The rules and regulations surrounding IRAs can be convoluted and confusing. Understanding what IRAs are, how they work, what the difference between a traditional and a Roth IRA is, how self-directed IRAs work, why some IRAs allow private investments while others don’t and which IRA custodian to go with are all challenges that savvy investors must overcome in order to help make the most of their retirement funds.
Putting your IRA account to work requires some research and homework to be done by the potential IRA owner upfront, as well as considering things most people are unfamiliar with, like setting up your IRA for tax-efficiency.
Because there is so much information to absorb around the subject, it can lead to many investors to go by hearsay and listening to what their friends and family tell them.
In the video below, Joe DiDomenico, Founder of WealthFlex, debunks three of the most commonly held misconceptions about IRAs:
It’s a myth that a Roth conversion will make sense for everyone. This isn’t always true. Everybody should do some calculations specific to their own situation, or work with a financial advisor or tax specialist to model it for you. Some of the variables to key in on are:
The big one a lot of people neglect to account for is:
5. What is the opportunity cost of the money you would have to pay in taxes earlier than you needed to because of the Roth conversion?
If you just calculate what your IRA will be worth to you tax-free down the road after having paid that taxes from your taxable funds, you’re not seeing the big picture.
The myth is that IRAs can only invest in traditional, marketable securities. This is incorrect.
Stocks, bonds, and mutual funds aren’t even mentioned in the Employee Retirement Income Security Act of 1974 nor in the IRS code that rules them. In fact, there are so many things your IRA can invest in, that it’s easier for the IRS to list the investment that cannot be held in an IRA. Investments that are prohibited in IRAs include:
1. Life insurance
It’s a myth that you can only use your IRA in retirement. There are plenty of things you can do with your IRA savings before retirement. The biggest is that it could be a source of cash in an emergency, called a hardship withdrawal. Hopefully, you and your family will never need it for this, but IRAs can be a source of income during hard times. Typically, if you take money from your retirement funds before retirement you will be taxed and pay a 10% penalty. The penalty is waived for substantial medical bills, paying higher education debt, if you become disabled, and even while withdrawing up to $10,000 for the purchase of your first home or a subsequent home if you haven’t owned one for two years.
Yieldstreet suggests that if you find these rules complex, do some additional research and work with a tax professional to make sure you have a retirement account strategy that works for you. Please note that YieldStreet does not provide tax advice, please consult with a tax specialist for advice specific to your situation.
Additionally, you can now take retirement planning to the next level with a Yieldstreet IRA. The Yieldstreet IRA offers investors the ability to invest in Yieldstreet products with a retirement account. You can explore setting up your Yieldstreet IRA in-depth and get answers to some of the most Frequently Asked Questions about the Yieldstreet IRA. If you have any additional questions about how to set up and get started with a Yieldstreet IRA, please reach out to [email protected].
This communication and the information contained in this article are provided for general informational purposes only and should neither be construed nor intended to be a recommendation to purchase, sell or hold any security or otherwise to be investment, tax, financial, accounting, legal, regulatory or compliance advice. Any link to a third-party website (or article contained therein) is not an endorsement, authorization or representation of our affiliation with that third party (or article). We do not exercise control over third-party websites, and we are not responsible or liable for the accuracy, legality, appropriateness or any other aspect of such website (or article contained therein).
1 Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections may not reflect actual future performance. All securities involve risk and may result in significant losses.
2 Represents a net estimated, unrealized annualized internal rate of return (IRR) of your portfolio and is based by reference to the effective distribution dates and amounts to and from the investments, as well as any outstanding principal and accrued and unpaid interest as of the current date, after deduction of management fees and all other expenses charged to the investments.[read more]
3 "Annual interest" or "Annualized Return" represents an annual target rate of interest or annualized target return and "term" represents the estimated term of the investment. Such target interest or target returns and estimated term are projections of the interest or returns and or term and may ultimately not be achieved. Actual interest or returns and term may be materially different from such projections. This targeted interest or returns and estimated term are based on the underlying investments held by the applicable.
4 Reflects the initial quarterly distribution declared by the board of directors on February 6, 2020, which will be payable to stockholders of record as of June 10, 2020, and the initial offering price of $10 per share.
5 The Fund will cease investing and seek to liquidate the Fund's remaining portfolio no later than 48 months after the Fund's initial closing. It may take up to twelve months thereafter to fully monetize any remaining illiquid investments in the Fund's portfolio.
6 Represents the sum of the interest accrued in the statement period plus the interest paid in the statement period.
7 The internal rate of return ("IRR") represents an average net realized IRR with respect to all matured investments weighted by the investment size of each individual investment, made by private investment vehicles managed by YieldStreet Management, LLC from July 1, 2015 through and including May 3rd, 2021, after deduction of management fees and all other expenses charged to investments.
8 Investors should carefully consider the investment objectives, risks, charges and expenses of the Yieldstreet Prism Fund before investing. The prospectus for the Yieldstreet Prism Fund contains this and other information about the Fund and can be obtained by emailing [email protected] or by referring to www.yieldstreetprismfund.com. The prospectus should be read carefully before investing in the Fund. Investments in the Fund are not bank deposits (and thus not insured by the FDIC or by any other federal governmental agency) and are not guaranteed by Yieldstreet or any other party.
No communication by YieldStreet Inc. or any of its affiliates (collectively, “Yieldstreet™”), through this website or any other medium, should be construed or is intended to be a recommendation to purchase, sell or hold any security or otherwise to be investment, tax, financial, accounting, legal, regulatory or compliance advice. Nothing on this website is intended as an offer to extend credit, an offer to purchase or sell securities or a solicitation of any securities transaction.
Any financial projections or returns shown on the website are estimated predictions of performance only, are hypothetical, are not based on actual investment results and are not guarantees of future results. Estimated projections do not represent or guarantee the actual results of any transaction, and no representation is made that any transaction will, or is likely to, achieve results or profits similar to those shown. In addition, other financial metrics and calculations shown on the website (including amounts of principal and interest repaid) have not been independently verified or audited and may differ from the actual financial metrics and calculations for any investment, which are contained in the investors’ portfolios. Any investment information contained herein has been secured from sources that Yieldstreet believes are reliable, but we make no representations or warranties as to the accuracy of such information and accept no liability therefor.
Private placement investments are NOT bank deposits (and thus NOT insured by the FDIC or by any other federal governmental agency), are NOT guaranteed by Yieldstreet or any other party, and MAY lose value. Neither the Securities and Exchange Commission nor any federal or state securities commission or regulatory authority has recommended or approved any investment or the accuracy or completeness of any of the information or materials provided by or through the website. Investors must be able to afford the loss of their entire investment.
Investments in private placements are speculative and involve a high degree of risk and those investors who cannot afford to lose their entire investment should not invest. Additionally, investors may receive illiquid and/or restricted securities that may be subject to holding period requirements and/or liquidity concerns. Investments in private placements are highly illiquid and those investors who cannot hold an investment for the long term (at least 5-7 years) should not invest.
Alternative investments should only be part of your overall investment portfolio. Further, the alternative investment portion of your portfolio should include a balanced portfolio of different alternative investments.
Articles or information from third-party media outside of this domain may discuss Yieldstreet or relate to information contained herein, but Yieldstreet does not approve and is not responsible for such content. Hyperlinks to third-party sites, or reproduction of third-party articles, do not constitute an approval or endorsement by Yieldstreet of the linked or reproduced content.
Investing in securities (the "Securities") listed on Yieldstreet™ pose risks, including but not limited to credit risk, interest rate risk, and the risk of losing some or all of the money you invest. Before investing you should: (1) conduct your own investigation and analysis; (2) carefully consider the investment and all related charges, expenses, uncertainties and risks, including all uncertainties and risks described in offering materials; and (3) consult with your own investment, tax, financial and legal advisors. Such Securities are only suitable for accredited investors who understand and willing and able to accept the high risks associated with private investments.
Investing in private placements requires long-term commitments, the ability to afford to lose the entire investment, and low liquidity needs. This website provides preliminary and general information about the Securities and is intended for initial reference purposes only. It does not summarize or compile all the applicable information. This website does not constitute an offer to sell or buy any securities. No offer or sale of any Securities will occur without the delivery of confidential offering materials and related documents. This information contained herein is qualified by and subject to more detailed information in the applicable offering materials. Yieldstreet™ is not registered as a broker-dealer. Yieldstreet™ does not make any representation or warranty to any prospective investor regarding the legality of an investment in any Yieldstreet Securities.
Banking services are provided by Evolve Bank & Trust, Member FDIC.
Investment advisory services are provided by YieldStreet Management, LLC, an investment advisor registered with the Securities and Exchange Commission.
Our site uses a third party service to match browser cookies to your mailing address. We then use another company to send special offers through the mail on our behalf. Our company never receives or stores any of this information and our third parties do not provide or sell this information to any other company or service.