Nor for the other 99% of us, and I'm not complaining. If I were in the elite of Bo$ton and beyond this is exactly what I would want to read:
"For the affluent, private equity can be worth the risk" by Paul Sullivan | New York Times June 01, 2014
As a young lawyer in New York, Robert Rich sometimes bought stocks based on tips he received while playing squash at the Yale Club.
Isn't that in$ider trading?
Most of them did not do well, so eventually he chose to put his money into mutual funds and focus on his work.
But then the itch for more control and the potential for bigger gains got the best of him and now, at 76, Rich has put nearly a fifth of his wealth into private equity — an illiquid, risky asset class with returns that range from double digits to a complete loss of principal.
The section is for greedy money junkies!
In this, Rich has been at the vanguard of a wave of affluent do-it-yourselfers investing in private equity by buying into funds that focus on a sector of the economy or on direct investments in particular companies. They most often do this through self-directed individual retirement accounts — a type of account that can invest in nonpublic securities. These accounts have been around since the 1970s and are typically used to invest in real estate.
But in the past five years, the custodians for self-directed IRAs report an increasing interest in private equity. Equity Trust, in Westlake, Ohio, said private equity now accounted for 10 to 15 percent of the $12 billion it holds as a custodian. Pensco Trust Co., based in San Francisco, said 60 percent of new accounts in the past three years had been opened by people who wanted to invest in private equity.
Kelly Rodriques, chief executive and president of Pensco, attributed the increase to the financial crisis. People left or lost jobs and converted their 401(k)s to retirement accounts, and many of them lost confidence in the stock market and became more interested in investing directly in companies.
I drained my 401k, but I did lose confidence in the stock market.
“It’s more comforting to be in a business or tangible asset that you know,” Rodriques said.
While this may be comforting to certain people, it is not risk-free or easy to do successfully. People investing through self-directed retirement accounts do not have the staff to vet deals the way very wealthy investors do. Nor do they have hundreds of millions of dollars to lessen the sting of a loss.
Rodriques said his firm, which holds just less than $11 billion as a custodian, focuses on people who are accredited investors — meaning, their annual income has exceeded $200,000 for two consecutive years or they have assets greater than $1 million, not including a primary residence. He said the average account was $250,000.
Is that you, reader? It's not me.
Self-directed accounts are still a niche. Equity Trust said they accounted for only 2 percent of all money held in IRAs. But the growing interest in private equity shows a shift in some investors’ mindset toward what Pensco calls “choose and control.”
Today Rich, for example, has investments in separate funds invested in technology, health care, and biotechnology as well as different financial strategies. His most recent investment was in a fund focused on hydraulic fracturing, or fracking — a controversial method for obtaining natural gas. The opportunity came to him like the others.
“The fracking fund was a man I had known for years,” he said. “They gave me the opportunity to join it if I wanted to.”
See: Finishing the Month With Fracking
And now I'm beginning with it, and I didn't even mention the earthquakes.
This may sound as reckless as getting stock tips on the squash court. But Rich said he had been part of the vetting process for the fund in his role as a trustee for a trust.
Sounds illegal to me, or a conflict of interest anyway.
“It’s a different story from the average guy who wouldn’t have access,” he said. “If I was someone who hadn’t had that access, I’d have been a little more cautious.”
You under$tand why I titled the post as I did, no?
Rich’s candor points to an important issue for anyone investing in this world: Do your homework, understand the investment and ask why you are being offered it.
“You have to be fully versed in what you’re doing,” said Robert M. Hofeditz, who works in private equity and also has 40 percent of his wealth invested in private equity, with three-quarters of that in his retirement account. “You have to have a level of expertise to do something like this. It’s not for everyone. It’s for people who have the time to study the asset class.”
That's when I realized this article and the whole new$paper is really not for me.
Custodians like Equity Trust and Pensco make investing IRA money in private equity fairly easy. They assess the validity of an investment by Internal Revenue Service standards. They also hold the investments, as a traditional custodian would, and process forms, like the ones calling for money.
“Our role is to figure out if something is administratively feasible,” said Eileen Loustau, senior vice president and head of marketing at Pensco. “Is this a going concern? Is your paperwork in order?”
The company has developed an online tool that it calls an Opportunity Analyzer. It allows people to check if the IRS would disallow their investment, which could disqualify the whole IRA and result in taxes and penalties.
Red flags for private equity investments through an IRA revolve around who owns the company — ownership by you, your parents or your children would disqualify the investment — or whether the opportunity to invest is part of a compensation package. Knowing someone does not disqualify you.
So this is all a TAX DODGE?
Related: 700 IRS contract workers owe $5.4m in back taxes
It's the third article of impeachment for a list that is growing by the day.
Related: Turning to debt collectors for unpaid taxes a bad idea
That is this government in a nut$hell: one big ca$h grab (remember that for below, kids).
But making sure an investment will not run afoul of IRS regulations is not the same as assessing whether it is a good investment. Custodians don’t do this. Rodriques said, for example, that his firm approved a retirement account investment in an underwater pet cemetery. (The man making the investment owned several pet cemeteries and saw this investment as the next wave, as it were.)
Jeffrey A. Desich, chief executive of Equity Trust, said his firm told clients it was up to them to make sure they understood the investment.
“Private equity provides a lot of opportunity, but one has to do their homework and understand what they’re getting into,” he said.
With smaller retirement accounts, people tend to make direct investments in a local business — a different level of risk and compliance.
Despite the risks and responsibility of assessing the investment, a self-directed account that is not someone’s sole source of income could be a good match of retirement money and private equity investments.
Rich has converted 80 percent of his retirement account to a Roth IRA, which will pay out distributions tax-free, with plans to leave it to his children. But he still brings to bear a certain cautiousness in selecting private equity managers.
“I go with organizations that seem conservative,” he said, “and not ones that are trying to hit a home run.”
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What a jewel of a $tory, huh?
Excuse me, I need to check my mutual fund statements:
"Good news for investors: We’re keeping more of what’s ours. A big reason for last year’s drop in expense ratios was how well the stock market performed. To be sure, not every corner of the market is seeing a similar trend....
The reporters even self-identify with them with arrogant attitude tossed in. Keeping what's ours!! As if that Fed printing press passing them money was their right! And it ain't all good, huh?
In the search for dividends, it can pay for investors to head abroad. Markets outside the United States have long been fertile ground for dividend hunters because their stronger cultures of paying dividends have resulted in higher yields. US companies have boosted their own dividends, and paid a record amount last year, but many mutual-fund managers say the most attractive dividend stocks are still outside the country. Investors also are showing a preference for foreign dividend payers: That’s where they’re putting more of their money."
Yeah, don't invest in America.
Or its children:
"Post-graduation course: budgeting; The joy of a paycheck may be tempered by the decisions and challenges that come along with it" by Lynn Asinof | Globe Correspondent June 01, 2014
Just because they’ve earned college degrees doesn’t mean recent graduates have any idea how to tackle the myriad financial decisions now facing them.
All those classes in American lit and chemistry don’t provide students with the skills needed to create a budget, establish an emergency fund, or pay off school loans. Moreover, many graduates may have a tough time finding work or end up in jobs that pay far less than what they expected, making these decisions even tougher.
Yeah, kids, you were $addled with debt and lied to. Forget about that economic recovery you heard so much about.
So here’s a primer for the newly independent as they tackle financial decisions that include choosing workplace benefits, creating a budget, and planning for the future.
New workers are usually handed a packet on their first day on the job and they will be asked to make choices about everything from health insurance and tax withholding to how they want to invest their retirement plan assets. “It is just so overwhelming to have so many decisions to make at one time,” said Jennifer Lane, a fee-only financial planner with Compass Planning Associates in Boston.
How can the kid afford that?
Some choices are relatively straightforward. Thanks to the new health care law, for example, young adults can stay on their parents’ health insurance plan until age 26. That means new graduates may be able to save money by opting out of their employer’s health care coverage.
That's a$$uming they offer it and their parents are covered! It's implied by the author, but that just shows the self-internalization of values she has adopted from her ma$ters.
They’ll also be asked to fill out a W-4 form to determine their income tax withholding. Checking the “single” box and claiming zero allowances is a good starting place for new grads and other young employees —it should mean enough will be withheld from their paychecks to avoid an unexpected tax bill come April 15. The allowances can be adjusted later if it turns out too much is being withheld.
One common financial planning question 20-somethings ask at this point: Do I have to put money aside in my retirement plan right now? “The answer is always yes, absolutely, you have to start right now,” said Mary Hoey, a fee-only financial planner with Braver Wealth Management in Needham....
HA!
Yeah, give your hard-earned and scarce money over the the Wall Street banks for safekeeping!!
Ha-ha-ha-ha-ha-ha!
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The flat-out agenda-pu$hing would be funny were it not so $ad!
Time to head home, kids:
"Shares of Toll Brothers, the largest US luxury home builder, rose this week on second-quarter profit as the company delivered more properties and raised its prices. Net income climbed to $65.2 million."
Yeah, Globe finally took its toll on me.
