How Media Hype Can Lead to Bad Retirement Decisions

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Today we’re talking about media hype and how it can lead people to make bad financial decisions that could cause problems with or ruin their retirement. Find out if you have fallen for any of this hype.

Don’t fall for media hype. On today’s show, we’ll explain how it can harm you financially and may even ruin your retirement.

Most people who have IRAs invest their money in traditional assets, like stocks, bonds, annuities, and cash. But the IRS gives investors a wide latitude of where to invest as long as it’s not in collectibles, like coins or cars.

There are things called self-directed IRAs, and they’re not for the faint of heart. They allow for non-traditional investments, like real estate or cryptocurrency. People sometimes run afoul of the rules because they don’t understand them.

In 2015, a Rhode Island couple rolled over an annuity and 401(k) and started buying gold and silver coins and investing in a condo after seeing a commercial on TV. An IRS audit showed that they engaged in prohibited transactions by storing the coins in a safe in their home.

That invalidated the IRA. If you make one prohibited transaction, the entire IRA can be invalidated. A tax court judge ruled that the unfettered control of the coins could be ripe for abuse. The couple was hit with another penalty for inaccurately reporting their assets.

If you want to invest in something outside the norm, look at the long-term return. Bitcoin and cryptocurrency, for example, fall in the category of speculation, not investing.

Try to find someone who buys bitcoin to explain it to you in a way that you understand it. They’ll use terms like tokens and blockchain and how it operates free of any central bank or government.

Certainly, there are people making a lot of money on this, but like a lot of other speculative pitches, it’s often people selling something that make all of the money.

Like the case of the couple in Rhode Island, the responsibility is on you to do everything right when investing your money.

If you have any questions for Don reach out at (732) 784-2867 or don@doncash.com.

Listen to the full episode to learn more or skip around to certain topics.

[3:00 ] Bitcoin

[3:59] Rhode Island couple

[9:40 ] Questionable Internet scheme

[11:40] Buying gold

[14:20] Investing in crypto

[16:15] Required minimum distributions

 

Resources: 

https://www.irahelp.com/slottreport/proceed-caution-when-investing-your-ira-gold

A Couple Stored Ira Gold at Home. They Owe the IRS More Than $300,000

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ABOUT YOUR HOST...

Donald W. Cash – CPA, CFP®, is an independent advisor. After graduating from Rutgers University, he began his career in 1985 as an accountant. In 1990, he entered the field of Estate Planning, concentrating on long-term care planning. Don has been advising clients in the baby boomer and retirement market for 20 years. He has helped over 1,000 families with their planning needs.

Don advocates for a holistic approach to Estate and Financial Planning and has relationships with other professionals including Attorneys, CPA’s, Mortgage Specialists, Insurance Specialists and Asset Managers.

He is married to Cathy and they have 4 children, Carly, DJ, Nick and Tori. They live in Freehold, NJ.

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WAYS TO CONTACT

(732) 784-2867

don@donaldcash.com