As many of you know, I made the decision to move all my retirement savings to a self-directed IRA, and it’s going great. I have completely eradicated myself from the Wall Street Casino, by selling all my positions and putting the proceeds into Cash! With this cash I have invested in things I can see, touch, and control which to me, are more important selling points than any “potential” returns. I wrote a post on Wealth Confiscation which was my motivation for making this change, you can read it here. I think traditional brokerage houses like the Edward D. Jones’ of the world, and NO, I am not picking on them, I am sure they are a fine company. It’s just that, they are looking out for their profits and those of their shareholders, which is fine, I assume that is what they are in business for. However, since my account is small and inconsequential ( hopefully not for long though) I thought it would be best to take the bull by the horns and manage it myself. I mean, any entity who manages thousands of clients retirement plans, can’t possible have the same objectives as those clients. So, if financial advice and management is not what I am getting, doesn’t that just make them a middle man? That’s how I see it, I am paying them to place an order for a stock or mutual fund, which I could buy from an online brokerage for a huge savings. So now, I will save on management fees and do it myself! After all, I am a do-it-yourselfer kinda guy anyway! So there you have it, I am done, capish, with traditional investing methods recognized by the masses! So, I am pleased to update you on what my investments have been doing for the last 3 months.
My 40 50 head of cattle.
I am now in the cattle investing business and have had the pleasure of visiting my tribe a couple weeks ago, and I’m proud to report, they are all doing fine. As I said, they are hanging out on my friends grandfathers farm and are well tended to. They have at least 50 acres of America’s finest hay to graze on. They also have a large pond to waller around in on those hot August days, and best of all, they have an excellent support system, made up of 39 of their closest friends. They can lay under the oak trees and watch the grass grow, moo at the moon and enjoy the rolling hills. What a life! Here is a picture of the happy heifers, just hanging out doing cow things!
So, the heifers will continue their laid back lifestyle until November when they will be brought into the barn and impregnated by Artificial Insemination or (AI) as is commonly known in the industry. According to my friend, the likelihood of all the heifers getting pregnant is very low, he said figure on 28-32 of them carrying to term. I can live with that, cause there is still considerable value in those heifers which are not able to get pregnant. Since things are going well and the cattle market is strong, I decided to invest in 10 more heifers for the next year.
Tax Lien Investing
Well, I have transferred some of the aforementioned remaining cash to my friend who is in the tax lien investing business. As I said, he raises capital for a group of investors and buys the tax liens in bulk, all at one time. For those of you who don’t know how tax liens work, here is the lowdown… A municipality relies on a property owner to pay their property tax as a means of funding the local government. If the local municipality sends that bill and does not receive payment, they then sell that lien to an individual, or in our case, a group of individuals. The municipality immediately receives payment for the tax, by way of selling the lien to an investor, which they may not have otherwise. Think of it as a ‘loan’ to the municipality, so that they can continue to fund the government, thank goodness!! So the investor, who essentially loaned the municipality the back tax revenue, can now attempt to collect on that debt, from the delinquent property owner. They attempt to get payment in full or set up payment plans on those back taxes. The individual/s are authorized to charge interest, based on an amount that the State deems appropriate. So, the investor will get the full tax amount back, plus interest. There is a percentage which goes to my friend’s company for managing this whole process. The thing is, you have collateral (the property), so if you dont get payment in full, an attorney (which my friend has in his office) can proceed with foreclosing on the property. So, this is a great investment with limited risk, sure the payout is not necessarily a home run, but it is very reliable, which is why I am such a fan!
Let me know if I can help you understand this process in further detail!
Oh and before I go, help me to congratulate the Frugalrules team for its 1-year bloggiversary by registering to win 150 George Washington’s!!
I must say, I’m a fan of your more original investment ideas. I’m trying to read as many PF blogs as I can and talk to as many people as I can about investing, and you are the first one who’s talked about things like timber harvesting and cattle investing. It’s what I’m looking for: my boyfriend and I are slowly on our way into the farming industry/business and I’d like some of our investments (both time and money) to be not only very diversified but related to future endeavors (after a couple years of research, we did recently buy some alpacas and one is already pregnant – joy!). I will need to go look in your posting history for more related articles!
Well thank you Jamie! Since I am no longer a fan of traditional investment options such as 401k’s and IRA’s, I have made it my passion to seek alternatives. I refuse to be the person who accepts limited options, so I will make sure to pass on anything I can..Possibly even info on Alpaca investing! Congrats on your success of getting yours pregnant!
I’d never have thought to invest in cattle but that sounds like a fun way to make money. The tax lien idea is particularly intriguing. Do you find the fees involved with having someone manage the process to be palatable?
Yes, the fees are certainly palatable. They charge 12% of the profit I earn. For instance, if I have a $1000 lien that pays in full in year one, I get my principal back plus the 88% of the interest charged. So those liens that pay out over a longer term are actually good, because I am making more the longer it is drawn out. Many of the liens will pay back in 30 days and all I get is my principal back plus a very minimal interest fee. Hope that helps!