Best of Growthink

Looking for Opportunities Now? How to Write a Business Plan for Raising Venture Capital Top Seven Capital Raising Mistakes 20 Reasons Why You Need a Business Plan Top 10 Private Placement Memorandum (PPM) Mistakes The Secrets to Their Success? 25 Quotes From Famous Entrepreneurs The 6 Untold Reasons Why Businesses Fail 7 Entrepreneurs Whose Perseverance Will Inspire You Top 7 Myths About Starting a Business Business Exit Strategy: Planning to Sell Your Business How to Make a Business Plan Capital Raising Resource Center

Blog Authors

Jay Turo

Dave Lavinsky

Most Popular
New Videos

"Business Plan
SHORT-CUT"

If you want to raise capital, then you need a professional business plan. This video shows you how to finish your business plan in 1 day.

CLICK HERE
to watch the video.

"The TRUTH About
Venture Capital"

Most entrepreneurs fail to raise venture capital because they make a really BIG mistake when approaching investors. And on the other hand, the entrepreneurs who get funding all have one thing in common. What makes the difference?

CLICK HERE
to watch the video.

"Brand NEW
Money Source?"

The Internet has created great opportunities for entrepreneurs. Most recently, a new online funding phenomenon allows you to quickly raise money to start your business.

CLICK HERE
to watch the video.

"Old-School Leadership
is DEAD"

"Barking orders" and other forms of intimidating followers to get things done just doesn't work any more. So how do you lead your company to success in the 21st century?

CLICK HERE
to watch the video.

Products & Services

Business Plan Writers Private Placement Memorandum Middle Market Investment Banking Business Plan Consultants Business Plan Template Sample Private Placement Memorandum Template Marketing Plan Venture Capital Marketing Plan Template Strategic Plan Template

Subscribe to this Blog

Growthink Around The Web
Growthink on Twitter
Growthink on LinkedIn
Growthink on YouTube
Growthink on Pinterest
Growthink Inc 5000 profile
Growthink BBB profile
Growthink VentureBeat profile
Growthink CrunchBase profile
Growthink Vator profile

Growthink Reviews
Growthink client reviews
Growthink customer reviews

Private Equity and Your IRA: The Pathway to Tax-Advantaged Returns

Written by Jay Turo on Tuesday, September 22, 2009
Categories:

Individual Retirement Accounts, or IRAs, in all their forms - traditional, Roth, 401k, Defined Contribution, Simple, SEP, 403(b) and 457, have become increasingly popular vehicles for private equity investing.

For the individual investor, Investing in private equity via a "Self-directed" IRA has a number of key advantages:

First and foremost are tax savings - both at the time of investment and as the investment appreciates. In some circumstances - for pre-tax contributions via a SEP-IRA for example - up to $49,000 can be invested on a pre-tax (i.e. tax deductible) basis.

Secondly, the power of tax - free compounding of interest, dividends, and capital gains - via both traditional pre-tax IRAs as well as the increasingly popular (and increasingly tax-advantaged) post-tax Roth IRAs is enormous.

In high-return and payout scenarios, where there are larger cash dividends and/or capital gains paid on an annual basis, the value of tax free compounding can lead up to a doubling of total investment return when compared to taxed compounding.

And thirdly, investing in private equity via an IRA addresses "de facto" arguably the key negative of private equity investing - its illiquidity. This is because, to encourage a long-term, retirement-focused time horizon, under the IRA umbrella there are significant, structured penalties for early withdrawl.

In short, IRAs are ideally designed to house long-term investment assets with high capital appreciation potential. This is, of course, the core objective of almost all private equity investing.

Best regards, and look forward to connecting.
--
Jay Turo
CEO
Growthink, Inc

Follow me on Twitter

Join my network on LinkedIn

Share this article: