What is the “Form 590 Retirement Secret?”

Sleuthalyzing the "Millionaire-Style Retirement" teaser from Unconventional Wealth

By Travis Johnson, Stock Gumshoe, April 24, 2012

The gang from Insiders Strategy Group, (which used to be called Taipan), are pushing folks to sign up for a subscription to Unconventional Wealth, (which used to be called Safe Haven Investor), and as part of that push they’re teasing us that they’ve identified a secret that they refer to as “Form 590” that will allow you to invest like the millionaires.

Here’s how they introduce their idea:

“How to create a millionaire-style retirement account without buying stocks, bonds or mutual funds ….

“When it comes to saving for retirement, most folks put their money into 401(k) plans.

“But allowing the fat cats on Wall Street to control your money is a big mistake. That’s because traditional retirement accounts like 401(k)s, made popular by Wall Street-run investment firms, used sophisticated charts and computer software programs to con most Americans into believing that if they put 5, 10 or even 15 percent of their income into the stock market, they could retire rich.

“It sounded good, but the problem is, things didn’t turn out that way. Over the past decade, the stock market has done nothing but move sideways — while miraculously, the very firms that hoodwinked you into participating in their devious plan have gotten richer….

“Here’s the good news. Did you know there’s already a small group of Americans who have discovered how to use the Form 590 retirement secret to escape Wall Street’s grip? They are putting their money into some of the most lucrative investments that exist.

“Instead of working well into their 50s or 60s, and hoping to have enough money to retire on… they’re building millionaire-like retirement accounts.”

So … who can resist that? Not us! We must know the secret! What on earth are they talking about?

Well, it’s really a pitch for investing like rich people — or like Snyder thinks rich people invest, by buying up private companies and rental real estate and collectibles and stuff like that. Not too different from the broad themes that we sometimes hear teased by Mark Ford over at the Palm Beach Letter or, occasionally, from Steve Sjuggerud at True Wealth — using “alternative” investments instead of (or in addition to) publicly traded stocks, bonds, options, etc.

Here’s how he puts it:

“Remember more than 52 million IRAs are under Wall Street’s control.

“Is this the best way for you to get rich? Let me answer this question with another question. How many billionaires… even millionaires… do you know who made their money through a 401(k) or a plain-vanilla IRA?

“I can tell you this: None of the wealthy people I met working at that fishing lodge made their fortunes with plain old IRAs or 401(k) plans.

“Stop Listening to Wall Street

“Nope. All the rich people I know started their own businesses, bought and sold real estate or invested in private companies.

“But guess what… if your money is tied up in a 401(k) plan or regular IRA, you can’t do any of that.

“And yet 95% of Americans with retirement plans do what Wall Street tells them to do: Put your money in our hands and we’ll make you rich.”

Here’s some more teasing that hints at what this special investment secret is:

“By using the Form 590 retirement method, I’ll show you how its possible to invest in the most appealing assets… what I call the ‘millionaire makers.’

“For example, did you know that with this method, you could buy your dream retirement property right now? But get this, instead of living in it, you lease it out from now until that great day when you can clock out for the final time from your 9-to-5 job.

“In the meantime, you could be getting steady and sizeable rent checks every single month.

“But that’s not all. You can also invest in a small business, offer a mortgage to your neighbor… even write checks out of your retirement account. Try doing that with your conventional retirement account. It’s impossible.”

Snyder goes on to refer to these kinds of investments as “Alternative Investment Opportunities (AIOs)” … So what is this “Millionaire-Making Secret of Form 590?”

Well, our answer’s going to have to come in a couple parts today — first, I’ll tell you what that “secret” is, then we’ll look at a few of the specific “AIOs” that he pitches.

The first part of the tease, the “Form 590 Retirement Secret,” refers, at least obliquely, to an actual IRS publication that does carry number 590 — it’s Publication 590, and it’s the basic information about Individual Retirement Accounts that gives tax guidance and details about how much you can put in an IRA or a Roth IRA, etc.

But what Snyder is pitching is an IRA that invests in unconventional assets — IRA’s can’t buy collectibles (with a few exceptions, mostly US gold coins), but they can buy other stuff if you find a custodian to hold it at arm’s length, things like rental real estate, private equity and private debt (ie, your IRA can lend money to strangers — but not to you or your family), offbeat assets like livestock or timber land or … well, most of the arm’s length investments you can imagine. The big rule is that you can’t operate or benefit from the assets, they have to be held in a trust by a custodian — so you can’t do something sneaky that benefits you or your family before you distribute the assets from the IRA … like buy a house, pay yourself to fix it up, and then rent it to your Mom and have her pay rent into the IRA. Nor could you stay in the house yourself, or put in a new driveway or water heater unless your IRA has the money to do it (since investing more in the house would be an additional contribution to your IRA). It can get pretty complicated.

But you can do a lot of other non-publicly-traded stuff … the problem, of course, beyond the additional complexity and rules, is that most of these things are quite illiquid and the “alternative” investment arena is also where you’ll find lots of scam artists (not that there aren’t plenty of scams in the stock market, too, but I’d wager that it’s easier to pull the wool over someone’s eyes when you’re selling them a share of an emu farm than when you’re selling them stock in Coca Cola).

Which isn’t to say that “alternative” IRAs are bad — they’re getting far more popular now, and they do enable you to do things that might work out really well, like buy some distressed real estate or gold coins or whatever interests you, and get that nice IRA tax shelter on those assets (yes, you can do this stuff with Roth IRAs, too, and then perhaps, if you follow the rules, not owe tax even when you distribute assets from your IRA). I am far from being an expert on this, but there has been a flurry of attention given to alternative investments in IRAs, some of it triggered by the revelations about the huge amount of money Mitt Romney has squirreled away in hedge funds and private equity in his IRAs.

Probably the best rundown on these kinds of alternative assets I’ve seen lately is from this column in the Wall Street Journal, so read that and make your own choices — just note that these kinds of accounts can increase your paperwork and your reliance on your IRA custodian (and thus your fees), and that they aren’t in and of themselves going to magically make you rich … you still have to choose the right investments that will generate compounding cash for you and/or go up substantially over time. And in case you really think it’s a “secret,” I think you have to lose that moniker once you’ve had your idea shared on the Today Show. If you’re interested in learning more about this or scoping out some of the custodians who offer these kinds of accounts, another place to start sniffing around is at the industry association for alternative IRA providers, the Retirement Industry Trust Association.

So that’s at least part of that that “Form 590” secret must be that Snyder is teasing — what are the specific investments that he hints at … investments that, presumably, you can buy in your alternative asset IRA?

Here’s one:

“The ‘Sigma Market’ is not new. In fact, according to a report from the University of Virginia, people began investing in the ‘Sigma Market’ in 16th century Germany. It’s not gold, silver, copper or any other commodity.

“Back in 2000, you could have put $195 into one top-performing investment in the ‘Sigma Market.’

“Today, that could be worth $2,500… a 26.1% return per year… a total return of 1,182%!

“During the same period, the Nasdaq would have turned your $195 into about $94… a negative 52% return….

“You know this has to be a valuable market when billionaire Microsoft founder Bill Gates spent $30.8 million on a purchase in this niche asset class.”

Well, what Bill Gates spent $30.8 million on, way back in 1994, was the Codex Leicester (well, it was called the Codex Hammer at the time, since Armand Hammer renamed it when he bought it in 1980), one of Leonardo Da Vinci’s notebooks, and, at least at that time, the most valuable book in the world.

So one presumes that this “Sigma Market” is either rare books or art, both of which (like most collectibles) are specifically disallowed from individual retirement accounts unless there’s some way around those basic rules (maybe you can buy a share of a partnership that owns this kind of stuff, or something like that), though they might end up being fine investments over time (as long, of course, as you happen to be an expert on rare collectibles — it rarely works out well when you jump into a new niche investment strategy that has you buying hard-to-evaluate stuff from someone who knows a lot more about it than you do).

I have enough worries about my IRA without being concerned that the valuable collectibles I’ve secreted away turn out to be the Beanie Babies of future generations — I do collect books, though I’m sure they’re not of investment grade and I certainly don’t try to hide them in an IRA (they’d be hard to read if I couldn’t touch them or admire them on my bookshelf). There is an interesting “special report” that Steve Sjuggerud wrote on collectibles years ago that’s been posted online by rare coin guy David Hall if you’re curious about the mindset or the “secrets” of being a “collectibles investor.”

And what else do the Unconventional Wealth folks think we might try as “alternative investment opportunities?” Here are our clues:

“Although you have probably never considered investing in it, the “Post-Q Index” asset class is not new. In fact, it originated in Britain back in 1840.

“Now, the incredible thing about the Post-Q Index is that it has risen every year for 50 years… in fact, averaging 10% per year!

“In other words, it has never lost money and has generated a stunning 10% per year for five decades.

“To put that in perspective, a $10,000 investment 50 years ago could now be worth a staggering $1,173,908!

“Amazing… By the way, the “Post-Q Index” asset class — long before I had ever even explored it — had drawn the interests of two of the wealthiest investors on the planet, both typically associated with traditional investments like stocks and bonds.

“Warren Buffett, the second-richest man in the world, is one of them. Bill Gross, head of the Pimco investment firm — the world’s largest family of mutual funds, with assets of $1 trillion under management — is another.

“Although Buffett was more of a hobbyist, Gross once generated a stunning $6.6 million in profit from a long-time investment in this asset class.

“In fact, when asked about the investment class we’re calling the ‘Post-Q Index,’ Bill Gross said, ‘It’s four times profit. It’s better than the stock market.’

“Why hasn’t a broker told you about this? As I said earlier, he can’t make any money selling it to you…

“In fact, trades can be made in the Post-Q Index asset class without paying a penny in commission or fees.”

So what’s the “Post-Q Index?” Rare stamps.

Yep, more collectibles. More stuff that you can’t buy in your “Form 590 Retirement Secret” special IRA. But Bill Gross has made a heck of a lot of money on some of his stamps, he’s one of the preeminent stamp collectors in the world when he’s not being the global bond guru, and he sold one of his collections for a four-fold return back in 2007. No, it wasn’t in his IRA — but he donated the proceeds to charity, so I suppose he probably didn’t pay taxes on it anyway.

So there you have the basics — Unconventional Wealth thinks you should explore “Alternative Investment Opportunities”, apparently including collectibles and alternative asset IRAs along with a bunch of other things. They don’t offer much in the way of hints regarding the other ideas in the list of 27 AIOs, but some of them sound like things you might have heard in other places, stuff like gold, real estate, property tax liens, venture capital, etc.

Though they don’t say you should shy away from the stock market entirely, thankfully (it would be hard to survive as an investment newsletter if they couldn’t recommend — and tout and tease — the stuff that most people use for most of their portfolios) … they say that …

“… every once in a while you can find a good moneymaking opportunity in the market… IF you know the right way to find it.”

And they do tease one of these “good moneymaking opportunity” stocks, just to give you a bonus. Here’s what they say:

“Just a few weeks ago, I recommended that my readers buy shares in a little-known company that invented a unique technology that enables engines to run on alternative fuel sources such as hydrogen, biofuels, compressed gas and, most important, natural gas….

“As of Feb. 1, less than two months after I made that recommendation, the stock is already up 45%… I haven’t even told readers to close their positions yet. That’s because I think there is the opportunity to make even more money from this company. I’m certain that shares will double and then double again. By the way, when you agree to give Unconventional Wealth a try, you’ll get all the details on this company.”

So yes, you’re almost certainly right if you’re guessing that this is the oft-teased stock Westport Innovations (WPRT), whose claim to fame is technology that makes better natural gas engines possible (mostly to do with storage tanks and their direct-injection technology that let nat gas engines have power comparable to diesel truck engines, though their patents and research cover some other areas as well).

From those clues it sounds like he must have recommended it on a dip in mid-December in the high-$20s and been still optimistic when it was around $40 on February 1, after which it went on another run on nat gas engine enthusiasm (fueled by lots of newsletters, by Congressional hope for the Nat Gas act which failed again, and by big name trumpeting from the usual suspects on CNBC as well), reaching almost $50 again before it fell apart on competitive concerns, political frustration, and simple realization that it’s a company that had gotten (and arguably still has) a big valuation on a story that hasn’t yet caught up with the income statement. Here’s what I said in early February when I covered Westport in my annual review of past suggestions for the Irregulars:

“I’d hold if I owned it (I don’t), and would probably put a stop loss in to protect profits if I’d held it for these remarkable gains of the past year, but cannot come up with a justifiable reason to buy it at this price [$43-ish] other than ‘it’s going up.'”

The valuation picture looks a bit better now at $30, though it’s still pricey by any standard measure, but we’ve covered WPRT a lot in this space over the years … so I’m sure you’re sick of it by now. If you have thoughts to share feel free to let ’em loose with a comment below.

And likewise, if you think there are some great “Alternative Investment Opportunities” that your fellow investors should be considering, or if you have had either good or bad experiences with a self-directed IRA in alternative assets, feel free to shout ’em out with a comment. We often learn more from our readers than from the teaser itself, so don’t be shy.

Related Gumshoe Articles

What are the $25 “RETIREMENT NOTES” teased by Unconventional Wealth?

Ryan Cole says "Buy enough of them, and you can collect regular, monthly checks as high as $9,517."

57 Comments Read More

What’s the “Queen’s Shocking Private ‘Account'”

Ryan Cole's "The Amazing Story of How $5 Turned Into $1 Million"

69 Comments Read More

Leave a Reply

13 Comments on "What is the “Form 590 Retirement Secret?”"

avatar

CARL CORNELIUS MD
Guest
0
CARL CORNELIUS MD
April 24, 2012 1:52 pm

WPRT just hit my sell stop. I’m not sure if it is being manipulated by some large group or it has just lost its luster. Out the window it must go. I don’t do collectibles either.
CJC

Roger Galvin
Guest
0
Roger Galvin
April 24, 2012 2:37 pm
I put notes on loans I made from my IRA account. These notes were backed by real property held in a corp. secured the notes. All was great and interest payments went directly into the IRA. The custodian Schwab valued them at face value. Now the problem begins….. The corp that issued the notes filed chapter 7. Trustee appointed to sell and distribute funds. Due to the very big ranges that the assets might bring, the trustee could not put any value on recovery. All indications estimated maybe a 10-15% return on the dollar. Schwab notifies me and others that… Read more »
Vic
Guest
0
Vic
April 24, 2012 2:44 pm

Travis, while tip-toeing around the Form 590 has the mightly Thinkolator ever encountered the quicksand offer to become your own bank and retire rich? It’s an Elevation Group thing where some fancy tap dancing allows legally skirting the tax man. Don’t really want to own a bank but rich might be acceptable. Any good, bad or ugly info and comments are appreciated.

nurturechef
Guest
0
April 24, 2012 3:01 pm

I have a rare 1936 saddle belonging to the Third Richt. It is not the typical German Calvary saddle – It was special made for a commander in Hitler’s Army. I would like to sell the saddle of go to auction with it, but I don’t know where to begin looking. If someone can help – please advise……….Thanx! Talk about collectables??

Jan
Guest
0
Jan
April 24, 2012 6:46 pm
Have you tried the big auction houses like Christies, Southby, & Butterfield (W. coast)? Sorry, I expect my spelling is off. I used to be a collector & sell things with both Christies & Southbys. There are a lot of fees associated with listing with them but if it is an item they really want to handle they will waive the fees. Or you can get a better rate asking a dealer you know who deals with them to list it for you. As far as I know unless you have access to collectors who collect that type of thing… Read more »
Martin
Guest
0
Martin
April 24, 2012 8:50 pm

One site I would recommend you check out is http://www.snyderstreasures.com/ which deals with historical collectibles. It offers a vast array of civilian and military collectibles, especially from the Nazi era. You could also do a web search that might identify other such dealers.

Dave
Guest
0
Dave
April 25, 2012 2:15 pm

You can also sell it on eBay, which thousands of collectors scour each day.

Buz Davis
Guest
0
Buz Davis
April 27, 2012 7:04 pm

Suggest that instead of auctioning it you donate it to the Democratic party.
Their actions of recent should be a good fit.
“The dust that Pancho bit down south….
….has ended up in Lefty’s mouth”
Gad! What a lefty!

johnny g.
Guest
0
April 24, 2012 6:26 pm
I think he has a point with other alternatives , but you must be careful with collectibles and be very selective, I have an antique business and I collect as well as buy and sell.. After all most of us are glorified collectors except for the big boys who sell their $35,000 highboys. Banks offer you nothing in return. Stocks are OK, but Art and certain antiques are like gold..The good stuff always sells and I concentrate on the good stuff for my collection. my web is http://www.jgalloantiques.com Oh and it helps if you write and publish a book..
Myron Martin
Guest
0
April 25, 2012 9:29 am
Westport has certainly been quite a roller coaster ride, and probably will continue to be. With Clean Energy Fuels slated to build 150 natural gas refueling stations in a deal with Pilot Truckstops, availability of the fuel at current low prices will be a strong incentive for long haul truckers to switch from increasingly expensive diesel, whether government incentives are finally legislated or not. Several analysts still expect it to double again from current prices, and no question, government incentives could well send it on another run higher. In at $26.53 and three covered call sales later this has been… Read more »
jude
Guest
0
jude
April 25, 2012 10:21 am

A popular ‘alternative investment’ for your pension scheme in the UK is your business property. Don’t know if it works in the US, but in the UK the rent is tax-deductible from your business profits, tax-free in your pension, the building is safe from creditors and when you retire can be sold tax-free to provide your pension. No dodgy brokers required!

FRED BROWN
Guest
0
FRED BROWN
October 10, 2015 4:34 pm

I AM INTERESTED IN LEARNING MORE ABOUT THE RETIREMENT SECRET FORM 590/
THANK YOU FRED BROWN FREDB6829@GMAIL.COM

Ashok Chopra
Guest
0
Ashok Chopra
June 26, 2016 8:38 pm

How can I start SRPs account. Where i can get form 590

wpDiscuz