Investing Ideas

by | Mar 21, 2003 | Archives

Here are three important business and investing ideas.

Before we review these, may I point out that most things mentioned in thesemessages whether investments, business, health ideas or whatever, comemostly from our experiences. So the ideas we share have been tried by me,Merri or someone we know and have trusted for years. I can never know ifwhat works for me, works for you, but at the least you can be assured thatwe have some personal familiarity and understanding with the product orservice.

This is mentioned because we'll first look at tax liens, one of the safest,high return investments I know. You invest your money with the government(county) and yet can earn 20% per annum or even more.

But there is a downside. It takes time to check out properties and attendauctions to buy the liens. Anyone of any nationality or residence caninvest in these liens, but these investments are more difficult for thosewho live out of the U.S. or who are so busy they don't have the time tolook over the property themselves.

There are two ways to overcome this. One, if we have time, we can turnthis time problem into a business of looking for liens for others. Theopposite side of this coin if you have little time is to let someone elselook for you.

For example, Merri and I have a very busy schedule so we made a deal withour son. We are experiencing both points of view (Jake as a business andwe as investors) so we will (from time to time) share our exploits in taxliens to help you both see Jake's view as a business person finding andbuying liens for others and Merri and me as investors.

The first thing we did is sign up Jake for Ted Thomas's course on taxliens. For more on this go to

Here is what Jake wrote upon completing the course:”Dad, I have now finished the Ted Thomas course. Very interesting indeed.I'm in! Let's get rich steady. Let's set up a call to discuss how we mightbest start taking action.”From your past comments I think we react the same way to Ted's research.That is, as I understand it, we should start out cautiously by focusing ontwo or three counties we can physically visit regularly. As the percentilereturn is higher in Georgia (20%) and it is a Tax Deed not a Tax Lien state(like North Carolina), the potential for higher returns is better. Sohaving me work on the ground here does make sense.”I suggest to avoid too much bidding competition we should identify two orthree rural counties beyond metropolitan Atlanta, then get very familiarand comfortable with their systems and zoning. At first we focus onimproved property (preferably single-family homes) in residentialneighborhoods and grow from there. Is this your line of thinking? “To find these counties I have defined thirty counties that may be goodones for me to begin researching. These are rural counties within athree-hour drive for me but at least one hour from a major city and thirtyminutes drive of a minor city. This should put us in counties that I can realistically get to when needed and with less competition thanplaces like Atlanta, Savannah and Macon. I will start doing somecomparisons of these counties (redemption rate, dates of auctions, generalrules, etc.) and once this is done present some findings to you. Once wenarrow down which of these we want to focus on we can see what GIS can dofor us.

“I sent out 30 requests one to each county for information on their countytax deed auctions and will get back to you review their replies. We had ourcompany investment advisor come to talk with us yesterday and I asked aboutTax Liens. She had no knowledge of them. This seemed to back up Ted'sresearch, explaining that one of the biggest reasons people don't invest in Tax liens is few know much about them. Thanks again for theopportunity, Jake”

So the first idea here is considering investing in tax liens. They requireextra effort but they are very safe government investments and you can earn20% a year or more.

The second idea we share in this message covers an important tax matterbecause many of you ask me about various tax plans that have been put toyou to avoid paying tax. To help you understand the implications, Icontacted Leslie Share, a tax attorney we have worked with for 20 years.Here is a press release Leslie sent. You can reach Leslie if you havefurther questions at

Here is the release:

“DOJ Seeks Restraining Order Against Notorious Tax Scheme Promoter”

“We have zero tolerance for those who make a living selling tax-schemepackages that falsely promise zero tax liability,” said Eileen O'Connor,Assistant Attorney General in charge of the Justice Department's TaxDivision, in a press release dated March 13, 2003. The statement was madein connection with a recently filed complaint against Irwin Schiff and hiscolleagues, in which the DOJ asked a Nevada District Court to issueinjunctive relief to stop the defendants from selling or providing taxadvice or return preparation.

“The defendants conducted business through an entity located in Nevadacalled Freedom Books, as well as through Internet sites. The complaintalleges that the defendants marketed tax-avoidance schemes to taxpayerspurporting to exempt their income from taxation and advised them on how tofrustrate governmental efforts to ascertain their true tax liabilities andcollect any deficiencies.

“Schiff, twice convicted of tax-related crimes in the mid-70s, has beenpromoting abusive tax-schemes for the last 25 years and has admitted thathe has not made any voluntary federal income tax payments for 30 years,despite having generated substantial income from promoting tax schemes andpreparing returns.

“According to the complaint, the IRS estimates that, based on Schiff's3,100 identified clients, his customers have evaded or have attempted toevade roughly $56 million in income taxes from 1999 to 2001. However,Schiff has been actively marketing his tax schemes since 1994, suggestingthat the actual loss of revenue may be much higher. According to thecomplaint, his adherents, several of whom have been convicted of tax crimesfor following his frivolous theories, may actually number in excess of amillion.

“The proliferation of Schiff's positions has been the product ofmass-marketing efforts on local and national radio and televisioninformercials in which he outlines his “zero income” strategy. Schiff alsooffers an instructional video, seminars and $300 per-hour one-on-oneconsultations.

“The release also states that over the last two years the DOJ has soughtinjunctions against 32 promoters and has been successful in every casedecided so far. The DOJ's move reflects the administration's policy ofcracking down on abusive tax schemes across the country. And, with the IRSand Treasury having recently finalized the tax shelter disclosureregulations, it appears as though the government is putting its foot downhard. “We plan to go after many more [tax schemes] and will continuepursuing tax promoters until the problem is solved,” said O'Connor. ByDaniel Rinke, CCH News Staff”

Here is the point. Schiff may be correct or not from a theoretical pointof view. One can argue abstract law till the cows come home, but theorydoes not mean much in court. Precedence is what counts. Many of us havevery ill feelings for the tactics of the IRS, but Schiff has spent time injail and has been heavily fined as have some of his clients. Morally rightor wrong, from a practical point of view if you use these types of schemes,you run the risk of being heavily fined and/or jailed.

The third idea shares a way to invest in shares outside the U.S. dollarnow. Our international investing message last Friday showed that one wayto invest out of the U.S. dollar is through the Multicurrency Sandwich.

Another way to invest outside the greenback is to buy overseas shares. Yetfew of us have the knowledge, experience or system to do this. One simpleanswer is to invest in many markets at once through the State Street GlobalAdvantage funds. These are one of only two mutual funds I have used in thelast decade.

I like this approach first because it is safe. State Street is one of thelargest fund managers in the world and the Global Advantage EmergingMarkets and Major Market funds follow eClub advisor Michael Keppler'sadvice on which markets currently offer top value.

The second reason I like this approach is that investing in value makessense. You can learn more if value investing makes sense for you: and

The third reason I like these funds is because they have a proven record ofperformance. Keppler's Top Value Strategy in the past 14 years has risen anannual compound average rise of 30.40% compared to the Morgan StanleyEmerging Markets Index of 6.94%. The Major Markets Strategy has an annualcompound average increase of 15.72% compared to the Morgan Stanley Worldindex of 8.12%.

If an investor wants a globally diversified portfolio of shares, there isno long-term strategy that makes more sense than investing in markets andshares that offer the best value.

You can learn more about this at and

Contact State street at

Markets may be tough and the economy may be slow, the dollar may drop andinflation may rise, but each of these conditions create their form ofopportunity. These three ideas we have shared here can help you cash in onthis negative economy and help you keep the profits you gain.

Until next message, may your global investing be good!