Wednesday, February 1, 2023

Supporting the American Dream: Kimberly's Story

From a young age, Kimberly of California was instilled with the mindset that contributing to a better world means more than the distant act of writing a check to an organization. Recently, the longtime real estate investor put this practice into place by using her Equity Trust IRA to help a single mother achieve homeownership. She discovered she could use her retirement funds to further social causes that matter to her while securing her financial future. “The self-directed IRA was a brand-new concept to me, and I've been investing for over 36 years in my professional life in 401(k)s and IRAs,” Kimberly says. “I talked to my CPA and I said, ‘I've heard recently about self-directed IRAs, and I am really curious about them, but I need to know a little bit more of the ins and outs.’ He sat down with me and explained the options and he recommended Equity Trust right off the bat. He said, ‘They really know what they're doing, and I recommend that you talk with them.’” Kimberly started with $20,000 that she took out of a substantial existing IRA. She partnered with a friend for her first self-directed real estate investment, renting a house to a single mom with two children in New York state. The renter approached the investors, saying she wanted to purchase the home. “When we heard about that, we were all behind it,” Kimberly recalls. “We're doing this for a number of reasons: to make some money, and to help a person through their real estate journey. And everybody won.” Kimberly’s upbringing has instilled in her the importance of helping others. “I'm a daughter of a Midwesterner, and a product of a Jesuit university, and I have been taught from a very early age to give back your whole life,” she says. “Don't write the checks when you're older. Don't even write the checks when you're younger and have no connection to whatever your investment may be. Make it something that is really palpable and that you can feel the direct impact of. “And so, I've made sure that a lot of my investments have that social impact long before they really had a high return or started to have a high return. It's just been something that I felt was important.” Kimberly started investing in real estate about 20 years ago, but it wasn’t until recently that she learned she could use her IRA to fund her real estate investments, rather than just letting her retirement account sit in stocks and mutual funds. “When I heard about (self-directed investing), I thought, ‘Ooh, here's a chance for me to be a bit more in the driver's seat.’ I like the idea of being able to allocate my funds towards projects in real estate in particular, which I think is a really smart way to go. And Equity Trust afforded that opportunity through the way that you manage this,” she says. In addition to helping a mom realize a dream of homeownership, Kimberly is also impacting her own financial future. “I did a little calculation this morning on my original investment in the account versus my return, and it looks to me as if it's up about 24 percent, which makes me pretty happy, considering that my conventional IRA is that I have did close to maybe the low 30s, but I don't think that they necessarily had the same impact,” she says. “I feel that we empowered someone along the way to become an homeowner for the first time, and there was nothing like that feeling. And it's encouraged me to consider doing this again and again. I would really like to explore this further.” Case studies are provided for illustrative purposes only. Past performance is not indicative of future results. Investing involves risk including possible loss of principal. Information included in the above case study was provided by the investor and included with permission. Equity Trust Company does not independently verify all information provided by third parties Equity Trust Company is a directed custodian and does not provide tax, legal or investment advice. Any information communicated by Equity Trust is for educational purposes only, and should not be construed as tax, legal or investment advice. Whenever making an investment decision, please consult with your tax attorney or financial professional.