, it's at the initiation of the partner or the creation of the asset. And as long as a partnership is established, on the front end, all expenses are paid that way, all income goes back into those accounts at that exact same ownership. So that's really the three different ways that you can fund a self directed IRA.
Billy Keels 26:41
Okay, perfect. So that is very helpful. And once again, it's just this, this goes to the point that that I like to share, which is it's just about being exposed to the right vehicles, understanding how those vehicles work, and then, most importantly, being able to tie these vehicles into the benefit that you're looking for, as an investor. You mentioned earlier Mindy, that this is this is a vehicle. It's not for everybody. It is for bearish can be for a very specific person. And I think part of what you talked about before, is this may not be the right vehicle, if you don't really know what type of asset class you want to invest in. Yes. What else would you say beyond that, that would maybe detour someone from saying, Well, this is probably not the right thing for you until you can get clarity on A, B, C, and D.
So a couple of things. Number one would be do you have enough money to in an account to purchase this type of asset that you're looking to purchase? If you are not sure, there are a lot of different options, right, you can partner with with someone, you can partner with a disqualified person, you can partner with anyone. But really the main thing is understanding that you are your own judiciary, and making sure that you're doing your own due diligence on the types of assets that you're investing in. That's really the the key main important piece here. And then just understanding what a prohibited transaction is. So again, a prohibited transaction is going to be when your IRA is doing business with a disqualified person, other than at the initiation of a purchase, or when your IRA is doing transactions that's not allowed by the IRS or investing in assets that wouldn't be allowed by the IRS, again, life insurance collectibles, S corporations, those three asset classes are not allowed inside of a self directed IRA. So it's just important that you really understand that you're your own fiduciary, you're taking on the responsibility of the assets that you're investing in. And then that you need to also understand what the rules and regulations are, and making sure that you're not committing a prohibited transaction. Because at the end of the day, you're the owner of the account, while the record keeper us, for example, would be there to monitor high level prohibited transactions, we're not checking to make sure that you're not staying at the property that your IRA is investing in, which would be a prohibited transaction. Because again, you're not allowed to utilise the assets that your IRA has invested in. So really just understanding the liability. That's it's that it's on you and not the record keeper. Because at the end of the day, we're just the record keeper, we're doing the reporting to the IRS and holding those assets on our books so that it stays within a tax sheltered account.
Billy Keels 29:31
Perfect. So higher control. Higher liability, one of the things I say all the time is you don't get something for nothing. And this is just another example that there are rules regulations in place. And ultimately, if you want to have something that is self directed by definition, you have more of the responsibility, more of the burden and the and the the burden and the responsibility and also the reward as an investment. Yep. So and then
yeah, I Just wanted to add one other thing that some people don't take into account that's also really important is your exit strategy for the assets that you're investing in. And this is one, one thing that I do like to share that I personally, I find that it's really cool that you can do. So I mentioned that the assets that you're investing in has to be for investment purposes. So you can't use the property, let's say that you buy a house in Costa Rica, or you buy a vacation home in Belize, you can't personally go there and stay in it, right, because your IRA owns it, even if your IRA owns 5% of that property, it's still off limits, everything needs to stay at arm's length. But the really cool thing is that once you're of retirement age, you can actually take it in kind distribution, and then personally own that property, because you could never sell the property to you personally. But you can take an income distribution on the property. And you can do that all at once. Or you can spread that out over a few years. So the tax burdens not as extreme, and then personally own that property and use the property at that point once you fully own the property. So also kind of understanding your exit strategy. So you're not, you know, 10 years down the road, you had planned to sell this to your child, or you had planned to sell this to yourself, just No, you can't do that. But you can personally own the asset by taking an income distribution. And then at that point, you can do whatever you want with it.
Billy Keels 31:27
Fantastic. And this is once again, this is about making sure that you have the right team around you to talk through the scenarios. And as you think about as you get into any type of investment asset, also recognise what are the different strategies that you have for exiting that fantastic bit of bit of bit of experience there that you're sharing with us? Hey, Mindy, there's this other topic that a lot of people maybe don't take into consideration. You know, a lot of people are investing in the alternative space and will consider investing in real estate, right large multifamily, or self storage facilities and all this kind of stuff. And typically, on those types of opportunities or deals people call you are using, you know, you're gonna go out and you're going to bring in, let's say, 30% of the value of a property, let's say it's a $10 million property, you're gonna go raise equity for 3 million, and then you're gonna get another 70 million or another 7 million to get to that $10 million property. Well, when we're bringing in our our self directed IRAs there's a kind of this four letter acronym that a lot of people don't understand or don't talk about. But it Well, there's two different ones, there's ubit, r u EBIT and UDF fi, can you talk to us about maybe just high level right now? No, a lot of detail. But what are these concepts? And why should I consider that? If I have a self directed IRA, when I'm considering investing in something that is using some type of loan structure or leverage?
Yes, and that is a very great point. And that is also something that is not talked about as widely as it probably should, with a tax advisor. So just to reiterate, we're not tax advisers, we don't provide any sort of tax advice. So tax specific questions need to be directed towards your tax advisor. But when you're using a self directed IRA, ubit tax, unrelated business income tax, can you your IRA could be exposed to ubit tax, if the asset that you're investing in is for example, a trade or a business, you ubit tax can come into play. Generally, when you're using a retirement account, all of your one of the main benefits of using a self directed IRA is the tax benefit, right? Your earnings are either growing tax deferred, if it's in a pre tax account, like a traditional or a SEP IRA, or it's tax free, if you're utilising a Roth IRA. Now, depending on the type of asset that you're investing in, for example, real estate, that's passive income, it's probably not going to generate ubit tax, unless you're leveraging and we'll go into that in a second because that is you DFI so if your IRA is investing in, let's say, a plumbing company, that is considered a trade or a business, there could be ubit. Tax, it depends on how the income is reported on the k one. So what I like to tell individuals is talk to the company that you're investing in, ask their tax advisor or their account, how is this income going to be reported on my k one, and that's going to determine if your IRA is going to be exposed to ubit. Tax, and what that ubit tax looks like? And does it make sense from a perspective of okay, I'm using my self directed IRA to invest. I'm paying ubit tax but if I were using my ordinary income, how much additional tax would I be paying? Does this tax strategy makes sense? Now, when you're using a self directed IRA, you can also leverage meaning your IRA can take out a loan if you don't have enough money to cover the property in full. That's that is an option. However, since your IRA is not buying The property in full, you DFI tax can come into play unrelated debt finance, income tax. So again, we don't get into tax specifics on that. It's always good to talk to your tax advisor on what you DFI tax looks like how long you'll be responsible for that what that rate is, etc. But that generally comes in when your IRA is leveraging, or if your IRA is investing in a trade or a business.
Billy Keels 35:25
That's absolutely crystal clear. And so helpful. And also, I just want to reiterate to everyone, Mindy's sharing concepts, examples, ideas, any of the things that she's talking about, this is where you need to go to your tax professional, because they are the ones that have the expertise in this area. And it's just like anything else it is. And this just shows once again, the power of having the right team around you. You know, Mindy, using the example of you know whether or not you want to evaluate whether it makes more sense, even if you do have the ubit tax that you're gonna have to pay. It's the same kind of process that people will look and say, do I actually want to keep my this maybe not the best time to talk about it? But like, do I want to keep my money in a potential type of plan? Or do I want to take the hit in be able to pull it out? Like these are different scenarios that you have to have your team of advisors around you to best advise you as to the different paths that you could take moving forward. And this is just another another clear example of that. So you know, before we get into the going on final three, Mindy, because we kind of need to get him to go along. Final three, tell us about how you are how you're working with clients at the interest group today.
So we're basically here as a resource for talking you through your investment options, meaning if what you're trying to invest in if that's going to be allowed by the IRS, I will say there are a lot of grey areas in the self directed space. And when it comes to those grey areas. Unfortunately, we're not we're not a legal counsel, we're we're not licenced legal professionals. So we can't give you any sort of legal advice on Yes, this would be this is crystal clear, this would be allowed or no, it would not be, we're only here to tell you what the IRS says the rules and regulations are. And then it's up to you to seek additional professional advice on Okay, in these grey areas. What what actually can I do and what I am not allowed to do. So we're we're there to talk you through those help you with the, the process in general. So this isn't the click of a button and you've invested like you would typically in the stock market or in the traditional space, there is a lot to the paperwork process in this. So it's three basic steps, open an account funding and account and purchase your investment. With that being said, there's, there's a lot of paperwork that is involved in the process. Unfortunately, this is a very complex industry. But that's where we come in, we help walk you through that process, we help with the account opening, we will help you with the account funding and letting you know what your different options are for funding the account that we went over earlier. And then finally, the process for submitting the paperwork for the investment purchase. For example, when you're buying a piece of real estate, the real estate is not titled in your name, it would be titled in the name of the IRA for the benefit of you. So we're there to kind of help you through the specifics on staying in compliance with the IRS as well. So that's really where we come into play. We're a resource, we're also educators. So we're here to answer those questions. Again, when it's the grey area, we can't really advise on that. Specifically, in the real estate side, there's a lot of grey areas. But that's also I say, self directed is glorious, but it can also be frustrating. Because you have so many options. It's glorious, but then it becomes frustrating, because there are so many options. And there are so many grey areas. So you know, it's kind of a, a, a two fold there.
Billy Keels 39:01
Yeah. And so this is just, you know, I know, I'm kind of gonna say this at nauseam, but this is why it's important to have a team, right because you need you, especially when the responsibility is yours. The options are yours, the control is yours, all the upside is there. But you also need to have someone that, in my opinion, have someone that can help them navigate these kinds of especially the grey areas, right, because you need an advisor that is there or a set of advisors because someone's going to advise you on the legal aspects and one's going to advise you on the tax aspect. Someone else is going to help you on the compliance aspect, right. And that's just in this scenario. That's three different groups of people. So listen, Mindy, I really appreciate you sharing that with us. The thing is, we've got to get into the going long, final three and the thing is many I never asked any of our special guests today. You are special guests. They're going long, final three without you telling me that you're ready. So are you ready?
I'm ready. All right.
Billy Keels 39:53
I think you were kind of born ready. So it was kind of a gimme, I guess. So. We started with you over Nashville, Tennessee. Although I'm originally from Columbus, Ohio, Midwestern, er, I now call this side of the pond, my new home, quote unquote, side of the pond. And so I'd like to kind of bring things back over here as we wrap up. And the first of the going on final three is to have you share with us, what is your favourite European city that you've either visited or still on your bucket list to visit?
Yes, and I, I get asked this often, because I actually do travel a lot. And it's really hard to have just one favourite just because so for two reasons. Number one, each place that I've visited has its own uniqueness. And the other reason that it's really hard to pick is because I'm very much a mood person. Sometimes I'm in the mood to do a lot of exploring and hiking and just activity after activity. And then sometimes I'm in just a very chill mood where I might want to go to a beach. But if I would have to pick my favourite European city, I'm probably going to go with Santorini, Greece, just simply because it kind of has both of those. It has the very scenic, you can do hiking there. And then it also has like the beach area where you can have a chill day and just kind of relaxed. So I would say that Santorini is probably a place that I would definitely consider going back a second or third time as well.
Billy Keels 41:20
Cool. Santorini, I actually have a cousin that just came back from there couple weeks ago. So yes, it Yeah, and it's a fantastic place. I am in agreement with you. And I can relate like I've travelled to 86 countries, I've been super fortunate and to like have to pick one. It's kind of like, but I had to ask the question. So it is what it is. So thank you for sharing that. So this leads into question number two, Mindy, which has a lot to do with the things that I have. I've been very fortunate right and meeting a lot of extremely successful people. And I continue to be someone who's very successful you, you're continuing to help people, broaden their education base, and be able to take more control over financial outcomes of their lives, et cetera, et cetera. And so this really has a lot to do with through these interactions and recognising different patterns with people that are very successful. And so hopefully, you'll agree with me like one of the things that I've noticed with successful people is that they like most people, when they set their mind to doing something going out to achieve a goal or a plan. They put the plan together, and then they go out. And then unlike most people, they just execute relentlessly. And they get every single thing right the first time, which allows them to actually go even faster. That was kind of a joke. If you're looking at me, like what, it's a joke, it's completely a joke. It's completely a joke. So we're not going to go off camera or anything like that. I like to have fun. Of course, people don't. Even really successful people, actually, the reality is many most successful people make like 20 to 50 times more mistakes, their failure events, as you said, than most people. This is not a joke, this is serious. I'm going to put Bill serious, Billy, again. The reality is, every single time that I've seen a successful person make a relevant mistake, or they've told me about making a relevant mistake or learning opportunity, however you want to call it every single time without fail. When that happens, they stop. They learn from the mistake. And then what they do next is absolutely amazing. They put different strategies, tactics and actions in place to minimise the probability of that exact same thing happening again. So I don't want you to think about the mistake that you made or, you know, the learning opportunity. What's really the lesson that you took away from the mistake? What's that one lesson that you know that we need to hear today here at the go on long podcast?
Yeah, so I was reflecting earlier about that question. And so one thing that I do regret is not starting a Roth when I was younger, and what that even meant when I was, you know, in my early 20s. And I would say the lesson that I learned is, it's never too late. So regardless of where you're at in life, starting a Roth IRA, or even if you don't have any retirement account, just start where you're at and pick up the momentum and just keep it going. Because it's never too late. It's never too late to do anything in life.
Billy Keels 44:22
Yeah. Awesome. Awesome. Awesome. It's never too late. You are where you are. The best time to plant a tree was 20 years ago. The next best time is today. Yeah, yeah, absolutely. appreciate you sharing that. And then lastly, Mindy is just to help us feed our minds with knowledge. If you could share the one book, it doesn't need to be a business book can be any kind of book, what is the one book that you would recommend to the going on family today?
So I have read quite a few books in the past and the book that just always sticks out and when somebody asks me for a book recommendation is it's called Extreme Ownership. It's written by to you Less Navy SEALs. And the book is really about taking ownership of your outcomes. You know, being a good leader. And there, there are no bad teams, it's the leaders. So essentially, the people that you're surrounding yourself with, right, we talked about earlier, having that good support system that that group of advisers that you're surrounding yourself with. So, to me, Extreme Ownership helps me to remind myself that I'm in control, that I need to take ownership of my outcomes of whatever happens, whether it's success or failures. So I would say that Extreme Ownership to me was is probably one of the favourite books that I've read in the past.
Billy Keels 45:45
Alright, fantastic. So don't worry, everybody, if you're running on the treadmill, if you're cooking dinner or whatever, just go, there's going to be a link that stream ownership, you can you can pick it up, and you can hear the reasons why Mindy really recommends that book to us. And so many of these conversations, like they literally fly by, like, I'm just thinking, we were just started talking a second ago. And you're telling us that you're getting started at 16 years old working in the bank, and then you're working for four years in college, and you're in the financial services industry. And then you're in this PEO and you actually broke that down for us, you help us understand what it means and how it's important for small business owners. And then you also helped us realise something that was amazing because you've been in this space. And then you've not really been exposed to even though you were talking about retirement and retirement planning and things like that, this whole self directed IRA space. And so you're kind of like, wow, even though I was here that why is this kind of thing, man over held to the side, and you've embraced that and really realised that this isn't another way to help another vehicle to help individuals have more control, there's a lot more responsibility. And it's also important to make sure that you have the right teams. But when you are able to have the right teams, you have the right education, and you were very focused on educating people. It gives you an unlimited number of possibilities. I'm think maybe there are three different types of things you can't include in this and maybe some different prohibited parties, but also that's part of the education that you're helping us with the help and shared with so much information today. I know that I know everybody's like Billy, just be quiet an ask the question. So here's the thing I do. Everybody wants to know, wait, you want you want to I was gonna is gonna say everybody wants to know how they can get in touch with you. Oh, are you gonna do?
Yeah, I want to share one fun fact about self directed IRAs. So they did a survey several years ago. And it was like 97% of Americans. Were not familiar with self directed IRAs, which is completely mind boggling. But that's also why companies like us are out there helping spread the word and providing the education and joining podcasts sharing about self directed IRAs and what the options are. So I just I love it.
Billy Keels 47:48
Well, I think that's awesome. I was actually I did a an episode not too long ago, a solo podcast episode, and I was saying that you're talking about 3%. So maybe I'll use that in a future solo episode. But even 63% of Americans when the survey was done, didn't even know, in the traditional IRAs, or qualified plans, they didn't even know where their money was invested. So if you are in a in a self directed, there's a pretty high probability that you know exactly where you're in what your retirement plan is invested. So that also helps to move that away from that 63%, which to me was also just mind boggling. Thank you for that 3% number, because I'm sure that I will use that sometime in the future. Anyway, many people want to know how can they get in touch with you? How can they how can they find out more about what you're doing an interest group and see how you can help them?
Yep, so there's several different methods to get in touch with me. So you can go to our website and go to location and all of my contact information is on our website. So just the interest group.com. I'm also on LinkedIn. So feel free to reach out to me on LinkedIn. My email address is m Gaye are at the th e interest E and TR ust Gero up.com. So M Garr at the interest group.com. Or you can call me on the phone. You can also text me. So you have many different options for getting a hold of me.
Billy Keels 49:06
All right, fantastic. Well, listen, Mindy, really, really appreciate that. Also, everyone from the go online family, when you reach out to Mindy on LinkedIn, leave her personalised invitation. That way, it's going to be so much easier for the two of you because and Nick because she's going to know that you've already invested time listening to her and she's already helped to educate you. So just make it a personalised invite, please. It's just it's kind of a pet peeve of mine. So anyway, so listen, Mindy, I really, really appreciate you deciding to invest your time with me and the entire going long family. So thank you very, very much. Really appreciate it.
Yeah, you're very welcome. I was happy to join and share with you all self directed IRAs. All right,
Billy Keels 49:42
fantastic. And listen, Mindy, if you can give me like 15 seconds I'm gonna wrap things up and then I'll let you get out of here. So listen, go along family. I mean, Mindy shared so much. He gave you a masterclass we thought it was gonna be like a one on one class, but she gave you a masterclass on the self directed IRAs. Things that you can consider if it's the right thing for you if it's not for him. For the parties, different types of things that you can put in, or the three that you can't out of everything else, helping you to understand about navigating the grey areas with your advisors, tax legal, and bringing the team together. So she gave you a lot of things to think about a lot of things to talk about, take the episode, read, listen to it, share the episode with family with friends, and then you all get on a phone call and talk to Mindy and how she can help you with your self directed IRA. So while you're doing that, and taking action, I'm gonna be here preparing the next conversation. So until then, go out and make it a great day. Thank you very much. Trust that you enjoy today's conversation. And once again, today's conversation was sponsored by first generation Capital Partners. If you're an accredited investor want to find out more about how we're helping accredited investors to gain their personal freedom even faster. Go to firstgencp.com forward slash going