Florida Self-Directed IRAs

Florida Self-Directed IRAs

Investors in Florida have utilized self-directed IRAs as a tax strategy when buying and selling investments for over thirty years. Self-Directed IRAs are a unique tool that allows you to invest in almost any type of asset with your IRA. Rather than paying the tax dollars, assets inside an IRA grow tax-free. By opening a Midland Self-Directed IRA, the investor opens a world of investment opportunities.

Florida is the mecca for unique assets. Investment Real Estate has always been king throughout the state. Millions of dollars have been made in Real Estate IRAs by buying and selling Florida investment real estate. As Florida has grown and developed, new investment opportunities have popped up all over the state.

Below are just some of the assets you can buy in a self-directed IRA:

  • Real Estate: Rentals, land, condos/house/multifamily
  • Hedge Funds
  • Futures Accounts
  • Limited Liability Companies and Partnerships
  • Limited Partnerships
  • Private Companies
  • Bank Stock
  • Brokerage Accounts
  • Gold and other precious metals

Almost all types of retirement accounts can become a Self-Directed IRA. Roth and Traditional IRAs are the most popular accounts. But small business owners can utilize a SEP or Individual K plan to control their retirement portfolio.

Midland Trust makes it a point to ensure every Florida investor has the opportunity to control and purchase the assets that they are familiar with. Whether you live in the Florida Panhandle, Southwest Florida, Central Florida, or the Keys, Midland wants to work with you. We have helped thousands of clients throughout Florida. Contact us today at 239-333-1032 or download our Guide on Florida Self-Directed IRAs. We can open an account for you today so you can start controlling your retirement.

Midland also does 1031 exchanges! Learn more about deferring taxes on investment property using a 1031 exchange.

Sanibel Real Estate Investment Strategies

Sanibel Real Estate Investment Strategies
Of course, you have to see it to believe it, but anyone who has watched the dolphin ballet on Sanibel knows full well that the dolphins are having the time of their lives! – Anonymous

Sanibel and Captiva Islands (SanCap) are known for their beautiful beaches. They also have some of the world’s most unique shelling. Many have discovered the seaside paradise. But, did you know Sanibel Captiva is also known for its investment opportunities? Sanibel Captiva has become a real estate and alternative asset investment paradise for investors. Captiva and Sanibel Island Investment real estate has stood the test of time. Their real estate and alternative investments have provided positive returns for many investors.

Sanibel and Captiva Island Real Estate Investments

There are two investment vehicles in which Sanibel Investors have taken advantage. These vehicles include Self-Directed IRAs and 1031 Exchanges. As a real estate investor, you can use either of these vehicles as a tax-deferral strategy.

1031 Exchanges

Midland’s first investment vehicle is 1031 Exchanges. Section 1031 of the Internal Revenue Code allows investors to defer sales taxes on an investment property’s sale. Save taxes by exchanging any investment-use property for other investment property of equal or greater value. Rather than paying taxes, the IRS allows the deferral of those tax dollars when following 1031 exchange rules.

There are many types of 1031 exchanges. Exchange examples include delayed, simultaneous, reverse, improvement, and specialty. One of the most common exchanges we see in Sanibel is property upgrading. For instance, investors sell a two-bedroom rental condominium and upgrade to a three-bedroom condominium. This exchange typically occurs with no additional cost to the investor. So, you can certainly see the importance of utilizing a 1031 exchange when selling investment real estate. Midland 1031 is here to be your Qualified Intermediary (QI) for your next Sanibel 1031 exchange.

Self-Directed IRAs

Midland’s second investment vehicle is the Self-Directed IRA. Self-Directed IRAs allow individuals to diversify their investment portfolio from the stock market to tangible assets.

Investments You Can Buy With Your Self-Directed IRA

  • Real Estate: Rental and Land
  • Condos/Single-Family House/Multi-Family House/Duplexes
  • Hedge Funds
  • Futures Accounts
  • Limited Liability Companies and Partnerships
  • Limited Partnerships
  • Private Companies
  • Bank Stock
  • Brokerage Accounts
  • Gold and Other Precious Metals

To learn more about 1031 exchanges or to start your Sanibel investment real estate exchange, contact Midland 1031 at 239-333-1031, or reach out to us here.

To learn more about Self-Directed IRAs, contact Midland IRA at 239-333-1032 or reach out to us here.

You may also learn more by downloading our free Real Estate IRA Guide and 1031 Exchange Guide.

Famous Sanibel Quote by long time Sanibel Businessman and resident “If we don’t have it, you don’t need it”.

Budgeting Made Simple for Millennials

Budgeting Made Simple for Millennials

Adulting is a term Millennials like to use when life hits you hard, wishing you could relive the days of being a kid with few worries. Being an adult means no longer having someone making decisions for you or holding your hand through the process. Adulting means taking control of your budget, your health, your retirement, and your life. One of the areas of adulting most Millennials struggle with is budgeting. Between student loans, rent/mortgages, car payments, transportation expenses, food, fun, entertainment, and potential credit card debt, there is a lot to consider. If there is anything left, does it go towards saving for retirement or a rainy day fund? Where does one begin? For Millennials, budgeting is the most important step in saving for retirement while simultaneously paying off debt.

4 STEPS TO MAKE MILLENNIAL BUDGETING SIMPLE

1. Calculate Your Earnings Each Month

You need to know how much you make after taxes, health insurance, and 401(k) deductions. If possible, contribute to your 401(k) up to the maximum amount of what your employer matches. Saving for retirement is crucial, and the reason you want to contribute to your 401(k) is that your employer is essentially giving you free money. You would otherwise not receive this free money in your regular paycheck. Can you say “no” to free money? With compounding gains year over year, the earlier you begin saving for retirement, the better. Even a few years will make a considerable difference in thousands to tens of thousands of dollars in the long run.

Through our budgeting example, we are going to assume you are single with no credit card debt, earn $50,000, and set aside roughly 24% for federal taxes, FICA taxes, and medical insurance. We will also assume you set aside 4% for 401(k) contributions. These assumed costs leave roughly $36,000 in cash for the year or $3,000 per month. You can use this calculator tool for assistance. You can use this calculator tool for assistance.

*Please note: your salary, state taxes, and living expenses will vary greatly based on your geographical location and occupation.

2. Calculate the Essentials and Subtract Them From Your Earnings

You need to know how much money you have to spend on food, fun, entertainment, and savings. Before we can do this, we need to know the essentials that need to be paid each month. Take your monthly payment amount and subtract rent/home payment, real estate tax (if applicable), home/auto insurance, car payments, utility bills, phone bill, internet bill, subscription services, etc.

Earnings: $3,000 monthly

Deductions:

– $1,500 (includes rent/home insurance, property taxes, utilities, and HOA fees if applicable)

– $125 auto insurance

– $150 for electric bill

– $100 transportation cost

– $50 for utility bills (water, trash, recycling)

– $100 for cell phone bill

– $50 for internet bill

– $50 for subscription services (Netflix, Hulu, Amazon Prime, etc.)

– $400 a month for car

Total Deductions = $2,525

Calculation: $3,000 monthly budget – $2,525 = $475 per month

*Please note: these are estimates and will vary greatly by location, living situation and personal preferences.

3. Put Money Into an Emergency Fund for Savings

Doing this will make budgeting simple in the future if you have an emergency fund established to fall back on. Your car may break down, or you may lose your job one day. Life is full of surprises, and you need to prepare for them. Let’s set aside another $100 per month for savings/emergencies.

Putting savings into a bank account is fine, but banks provide little interest in savings accounts or CDs. This low interest will likely lose you money over time if it is less than the annual inflation rate (cost increase of goods per year). Instead, consider putting money into a Roth IRA to allow gains to grow tax-deferred. You can contribute up to $6,000 to a Roth IRA if you are under 50. Roth IRAs can be a powerful emergency fund, saving fund, and retirement fund. You can take Roth IRA distributions tax-free at any time. If you hold your Roth IRA for five years or more and are under 59 ½, you can withdraw your gains on investments and only pay a 10% early withdrawal penalty. Stocks are relatively easy to liquidate, and you should be able to receive Roth IRA distributions for emergencies within a week or two.

Yes, there is a risk of loss on investments. However, statistics show that if you invest for the long term in well-known stocks, the typical return is 8-10%. Would you rather work for money, or have your money work for you? By investing more, you are having your money work for you, and over time this can be the difference of thousands to tens or even hundreds of thousands of dollars in additional funds.

4. Stay Within Your Budget

Discipline is essential. Okay, so this step is not that simple, but it is needed if you want to manage your budget successfully. You can make budgeting much more complicated, but it can be simple if you stay within your budget. If you know you overspend with credit cards, consider shredding the card(s). Or, lock the card in a lock-box and give the key to a trusted friend or family member. Withdraw your budgeted “fun” money in cash each month. This way, you are only able to spend what is available to you in cash. Physically seeing your available cash in your wallet allows you to see how much you are spending and hopefully leads to you saving more. You may find yourself naturally looking to cut expenses, clip coupons, find cheaper alternatives, or find ways to generate additional income through a side hustle. Stay tuned to Midland Trust for our next article to learn about reducing your monthly budget. We will also discuss investments as a way to increase your “fun and entertainment” budget.

AVAILABLE BUDGETING TOOLS THAT MILLENNIALS LOVE

Are you struggling to set a budget? Consider using an app such as Mint, Simplifi, or Dave Ramsey’s Every Dollar. These apps can consolidate your accounts (credit card, bank, investing accounts, etc.) into one and break down your expenses into categories, making things easier to view. They can also send you alerts when your balance is low, or you have upcoming bills.

MIDLAND TRUST IS NOT A FIDUCIARY: Midland’s role as the custodian of self-directed retirement accounts is non-discretionary and administrative in nature. The account holder or authorized representative must direct all investment transactions and choose the account’s investment(s). Midland has no responsibility or involvement in selecting or evaluating any investment. Nothing contained herein shall be construed as investment, legal, tax, or financial advice or as a guarantee, endorsement, or certification of any investments.

Health Savings Account: a Triple Tax Advantage

Health Savings Account (HSA)

Health Savings Accounts

A Health Savings account (HSA) is a tax-exempt account that will allow you to pay for a diversified list of allowable medical expenses. In addition to saving money, you can spend these funds for medical expenses in retirement. This makes having an HSA a huge advantage now and in the future.

What makes an HSA so desirable? How about a triple tax advantage! IRA account money gets taxed at some point, either going in (Roth) or coming out (Traditional/SEP/Simple). However, if appropriately used, HSAs never get taxed. HSAs come with three significant tax benefits. The first benefit is that you can contribute on a pretax basis. Second, your savings grow tax-free over time, and third, you can make tax-free withdrawals to cover eligible medical expenses.

With that said, there are firm IRS rules for contributing and spending HSA funds.

Some of the key facts are as follows:

  • To qualify for an HSA, you must have a high deductible health plan (HDHP).
  • There is no income limit to qualify for an HSA.
  • There are annual contribution limits for these accounts.
    • For 2020, you can contribute as much as $3,550 as an individual or up to $7,100 if you have a family HDHP. If you are 55 or older at the end of the tax year, you can increase these limits by $1,000.
  • Any HSA distributions that are spent on non-qualified expenses are subject to a hefty 20% tax penalty unless you are 65 or older.
  • Contributions to your HSA can come from you, your employer, or someone else such as your spouse and are deductible on your tax return, yes, even if you don’t itemize deductions.

What is a High Deductible Health Plan?

A high deductible health plan (HDHP) typically has a higher annual deductible than a standard health plan, but usually comes with lower premiums. The IRS defines a HDHP as a plan with a minimum annual deductible of $1,400 for an individual or $2,800 for a family. You must be covered under this type of health plan to make contributions to an HSA. Medicare does not qualify. Beginning the first month that you enroll in Medicare coverage you can no longer make contributions.

What if I become uninsured or unemployed?

Another important factor with HSAs is that the account remains yours even when you become unemployed or uninsured. However, keep in mind that these circumstances could affect your ability to make contributions. If you need to stop contributing for any reason, you’re still able to use the money in your HSA on qualified healthcare expenses.

As mentioned, distributions from an HSA for qualified medical expenses are tax-free. Tax-free distributions include any interest earnings or capital gains if you choose to invest the funds held in your HSA. In retirement, once you reach age 65, you can take distributions for medical or non-medical purposes without a penalty; however, you will still need to claim those distributions as income in the case of non-medical distributions.

What Can I use an HSA for?

Let’s talk about allowable expenses. There is an abundant list of IRS-qualified medical expenses in which you can use an HSA. Common expenses include things such as doctor’s office visits and co-pays, laboratory fees, vaccines, and dental cleanings, among many others. Some otherwise uncommon expenses would include acupuncture, chiropractor services, and even medical equipment such as hearing aids or a wheelchair.

In addition to all the established eligible medical expenses, the new CARES Act has further expanded the list to include over-the-counter medications for which you do not need a prescription.

For more information or questions regarding HSAs, please contact Midland Trust at (239) 333-1032 or visit www.midlandtrust.com.

Did you know you can invest in alternative assets with your HSA? Click here for more information on investing in alternative assets with an HSA.

MIDLAND TRUST IS NOT A FIDUCIARY: Midland’s role as the custodian of self-directed retirement accounts is non-discretionary and administrative in nature. The account holder or his/her authorized representative must direct all investment transactions and choose the investment(s) for the account. Midland has no responsibility or involvement in selecting or evaluating any investment. Nothing contained herein shall be construed as investment, legal, tax, or financial advice or as a guarantee, endorsement, or certification of any investments.

Bitcoin Investing Options, Including IRAs

Bitcoin Investing Options, Including IRAs

What Is Bitcoin?

By now, everyone should have heard of Bitcoin at some point in the last few years. If you can recall, it was a hot topic of conversation among friends and families during its parabolic rise from Thanksgiving to Christmas during 2017 when it hit its all-time high of $20,000 before taking a beating. Since then, it has been a volatile up-down wave from $3K to $12K, back to $5K, and currently sits around $11K-12K. Several things should be taken into consideration when investing in Bitcoin and cryptocurrencies. This article discusses those considerations and provides options for investing in Bitcoin and cryptocurrencies.

If you are unaware of what Bitcoin is or forgot as it has been a while since Bitcoin has been in the news, Bitcoin is simply a digital currency. The idea of a digital currency shouldn’t be all that foreign to you. With Apple Pay, credit cards, and the rise in e-commerce, money in its physical form is becoming something of the past. When you buy something with Apple Pay or a credit card, you are purchasing in US Dollars, or a foreign currency if international. As with all money and exchanging of goods and services, you need to have someone willing to accept the payment. While Bitcoin is popular on the dark web as it can be challenging to trace Bitcoin transactions, Bitcoin is still in the infancy stage of gaining traction as a widely accepted form of currency, and there are a few reasons why.

Why Bitcoin Is Risky:

  1. The price is too volatile. Most currencies such as the US Dollar, Euro or Japanese Yen move maybe .2% on a typical day to 1%+ on an abnormal day or day with fiscal policy updates. Bitcoin, on the other hand, can move several percent in a day for no reason at all, and as we saw, the first weekend in August it moved 10% down in a matter of 30 minutes. Imagine buying a product with Bitcoin for $100 and realizing you could’ve bought it for 10% cheaper if you had just waited another day. Welcome to the world of purchasing goods and services with a volatile digital currency!
  2. Bitcoin is not accepted by many places you usually do business with daily. You more than likely cannot go to your local grocery store and purchase food using Bitcoin.
  3. Purchasing Bitcoin is not simple for some people. Your employer does not pay you in Bitcoin, and it is not as simple as going to the bank or exchanging cash with your friend for Bitcoin. You need to have a digital wallet and one that can accept and send Bitcoin as payments. There is a learning curve, and people are still discovering how Bitcoin can be a form of payment. Early adopters are testing the waters, and Bitcoin is far from being widely accepted and easily used.
  4. Bitcoins have disappeared. There needs to be a lot of protection in place on a website or your computer holding your digital Bitcoin wallet. A hack could wipe away Bitcoin, as we have seen in the news several times over the last couple of years. Unlike credit cards and bank accounts, recovery of Bitcoin is much more difficult and nearly impossible. If the exchange you are in gets hacked or your computer gets hacked, and someone moves money out of your Bitcoin wallet, you may never get your Bitcoin back. There is even the story of someone having Bitcoin from the early days stored on his hard drive, which he accidentally threw in the garbage. The Bitcoin from the hard drive tossed in the trash is now worth millions today but is lost in a landfill.
  5. It is unknown how governments will respond to Bitcoin and digital currencies in general. A government could technically ban Bitcoin as a form of payment and/or shutdown Bitcoin websites. There could always be a workaround to access the sites, but how will businesses respond to government regulations? If a Venezuela-type inflation period occurred, how will the people react to Bitcoin and government regulations? There are a lot of uncertainties and scenarios here.

Undoubtedly, Bitcoin is a high risk, high reward investment. However, as with all new eras and companies, there could be a tremendous upside.

Why Is Bitcoin an Attractive Investment?

  1. Bitcoin has come a long way over the years. Bitcoin was unknown by the mass public in 2010. Fast forward to today, and just about everyone has heard of Bitcoin. Several well-known companies are now accepting Bitcoin payments (the below list may surprise you). If security and popularity around Bitcoin wallets grow, more and more companies may be willing to take it:
    • AT&T
    • Overstock
    • Playboy
    • Expedia
    • Badoo
    • Subway
    • Paypal
    • Newegg
    • Shopify
    • Microsoft
    • Wikipedia
    • Twitch
    • Virgin Galactic
    • Norwegian Air
    • CheapAir
    • Zynga
    • Rakuten
    • BurgerKing (In Venezuela and Germany)
    • KFC (test in Canada for a limited time for the “Bitcoin Bucket”)
    • Miami Dolphins (when purchasing tickets for teams 50/50 raffle)
    • Dallas Mavericks (Mark Cuban’s organization accepts Bitcoin for both game and merchandise sales through the team’s website)These companies were found at www.99bitcoins.com, www.buybitcoinworldwide.com, and www.wrcbtv.com.
  2. Bitcoin has grown into wallets that are much more easily accessible. When Bitcoin first launched, there was no Robinhood, Coinbase, Kraken, or Gemini exchange. You mined Bitcoin, and it went into a digital wallet. None of your friends had a Bitcoin wallet, and the concept of a Bitcoin wallet without an exchange still boggles my mind. Thankfully, things are much easier now for the general public. Few people still do not know where to begin with mining Bitcoin; however, it is relatively easy to purchase Bitcoin on Robinhood, Coinbase, or Kraken in the US. You can also use Coinbase to send and receive Bitcoin payments from other people and for goods and services. There is still a tremendous area for improvement for point of sales goods and services in a physical brick and mortar store and even e-commerce. There are companies out there with credit cards tied to cryptocurrencies. Until banks or the more well-known credit card companies such as Visa, Mastercard, AMEX, or Discover begin taking Bitcoin payments, progress will remain slow. If Bitcoin becomes more widely accepted and banks and credit cards start accepting Bitcoin payments, this will undoubtedly be great news and drive Bitcoin’s price up.
  3. Thirdly, let’s look into some Technical Analysis of prices when it comes to stocks and cryptocurrencies. Technical Analysis is the study of price movements, the psychology behind past movements, and the prediction of future movements of a stock or cryptocurrency. Looking at the history of Bitcoin’s price action, we have some clearly defined tops (where buyers became exhausted) and bottoms (where buyers come in or sellers became exhausted).

    Starting from the beginning, we see a gradual build-up in popularity (mostly due to its use on the dark web and funding sports betting/poker accounts) and then following more public awareness and the beginning of bigger, well-known companies adopting Bitcoin in 2017. The price eventually dramatically rose from sub $1K to $5K and eventually led to a parabolic run during the holidays of 2017 to $20K as FOMO (fear of missing out) kicked in.$20K was the top and where buyers became exhausted. As Bitcoin dropped, there were no buyers to support the number of sellers as people began taking profits from investing earlier. The price of Bitcoin snowballed downward as Bitcoin purchasers were now selling to break even or suffer a loss. This fall continued until Bitcoin found a temporary bottom (some people willing to support the price and buy back in or sellers becoming exhausted) as Bitcoin hovered around $6K from July of 2018 until November of 2018. Sellers eventually came out in force, driving it back down to $3K, where it found a new bottom for a while. Bitcoin rallied back to $12K in June 2019, followed by a drop to $7K, then the COVID-19 pandemic happened. Bitcoin initially dropped along with the mass sell-off in stocks and metals. It has since rebounded to the point where it is now, near the highs of June of 2019.That was a lot to take in, what’s next? Where do we stand now? Let’s look at the psychological side going forward. Most of the people who bought during the parabolic run likely exited during the mass sell-off in 2018. Those that kept their Bitcoin may have gotten out in the 2019 run-up. Some people accumulated Bitcoin when it was at $6K or on the drop to $3K, and in the volatile movement since. The question is, are they looking to get out now, or are they holding on for the ride? We may see a big rush of buyers once Bitcoin passes the highs of 2019 as people will be talking about Bitcoin rising to new heights. You’ll begin hearing Bitcoin more often in the news at this point, and FOMO could set in again.
  4. The FED stated in June of 2020 that they were looking to keep interest rates near 0% until at least 2022. These interest rates, along with the continuation of unemployment benefits and rounds of stimulus checks, means the FED is printing a lot of money! Depending on how the FED handles interest rates going forward, Bitcoin could potentially be a way to combat inflation.
  5. Unlike the USD, which the FED can print an unlimited amount of, Bitcoin is capped at 21,000,000 units (even less considering some Bitcoins are lost forever in tossed hard drives). There will never be more than 21,000,000 created. To date, there are around 18,500,000 Bitcoins in circulation. Over time, the amount of Bitcoin released daily declines due to “halving.” This decline means supply-wise and demand-wise, if there is more demand than supply, then, in theory, Bitcoin value should go up over time. Investopedia explains halving best: Bitcoin was halved on May 11, 2020, at around 4 pm EST.
    • A Bitcoin halving event is when the reward for mining Bitcoin transactions is cut in half.
    • This event also cuts Bitcoin’s inflation rate and the rate at which new Bitcoins enter circulation in half.
    • Previous halvings have correlated with intense boom and bust cycles that have ended at higher prices than before the event.
  6. Bitcoin has the potential to be viewed as an alternative to hedging against inflation. While gold is currently the standard to hedge against inflation rates, Bitcoin is starting to be viewed as an alternative option. We just saw the publicly-traded company MicroStrategy Inc. (MTSR) buy 25,000 Bitcoins worth nearly $250 million as a hedge against inflation. If more companies begin buying Bitcoin as a means to hedge against inflation, Bitcoin could surge in value given its limited supply. In a way, it makes sense. In a country such as Venezuela with hyperinflation, what good would gold do? Gold will hold its value as the currency’s value decreases, but it is unfeasible to exchange gold for goods as you can’t shave off grams or calculate ounces before that purchase. You would need to sell the gold for physical currency before purchasing goods or services. Bitcoin, on the other hand, is much easier to exchange, or has the potential to be. It can all be done from your phone, online, or potentially with credit cards one day. If hyperinflation were to occur, the theory with Bitcoin is that you would not have to worry about the value of your currency decreasing. It would be tied directly to the value of Bitcoin, which should remain the same or increase in value. If you were in Venezuela, would you rather own gold or Bitcoin? Again, the vendor at which you are buying the goods and services needs to accept Bitcoin for this to work.
  7. Lastly, at Midland, we saw a massive surge in interest in 2017 with people investing in Bitcoin and cryptocurrencies in their IRA accounts. After the bubble burst, Bitcoin and cryptocurrencies became nearly dead as an investment topic with clients from spring 2018 until early 2020. In the last couple of months, interest in cryptocurrencies and Bitcoin has been on the rise again. That investment interest has not reached the level of the run-up in 2018, but that could be because we have not reached the FOMO stage yet.

You can track the interest in Bitcoin via google searches yourself by using Google Trends. Again, FOMO has not kicked in yet, but if you check weekly, you may be able to see a gradual increase in people searching Bitcoin on Google.

Is Bitcoin Making A Comeback?

No one truly knows if Bitcoin is making a comeback. As with the tulip mania and penny stock pumps, you don’t have to be the first person to invest in something; you just don’t want to be one of the last.

Bitcoin may be the biggest Ponzi scheme the world has ever seen. It may be more heavily regulated by governments and disallowed. It could be worth one million dollars in ten to twenty years and the first worldwide currency. There is no way to be sure. No one knew when Steve Jobs was working at Apple that the company would grow into the most valuable company in the world, valued at nearly two trillion dollars. The growth of Apple evolved slowly over time, not overnight. Likewise, no one was able to predict Enron going bankrupt due to the uncovering of it being a massive accounting fraud years in the making.

Simply put, there is a huge risk/reward for investing in Bitcoin. Based on what you know right now, I’m going to conclude by asking you, is investing in Bitcoin worth it?

Bitcoin Investing Options:

If you think Bitcoin’s making a comeback, here are some ways you can get involved. As discussed above, Bitcoin can be very risky, especially if you own Bitcoin outright. Here are some ways you can invest in Bitcoin:

Futures Contracts

Bitcoin can be traded on the futures exchange with most futures companies. Futures trading is a contractual agreement between a buyer and seller on a specific price for a commodity such as Bitcoin at a specified future date. The buyer of a futures contract is taking on the obligation to buy and receive the underlying asset when the futures contract expires. For this reason, futures trading, especially in IRAs, is often speculative, and the contract is sold before expiration. Still, futures trading can also be used for hedging against the market or industry. Most futures traders have no intention of taking delivery (personal ownership) of an underlying commodity and are simply in the market to take advantage of price swings. Trading Bitcoin via futures is more for short to medium-term investment horizons.

Crypto Exchange

You can set up a cryptocurrency account with several exchanges. Some of the more popular exchanges to buy Bitcoin in the US are Robinhood, Coinbase, Kraken, and Gemini. The cryptocurrency exchanges will allow you to invest in many cryptocurrencies, not just Bitcoin. Here you can buy cryptocurrencies for the short or long term and sit on them for years.

Bitcoin Stocks

There are very few Bitcoin stocks in existence. Some of these stocks are directly correlated to Bitcoin, others are involved with mining Bitcoin, and one looks to have a Bitcoin/cryptocurrency exchange. GBTC is a trust that trades nearly identical to Bitcoin, whereas stocks such as RIOT and MARA are more speculative penny stock investments. Other companies not directly involved in owning or mining Bitcoin include, OSTK (with their digital securities platform tZero and its cryptocurrency app) and companies such as AMD and NVDA that produce computer chips used to power Bitcoin mining. With any stock, you can buy for the short or long term and sit on them for years.

Private Placements or Hedge Funds

There are a few Bitcoin and cryptocurrency hedge funds in existence. Rather than worry about trading, you could have someone else do it for you and pool your money with other investors’. This type of investment is only available to accredited investors and is for mid to long-term investing as liquidation is not as easy. You cannot sell when you want, and you are restricted to pulling funds out during specific windows. Timing will vary by investment but is usually quarterly.

Be sure to consult with your financial advisors to determine if cryptocurrency is right for your investment portfolio.

Midland specializes in alternative assets such as real estate, LLCs, hedge funds, crowdfunding, private lending, and more. If you are interested in investing in Bitcoin with your retirement funds, please contact us at (239) 333-1032 or visit www.midlandtrust.com. We are here to help!

MIDLAND TRUST IS NOT A FIDUCIARY: Midland’s role as the custodian of self-directed retirement accounts is non-discretionary and administrative in nature. The account holder or his/her authorized representative must direct all investment transactions and choose the investment(s) for the account. Midland has no responsibility or involvement in selecting or evaluating any investment. Nothing contained herein shall be construed as investment, legal, tax, or financial advice or as a guarantee, endorsement, or certification of any investments.

Tips to Handle Your Inheritance

Tips to Handle Your Inheritance

Baby Boomers are currently the wealthiest generation in history. But going forward, the Gen-Xers and Millennials are likely to inherit that crown. Studies have shown that birthrates and the number of children per family have gone down drastically over the last few decades. Fewer children mean inheritances being concentrated and passed down to fewer individuals. In this article, we will discuss a few tips for handling an inheritance.

Ways To Handle Your Inheritance

Inheriting from a Baby Boomer will vary significantly by individual and the amount inherited. It may be best to hire a financial advisor, especially if you have poor savings habits yourself. Let’s break down your options into three categories of inherited assets: Retirements Funds (tax-deferred), Non-Retirement Funds, and Real Estate.

INHERITING RETIREMENT FUNDS (TAX-DEFERRED)

When inheriting retirement funds from a non-spouse Baby Boomer, you have ten years to deplete the account through distributions. One exception that existed for inherited retirement funds was the Stretch IRA. A Stretch IRA was an estate planning strategy that applied to an individual retirement account inherited by a non-spouse beneficiary. By using the Stretch strategy, an IRA could be passed from generation to generation, taking advantage of tax-deferred and/or tax-free growth of the assets within it. (Investopedia) This strategy is no longer an option, however, due to the SECURE Act. Click here to learn more about how the SECURE Act affected retirement accounts. These distributions for retirement funds will differ for everyone depending on your current income and the amount you inherit.

  1. Inherited Roth IRA – Because Roth IRAs are after-taxed, consider this your new emergency fund and, potentially, the ultimate retirement fund. Most advisors recommend letting funds grow tax-deferred for as long as you can and taking everything out at year ten to maximize the benefits of an Inherited Roth IRA.
  2. Inherited Traditional IRA – Funds in an Inherited Traditional IRA grow tax-deferred, but when you take money out, you need to include it as income for the year. It may be beneficial to take some portion out each year, or, let it grow tax-deferred and take it all out at year ten. The best decision will be determined by the amount you are inheriting, your current income level, and when you plan on retiring.

INHERITING NON-RETIREMENT FUNDS

Inheriting non-retirement funds from a Baby Boomer gives you more options as funds are not in a tax-deferred account. Tax-deferred accounts certainly have their advantages and must be considered, even if you inherit non-retirement funds. Here are some ways you may want to proceed:

  1. Pay off any credit card debt. Credit card debt should be the first thing paid off (if you have any) as it carries the highest interest rates. If you do not have excellent money habits, now is the time to find someone to help. You may want to consider hiring a financial advisor to assist you in managing your funds.
  2. Pay off loans. You may have an outstanding loan you want to pay off. Being debt-free can certainly feel great, but again, you will want to talk to your financial advisor as everyone’s situation is different.
  3. Invest in yourself. With more disposable income, you may be able to afford that personal trainer now, practice mindfulness and meditation with a yoga instructor, read more books, eat healthier, or take that dream vacation.
  4. Max out an ESA or 529 plan for your children. Student loans hinder many people from the ability to save. If you can assist your children in any way, paying off school loans can give them a significant advantage over their peers. The earlier you begin saving for your children, the better, as gains in an ESA or 529 plan will compound year over year.
  5. Max out your IRAs. As long as you are working, you can contribute up to $6,000 of earned income into a Traditional IRA (potentially tax-deductible, depending on your income level) or Roth IRA (depending on your income level). IRAs grow tax-deferred, which makes them a great tool in saving for retirement. Roth IRAs can also be a great emergency fund. Click here to read about the benefits of “gifting” to a Roth IRA.
  6. Max out your 401(k)s. You’ll need to work for a company that offers 401(k)s to be eligible to contribute to one, but you can contribute a whopping $19.5K to a 401(k) per calendar year. Like IRA funds, 401(k)s also grow tax-deferred either through a Traditional 401(k) or a Roth 401(k). With a Traditional 401(k), contributions are tax-deductible. With a Roth 401(k), there is no income limit for contributions. However, withdrawing from a 401(k) is more difficult than withdrawing from your IRA and may not even be possible if you are still working at the company in which you have the 401(k).
  7. Max out your HSA. You can contribute to an HSA as long as you have a high deductible health insurance plan. Like IRAs and 401(k)s, HSA contributions are tax-deductible no matter your income level.
  8. Invest. Invest. Invest. The importance of investing cannot be stressed enough. If you leave money in cash, you’re losing money each year due to inflation. Put your money to use and have your money work for you. Invest in what you know best, or hire a financial planner to assist you.

INHERITING REAL ESTATE

If inheriting property from a Baby Boomer, sit down for a minute and talk with your financial advisor. Everything can be simplified into three options for inherited real estate:

  1. Sell the property for cash and refer back to your options on how to utilize inherited non-retirement funds.
  2. If the property is residential or commercial real estate property, you could rent it out for another source of income.
  3. You could hold the property, let it appreciate before selling it, or look into doing a 1031 exchange for a different kind of investment property.

Midland specializes in alternative assets such as real estate, LLCs, hedge funds, crowdfunding, private lending, and more. If you have retirement funds or inherited retirement funds and would like more information on your options, please contact us at (239) 333-1032 or visit www.midlandtrust.com. We are here to help!

MIDLAND TRUST IS NOT A FIDUCIARY: Midland’s role as the custodian of self-directed retirement accounts is non-discretionary and administrative in nature. The account holder or his/her authorized representative must direct all investment transactions and choose the investment(s) for the account. Midland has no responsibility or involvement in selecting or evaluating any investment. Nothing contained herein shall be construed as investment, legal, tax, or financial advice or as a guarantee, endorsement, or certification of any investments.