Understanding Private Placements
There are many opportunities to choose an investment for your retirement plan. Some investments are more risky than others. But since we self-direct meaning, we choose to direct our funds as we see fit, we have the ability to invest in anything that the IRS allows.
One of the more unique types of investing is Private Placements.
So what is a Private Placement?
Mary Ross, mother of two, spent thousands of dollars in dry cleaning or discarding her toddler's clothes due to stains from wiping their mouths on their sleeves instead of using a napkin.
Frustrated, Mary tried to come up with an idea to save her children's clothes from total destruction after one wearing. Why not develop a throw-away napkin that could be affixed to the sleeve of her children's clothes, then removed when the child is done eating?
Mary ran her idea by a few friends from her local mothers group. They loved it! She made samples of the arm-type slings that were affixed with Velcro. The mothers who tried it loved it! They started ordering dozens of them. Mary needed a one word name to meet the needs of her clients. She decided on Slopkins!
Mary met with an attorney, who went through the process of helping her start her business. She needed some cash infusion so Slopkins could be made in mass and marketed. Her attorney recommended a private placement. They put a memorandum together that described the idea, and the investment formed an LLC (Limited Liability Company) and away Mary went to "sell" her idea to others.
Many people used their IRA dollars to invest in Mary's idea. They understood there were no guarantees of a payback and that basically, they could lose their investment. But so many believed this was the best invention in years that Mary was able to raise her initial 5 million and begin production.
Mary proceeded to raise the capital through her Private Placement. She went around the country demonstrating Slopkins to every major day care facility in the Country.
Eventually one of the day care facilities bought out Mary's Slopkins for 25 million. Mary paid off her investors and retired to Hawaii where she is busy with a new idea for protecting one's home in lieu of a security system. A barking doormat!
All kidding aside - Private Placements work just this way. They are not for people who need their last dime to survive. Generally, investors hear of Private Placements through their Financial Advisor or their Attorney.
As with any investment, it is up to you to do your due diligence. Private Placements can be self-directed with an IRA or 401 (k) through an administrator who does record keeping for these investments. Record keepers do not give investment advice or make any recommendations. The decision is yours!
Liane Bruno is President of IRA Resources. Located in San Diego, California, IRA Resources only performs record keeping and administration for Private Placements.
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IRA Resources, Inc.
6825 La Jolla Blvd La Jolla, CA 92037 |  | Phone: 888 322-6534 Phone: 858 459-1212 Fax: 858 459-6565 |