<ul class="summary-list"><li>A <keyword id="6354947" type="UNKNOWN" weightage="60" keywordseo="bitcoin">bitcoin</keyword> <keyword id="31402" type="PERSON" weightage="60" keywordseo="ira">IRA</keyword> is a self-directed individual retirement account allowed to hold <keyword id="2420795" type="PERSON" weightage="60" keywordseo="cryptocurrencies">cryptocurrencies</keyword>.</li><li>The pros of bitcoin IRAs include portfolio diversification and tax-free gains on profits.</li><li>Bitcoin IRA drawbacks include high fees and the responsibility of managing your own account.</li></ul>Not a day goes by without bitcoin being in the news. And given the cryptocurrency's phenomenal price rise, from zero to approximately $32,000 in a little over a decade, you - like many other individual investors - may be tempted to buy in. But how?Actually, you can invest in finance's newest asset via one of its most familiar vehicles: the IRA. Yes, you can buy bitcoin for a good old individual retirement account.Cue the excitement? Maybe. In many ways, bitcoin investments are well-suited to an IRA. But, as with any investment strategy, there are pros and cons to consider. <h2>What is a bitcoin IRA? </h2>Bitcoin is a type of cryptocurrency (sometimes called a digital or <a href="https://www.irs.gov/businesses/small-businesses-self-employed/virtual-currencies" target="_blank" rel="noopener">virtual currency</a>) - the oldest, and most popular of the dozen varieties available for trading and investment. So a bitcoin IRA is a type of investment retirement account that includes bitcoin within its portfolio. Although these accounts may carry the name "bitcoin," they also allow you to invest in other cryptocurrencies, like ethereum, litecoin, and bitcoin cash. You can't put bitcoin into a pre-existing, regular IRA that holds your stocks, bonds, ETFs, or mutual funds. Instead, you have to set up a special one, technically known as a <a href="https://www.businessinsider.com/what-is-a-self-directed-ira" target="_blank" rel="noopener">self-directed IRA</a> (SDIRA). The reason: The Internal Revenue Service (IRS) deems cryptocurrencies like bitcoin a type of property, which is off-limits to regular IRAs. "A self-directed IRA has a little bit looser IRS rules, so you can hold things like property," or other alternative investments, confirms <a href="https://www.mcdanielknutson.com/team/victoria-bogner-cfp-cfa" target="_blank" rel="noopener">Victoria Bogner, a certified financial planner and chief executive officer of McDaniel Knutson</a>.<h2>How bitcoin IRAs work</h2>In some ways, bitcoin IRAs work like regular IRAs. While you can set one up with any amount of funds, they have annual contribution limits set by the IRS: You can only contribute $6,000 a year for 2020 and 2021 (or $7,000 a year if you're age 50 or older). Any returns, income, or gains generated by the investments within them grow tax-free.You can also establish a bitcoin IRA as either a <a href="https://www.businessinsider.com/personal-finance/how-to-open-an-ira-for-retirement" target="_blank" rel="noopener">traditional account</a> (for which contributions are tax-deductible, and funds taxed upon withdrawal) or a Roth account (no tax break on contributions, but distributions are tax-free). Of the two, the Roth version might have an edge, says Bogner, especially "if you are of the mindset that Bitcoin is going to explode" in price in the future. <a href="https://www.businessinsider.com/personal-finance/how-to-invest-in-roth-ira" target="_blank" rel="noopener">Roth IRAs</a> are preferred by investors who project they'll be in a higher tax bracket when they retire and start withdrawing money from the account. Since the Roth is funded with after-tax dollars, they won't owe anything on their bitcoin gains - even if the currency has gone up 10 or 20 times. <h2>How to buy bitcoin in your IRA</h2>Bitcoin IRAs do operate differently in a few ways, though.As the "self-directed" implies, these IRAs are directly managed by the account holder (as opposed to a financial advisor or money manager). And your regular brokerage, bank, or investment app probably doesn't handle them. Self-directed IRAs are only available through firms that specialize in the type of asset you're interested in. So, to open a bitcoin IRA, you'd work with special custodians that can hold and deal in cryptocurrency. Some custodians require an application, walking you through the process. If you move forward, you can then fund these accounts via a rollover of funds from an existing IRA or another tax-advantaged account, or contribute new funds. Some of the better-known, well-established custodians for bitcoin IRAs include:<ul><li><a href="https://bitcoinira.com" target="_blank" rel="noopener">Bitcoin IRA</a></li><li><a href="https://www.bitira.com" target="_blank" rel="noopener">BitIRA</a></li><li><a href="https://coinira.com" target="_blank" rel="noopener">CoinIRA</a></li><li><a href="https://itrustcapital.com" target="_blank" rel="noopener">iTrustCapital</a></li></ul>This is still a young field, and information on a firm may be hard to come by. Frankly, some are little more than sales platforms. So, no matter which custodian you're considering, be sure to do your due diligence on it. Visit its website or call its customer service line to confirm and compare its fee structure, operations. Ask how your bitcoins will be stored, exactly, and about security procedures and measures - you don't want your account holdings vulnerable to hackers. <h2>Why invest in a bitcoin IRA? </h2>There are plenty of positives to consider with bitcoin IRAs. <ul><li>Portfolio diversification. Bitcoin tends to be "a great diversifier" for your financial assets, Bogner explains. Holding a bit of bitcoin "can be a good way to own something that doesn't move exactly like the rest of your investments move," she says. It could also be a hedge against inflation as the dollar's value against some other currencies has declined.</li><li>The potential for great gains. While there have been bitcoin drops, there also have been returns that outpace other <keyword id="31671" type="CITY" weightage="100" keywordseo="markets">markets</keyword>. If its history weren't enough, the fact that only a limited number of bitcoins (21 million) can ever be mined suggests great future promise. </li><li>Positioning for a long-term hold. Though bitcoin fluctuates in price, it has generally trended up since its inception in 2009. Given its volatility, individual investors should consider it a long-term hold. That means it may be a good fit for an account that you don't plan to access until retirement, anyway. </li><li>Demonstrated tax savings. The <a href="https://www.businessinsider.com/bitcoin-taxes-overview" target="_blank" rel="noopener">IRS taxes Bitcoin</a> as an investment - it's subject to a <a href="https://www.businessinsider.com/what-are-capital-gains" target="_blank" rel="noopener">capital gains </a>tax when you sell it at a profit. But not if it's held in your IRA. That gain is tax-shielded, as any transactions within an IRA are. You only pay taxes on funds that you withdraw, when you withdraw them - in a traditional IRA; and never if in a <keyword id="1737935" type="PERSON" weightage="60" keywordseo="Roth-IRA">Roth IRA</keyword> (if you obey the rules).</li></ul><h2>Are bitcoin IRAs safe?</h2>No investment is without risk. Potential issues also exist with bitcoin IRAs. <ul><li>Volatility. <a href="https://markets.businessinsider.com/currencies/btc-usd" target="_blank" rel="noopener">Cryptocurrencies, including bitcoin, can have wide-ranging and sudden price fluctuations. </a>This could be a problem if a decline hits about the time you were planning on withdrawing funds. If you don't have the time to wait for market corrections, this kind of account may not be a fit for you. </li><li>Higher fees. Bitcoin accounts can cost more to maintain or set up than other IRAs. For instance, a bitcoin account can reportedly have an initial buy-in fee of 10% or more, depending on the type and the custodian. <a href="https://coinnotes.news/2018/11/14/bitcoin-ira-trading/" target="_blank" rel="noopener">Establishing a $50,000 self-directed IRA account can cost as much as $660 in annual charges</a>, a Coinnotes article noted. And there can be wallet holding fees, transfer fees, and dues. All these fees can add up, eating into your returns. </li><li>Investment minimums. Bitcoin IRAS can have investment minimums, some considerably high (again, compared to regular IRAs). For instance, <a href="https://bitcoinira.com/faq" target="_blank" rel="noopener">BitcoinIRA currently has a $3,000 minimum; </a><a href="https://www.bitira.com/digital-ira/faq/" target="_blank" rel="noopener">BitIRA currently has a $20,000 minimum. </a></li><li>Responsibilities. While they're called custodians, firms that offer self-directed IRA services - especially in the relatively young bitcoin IRA space - are not necessarily as responsible as conventional brokerages, registered investment advisors, and other financial services firms are. They are not overseen by regulatory agencies like FINRA, they are not SIPC-insured (reimbursing your funds if the firm goes under) and they are not bound by fiduciary rules that demand they put your interests first. In short, with bitcoin IRAs - as with any self-directed IRA - you're solely responsible for making the decisions and taking on the risks of investing.</li></ul>Quick tip: An IRA custodian should never promise your account is protected against losses due to a drop in your holdings' price or value. It's not. Protection against literal loss, due to theft or the firm going bankrupt, possibly. Protection from investment loss, never.<h2>The financial takeaway</h2>Bitcoin IRAs can offer an opportunity for investors who believe in the crypto's future, but who want some tax savings along with their gains. Plus, the ease of dealing with a familiar type of account.But there can be higher fees and account minimums when compared to other IRAs, so determine whether the trade-off is appropriate for you. Bear in mind that there are other ways to hold bitcoin, in regular accounts on crypto trading platforms like Coinbase and Binance US.If you decide to open a bitcoin IRA, choose a custodian carefully. And only commit to bitcoin an amount that you can afford to lose, and think long term. Says Bogner: "Twenty years later, hopefully it's worth more than what you put in." <h2>Related Coverage in <a href="https://www.businessinsider.com/investing-reference" target="_blank" rel="noopener">Investing</a>:</h2><h3><a href="https://www.businessinsider.com/how-to-invest-in-bitcoin" target="_blank" rel="noopener">How to invest in bitcoin: The major ways to buy, their pros and cons, and the strategies to consider</a></h3><h3><a href="https://www.businessinsider.com/what-is-cryptocurrency" target="_blank" rel="noopener">Cryptocurrency is an electronic, private type of money - here's how it works and how you can invest in it</a></h3><h3><a href="https://www.businessinsider.com/what-is-bitcoin" target="_blank" rel="noopener">What is Bitcoin? A beginner's guide to the world's most popular type of cryptocurrency, and tips for investing in it</a></h3><h3><a href="https://www.businessinsider.com/what-is-diversification" target="_blank" rel="noopener">What is diversification? A portfolio strategy that uses a variety of investments to limit risk</a></h3><h3><a href="https://www.businessinsider.com/what-are-alternative-investments" target="_blank" rel="noopener">Alternative investments are exotic assets that can diversify your portfolio - here are the five major kinds and everything you should know about them</a></h3>

A bitcoin IRA lets you profit from the cryptocurrency's potential gains in a tax-advantaged way

<ul class="summary-list"><li>With variable annuities, you invest a sum that's returned with interest in periodic payments.</li><li>Unlike traditional annuities, variable annuities earn and pay a fluctuating rate, based on investments you select.</li><li>Variable annuities can offer bigger returns, but their fees are high and they're subject to investment risks.</li></ul>An <keyword id="488576" type="ORGANIZATION" weightage="60" keywordseo="annuity">annuity</keyword> is a little like a self-funded pension: You pay an insurance company a lump sum now and, in exchange, the insurance company pays you back later, in steady installments - with interest.How much interest do they pay? That depends on the type of annuity. If it's a <keyword id="10658092" type="UNKNOWN" weightage="60" keywordseo="variable-annuity">variable annuity</keyword>, the interest rates are, well, variable: The size of your payouts is tied to the performance of the stock market, the bond market, or whatever sort of investments you picked to put your original lump sum in.So it adds an investing component to your annuity account. That can mean greater growth and more income. But it also adds some risk. Here's what you need to know before purchasing a variable annuity.<h2>What is a variable annuity?</h2>An <a href="https://www.businessinsider.com/what-is-an-annuity" target="_blank" rel="noopener">annuity </a>is an agreement with an insurance company. It's designed to provide financial security - usually in your golden years - via a regular income stream. Annuities come in many different shapes and sizes. Some require you to pay in one lump sum; others let you make smaller payments over time. Some begin to pay you back immediately after your deposit (immediate annuities). Others have a longer accumulation period, and you start receiving your payout years into the future (deferred annuities). Annuities can also differ in terms of how your interest rate is calculated, both when the funds are accumulating and when they start getting paid out. With variable annuities, the interest rates are calculated based on a set of investments you choose. They will provide a guaranteed income stream, but at a fluctuating rate - one tied to investments of your choice. So your return is potentially greater, but so is your risk. Variable annuities can be immediate or deferred, funded immediately, or over time. But all variable annuities have in common that their rates of return are tied to market performance.Because of this investment component, and because the money accumulates in the account tax-free, variable annuities often position themselves as competitors to retirement accounts, like IRAs and 401(k) plans. <h2>How does a variable annuity work?</h2>A variable annuity begins with you paying into a pot - this is your principal. Your principal is then allocated into sub-accounts that you choose. These sub-accounts are like private mutual funds or ETFs: They invest in a portfolio of a certain kind of asset - stocks, bonds, or other investments. Some model themselves after a stock index, like an <a href="https://www.businessinsider.com/what-is-an-index-fund" target="_blank" rel="noopener">index fund</a>.For example, Jackson National Life Insurance, a major player in the annuity field, offers over <a href="http://ackson.com/static/jwp/pdf/jmv24553.pdf" target="_blank" rel="noopener">120 investment portfolios</a> for annuity holders to choose among, including some that invest in stocks at certain <a href="https://www.businessinsider.com/what-is-market-cap" target="_blank" rel="noopener">market cap levels</a>, some that invest only in bonds, and some that invest in a mix of asset classes. While the money's invested within the annuity, it compounds and grows tax-free. If your investment choices perform well, you earn a higher rate of interest on your principal. Of course, if they drop in value, your interest rate goes down - you could lose money. Some insurance companies do guarantee that you won't lose your principal - so you'll get back what you put in, at least. But even then, if your investments tank, you won't see any growth on your money and its value will be <a href="https://www.businessinsider.com/what-is-inflation" target="_blank" rel="noopener">eaten away by inflation</a>.If you're not happy with your sub-account choices, you can usually shift them around (sometimes for a fee). You can usually make changes even after you start receiving your payments, but rules vary by insurance company.<h3>Variable annuities vs. fixed annuities</h3>In contrast to variable annuities, fixed annuities don't involve investments. Instead, the insurance company invests your principal for you. Your annuity generates a fixed rate of interest. These can range between 1% and 5%, but averages usually sit between 2% and 4%. The fixed interest rate means there is less risk - you know your rate of return. And your payouts won't vary. But it also means you miss out on higher returns offered by stocks if the market is performing well.<h3>Variable annuities vs. indexed annuities</h3>Indexed annuities are a kind of hybrid of fixed and variable annuities.They typically offer you a guaranteed base interest rate, so you know that your principal will grow at least a little. But, the rate is also tied to a specific <a href="https://www.businessinsider.com.au/what-is-a-stock-market-index-2020-12" target="_blank" rel="noopener">market index</a> like the <a href="https://markets.businessinsider.com/index/s&amp;p_500_500" target="_blank" rel="noopener">S&amp;P 500</a>. If that index does well, your interest rate will get higher, and you'll capitalize on strong market performance and earn more interest.This protects you from market losses while still allowing you to profit from market gains.<h2>Is a variable annuity a good investment?</h2>Variable annuities do offer a variety of advantages, both compared to other annuities and to other investments. <ul><li>Potentially higher returns. The major benefit of variable annuities is being able to take advantage of equities and their appreciation potential. Solid investment picks could result in much higher interest rates than a fixed or indexed annuity provides. </li><li>Keeping up with inflation. While fixed annuities are safer, they pay lower interest rates that may over time be eaten up by an increasing cost of living - the enemy of all fixed-income investments. Variable annuities were designed to keep pace with inflation - and some <a href="https://www.jstor.org/stable/41946036?seq=1" target="_blank" rel="noopener">research suggests they do</a>.</li><li>Tax-deferred earnings. Funds within the annuity grow tax-free. You're only taxed on a portion of them when you get your payout. This allows you to lessen the tax you're paying in your high-income years and instead pay it later, in retirement, when your income is usually lower. </li><li>Familial protection. Like life insurance, variable annuities pay a death benefit if you die before payouts start. You can also arrange to have payouts continue to a spouse after your death.</li></ul><h2>What are the drawbacks of variable annuities?</h2>Variable annuities have their downsides. The big one, of course, is investment risk. You are not guaranteed interest on your principal, because there are no guarantees in investing, ever. If your investment choices don't perform, your money won't grow, and it'll impact your income stream. Fixed-rate annuities pay less, but they pay. Other variable annuity drawbacks include:<ul><li>Illiquid funds. Annuities are designed to be long-term investments - and they come with steep surrender charges if you want to withdraw money early. Also, you usually cannot touch annuity funds at all until you reach age 59½; if you do, you incur a 10% tax penalty - similar to an early withdrawal from an IRA.</li><li>Taxes. The earnings part of your annuity payouts is taxed as income (not as <a href="https://www.businessinsider.com/capital-gains-tax-rates" target="_blank" rel="noopener">capital gains)</a>. That's not good for anyone whose regular income tax rate is higher than the capital gains tax rate.</li><li>High expenses. All annuities charge commissions (up to 4%) and fees: administrative fees, mortality expenses, guaranteed income fees, and fees for other optional add-ons. But variable annuities also typically charge a fee for managing the investment accounts. Together, these fees can get as high as 3% or 4% of the total value of your annuity, significantly impacting your returns. </li><li>No insurance. Diedre Woodruff, senior vice president at <a href="https://puritanlifeinsurance.com/" target="_blank" rel="noopener">Puritan Life Insurance</a>, notes that annuity contracts aren't FDIC-insured, like bank accounts are, or SIPC-insured, like brokerage accounts. So if the insurance company goes out of business, your annuity disappears with it.</li></ul><h2>The financial takeaway </h2>Variable annuities basically try to combine the steady income stream of insurance products with the appreciation potential of investments - particularly securities. So are variable annuities right for you? As Woodruff says, "Annuities are the only product that can offer guaranteed lifetime income." They also offer tax-deferred growth, and you aren't as limited in the amount you invest as you are with other tax-advantaged retirement accounts. But they're certainly not for everyone: They can be expensive, they are <a href="https://www.businessinsider.com/what-is-liquidity" target="_blank" rel="noopener">illiquid</a>, and if you make poor investment choices, your payouts will be lower. The <a href="https://www.sec.gov/investor/pubs/varannty.htm" target="_blank" rel="noopener">SEC notes</a> that, for most investors, it's a good idea to max out payments to IRAs and 401(k) plans before considering a variable annuity. Still, if you're looking for guaranteed retirement income and you're willing to take some risk and pay higher fees in exchange for potentially higher returns, variable annuities might be right up your alley. Just make sure you understand all the details, including fees and surrender charges. And choose an established company that's still going to be around when it's your turn to get paid.<h2>Related Coverage in <a href="https://www.businessinsider.com/investing-reference">Investing</a>:</h2><h3><a href="https://www.businessinsider.com/investment-income-definition">Investment income is money earned by your financial assets or accounts, and understanding how it works can help maximize your profits</a></h3><h3><a href="https://www.businessinsider.com/how-to-invest-for-inflation" target="_blank" rel="noopener">Investing for inflation means choosing assets that keep pace with rising prices - here's how to inflation hedge to protect your wealth</a></h3><h3><a href="https://www.businessinsider.com/investment-income-assets">Investing for income: 7 money-generating assets for your portfolio and how to get started</a></h3><h3><a href="https://www.businessinsider.com/personal-finance/million-dollar-life-insurance-policy">A million-dollar life insurance policy sounds like a lot, but you might want to consider it</a></h3><h3><a href="https://www.businessinsider.com/liz-weston-how-to-mess-up-a-variable-annuity-2019-8">Liz Weston: How to mess up a variable annuity</a></h3>

A variable annuity can provide you with more retirement income, since its payouts rise with the stock market

<!DOCTYPE html PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN" "http://www.w3.org/TR/REC-html40/loose.dtd"><html><body><div class="KonaFilter image-container display-table"><div><div class="image on-image"><a href="https://www.realtymogul.com/diversified-investing/a?utm_campaign=mogulreit&amp;utm_medium=affiliate&amp;utm_source=businessinsider&amp;utm_content=&amp;utm_term=&amp;utm_campaignid=701G0000001j6L8" target="_blank"></a>Getty Images</div></div></div>Savvy investors know that commercial real estate can potentially make for an incredible investment, generally offering higher rental income, lower ownership costs, and longer leases than residential real estate.And as a <a href="https://www.realtymogul.com/resource-center/articles/why-should-online-reits-be-in-your-portfolio?utm_campaign=mogulreit&amp;utm_medium=affiliate&amp;utm_source=businessinsider&amp;utm_content=&amp;utm_term=&amp;utm_campaignid=701G0000001j6L8" target="_blank">long-term investment</a>, it can generate a steady cash flow, increase in value, and diversify a traditional portfolio. In fact, most asset allocation models suggest that people should invest a part of their <a href="https://www.realtymogul.com/resource-center/articles/why-diversification-matters-for-your-portfolio?%20utm_campaign=mogulreit&amp;utm_medium=affiliate&amp;utm_source=businessinsider&amp;utm_content=&amp;utm_term=&amp;utm_campaignid=701G0000001j6L8" target="_blank">portfolio</a> in real estate. That said, investing in real estate can be risky and there is no guarantee of a return so it's equally important for investors to stay well informed and conduct their own due diligence.Historically, commercial property has been dominated by pension funds, insurance companies, and other institutional investors; average investors just haven't had the same type of access.But now, <a href="https://www.realtymogul.com/diversified-investing/a?utm_campaign=mogulreit&amp;utm_medium=affiliate&amp;utm_source=businessinsider&amp;utm_content=&amp;utm_term=&amp;utm_campaignid=701G0000001j6L8" target="_blank">RealtyMogul.com</a> is cracking the market open. It's giving everyone the opportunity to get into the real-estate investing game - and it's all being done online.In the past three years, the fast-growing <a href="https://www.realtymogul.com/resource-center/articles/real-estate-crowdfunding?%20utm_campaign=mogulreit&amp;utm_medium=affiliate&amp;utm_source=businessinsider&amp;utm_content=&amp;utm_term=&amp;utm_campaignid=701G0000001j6L8" target="_blank">real-estate crowdfunding</a> marketplace has originated, underwritten, and financed more than $215 million in properties. And with the introduction of its new product - <a href="https://www.realtymogul.com/diversified-investing/a?utm_campaign=mogulreit&amp;utm_medium=affiliate&amp;utm_source=businessinsider&amp;utm_content=&amp;utm_term=&amp;utm_campaignid=701G0000001j6L8" target="_blank">MogulREIT I</a> - RealtyMogul.com is making the traditionally high barrier to entry for commercial real estate a possible thing of the past.<div class="KonaFilter image-container display-table"><div><div class="image on-image"><a href="https://www.realtymogul.com/diversified-investing/a?utm_campaign=mogulreit&amp;utm_medium=affiliate&amp;utm_source=businessinsider&amp;utm_content=&amp;utm_term=&amp;utm_campaignid=701G0000001j6L8" target="_blank"></a>RealtyMogul.com</div></div></div><h2>Simplifying real-estate investment</h2>Since its launch, <a href="https://www.realtymogul.com/diversified-investing/a?utm_campaign=mogulreit&amp;utm_medium=affiliate&amp;utm_source=businessinsider&amp;utm_content=&amp;utm_term=&amp;utm_campaignid=701G0000001j6L8" target="_blank">RealtyMogul.com</a> has set out to change the way real-estate investing and financing is viewed by connecting real-estate entrepreneurs and investors through technology.Traditionally, investors had three options when it came to REITs: Invest in a REIT that is traded like a stock and therefore exposed to market volatility, one that is not traded but charges high up-front fees, or one that requires a massive minimum investment.<a href="https://www.realtymogul.com/diversified-investing/a?utm_campaign=mogulreit&amp;utm_medium=affiliate&amp;utm_source=businessinsider&amp;utm_content=&amp;utm_term=&amp;utm_campaignid=701G0000001j6L8" target="_blank">MogulREIT I</a> lets people invest in private, low-cost options with an initial investment requirement of just $2,500. This investment sector that was once closed to most is now not only attainable, but realistic.<h2>Getting more for your money</h2>As a nontraded REIT, MogulREIT I isn't potentially subject to unpredictable market conditions.Compared with publicly traded REITs, which generally have yields of 3%, nontraded REITs have yields closer to 6% and offer direct exposure to portfolio-diversifying real-estate assets with much lower volatility.What's more, traditional nontraded REITs <a href="https://www.realtymogul.com/diversified-investing/a?utm_campaign=mogulreit&amp;utm_medium=affiliate&amp;utm_source=businessinsider&amp;utm_content=&amp;utm_term=&amp;utm_campaignid=701G0000001j6L8" target="_blank">typically charge</a> 10 to 15% in up-front costs and fees. MogulREIT I's fees are much lower, meaning more of your money goes into the investment from the start.<div class="KonaFilter image-container display-table"><div><div class="image on-image"><a href="https://www.realtymogul.com/diversified-investing/a?utm_campaign=mogulreit&amp;utm_medium=affiliate&amp;utm_source=businessinsider&amp;utm_content=&amp;utm_term=&amp;utm_campaignid=701G0000001j6L8" target="_blank"></a>RealtyMogul.com</div></div></div>And thanks to the pooled-fund structure, MogulREIT I offers greater real-estate diversification between debt and equity than you might be able to afford by relying on your individual investments.<h2>Full transparency<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><a href="https://www.realtymogul.com/diversified-investing/a?utm_campaign=mogulreit&amp;utm_medium=affiliate&amp;utm_source=businessinsider&amp;utm_content=&amp;utm_term=&amp;utm_campaignid=701G0000001j6L8" target="_blank"></a>RealtyMogul.com</div></div></div></h2>By working with professionals who have deep experience in their fields, <a href="https://www.realtymogul.com/diversified-investing/a?utm_campaign=mogulreit&amp;utm_medium=affiliate&amp;utm_source=businessinsider&amp;utm_content=&amp;utm_term=&amp;utm_campaignid=701G0000001j6L8" target="_blank">RealtyMogul.com</a> is able to "examine the local real-estate market, business plan, and demographic trends, and study each investment thoroughly," CEO Jilliene Helman says.This attention to detail, and deep knowledge of a property and its surrounding area sets <a href="https://www.realtymogul.com/diversified-investing/a?utm_campaign=mogulreit&amp;utm_medium=affiliate&amp;utm_source=businessinsider&amp;utm_content=&amp;utm_term=&amp;utm_campaignid=701G0000001j6L8" target="_blank">RealtyMogul.com</a> apart, and it allows investors to track the REIT's operational and financial performance with full transparency while providing a steady stream of quarterly dividends."Our overall goal is to select investments at a good value, work with strong management teams, and deliver positive long-term performance," Helman says. "We're excited about MogulREIT I because it opens the door for more individual investors to become owners of valuable commercial real-estate assets."<a href="https://www.realtymogul.com/diversified-investing/a?utm_campaign=mogulreit&amp;utm_medium=affiliate&amp;utm_source=businessinsider&amp;utm_content=&amp;utm_term=&amp;utm_campaignid=701G0000001j6L8" target="_blank">Find out how you can get a piece of the commercial real-estate market</a>.This post is sponsored by <a href="https://www.realtymogul.com/diversified-investing/a?utm_campaign=mogulreit&amp;utm_medium=affiliate&amp;utm_source=businessinsider&amp;utm_content=&amp;utm_term=&amp;utm_campaignid=701G0000001j6L8" target="_blank">RealtyMogul.com</a>.Disclaimer: Not an offering of securities. All investment involves risk of loss and past performance is not indicative of future results. Securities are available to qualified investors only through North Capital Private Securities, member FINRA, and SIPC.</hr></body></html>Find out <a href="http://www.businessinsider.com/sponsor-posts">more about Sponsor Content</a>.

Meet the crowdfunding site making it possible for everyone to invest in real estate

<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"></div></div></div>Tony Robbins became the world's most famous performance coach through decades of energetic seminars and high-profile clients, but he's made spreading personal finance knowledge his mission the past couple years.Around 2010, Robbins began speaking with what would become 50 of the United States' top financial minds, including his longtime client Paul Tudor Jones, Bridgewater Associates founder <a href="http://www.businessinsider.com/ray-dalio-interview-henry-blodget-1-2017">Ray Dalio</a>, Vanguard founder Jack Bogle, and JP Morgan Asset Management CEO Mary Callahan Erdoes.One of the recurring themes he found is that the American public - even those who had accumulated a degree of wealth - needed to become better educated about their relationship to financial advisers, and how they could avoid losing thousands of dollars in the longterm.Robbins recently came by Business Insider's New York office <a href="https://www.facebook.com/businessinsider/videos/10154421220919071">for a Facebook Live Q&amp;A</a> where he discussed his latest book based on these interviews, "<a href="https://www.amazon.com/Unshakeable-Your-Financial-Freedom-Playbook/dp/1501164589?tag=bisafetynet-20">Unshakeable</a>," a much slimmer version of his 2014 book "<a href="https://www.amazon.com/MONEY-Master-Game-Financial-Freedom/dp/1476757860?tag=bisafetynet-20">Money: Master the Game</a>," with additional insights from Peter Mallouk, who was rated the No. 1 wealth adviser in the US by Barron's three times, and <a href="http://riabiz.com/a/2016/4/5/what-to-make-of-peter-mallouks-sweeping-deal-with-tony-robbins-and-where-the-unlikely-pairing-goes-from-here">who brought Robbins into his firm Creative Planning in 2016</a>."If you're watching right now, there's a new word you've got to learn. It's an F word: Fiduciary," Robbins told the audience. He explained that it's crucial to understand the difference between brokers, who will prioritize the interests of their firm, and fiduciaries, who are legally obligated to prioritize their client's interests.It's especially important to know, especially since <a href="http://www.businessinsider.com/fiduciary-questions-for-financial-adviser-2017-2">a proposed fiduciary rule</a> that would require all financial advisers to be fiduciaries looks like it will not pass under the Trump administration.Robbins pointed to seven questions in "Unshakeable" - developed with the help of Mallouk - that everyone needs to ask their financial adviser, whether they're looking to manage a few thousand dollars or significant wealth.<h2>1. 'Are you a registered investment advisor?'</h2>Registered investment advisors (RIAs) are fiduciaries, as opposed to brokers.Opponents to a fiduciary rule becoming law, like President Donald Trump's chief economic adviser Gary Cohn, find it to be an unnecessary restriction on how advisers can serve their clients, who may want to invest in higher-risk funds. But regardless of your approach or politics, you need to know who you're dealing with.<h2>2. 'Are you or your firm affiliated with a broker-dealer?</h2>There are approximately 310,000 financial advisers in the US, and about 10% of them are RIAs. "Unfortunately, I uncovered a gray part of the law," Robbins said. "And of the 31,000 people that are RIAs, literally 26,000 of them, so the vast majority, are what we call dually registered. That means they're a broker and they're an RIA."To see if your adviser can switch hats, Robbins recommends looking at the adviser's website and seeing if there's a sentence like, "Securities offered through [adviser's company name], member FINRA [Financial Industry Regulatory Authority] and SIPC [Securities Investor Protection Corporation]."<h2>3. 'Does your firm offer proprietary mutual funds or separately managed accounts?'</h2>"You want the answer to be an emphatic no," Robbins writes of the two products, which are less transparent and potentially more expensive than a typical mutual fund. &#xa0;"It probably means they're looking to generate additional revenues by steering you into these products that are highly profitable for them (but probably not for you)."<a href="https://vimeo.com/160298589">In a conversation with Mallouk recorded last year</a>, Mallouk noted that it becomes an easy choice to offer your firm's proprietary mutual funds to your clients when you'll be getting an extra commission, especially when you know the people managing those funds.<a href="http://www.investopedia.com/articles/mutualfund/08/managed-separate-account.asp">Separately managed accounts</a>&#xa0;are alternatives to mutual funds for wealthy individuals, and they do not come with prospectuses, meaning clients need to perform their own due diligence. If you're not a sophisticated investor who specifically wants this approach, you're better off steering clear.&#xa0;<h2>4. 'Do you or your firm receive any third-party compensation for recommending particular investments?'</h2>"This is the ultimate question you want answered," Robbins writes. "Because you need to know that your advisor has no incentive to recommend products that will shower him or her with commissions, kickbacks, consulting fees, trips, or other goodies."<h2>5. 'What's your philosophy when it comes to investing?'</h2>Robbins and Mallouk recommend avoiding high-risk investments for the average investor, but however you want to invest your money, you need to understand how it's being invested.<h2>6. 'What financial planning services do you offer beyond investment strategy and portfolio management?'</h2>You may only need investment help at your particular stage in life, but you should consider where you want to be headed."Ideally you want an advisor who can bring tools for tax efficiency in all aspects of your planning - from your investment planning to your business planning to your estate planning," Robbins writes.<h2>7. 'Where will my money be held?'</h2>"A fiduciary advisor should always use a third-party custodian [like Fidelity or Schwab] to hold your funds," Robbins writes. "You then sign a limited power of attorney that gives the advisor the right to manage the money but never to make withdrawals."This allows you to switch advisers whenever you'd like without having to move your accounts - and it also helps you keep from falling victim to a con man!<h3>Watch the full Facebook Live »</h3>&#xa0;<div></div> <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/tony-robbins-importance-achievement-fulfillment-skills-happiness-2016-12">TONY ROBBINS: Your happiness depends on mastering these two skills</a></h3> <div> <div> <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="VtZmlyNDE6s97LbpahNzY-vyhXpPzdp3" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div> </div> </div> </div>

7 questions to make sure your financial adviser is on your side, according to the one who helped Tony Robbins write his second book about money

<div class="KonaFilter image-container display-table"><div><div class="image"><a href="http://pictures.reuters.com/C.aspx?VP3=SearchResult_VPage&amp;VBID=2C0BXZ6QDCN54&amp;SMLS=1&amp;RW=1478&amp;RH=827">REUTERS/Jim Young</a></div></div></div> Brokerage Schwab just put out this statement blasting High-Frequency trading, calling it a "growing cancer." (Via <a href="http://www.twitter.com/ritholtz">Barry Ritholtz</a>)
Check it out.
-------------------------------
SAN FRANCISCO--(<a href="http://www.businesswire.com/" target="_blank">BUSINESS WIRE</a>)--Charles Schwab Corporation Chairman Charles Schwab and President and CEO Walt Bettinger posted the following statement on high-frequency trading at: <a href="http://cts.businesswire.com/ct/CT?id=smartlink&amp;url=http%3A%2F%2Fwww.aboutschwab.com%2Fpress%2Fissues%2F&amp;esheet=50837369&amp;newsitemid=20140403005386&amp;lan=en-US&amp;anchor=http%3A%2F%2Fwww.aboutschwab.com%2Fpress%2Fissues%2F&amp;index=1&amp;md5=ac0aab5c3409f59f5a1b690b92b059c5">http://www.aboutschwab.com/press/issues/</a>
High-frequency trading is a growing cancer that needs to be addressed
Schwab serves millions of investors and has been observing the development of high-frequency trading practices over the last few years with great concern. As we noted in an opinion piece in the Wall Street Journal last summer, high-frequency trading has run amok and is corrupting our capital market system by creating an unleveled playing field for individual investors and driving the wrong incentives for our commodity and equities exchanges. The primary principle behind our markets has always been that no one should carry an unfair advantage. That simple but fundamental principle is being broken.
High-frequency traders are gaming the system, reaping billions in the process and undermining investor confidence in the fairness of the markets. It's a growing cancer and needs to be addressed. If confidence erodes further, the fuel of our free-enterprise system, capital formation, is at risk. We can't allow that to happen. For sure, we still believe investing in equities is a primary path to long-term wealth creation, and we believe in the long-term structural integrity of the markets to deliver that over time for individual investors, which is all the more reason to be vigilant in removing anything that creates unfair advantage or undermines investor confidence.
On March 18, New York Attorney General Eric Schneiderman announced his intention to "continue to shine a light on unseemly practices in the markets," referring to the practices of high-frequency trading and the support they receive from other parties including the commodities and equities exchanges. He has been a consistent watchdog on this matter. We applaud his effort and encourage the SEC to raise the urgency on the issue and do all they can to stop this infection in our capital markets. Investors are being harmed, and they shouldn't have to wait any longer.
As Michael Lewis shows in his new book Flash Boys, the high-frequency trading cancer is deep. It has become systematic and institutionalized, with the exchanges supporting it through practices such as preferential data feeds and developing multiple order types designed to benefit high-frequency traders. These traders have become the exchanges favored clients; today they generate the majority of transactions, which create market data revenue and other fees. Data last year from the Financial Information Forum showed this is no minor blip. High-frequency trading pumped out over 300,000 trade inquiries each second last year, up from just 50,000 only seven years early. Yet actual trade volume on the exchanges has remained relatively flat over that period. It's an explosion of head-fake ephemeral orders - not to lock in real trades, but to skim pennies off the public markets by the billions. Trade orders from individual investors are now pawns in a bigger chess game.
The United States capital markets have been the envy of the world in creating a vibrant, stable and fair system supported by broad public participation for decades. Technology has been a central part of that positive story, especially in the last 30 years, with considerable benefit to the individual investor. But today, manipulative high-frequency trading takes advantage of these technological advances with a growing number of complex institutional order types, enabling practitioners to gain millisecond time advantages and cut ahead in line in front of traditional orders and with access to market data not available to other market participants.
High-frequency trading isn't providing more efficient, liquid markets; it is a technological arms race designed to pick the pockets of legitimate market participants. That flies in the face of our markets' founding principles. Historically, regulation has sought to protect investors by giving their orders priority over professional orders. In racing to accommodate and attract high-frequency trading business to their markets, the exchanges have turned this principle on its head. Through special order types, enhanced data feeds and co-location, professionals are given special access and entitlements to jump ahead of investor orders. Last year, more than 95 percent of high-frequency trader orders were cancelled, suggesting something else besides trading is at the heart of the strategy. Some high-frequency traders have claimed to be profitable on over 99 percent of their trading days. Our understanding of statistics tells us this isn't possible without some built in advantage. Instead of leveling the playing field, the exchanges have tilted it against investors.
Here are examples of the practices that should concern us all:
<ul>
<li class="bwlistitemmargb">Advantaged treatment: Growing numbers of complex order types afford preferential treatment to professional traders' orders, most notably to jump ahead of retail limit orders.</li>
<li class="bwlistitemmargb">Unequal access to information: Exchanges allow high-frequency traders to purchase faster data feeds with detailed information about market trading activity and the specific trading of various types of market participants. This further tilts the playing field against the individual investor, who is already at an informational disadvantage by virtue of the slower Consolidated Data Stream that brokers are required by rule to purchase or, even worse, the 15- to 20-minute-delayed quote feed they have public access to.</li>
<li class="bwlistitemmargb">Inappropriate use of information: Professionals are mining the detailed data feeds made available to them by the exchanges to sniff out and front-run large institutions (mutual funds and pension funds), which more often than not are investing and trading on behalf of individual investors.</li>
<li class="bwlistitemmargb">Added systems burdens, costs and distortions of rapid-fire quote activity: Ephemeral quotes, also called "quote stuffing," that are cancelled and reposted in milliseconds distort the tape and present risk to the resiliency and integrity of critical market data and trading infrastructure. The tremendous added costs associated with the expanded capacity and bandwidth necessary to support this added data traffic is ultimately borne in part by individual investors.</li>
</ul>
There are solutions. Today there is no restriction to pumping out millions of orders in a matter of seconds, only to reverse the majority of them. It's the life-blood of high-frequency trading. A simple solution would be to establish cancellation fees to discourage the practice of quote stuffing. The SEC and CFTC floated the idea last year. It has great merit. Make the fees high enough and they will eliminate high-frequency trading entirely. But if the practice is simply a scam, as we believe it is, an even better solution is to simply make it illegal. And exchanges should be neutral in the market. They should stop the practice of selling preferential access or data feeds and eliminate order types that allow high-frequency traders to jump ahead of legitimate order flow. These are all simply tools for scamming individual investors.
The integrity of the markets is at the heart of our economy. High-frequency trading undermines that integrity and causes the market to lose credibility and investors to lose trust. This hurts our economy and country. It is time to treat the cancer aggressively.
Charles Schwab, Founder and Chairman Walt Bettinger, President and CEO
About Charles Schwab
The Charles Schwab Corporation (NYSE:SCHW) is a leading provider of financial services, with more than 325 offices and 9.1 million active brokerage accounts, 1.3 million corporate retirement plan participants, 928,000 banking accounts, and $2.29 trillion in client assets as of February 28, 2014. Through its operating subsidiaries, the company provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab &amp; Co., Inc. (member <a href="http://cts.businesswire.com/ct/CT?id=smartlink&amp;url=http%3A%2F%2Fwww.sipc.org%2F&amp;esheet=50837369&amp;newsitemid=20140403005386&amp;lan=en-US&amp;anchor=SIPC&amp;index=2&amp;md5=a736862b6fbc5931aa3d50972b98eb90">SIPC</a>, <a href="http://cts.businesswire.com/ct/CT?id=smartlink&amp;url=http%3A%2F%2Fwww.sipc.org%2F&amp;esheet=50837369&amp;newsitemid=20140403005386&amp;lan=en-US&amp;anchor=www.sipc.org&amp;index=3&amp;md5=8546cc8b6addea127b99ed9e96c9adf1">www.sipc.org</a>), and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through Schwab Advisor Services. Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides banking and lending services and products. More information is available at <a href="http://cts.businesswire.com/ct/CT?id=smartlink&amp;url=http%3A%2F%2Fwww.schwab.com%2F&amp;esheet=50837369&amp;newsitemid=20140403005386&amp;lan=en-US&amp;anchor=www.schwab.com&amp;index=4&amp;md5=0e909df767c4b2041fb111cd5dbdee27">www.schwab.com</a> and <a href="http://cts.businesswire.com/ct/CT?id=smartlink&amp;url=http%3A%2F%2Fwww.aboutschwab.com&amp;esheet=50837369&amp;newsitemid=20140403005386&amp;lan=en-US&amp;anchor=www.aboutschwab.com&amp;index=5&amp;md5=9a8f126d4c705381f58dd1d0f62fb85b">www.aboutschwab.com</a>.
 
 
- See more at: http://pressroom.aboutschwab.com/press-release/corporate-and-financial-news/schwab-statement-high-frequency-trading#sthash.lQW3MpfS.UEXmLhun.dpuf

SCHWAB: High-Frequency Trading Is A Growing Cancer That Must Be Addressed

<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><a href="https://www.motifinvesting.com/?utm_source=bi&amp;utm_medium=advertorial&amp;utm_campaign=reinventingInvesting_100615" target="_blank"></a>iStockLove beer and want to invest in it? There's a motif for that.</div></div></div>If you're frustrated with your investments, you're not alone.Wall Street doesn't make it easy. You may find yourself limited to individual stocks or packaged funds that miss the mark and are overrun with fees. You dedicate endless hours to research, carefully crafting your strategy around your insights; but constant roadblocks prevent you from acting on them.But a company called&#xa0;<a href="https://www.motifinvesting.com?utm_source=bi&amp;utm_medium=advertorial&amp;utm_campaign=reinventingInvesting_100615">Motif Investing</a>&#xa0;is disrupting the status quo and changing the way you can invest your money.Taking Wall Street by storm, this <a href="https://www.motifinvesting.com?utm_source=bi&amp;utm_medium=advertorial&amp;utm_campaign=reinventingInvesting_100615">online broker</a> has captured a lot of attention, boasting an impressive board and lining up investors that include Goldman Sachs and J.P. Morgan.The online broker lets you translate your insights into investments at a low cost. It's taking a new approach to traditional investing with an intelligent, intuitive platform built around its customers and the way they think. In other words, Motif finally lets you invest in your insights. It's the future of trading in a way that works for you.But what does that mean? How can a broker be tailored specifically to you?Motif focuses on why and how you put your money into the markets. Its mission is to give you complete control and customization, so you have the opportunity to invest in the way you think, work, and see the world.You can invest in anything. Look around you: There are thousands of trading opportunities you may be overlooking because brokers haven't provided an easy, idea-based platform for turning those ideas into investments. And that's the core of Motif Investing's entire business.&#xa0;Worried about rising interest rates? There's a motif for that. Take advantage of fluctuating interest rates with the <a href="https://www.motifinvesting.com/motifs/rising-interest-rates1?utm_source=bi&amp;utm_medium=advertorial&amp;utm_campaign=reinventingInvesting_100615">Rising Interest Rates motif</a>. Looking to get in on a hot trend like connected cars? Motif lets you capitalize on your intuition without endless hours of research by easily selecting the <a href="https://www.motifinvesting.com/motifs/connected-car?utm_source=bi&amp;utm_medium=advertorial&amp;utm_campaign=reinventingInvesting_100615">Connected Car</a> basket of stocks.The online broker gives you access to more than 150,000 insights reflecting unique industry trends, trading strategies, and personal values. You're now able to put your money into concepts like Wearable Tech, Cybersecurity, and Battling Cancer with a single click.The low cost makes things easier, too. You shouldn't be charged excessively for putting your ideas to work. In investing, there are few things worse than drowning in fees. Motif comes in aggressively here, as well: You can trade a basket of up to 30 stocks based on trends for $9.95 total commission (33 cents per stock).&#xa0;The company's flagship product, the Motif, is your own customizable basket of up to 30 individual stocks or ETFs, based on a theme and intelligently weighted, which you can buy in one click. You have direct ownership and control in customizing your motif. Don't like something in your basket? Go ahead and change it.Motif has redefined investing by tailoring it to its customers. And the returns haven't been too shabby, either. With combined average annual returns of 16.3% since creation for the firm's equity-based motif portfolios1, the online broker is disrupting traditional investing, maybe for good.Although it's difficult to predict which way the markets may move, one thing is certain. Motif believes that in the future, investing will empower you to act on the insights you trust the most: your own.<a href="https://www.motifinvesting.com?utm_source=bi&amp;utm_medium=advertorial&amp;utm_campaign=reinventingInvesting_100615" target="_blank">Learn how Motif Investing is disrupting the status quo and changing the way you can invest your money.</a><div><div></div></div>This information is created by Motif Investing, Inc. (member SIPC) and provided for informational purposes only and is not a solicitation or a recommendation that any particular investor should purchase or sell any particular security. Motif does not assess the suitability, risk tolerance, or the potential value of any particular investment. You are responsible for understanding the risks involved with investing in securities and for all investment decisions you make.$9.95 total commission per motif transaction or $4.95 per stock for individual stock/ETF transactions. Other fees may apply.1Average annual return based on averaging the returns of 113 equity motifs from January 1, 2012 through July 31, 2015 and rounded to the nearest tenth of a percent. This data is based on past performance and is for illustrative purposes only. The results depicted are not intended to be representative of actual results or performance an investor should expect to achieve. The return is calculated by annualizing returns for each individual motif and then equally averaging them across motifs. The calculation includes 113 professionally built stock-based motifs from their creation date through July 31, 2015, and excludes recently created motifs asset allocation and customized motifs. The return calculation does take into consideration rebalancing of securities within each motif according to a motif's rebalancing schedule. These returns do not include transaction fees, commissions, or other charges, or dividends.&#xa0;This post is sponsored by <a href="https://www.motifinvesting.com?utm_source=bi&amp;utm_medium=advertorial&amp;utm_campaign=reinventingInvesting_100615" target="_blank">Motif Investing</a>.&#xa0;&#xa0;Find out <a href="http://www.businessinsider.com/sponsor-posts">more about Sponsored Content.</a>

This online broker is reinventing the way people invest

<div class="image-container float_right" style="width:479px"><div class="image"><a href="http://www.imdb.com/media/rm272865536/tt0265666">Touchstone/IMDB</a></div></div>FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors. For more visit Business Insider's new <a href="http://www.businessinsider.com/wealthadvisor">Wealth Advisor</a> vertical.
<a href="http://www.investmentnews.com/article/20130801/FREE/130809990">Understanding Family Dynamics Could Give Advisors An Edge</a> (Investment News)
Ellen Eichelbaum, a gerontology consultant, told Investment News that advisors that take the time to understand family dynamics will likely come away winners. She says advisors should watch for favoritism, or an adult child that feels like he/she bears most of the burden of care and address such issues before they explode. "You would be the best financial adviser in the world if you ask the right questions," Eichelbaum told Investment News. "You would get the client, as well as their children after they see that you've taken good care of their mother."
<a href="http://www.pimco.com/EN/Insights/Pages/Alternatives-for-Todays-and-Tomorrows-Market-Challenges.aspx">How Investors Can Incorporate Alternative Investment Strategies Into Their Portfolios </a>(PIMCO)
Jennifer S. Bridwell and Sabrina C. Callin at PIMCO think investors should consider alternative investment strategies. This is an environment in which returns from more traditional asset classes are expected to be lower and more volatile. In a Q&amp;A published on PIMCO's website both explain how investors can implement these strategies in their portfolios. 
Bridwell: Hedge funds and other alternative strategies can be employed to help investors limit risk or volatility and preserve returns in their portfolios, while private equity strategies can offer a significant opportunistic liquidity premium. As we have said, though, strategy and manager due diligence is very important and has been ramped up significantly by clients globally, much to the benefit of investors, we would argue.
Callin: Alternative strategies are quite heterogeneous. There are a wide variety of approaches, risk exposures and target returns and risk. The key to realizing the important diversification benefit that alternatives offer is understanding the risk exposures, both systematic and variable, and how they will likely correlate to the dominant risk exposures in one’s existing portfolio, especially during periods of stress. 
<a href="http://online.wsj.com/article/SB10001424127887323681904578640322042802396.html?mod=WSJ_WealthAdviser_WhatsNews_3_3_Left">Bank Of America's Plan To Raise Merrill Fees Has Upset Its Advisors</a> (The Wall Street Journal)
Bank of America plants to raise its fees for customers with managed accounts at Merrill Lynch's brokerage unit, according to the WSJ. These clients could end up paying 50% more a year and advisors are worried that this may cause clients to jump ship. "The increases come amid a $100 million platform overhaul at Merrill that is designed to make it easier for advisers to manage their clients' accounts and build portfolios, according to the firm," reports Corrie Driebusch at the Wall Street Journal.
"As part of that change, which brought together five separate platforms, Merrill also unified its fee structure, setting minimum fees based on the amount of money a customer has invested with the firm." Advisors have to change their fees by the end of 2015.
<a href="http://www.valuewalk.com/2013/08/fbi-arrests-men-ponzi-scheme/"></a><a href="http://www.newsday.com/feds-brian-callahan-adam-manson-charged-in-nearly-100m-ponzi-scheme-1.5810118?qr=1">Two Men Arrested For Running $100 Million Ponzi Scheme</a> (Newsday)
The FBI has charged Brian R. Callahan and Adam J. Manson in a 24-count indictment each with conspiracy to commit securities and wire fraud, according to Newsday. The two are accused of running a $100 million Ponzi scheme and using the funds to buy the Panoramic View Hotel &amp; Residence in Montauk, other homes and luxury automobiles. Some of the money was also reportedly used to pay back some investors. 
"The defendants used one of Long Island's landmarks, the Panoramic View Resort, to perpetuate a wide-ranging fraud," Eastern District U.S. Attorney Loretta Lynch said in a statement cited by Newsday. "Callahan gave his word that he would invest his clients' funds safely and responsibly in established vehicles. Instead, he simply stole the funds to prop up his partner's failing investment."
<a href="http://www.sec.gov/News/PressRelease/Detail/PressRelease/1370539740621#.Ufq7WVPMqRs">SEC Adopts Rules To Increase Protection For Investors That Have Assets With Broker-Dealers </a>(SEC)
The SEC has adopted stricter broker-dealer custody rules. This is intended to "substantially increase protections" for investors who have invested with broker-dealers that are registered with the SEC. 
"These rules will provide important additional safeguards for customer assets held by broker-dealers," said Mary Jo White, Chair of the SEC in a press release. "These rules will strengthen the audit requirements for broker-dealers and enhance our oversight of the way they maintain custody of their customers’ assets." Broker-dealers are expected to start filing new quarterly reports with the SEC and annual reports with Securities Investor Protection Corporation (SIPC) by the end of the year.

Financial Advisors Who Understand Family Dynamics Have An Edge

According to a new study by Edward Jones, one of the country's biggest retail brokerages, 63% of Americans don't know how rising interest rates will affect their retirement portfolios – their 401(k)s, IRAs, et al. – and 24% say they feel completely in the dark about what rising interest rates mean.
Bond yields have soared on the back of a big sell-off in the U.S. Treasury market this summer as markets price in a return to normalization following years of low rates and excess liquidity in the wake of the financial crisis.
And as Treasuries have declined in value, many bond investors have been caught off guard by something they aren't used to seeing: negative returns in their monthly statements.
Meanwhile, Wall Street is telling clients to brace themselves for more.
"The secular 30-yr bull market in bonds likely ended 4/29/2013," <a href="http://www.businessinsider.com/bill-gross-calls-top-of-bond-bull-market-2013-5">tweeted Bill Gross</a>, who runs PIMCO, the world's biggest bond manager. "PIMCO can help you navigate a likely lower return 2 - 3% future."
<div class="image-container float_right click-to-enlarge"><div class="image"><a title_source="AMG/Lipper, BofA Merrill Lynch Global Research" title_caption="In recent years, Americans have poured money into bond funds, which have been billed as a " safe-haven="" investment="" in="" the="" wake="" of="" financial="" crisis.="" class="zoomin" href="http://static1.businessinsider.com/image/5214d827ecad047f0e000012-960/screen%20shot%202013-08-21%20at%2011.07.00%20am.png"></a>AMG/Lipper, BofA Merrill Lynch Global ResearchIn recent years, Americans have poured money into bond funds, which have been billed as a "safe-haven" investment in the wake of the 2008 financial crisis.</div></div>Yet it's clear from the Edward Jones survey and other anecdotes that everyday Americans – and even more sophisticated investors – still don't know what the sell-off in the Treasury market means for their portfolios.
"I have had more than one high-net-worth broker tell me that his clients think the 'Risk Free Rate' means that you never see a mark down in the value of your Treasury portfolio," says ConvergEx Group chief market strategist Nick Colas. "They are only now discovering their error, and the realization is unwelcome."
(The "risk-free rate" is a theoretical concept used in ubiquitous financial calculations like the capital asset pricing model to value securities. The "risk-free rate" in these models usually refers to the yield on U.S. Treasuries, where the rate of return – the yield on the bond – is viewed as "riskless" because Treasuries don't contain default risk.)
If the sell-off continues, and the Federal Reserve does decide in September to begin to slow the pace of monthly bond purchases it makes under its quantitative easing program – as the consensus on Wall Street expects – more and more Americans will be waking up to the reality that bond funds can in fact lose money.
The full press release from Edward Jones is included below.
------------------------------------------------------------------
St. Louis, MO, – August 21, 2013 – According to a recent survey by <a href="https://www.edwardjones.com/cgi/getHTML.cgi?page=/en_US/index.html" target="_blank">financial services firm Edward Jones</a>, 63 percent of Americans don’t know how rising interest rates will impact investment portfolios such as 401(k)s, IRAs and other savings platforms. In fact, a full 24 percent say they feel completely in the dark about the potential effects.
“While it’s hard to know exactly where interest rates will go in the coming weeks and months, we believe over the long-term that rates will continue to rise," said Tom Kersting, Fixed Income Strategist at Edward Jones. “Fixed income is still an important part of an overall investment portfolio, but we want to remind investors that now is the time to consider buying shorter- and intermediate-term bonds, rather than just longer-term bonds. Our financial advisors are focused on making sure investors have properly laddered their fixed income investments across various maturities.”
Why Interest Rates Matter
Bond prices typically move inversely to interest rates. This means that as interest rates rise, the price, or value, of bonds will decrease. Higher interest rates mean higher current income for an investor purchasing new bonds. For investors who already own a significant amount of fixed income, rising rates and corresponding falling bond values may mean lower overall portfolio value. Shorter-term bonds, while offering lower income opportunities, are less impacted by the drop in bond value seen in longer-term investments.
The survey of 1,008 Americans conducted by ORC International, gauged how well they understood the impact potential rising interest rates would have on investment portfolios.
Age and Awareness
One-third of respondents between the ages of 18 and 34 replied they have “no idea” how interest rate changes will impact a portfolio. As respondents’ age increased, their level of awareness increased as well with the exception of the oldest age group. One-quarter of those 65 and older also indicated they had “no idea.”
Gender Breakdown
Men and women are evenly matched when it comes to respondents who, while understanding there will be some impact to portfolios, do not quite understand the specifics (40 percent and 39 percent, respectively). A division occurs among respondents who admit they “do not understand at all” what those impacts may be. While 29 percent of women admitted they do not understand the issue, just 19 percent of their male counterparts did.
Income Discrepancy
Respondents in the lowest income bracket were most likely to misunderstand the impact of rising rates, with 35 percent of Americans surveyed identifying as such. Just 13 percent of those with household incomes of $100,000 or more indicated the same.
Additional survey results are available upon request.
Editor’s Note
Survey was based on 1,008 telephone and cell phone interviews of U.S. adults conducted between July 26 and July 29, 2013. The margin of error was +/-3%. 
About Edward Jones 
Edward Jones provides financial services for individual investors in the United States and, through its affiliate, in Canada. Every aspect of the firm's business, from the types of investment options offered to the location of branch offices, is designed to cater to individual investors in the communities in which they live and work. The firm's <a href="http://www.edwardjones.com/en_US/locator/index.html" target="_blank">12,000-plus financial advisors</a> work directly with nearly 7 million clients to understand their personal goals - from <a href="http://www.edwardjones.com/en_US/products/education_saving/index.html" target="_blank">college savings</a> to <a href="http://www.edwardjones.com/en_US/products/retire/index.html" target="_blank">retirement</a> - and create long-term <a href="http://www.edwardjones.com/en_US/products/investments/index.html" target="_blank">investment solutions</a> that emphasize a well-balanced portfolio and a buy-and-hold strategy. Edward Jones embraces the importance of building long-term, face-to-face <a href="http://www.edwardjones.com/en_US/different/principles/index.html" target="_blank">relationships</a> with clients, helping them to understand and make sense of the investment solutions available today. 
Edward Jones, which ranked No. 8 on FORTUNE magazine's "100 Best Companies to Work For 2013," is headquartered in St. Louis. The Edward Jones Web site is located at www.edwardjones.com, and its recruiting Web site is www.careers.edwardjones.com. Follow on Twitter @EdwardJones. Member SIPC.

It's Crazy How Many Americans Have No Clue What Rising Interest Rates Are Doing To Their Investments

<div class="KonaFilter image-container display-table float_right"><div><div class="image">REUTERS/Lucas Jackson</div></div></div>The New York Department of Financial Services has released a draft for what the state's BitLicenses will look like, and they're going to change the face of Bitcoin in the U.S..
The greatest change is that anyone using a New York-sanctioned Bitcoin service will no longer be anonymous. This was something Bitcoin's earliest users said was essential to the digital currency's appeal, but which DFS, as well as other lawmakers, expressed strong distaste for at hearings earlier this year.
Now, any business whose essential service is buying, selling, or processing Bitcoin will have to maintain records of their customers' names and addresses, and check them against the Treasury's list of bad actors.
They'll also have to maintain reserve Bitcoin assets equal to 100% of however much they are holding on behalf of customers, and get bonded-up "in such form and amount as is acceptable to DFS for the protection of the licensee's customers." And they'll have to submit and publish a detailed consumer complaint policy that must include a provision allowing customers to pursue their complaint with DFS.
The draft proposal makes New York the first government entity to propose comprehensive Bitcoin regulations, and are likely to serve as a model for other states and even federal guidelines, given New York's role as the vanguard financial authority outside Washington - DFS Superintendent Ben Lawsky, for instance, was a critical player in the recent penalties delivered against BNP Paribas for violating sanctions. 
You won't need a license if you're a retailer accepting Bitcoin or other cryptocurrencies as a form of payment.
Here's the full text:
NY DFS RELEASES PROPOSED BITLICENSE REGULATORY FRAMEWORK FOR VIRTUAL CURRENCY FIRMS 
Framework Includes Consumer Protection, Anti-Money Laundering, and Cyber Security Rules for Virtual Currency Businesses 
 
Proposed Regulations Submitted for a 45-Day Notice and Comment Period to Solicit Public Feedback 
Benjamin M. Lawsky, Superintendent of Financial Services, today announced that the New York State Department of Financial Services (DFS) has issued for public comment a proposed "BitLicense" regulatory framework for New York virtual currency businesses. The proposed regulatory framework - which is the product of a nearly year-long DFS inquiry, including public <a href="http://www.dfs.ny.gov/about/hearings/vc_01282014_indx.htm" target="_blank">hearings</a> that the Department held in January 2014 - contains consumer protection, anti-money laundering compliance, and cyber security rules tailored for virtual currency firms. Superintendent Lawsky said: "We have sought to strike an appropriate balance that helps protect consumers and root out illegal activity - without stifling beneficial innovation. Setting up common sense rules of the road is vital to the long-term future of the virtual currency industry, as well as the safety and soundness of customer assets." 
In accordance with the New York State Administrative Procedures Act (SAPA), the proposed DFS rules for virtual currency firms will be published in the New York State Register's July 23, 2014 edition, which begins a 45-day public comment period. After that public comment period, the rules are subject to additional review and revision based on that public feedback before DFS finalizes them. Additionally, DFS is today immediately publishing a copy of the regulations on the website Reddit. Earlier this year, Superintendent Lawsky hosted an "Ask Me Anything" <a href="http://www.reddit.com/r/IAmA/comments/1ygcil/as_requested_im_ben_lawsky_superintendent_of_the" target="_blank">forum</a> on Reddit about DFS' work on virtual currency regulation, which generated more than 1,200 public comments. Links to the proposed rules are also being tweeted out from the DFS Twitter handle (@NYDFS) and Superintendent Lawsky's Twitter handle (@BenLawsky). Superintendent Lawsky said: "We recognize that - as the first state to put forward specially tailored rules for virtual currency firms - continued public feedback will be an important part of finalizing this regulatory framework. We look forward to carefully and thoughtfully reviewing public comments on our proposal."
 
The new DFS BitLicenses will be required for firms engaged in the following virtual currency businesses: 
<ul>
<li>Receiving or transmitting virtual currency on behalf of consumers;</li>
<li>Securing, storing, or maintaining custody or control of such virtual currency on the behalf of customers;</li>
<li>Performing retail conversion services, including the conversion or exchange of Fiat Currency or other value into Virtual Currency, the conversion or exchange of Virtual Currency into Fiat Currency or other value, or the conversion or exchange of one form of Virtual Currency into another form of Virtual Currency;</li>
<li>Buying and selling Virtual Currency as a customer business (as distinct from personal use); or</li>
<li>Controlling, administering, or issuing a Virtual Currency. (Note: This does not refer to virtual currency miners.) </li>
</ul>
The license is not required for merchants or consumers that utilize Virtual Currency solely for the purchase or sale of goods or services; or those firms chartered under the New York Banking Law to conduct exchange services and are approved by DFS to engage in Virtual Currency business activity. 
 
Key requirements for firms holding BitLicenses include:
 
<ul>
<li>Safeguarding Consumer Assets. Each firm must hold Virtual Currency of the same type and amount as any Virtual Currency owed or obligated to a third party. Companies are also prohibited from selling, transferring, assigning, lending, pledging, or otherwise encumbering assets, including Virtual Currency, it stores on behalf of another person. Each licensee must also maintain a bond or trust account in United States dollars for the benefit of its customers in such form and amount as is acceptable to DFS for the protection of the licensee's customers. </li>
<li>Virtual Currency Receipts. Upon completion of any transaction, each firm shall provide to a customer a receipt containing the following information: (1) the name and contact information of the firm, including a telephone number established by the Licensee to answer questions and register complaints; (2) the type, value, date, and precise time of the transaction; (3) the fee charged; (4) the exchange rate, if applicable; (5) a statement of the liability of the Licensee for non-delivery or delayed delivery; (6) a statement of the refund policy of the Licensee. </li>
<li>Consumer Complaint Policies. Each firm must establish and maintain written policies and procedures to resolve consumer complaints in a fair and timely manner. The company must also provide notice to consumers, in a clear and conspicuous manner, that consumers can bring complaints to DFS's attention for further review and investigation. </li>
<li>Consumer Disclosures. Companies must provide clear and concise disclosures to consumers about potential risks associated with virtual currencies, including the fact that: transactions in Virtual Currency are generally irreversible and, accordingly, losses due to fraudulent or accidental transactions may not be recoverable; the volatility of the price of Virtual Currency relative to Fiat Currency may result in significant loss or tax liability over a short period of time; there is an increased risk of loss of virtual currency due to cyber attacks; virtual currency is not legal tender, is not backed by the government, and accounts and value balances are not subject to FDIC or SIPC protections; among others. </li>
<li>Anti-money Laundering Compliance. As part of its anti-money laundering compliance program, each firm shall maintain the following information for all transactions involving the payment, receipt, exchange or conversion, purchase, sale, transfer, or transmission of Virtual Currency: (1) the identity and physical addresses of the parties involved; (2) the amount or value of the transaction, including in what denomination purchased, sold, or transferred, and the method of payment; (3) the date the transaction was initiated and completed, and (4) a description of the transaction. </li>
</ul>
o Verification of Accountholders. Firms must, at a minimum, when opening accounts for customers, verify their identity, to the extent reasonable and practicable, maintain records of the information used to verify such identity, including name, physical address, and other identifying information, and check customers against the Specially Designated Nationals ("SDNs") list maintained by the U.S. Treasury Department's Office of Foreign Asset Control ("OFAC"). Enhanced due diligence may be required based on additional factors, such as for high-risk customers, high-volume accounts, or accounts on which a suspicious activity report has been filed. Firms are also subject to enhanced due diligence requirements for accounts involving foreign entities and a prohibition on accounts with foreign shell entities. 
o Reporting of Suspected Fraud and Illicit Activity.Each Licensee shall monitor for transactions that might signify money laundering, tax evasion, or other illegal or criminal activity and notify the Department, in a manner prescribed by the superintendent, immediately upon detection of such a transactions. When a Licensee is involved in a transaction or series of transactions for the receipt, exchange or conversion, purchase, sale, transfer, or transmission of Virtual Currency, in an aggregate amount exceeding the United States dollar value of $10,000 in one day, by one Person, the Licensee shall also notify the Department, in a manner prescribed by the superintendent, within 24 hours. In meeting its reporting requirements Licensees must utilize an approved methodology when calculating the value of Virtual Currency in Fiat Currency. 
<ul>
<li>Cyber Security Program: Each licensee must maintain a cyber security program designed to perform a set of core functions, including: identifying internal and external cyber risks; protecting systems from unauthorized access or malicious acts; detecting systems intrusions and data breaches; and responding and recovering from any breaches, disruptions, or unauthorized use of systems. Among other safeguards, each firm shall also conduct penetration testing of its electronic systems, at least annually, and vulnerability assessment of those systems, at least quarterly.</li>
</ul>
 
<ul>
<li>Chief Information Security Officer. Each Licensee shall designate a qualified employee to serve as the Licensee's Chief Information Security Officer ("CISO") responsible for overseeing and implementing the Licensee's cyber security program and enforcing its cyber security policy.</li>
</ul>
 
<ul>
<li>Independent DFS Examinations: Examinations of licensees will be conducted whenever the superintendent deems necessary - but no less than once every two calendar years - to determine the licensee's financial condition, safety and soundness, management policies, and compliance with laws and regulations. </li>
<li>Books and Records: Licensees are required to keep certain books and records, including transaction information, bank statements, records or minutes of the board of directors or governing body, records demonstrating compliance with applicable laws including customer identification documents, and documentation related to investigations of consumer complaints. </li>
<li>Reports and Financial Disclosures, Audit Requirements. Each firm must submit to DFS quarterly financial statements within 45 days following the close of the Licensee's fiscal quarter. Each firm must also submit audited annual financial statements, prepared in accordance with generally accepted accounting principles, together with an opinion of an independent certified public accountant and an evaluation by such accountant of the accounting procedures and internal controls of the firm within 120 days of its fiscal year end. </li>
<li>Capital Requirements: Necessary capital requirements will be determined by DFS based on a variety of factors, including the composition of the licensee's total assets and liabilities, whether the licensee is already licensed or regulated by DFS, the amount of leverage used by the firm, the liquidity position of the firm, and extent to which additional financial protection is provided for customers. </li>
<li>Compliance Officer. Each Licensee shall designate a qualified individual or individuals responsible for coordinating and monitoring compliance with NYDFS' BitLicense regulatory framework and all other applicable federal and state laws, rules, and regulations. </li>
</ul>
 
<ul>
<li>Business Continuity and Disaster Recovery. Each Licensee shall establish and maintain a written business continuity and disaster recovery plan reasonably designed to ensure the availability and functionality of the Licensee's services in the event of an emergency or other disruption to the Licensee's normal business activities.</li>
</ul>
 
<ul>
<li>Notification of Emergencies or Disruptions. Each firm must promptly notify DFS of any emergency or other disruption to its operations that may affect its ability to fulfill regulatory obligations or that may have a significant adverse effect on the Licensee, its counterparties, or the market.</li>
</ul>
 
<ul>
<li>Transitional Period. Applications for the license will be accepted beginning on the date the proposed regulations become effective. Those already engaged in virtual currency business activity will have a 45-day transitional period to apply for a license from the date regulations become effective. The superintendent will issue or deny the license within 90 days of a complete application submission.</li>
</ul>
 
In August 2013, DFS announced its <a href="http://www.dfs.ny.gov/about/press2013/memo1308121.pdf" target="_blank">inquiry</a> into the appropriate regulatory guidelines for virtual currencies. As part of an ongoing fact-finding effort informing that inquiry, the Department held <a href="http://www.dfs.ny.gov/about/hearings/vc_01282014_indx.htm" target="_blank">public hearings</a> in January 2014. In March 2014, the Department issued a<a href="http://www.dfs.ny.gov/about/po_vc_03112014.pdf" target="_blank">public order</a> announcing it will be considering formal proposals and applications for the establishment of regulated virtual currency exchanges operating in New York.
 
To view a copy of the proposed DFS BitLicense framework, please visit, link<a href="http://www.dfs.ny.gov/about/press2014/pr1407171-vc.pdf" target="_blank"></a>. Only comments formally submitted pursuant to the SAPA process will be considered in connection with the promulgation of the proposed regulations.

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