News & Events

Want to open an account?

Find an office.

September IRA Insights: Beardstown Ladies Revisited

By: Catherine Wynne

Back in 1983, a group of 16 professional women formed the Beardstown Business and Professional Women's Investment Club in Beardstown, Illinois. The intent of the club was to understand and take control of their own investments. For these women this was usually left to the man of the house. The focus of the group was on learning as well as investing.

Over the course of the club's existence, the Beardstown women penned a best-selling book, The Beardstown Ladies' Common-Sense Investment Guide, and reported high returns on securities-based investments. The return claims have not been thoroughly documented, but the group did have an excellent investment premise. That premise was "invest in what you know". The Beardstown women researched what they invested in and often focused on companies with goods and services that appealed to them. Learning the language and the methods of securities analysis was important groundwork for these women.

Fast forward to 2008. The Beardstown ladies are still in existence and the novelty of women investing their own money and understanding their investments has passed. Investing one's own money, for many women, is now a necessity. The difference between "then" and "now" is that there is no longer a focus on securities-based investments. Even now however, women's retirement account sizes still trail behind men's, so it is particularly important for everyone to learn the language and rate of return analysis for alternative retirement investments.

The term "alternative investments" sounds sort of Bohemian but in reality is a broad term for "non-security" based investments. Real estate purchases, pre-construction contracts, options, trust deeds, leases and more all fall within this category. Other examples include note brokering, private stock, bank IPOs and private notes. All have their specific terminology and methods for analyzing rate of return. The key to making these investments within a tax-deferred/free vehicle is a truly self-directed IRA.

In my position as a self-directed IRA administrator, I have seen many creative and successful investments assembled by groups of women. Most of these women are real estate brokers investing in what they know - real estate. My daughters routinely partner their Roth IRAs to make hard money loans to borrowers/investors needing quick short-term money. There is the woman who invested in her friend's innovative child and maternity clothing store, the women who partnered on a pre-construction purchase and another group who invested in a local startup tea company.

The Beardstown group had the right idea-educate yourself and invest in what you know. Although daily quotes of stock prices, P/E ratios and an endless supply of data on publically held companies are available, trust in the stock market has diminished. Alternative investments, on the other hand, require due diligence and a basic understanding of the workings of the investment, but have the benefit of a true sense of tangibility and control for the IRA holder. Which is better? Only the individual can decide.

What women should take away from this article is this: take a look at your network of acquaintances and your knowledge base. What do you regularly buy and what services do you use throughout your day? Is there something you or a group of friends could invest in that would be closer to home than shares of stock in a company you know nothing about? Knowledge, innovation and a broad view are the keys to investing successfully. Consider the power of making these investments within an IRA and take advantage of tax-free growth.

Catherine Wynne is a principal in Entrust New Direction IRA, Inc., a licensee of The Entrust Group (TEG). TEG has been, since 1981, the leader in self-directed IRA, Roth, SEP and 401(k) administration. New Direction, in Lafayette Colorado, provides administration services as well as continuing education for tax and investment professionals and the general public.