There are compelling reasons why your child, grandchild or other young relative should have an IRA:

  • You can transfer your assets to your children while you're still alive.
  • If employed, your child or grandchild will get a tax deduction.
  • Their money compounds tax deferred for 20, 50 even 100 years.
  • It will create estates for your children and grandchildren and make them millionaires.
  • The company that hires them gets a tax deduction.

Begin by investing $2,000 per year for four years when your child is 10, an $8,000 total cash investment. Compound this amount at 10 percent and it would amount to $1,089,000 by the time the child reaches age 65; compound at 12 percent, and the total would equal $2,762,000! The same $2,000 investment made for eight years - a $16,000 total cash investment would amount to $2,017,000 when compounded at 10 percent, and $5,059,000, compounded at 12 percent!

In reality though, no one knows what tax rates will be in 69 years. Here's a solution. Start a Roth IRA, rather than a traditional IRA, for your child. This new IRA has a unique feature. While there is no deduction from current income taxes for the contribution (and your child won't need one), there are also no taxes imposed when the money is withdrawn during retirement years. In the above example, your child would get to keep the whole 1.4 million dollars. Not bad for a $2,000 one time investment!

I opened ROTH IRA’s for my children.  I look for defaulted mortgages to purchase with the assets in their IRA.  As the trustee of the IRA, I can make the investments on behalf on my children.  Once the assets are purchased, I have the option of forcing the payoff or letting it sit in my child’s IRA, gaining interest at the full face value until it pays off when the homeowner (debtor) refinances or sells his home.

 What’s The Bottom Line?

I personally like the idea of combining investing with my retirement plans and the retirement plans of my children.  If you have no cash to get started, even if you don’t have the money to put into your IRA to get started, don’t let that stop you. 

You can easily get started by finding deals for other investors who will pay you a finder’s fee for your efforts.  After you make some referral fees from a few deals start to save some of the money you make so that you can reinvest the money into your own portfolio.  As you start to amass a portfolio you will need to look for ways to legally shelter some of your profits.  IRA’s give you this ability. Using a ROTH IRA you can avoid having to pay any taxes on the profits you make in your ROTH IRA.

It can literally cost you thousands if you do not get started today.  The longer you wait the harder it will be to get started later.  The worst mistake you can make is to not get started at all.  So what do you do now?

What does this have to do with forbearances and pre-foreclosures? Easy.  After you get started in the business you will run into deals where the homeowners are willing to just sign the house over to you and walk away.  What do you do with the house.  You control it with and IRA and make your return tax-free inside your IRA.