The Black Book of Alternative Investment Strategies

By Sean Erlenbeck

This is a great resource for those just getting into investments such as real estate, oil/gas, precious metals, life-insured banking or learning about self directed IRAs. The book also covers how to reduce your tax burden.

Those with experience will also get many great "nuggets" of information to help them fine-tune their wealth building.

The Ultimate Blueprint for investing strategies outside the stock market.

With a Foreword by Robert A. Wiedemer, Author of the NYT and WSJ Bestselling book Aftershock, The Black Book of Alternative Investing divulges 12 little-known ways to invest outside the stock market to diversify your portfolio (while keeping risk in control). This is what you never knew about investing, and the shockingly simple wealth strategies used by the ultra-rich.

• Language: English
• Publisher: Sean Erlenbeck
• Release date: May 31, 2015
• ISBN: 9781310347139

Sean Erlenbeck

The Investor Advisory Network Team isBuilding an Investment Community for You.Investor Advisory Network was founded by Dave Risi and Sean Erlenbeck. We both have a passion for doing the right thing. Our mission is to provide our members investment strategies that are proven, realistic and profitable. We firmly believe the strategies we offer will no longer be considered alternative but rather Main Street going forward.

Book preview

The Black Book

of Alternative Investment Strategies

12 Little-known Ways to Invest Outside the Stock Market

Sean Erlenbeck & David S. Risi

Copyright 2014 by Investor Advisory Network, LLC

Smashwords Edition

All rights reserved. No part of this book may be reproduced or used in any manner whatsoever, except in the case of brief quotations embodied in critical articles or reviews, without the express written permission of the Investor Advisory Network, LLC. For more information write to Investor Advisory Network, LLC, 14855 Van Dyke #444, Plainfield, IL 60544 or visit us at www.investoradvisorynetwork.com.

DISCLAIMER

This e-book is for informational purposes only, and is not intended as legal, accounting or investment advice. The information in this e-book is for your general use; it is not advice and should not be considered as such. It should not be taken as legal or investment advice or in the place of legal or investment advice. This publication and the accompanying materials are designed to provide general information in regard to the subject matter covered in it. It is provided with the understanding that the Investor Advisory Network, LLC is not engaged in rendering legal, accounting, investment or other professionals' opinions. If legal advice or other expert assistance is required, the service of a competent, qualified professional should be sought. We do not represent, warrant, undertake or guarantee: that the information in this e-book is correct, accurate, complete or not misleading; that the use of the guidance in this e-book will lead to any particular outcome or result; or, in particular, that by using the guidance in the e-book you will increase your cash flow, profits or otherwise experience monetary gain. Investor Advisory Network, LLC will not be liable to you in respect of any losses arising out of any event or events beyond our reasonable control. We will not be liable to you in respect of any business losses, including, without limitation, loss of or damage to profits, income, revenue, use, production, anticipated savings, business, contracts, commercial opportunities or goodwill.

Reproduction or translation of any part of the information contained herein, in any form or by any means, without the written permission of Investor Advisory Network, LLC is unlawful.

Table of Contents

FOREWORD BY ROBERT A. WIEDEMER

Contributor: Robert A. Wiedemer, Managing Partner, Absolute Investment Management

CHAPTER 1: A NOTE FROM SEAN ERLENBECK

Sean Erlenbeck, Co-Founder, Investor Advisory Network

CHAPTER 2: A NOTE FROM DAVE RISI

Dave Risi, Co-Founder, Investment Advisory Network

CHAPTER 3: SELF-MANAGED IRA: TAKING CHARGE OF YOUR RETIREMENT

Contributor: Easy IRA Solutions

CHAPTER 4: STRUCTURED TO WIN: HOW TO MAKE MORE AND KEEP MORE OF YOUR INCOME FOR YOURSELF AND YOUR FAMILY TO ENJOY FOREVER

Contributor: Drew Miles, Esq., President, Pathfinder Business Strategies

CHAPTER 5: WHAT YOU NEED TO KNOW BEFORE INVESTING IN GOLD AND SILVER

Contributor: Doyle Shuler, Gold Silver Alliance

CHAPTER 6: INVESTING IN OIL & GAS: AMERICA'S NEW GROWTH ENGINE

Contributor: Chris Faulkner, President & CEO, Breitling Energy Corporation

CHAPTER 7: RESERVE CAPITAL STRATEGY: THE #1 STRATEGY OF THE WEALTHIEST FAMILIES IN AMERICA

Contributor: Sean Briscombe, CLA, CMPS, Senior Consultant & Wealth Strategist, National Institute of Financial Education

CHAPTER 8: THE ASSET OF THE CENTURY

Contributor: Samuel T. Prentice, Barefoot Retirement

CHAPTER 9: INTRODUCTION TO FOREX TRADING

Contributor: Joshua A. Bevan, Managing Director, BlackBox Alpha

CHAPTER 10: THE MOBILE HOME PARK INDUSTRY AS AN INVESTMENT VEHICLE

Contributor: Frank Rolfe, Vice-President, MHP Funds

CHAPTER 11: INVESTING IN SELF STORAGE UNITS

Contributor: Scott Meyers, Owner & President, Alcatraz Storage

CHAPTER 12: THE POWER OF CASH FLOW INVESTING

Contributor: Jeremy Roll, Roll Investment Group & FIBI

Contributor: David Coe, Founder, Freedom Growth

CHAPTER 13: WEALTH THE RIGHT WAY

Contributors: JP Newman and Adrian Lufschanowski, Owners & Operators, Thrive, FP

CHAPTER 14: CREATE AND PROTECT WEALTH WITH REAL ESTATE

Contributor: Jeff Ballard

CHAPTER 15: NO MATTER WHAT IT TAKES STRATEGY FOR REAL ESTATE SUCCESS

Contributor: Peter Vekselman, Real Estate Investing Coach

End Notes

Foreword by Robert A. Wiedemer

Stocks will always go up over time. At least that's what just about every stockbroker and financial analyst will tell you. Ignore the valleys, because the peaks will always be higher.

It was good advice—for about 20 years. Between 1980 and 2000, picking stocks was easy. A broker could pick a portfolio of stocks by throwing darts and probably earn 10 to 15 percent returns every year. No wonder expert analysts rated 95 percent of stocks a buy. It was a great time to be a Wall Street broker.

But consider this: when adjusted for inflation, the Dow in early 2014 is more or less where it was in 2000. In the last 14 years, stocks have essentially gone nowhere. In fact, if you look at the chart below, you'll see that—when adjusted for inflation—nearly all the growth in the stock market in the last 65 years came between 1980 and 2000. In the other 45 years, stocks have barely grown at all.

Still, you might argue, there's something to be said for keeping your money current - better for an investment to keep up with inflation than to be losing value. That's true; but consider how precarious even the stock market's modest gains are. The U.S. Federal Reserve is currently pumping $75 billion dollars every month into the economy in order to boost activity in the stock market. That's $900 billion a year. You would think with all that stimulus, the stock market would be soaring.

Stocks will always go up over time, we are told. But the 1980s and '90s were not normal. Adjusted for inflation, stocks have gone nowhere since 2000.

But that's because we're still recovering from the 2008 financial crisis, you might say. First of all, the financial crisis was more than five years ago now. Aren't you a little tired of waiting for this so-called recovery to make its way into your portfolio?

Secondly, and more importantly, back up a few years from the 2008 crash and what do you see? Another crash we had to recover from. That time it was the Internet bubble, the bubble no one saw coming until it was too late, the bubble that would never happen again. Sound familiar?

Now let's take a look at the facts on the ground in 2014. The Fed has created a massive dollar bubble, quadrupling the money supply in six years. The national debt is exploding, now over $17 trillion in early 2014 and still accumulating by more than a half-trillion dollars each year. The stock market appears to be increasingly divorced from reality, with nearly 30 percent price gains for the S&P 500 in 2013 in spite of single-digit earnings growth. It's easy to understand why there is growing concern that stock prices are reaching unsustainable levels, and that another crash might not be too far off.

You may share that concern and you may not. Either way, if my investment is only keeping pace with inflation over a 14-year period, I expect a lot less risk than that.

Wait a second. If stocks in general aren't growing much, then the key is just to pick the right stocks, right? Well, yes and no. It's true that some stocks do better than others. It's great to invest in a Coca-Cola or McDonald's in the early days and watch it take off. However, when stock prices drop, they tend to drop across the board. If you have a diversified portfolio of stocks—as most stock owners do—your portfolio will tend to go up and down with the stock market in general.

The key is not just diversity among stocks, but diversity among asset classes. That doesn't just mean stocks and bonds, either, but a whole assortment of investment options. There are assets that may perform well even when stocks and bonds are suffering. However, they may not be obvious to an investor whose experience is limited to ticker symbols and Treasury Direct.

While inflation (and the rising interest rates that come with it) is poison to stocks and bonds, for example, it is favorable for precious metals like gold and silver. This is an important consideration when the Federal Reserve is expanding the money supply by almost $1 trillion every year. If the U.S. dollar falls in value, it has heavy implications for energy commodities and foreign exchange. How can you take advantage of that if you are only investing in U.S. stocks and bonds?

This book will hopefully help you overcome this problem. While it might feel safe to stick with traditional investments, the last decade or so should make it very clear that the stock market isn't safer than any other kind of investment, and is even more risky than some. Alternative investments will be very important. The days of earning double-digit returns every year with little or no effort are over. It's time for investors to get educated, take control of their financial future, and not be fooled by Wall Street experts who keep feeding them the same old, tired line from the 1980s and '90s.

No investment is risk-free. With the help of this book and a little diligence, though, you can learn to manage risk and reap rewards while other investors blindly ride the stock market roller coaster -wherever it takes them.

Contributor: Robert A. Wiedemer, Managing Partner, Absolute Investment Management

Author of New York Times and Wall Street Journal Bestseller Aftershock and Wall Street Journal Bestseller Aftershock Investor

www.aftershockpublishing.com

www.absolute-im.com

Chapter 1: A Note from Sean Erlenbeck

This is what your financial planner never told you about investing, and the shockingly simple wealth strategies that guarantee you'll get a fair return on your money... without increasing your risk.

In 2010 just after the market crashed due to an unstable housing market, I met Dave. At first we were business associates. He was selling safety software and I was a safety manager for a general contractor just outside of Chicago, Illinois.

At that time my soon-to-be good friend and business partner asked me, Are you investing in silver? I asked, Why? He replied After what happened with the Stock Market I am getting out and investing in other assets, like gold and silver. He mentioned that the price of gold and silver would be on the rise and that I should invest as insurance against the devaluation of the dollar.

Of course I thought his doomsday mentality was exactly that - a paranoid person who was obviously distraught by the recent market crash. I mean, the Stock Market always goes up over time, right? I decided that I would keep my money right where it was, in the Stock Market. I felt good about my financial position. I was doing everything my Financial Planner told me to do. As a matter of fact, my guy said that I was one of the few investors that really understood that no matter what, the market always goes up. I was contributing to my 401k at the max rate; I had ROTH IRAs in both my wife's and my accounts. I started a 529 savings plan for my son as soon as he was born. Heck! I even had a Pension Plan with the union in which I was vested. I had it all figured out. Or did I?

Fast forward two years... In 2012, I was just starting to recover the losses I suffered in the Stock Market. The DOW was approaching 13k and I needed to get up to pre-2008 levels of 14k before I would break even. At this point, it dawned upon me that I had been waiting FIVE years to make ZERO interest from my traditional investments.

After realizing this, I asked my now-good-friend Dave during a business conference what he was doing with his finances. He showed me a website called the Elevation Group (EVG). I didn't know it yet but this would change life as I knew it. The Elevation Group is a website that introduces ways to invest your money other than the Stock Market.

When I returned home I immediately needed to find out more about the Elevation Group. For the first time in my life, the education I was getting made absolute sense to me. I didn't feel like I was just handing over my money to a Financial Planner and hoping they'd make me a killing in the stock market, but rather I was educating myself and gaining confidence to go out on my own and invest for myself in areas I had thought were reserved only for the rich.

Financial freedom was a new word for me and I was determined to make it my credo!

At this time I was ready to make some moves. EVG offered one educational video for each investment strategy, so I started to contact the businesses that offered the type of investments in which I was interested.

The first was a company that specialized in Infinite Banking, a concept made famous by R. Nelson Nash. This particular investment strategy made me very nervous as there were a lot of uncertainties and a heck of a lot of other companies that were doing the same thing but using different insurance policies. In the end, I did not invest in this concept as I felt I did not receive enough education from my source to stick my hard-earned money into. I did, however, think it was an intriguing strategy that needed to be explored further.

I then moved to the next strategy that I felt would benefit me: converting my traditional IRA and ROTH IRAs to a Self-Directed ROTH IRA. This strategy allows an IRA to invest in tangible assets such as gold and silver or Real Estate. Again, I was given one source and that source did it one way.

Further education on this subject led me to the fact that there are two way to accomplish this. One is to have an LLC own the IRA, commonly called a checkbook IRA. The other is to have a custodian manage the IRA, with you being the owner. I decided to go with the custodian as I did not wish to further complicate my life by creating entities, which I'd never done. Later I ended up transferring all my assets to a checkbook or LLC style. The reason why will be revealed further in this eBook.

My last investment was gold and silver. It's a pretty simple process, but I have to admit I was very nervous doing it the first time. (Wouldn't it be great to read reviews and people's experiences that have done like investments, first? This will be a major area for subscribers to our website as our membership grows and we start receiving feedback from our members.)

So, what did I do with all of the money I had in my IRA?

Before I established my Self-Directed IRA, I contacted my Financial Planner and asked if I could buy physical gold and silver. I was told I could not. If I wanted to invest in metals I would have to purchase Exchange-Traded Funds (ETFs), such as SLV or GLD. Well, if you remember, it took me FIVE years to make my money back in the Stock Market and I wanted out. Buying ETFs was not an option for me.

I then asked if I could invest in Real Estate. My Financial Planner told me sure; we have dozens of REITS for you to choose from. REITS (Real Estate Investment Trust) is another STOCK in the STOCK MARKET. Again, I wanted to invest in real physical assets. Metal ETFs and REITS are not backed by the real asset; they are certificates, much like the dollar, saying you have the right to sell for a value. However, if that value tanks (think Stock Market), you are out of that value.

This is the reason I had to leave my Financial Planner and convert my IRA monies to a Self-Directed format. The conversion process to a Self-Directed IRA would now allow me to invest in just about any asset class I wished. This was the reason I did it! The real beauty about this conversion is just how easy it is to execute. Sure there was paperwork but in the end I, not a financial planner, had control of my money.

After purchasing some gold and silver, I decided to invest in Real Estate - the real, tangible kind. I was well on my way to investing all my retirement money in real assets. All was right in the world for me.

I had a company all lined up, through the educational websites I joined, in which to invest. I contacted this company that did mostly Hard Money lending and soon figured out that they were only taking a minimum investment of 50k for a non-equity position and 100k for an equity position. I had the 50k but did not want to spend such a large percentage of my current holdings so I held off and thought about it for a couple of weeks. This was the beginning of my problems. I wasn't rich. I didn't have the cash to be spending $50,000.00 on one investment. Perhaps I made a mistake.

During this time a new educational video was released on my pay site. Low and behold, it was a question and answer format and the guest was the Hard Money lending company with which I was trying to do business. I immediately marked the date that it would be live and sat down to almost two hours of great investment education.

Towards the end of the session, the owners of the company made a very disturbing announcement. They were now only able to take a minimum investment of $100k! This was quite a blow for my plans. Not only did I not have $50k, but now I needed more? Herein lay Problem #2. I was dead in the water, holding a large chunk of my retirement nest-egg with nowhere to invest. I would never find an investment company that was willing to take my seemingly paltry offerings. Plus, I didn't know anybody else other than those suggested by my investment site. I paid for this education but was left literally holding my money with nowhere to invest it.

Dave, my buddy, had run into a problem with the very same company but had a completely different problem. He had the money but was on a waiting list to invest it! There were so many investors watching the same video that the investment company didn't have a fund to invest in. That was Problem #3.

Now both of us were stuck holding the bag-o-cash, literally. Luckily, Dave had other resources that were looking for investors in Real Estate.

This is when the light went on! Dave and I could find investors for exactly the kind of investments that we wanted to invest in, at just about any dollar amount. It was the ah-ha! moment. We needed a network of investors that knew other companies that are willing to invest with us.

However, finding these investments is hard work and consumes a lot of time and energy. I was lucky; I had a good friend who already knew some good people with whom I felt comfortable investing. If I didn't I would of had to spend an incredible amount of time searching on the Internet, calling contacts and networking at local meetings and national conferences. I would then need to compile a list of potential investments and proceed on to the vetting process.

It is important to me to know the people with whom I am investing or at least know someone who has invested, as I'm sure you do, too. I like my money and the thought of giving it to some Ponzi-scheming thief is absolutely gut wrenching.

Again, I saw an opportunity to help people that are looking for other ways to invest their hard-earned money without feeling like they are getting into some sort of rip-off. We all want to make an honest buck.

The solution was to create a website called the Investor Advisory Network (IAN) that contains lists of responsible alternative investment contacts, individually graded through our network of customer reviews. These reviews will be generated from real people that will basically vouch for that company so you feel comfortable investing your money.

Back to that ah-ha! moment, right?

Let me recap what my driving factors were for creating this website:

1. High buy-in minimums prevented me from investing.

2. Demand could not meet supply, even if I had the money.

3. Education was too vague.

4. The Stock Market was proving unreliable and I didn't want my entire nest-egg in it.

5. I felt like my Financial Planner was just running me through the paces.

6. I wanted to be in control.

We are offering independence from financial planners, and the self-reliance that you have the knowledge and education to invest yourself. Convenience will be our motto; you will be able to find a company in an area that interests you.

We are selling self-sufficiency for one's wealth and retirement goals through private investing opportunities that can be easily researched through vendor-led video instruction, verified by a user-generated rating system and perused by the click of a button.

We decided to do all of this leg-work for you. We will provide a list of companies for you to invest with. You will be able to sort our list of advisors by investment amount, investment category and much more.

We will also try to make it as comfortable as possible by doing as much of the vetting process as we can.

Most of our advisors will have educational videos, pod-casts or material to read within their company profile on our site, not to mention a contact name and number if you prefer the old way.

On top of it all, we are going to build a solid community that can recommend investment strategies as well as critique any current companies in which we invest. Any customer that engages with one of our advisors will be able to submit a review, good or bad. This information will be available to our subscription customers.

Sound good?

By now you are probably asking yourself, Why would I want to invest in the strategies listed on the Investor Advisory Network? Well, the answer is simple. Dave or I do not claim to be an investment guru in any of the strategies mentioned in this e-book. What we are claiming is that we will seek out the most honest, trustworthy and team-minded individuals, companies, syndicates and groups that we can find and bring them to you.

These folks will be the ones to educate you on the particular strategy in which they are experts. You will be able to find it in one place - on IAN, the Investor Advisory Network.

www.investoradvisorynetwork.com

As the site grows we will develop a community of well-seasoned veterans like you will soon be, that will bring us, the NETWORK, new strategies, a larger base of the same strategy or perhaps educational materials.

Dave and I are literally giving away this e-book for the price we are asking. The amount of educational information we have given you today would be well worth 100x the cost if you were to sign up for individual classes.

Dave and I hope to see you at the site - learning, contributing and above all, earning!

Thank you for listening.

Sean Erlenbeck, Co-Founder, Investor Advisory Network

Chapter 2: A Note from Dave Risi

I have always been a bit of a skeptic when it comes to investing in stocks and bonds. They go up and down in price with little to no controls or ways to influence to my returns. Additionally, paying a Financial Planner 2% of my account each year regardless of the returns always rubbed me the wrong way. You never know if they are looking out for your best interests or just pushing you into the funds/stocks where they make the most commission.

After years of moving my money from broker to broker and losing 30% in the crash of 2007, I decided to take matters in my own hands. I started reading everything I could get my hands on. One of the first books I read, which was a HUGE wake-up call for me, was Aftershock by Robert A. Wiedemer. The book educated me on the economy, bubbles, the Fed and how best to protect my savings and family from financial ruin.

After discussing the book with several friends of mine, one of them recommended Rich Dad Poor Dad, written by Robert Kiyosaki. This single, simple-to-read book changed my life forever. It was as if I was seeing the world through a completely different set of lenses.

These two books ignited a fire in me that I have never felt before. It created a passion for taking control of my own life, investing and wealth strategy. Before becoming educated, I didn't even know what a wealth strategy was!

The first step was to evaluate my tax strategy. My previous accountant's famous line was, You just have to pay more in taxes if you make more money. I hated hearing that, but lived with it for ten years. All of that was about to change. I found an accountant that got it. He understood the tax code and huge benefits that is available to business owners and investors. He saved me $8,000 in taxes in our first 30-minute conversation! That would have saved me $80,000 over the past ten years! It kills me to think about it even to this day.

I went back to my old accountant and told him the correct statement should have been, You just have to get a better tax strategy if you make more money. I then fired him.

Next, I was off to tackle gold and silver. I am not a gold bug, but I wanted to have some gold and silver as a hedge against inflation, and more importantly to be able to take care of my family if there was hyperinflation or a currency crash.

This was a number of years ago, before there was a lot of information available on how to buy and store precious metals. I spent countless hours online and talking with their brokers and they confused the hell out of me. They all quoted different spot prices and had their own gimmicks on why their prices were the best, but there were huge ranges in the prices. Should I just use the cheapest dealer? What about shipping or storage? Should I buy Junk silver, bars, Silver Eagles, or numismatics? What do I do when I want to sell the metals?

After becoming quite frustrated with all of the sales pitches and feeling I was not receiving good, usable information, I decided to try to find someone local that would be willing to educate me about it all. This is how I met Marc. He was the owner of a local coin shop who had over 30 years of experience in buying and selling precious metals. He couldn't have been any nicer. We met at his shop at 10:00 am on a Tuesday since it was slow at that time. He spent nearly two hours showing me his shop (he was very proud of the business he built) and gave me an education on precious metals that far exceeded my expectations. I was amazed by the level of ignorance I had - seriously! To this day I always wonder how much people really know before they buy gold and silver. If you are looking to buy precious metals, ask yourself the following:

Why am buying it?

What is the goal?

Do I buy it with my IRA, after tax money, both?

How will I store it?

How/when do I sell it?

Please do not just jump in and start buying. Our chapter on Gold and Silver covers a lot of these questions.

The last item that I considered to be my foundation was to move my 401K to a Self-Directed IRA. There are several methods for Self-Directed plans, and they all have their pros and cons. I chose to work with EasyIRA on this and they helped make the process a lot simpler and quicker than I had expected.

Now I don't recommend this for everyone, but I actually rolled over my and my wife's 401K into a Roth IRA. When you convert a pretax plan like a 401K to an after-tax plan like a Roth, all of the money rolled over was considered salary for that tax year - ouch! It was a large nut to crack, but now that it is converted, this money will continue to grow and will be withdrawn tax-free.

Prior to making this conversion, I consulted with my new tax guy and we put together tax-saving strategies that saved me a lot of money that I would have had to pay in taxes if I didn't have the plan.

With my solid foundation and money in my IRA accounts, I was ready to jump in and start investing in alternative investments. I felt paralyzed and afraid to take the first step. Who can I trust? How do I know which investment is best? How do I manage it all?

I then discovered the key to successful investing: NETWORKING. Getting to know experts and mentors in the types of investments you are looking to invest in is the single, most important factor in the level of success you will have. Why make the same mistakes others make when starting to invest? Go to the experts and have them educate and guide you.

Like many of you, I joined a couple membership sites and newsletters. The information they provided was beneficial, but there was only one person for each of their types of investments. This led me to the same questions - can I trust them? Are they the best at what they do? Why aren't there options for me - why