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Investor Insights Blog

Sweet 16 and Investing in Real Estate

January 16, 2020
Even if she only makes half that (40 percent), a 20 percent return, she’ll have oodles of millions of dollars by the time she is able to start withdrawing funds at age 59 1/2,”
Jan, Brittany’s Mother

Never Too Early…or Late

Jan says some of their investments achieve returns as high as 40 percent. Jan knows that with the power of compound interest, Brittany’s early start will have a huge impact on her financial future.

Jan also hopes that with this early start, Brittany will be able to teach others these financial lessons, and they will carry on to the next generation.

“You can do this with your kids and grandkids,” Jan says, adding it’s easy – and can even be beneficial – to get children involved in the work involved in the investments.

“Brittany sends mailings, meets with contractors, and helps me buy properties I wouldn’t have been able to purchase otherwise. Plus, people trust me more when they see her involved.”

Increasing Children’s Financial Literacy

Brittany began learning to budget her money when she was in fifth grade. “Before the budget, my mom and I would go into a store and it was a game to see if I could get her to buy things for me,” she says.

This helped Brittany develop her negotiation skills, but little else. Now her mom works as her consultant and Brittany makes all the decisions and enters her transactions in a phone app to track her income and expenses.

“Whether children are in fifth grade or in college, investing isn’t out of the question,” Jan says.

No. This is considered a prohibited transaction (see IRC 4975). You may not purchase a property, or interest in a property, that’s currently owned by a disqualified person, which includes yourself.

The IRS publishes maximum IRA contribution limits and catch up provisions each year. Summaries for each type of contribution can be found on Contribution Limits.

There are several reasons to open your self-directed account at Equity Trust Company, even before you have selected an alternative investment.

  1. If you are transferring cash/assets to your account from another custodian, you should allow time for the resigning custodian to process your request and deliver the account holdings to Equity Trust.
  2. You have the ability to invest in traditional assets while you are researching other opportunities.
  3. Once you have selected an alternative investment, you will not have other actions in process that may delay the funding processing.

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