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What is Crowd Funding?

Funding Launchpad Chief Marketing Officer Dave Milliken recently wrote a guest blog post for public relations firm Leverage PR titled “Crowdfunding Explain- An In Depth Look”. This post provide a brief history of crowdfunding and describes the four types of crowdfunding in broad use today.

For your reference, we have re-posted that information below.

With the passage of the JOBS Act, crowdfunding has received a lot of attention lately. In an effort to explain what crowdfunding is and how your business could potentially benefit from it, we have asked David Milliken, Co-Founder and SVP of Marketing for Funding Launch Pad to do a guest post about crowdfunding.

The crowdfunding concept dates back to the 1700s, when Jonathan Swift launched the Irish Loan Fund.[i] Crowdfunding is broadly described as aggregating funds from a broad donor base towards a common cause. This guest blog post explores the four common forms of crowdfunding.


Microfinance is when contributors align to provide financial services, often seemingly miniscule loans, to low-income clients. Recipients generally lack access to banking services[ii].

Historic examples of microfinance include Swift Irish Loan Fund, and more recently, the March of Dimes. Barack Obama’s 2008 campaign fundraising approach, accepting smaller than traditional contributions from a broader voter base, could be considered a form of microfinance.

Today’s microfinance model began when Nobel Prize winner Muhammad Yunus began giving microloans in the 1970s to help the poor in his native Bangladesh escape poverty. Kiva.org is a prominent microfinance platform, having facilitated $303 million in loans.

Peer-to-Peer Loans

Also known as P2P loans or social lending, peer-to-peer lending enables individuals to borrow from a group of lenders, without the use of an official financial institution as an intermediary[iii]. The theory is that by removing the overhead of banks, borrowers receive lower rates while lenders earn higher returns than expected from savings accounts.

P2P lending grew over 1200%, from $118 million to $1.555 billion, in outstanding loans between 2005 and 2008[iv]. P2P lending is highly regulated by a maze of securities laws. Leading platforms in this fast growing field are Prosper.com and Lending Circle.

Donation-Based Crowdfunding

Donation-based crowdfunding (DBC) has exploded in the past few years, with hundreds of platforms. DBC campaigns are often creative (movies, music, art), community, or philanthropic projects. They can also be business-oriented, like the Pebble watch that recently broke the record for largest DBC campaign[v].

When contributing to a DBC project, you are guaranteed no financial return. Instead, you generally receive a non-monetary reward related to the project, like a T-shirt, pre-released CD, credits, or unique experiences. No financial returns mean DBC campaigns are not impacted by securities laws, and are generally viewed as legal today[vi].

The DBC industry nearly quadrupled in 2011, from $32 million to $123 million[vii]. According to Funding Launchpad’s exclusive consumer research, despite hundreds of platforms, Kickstarter dominates the DBC landscape. IndieGoGo and RocketHub are also major sites[viii].

Investment Crowdfunding

With investment crowdfunding, the crowd earns securities – equity, debt, or a revenue share – in exchange for their contributions. Today, investment crowdfunding is generally considered illegal in the US[ix], but Title III of the recently passed JOBS Act will change that. The Securities and Exchange Commission has 270 days to write the rules and establish a new type of intermediary called a “funding portal” so investment crowdfunding will probably not be enacted in America until Q1 or Q2 2013. To learn more about the crowdfunding portion of the JOBS Act, please see our plain English summary.

Entrepreneurs and politicians expect investment crowdfunding to boost the American economy by giving startups and small businesses access to a new source of capital. Investment crowdfunding is the primary driver behind consultancy Gartner predicting the industry to grow to $6.2 billion by 2013[x]. Crowdfunding for securities is already an emerging fundraising tool outside the US. Leading platforms around the world include Crowdcube (UK), Symbid (The Netherlands), and ASSOB (Australia).

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What happens if tax cuts expire?

It’s 2010 all over again when it comes to Congressional wrangling over tax policy. The Bush-era tax cuts were originally set to expire Jan. 1, 2011, but were given a two-year reprieve to avoid dampening the fledgling economic recovery with higher taxes. Unless Congress acts to extend the current rules and rates again, most taxpayers will see higher tax bills starting Jan. 1, 2013. Here are some of the changes to expect and a few ways to plan now to lessen their impact on your wallet.

If the Bush tax cuts are simply allowed to expire, everyone will face higher taxes next year. The current 10 percent bracket will disappear in favor of a new bottom rate of 15 percent. All other rates will also shift higher. The current 25 percent rate will become 28 percent, 28 percent will become 31 percent, 33 percent will become 36 percent and the top rate will rise from 35 percent to 39.6 percent. For investors, higher rates on ordinary income will be joined by the elimination of favorable tax treatment of long-term capital gains and qualified dividends. Currently, gains on assets held longer than one year are taxed at a maximum 15 percent rate. This rate will increase to 20 percent if the tax-cuts are not extended. Dividends, both qualified and non-qualified, will all be taxed as ordinary income. As a result, for some taxpayers, the dividend tax rate will more than double from 15 percent to 39.6 percent. Distributions from qualified retirement plans and IRAs are excluded from net investment income and income from municipal bonds.

Minimizing the impact of these impending tax hikes will require strategies either to accelerate taxable income to 2012, before the rates increase, or reduce future taxable income. Investors should consider realizing investment gains in 2012 to lock in today’s lower tax rates. Realizing losses before year’s end may also be advantageous as these losses can be carried over to future years to offset gains that will be taxed at higher rates. Converting all or part of a traditional IRA to a Roth IRA in 2012 is another strategy for accelerating income to lock in today’s lower rates. When performing a Roth conversion you pay ordinary income tax on the amount transferred out of your traditional IRA in exchange for tax-free withdrawals from your Roth IRA in the future.

Other ways to reduce current taxes and keep income below the surtax threshold include maximizing contributions to 401(k)s and other deferred-compensation plans. Maximizing retirement-plan contributions will also help lessen the tax bite because these reduce current taxable income, a feature that becomes even more important if these salary deferrals can keep your income under the surtax threshold. Finally, it may also pay to reconsider your asset location strategy. That is, what types of investments to hold in your taxable, tax-deferred and tax-free (Roth IRA) accounts. Implementing a well-conceived asset location strategy can help boost the after-tax returns from your portfolio.

Once dividends are again taxed at ordinary income tax rates it will be less advantageous to hold dividend-paying stocks in taxable accounts. Instead, these income-generating investments may provide better after-tax results if they are held in tax-deferred traditional IRA or 401(k) accounts. Growth-oriented stocks with lower dividend yields, alternatively, may be the best asset to hold in a taxable account.

I hope this gives you some ideas to consider and to consider alternative assets in your retirement account.

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Not A Good Use Of 401k Money

A Fond du Lac man accused of murdering his wife will be able to hire an attorney. Jason E. Anderson, 35, can now withdraw about $37,000 from his 401K savings plan to help pay for representation, Fond du Lac County Circuit Court Judge Richard Nuss ruled Tuesday.

Anderson’s wife, Nicole Anderson, 33, was found dead from a single gunshot wound to the temple on Nov. 8 at the couple’s home, 312 Winnebago Drive. After the shooting, Anderson left Wisconsin and was tracked to Alabama through debit card records, according to the criminal complaint.

Judge Peter Grimm on Dec. 2 restrained Jason Anderson from using part of the couple’s marital estate to hire a private attorney. Anderson on Tuesday sat in the corner of the courtroom weeping before his case was called. During the duration of the hearing, he kept his face down and stared at his hands.

Defense attorney Robin Shellow said it is Jason Anderson’s intention to hire her to represent him. “When you lose a loved one, someone you care about, who is your soul mate and is your heart — whether it is your legal fault or not your legal fault — there’s an enormous amount of pain,” Shellow said. “He is grieving and distraught over the loss of his life partner.”

A document filed by Shellow claims Jason Anderson stated that on the night of Nicole Anderson’s death, he thought he heard an intruder, armed himself with a handgun, it accidentally discharged when the trigger guard was knocked against some furniture and the recoil caused Anderson to almost fall and for the gun to be fired a second time.

District Attorney Dan Kaminsky and Police Chief Bill Lamb responded in a press release that documentation filed by Shellow was nothing new and it would not change the charge of first-degree intentional homicide filed against Anderson. “While similar, those claims are in part inconsistent with information Mr. Anderson previously provided to investigators. Further, additional evidence recovered in the case suggests a different scenario surrounding the homicide,” the release states Shellow told The Reporter on Tuesday that it is premature to be speculating about what does and does not match in the Anderson case. “It was interesting to me that he (Kaminsky) was willing to entertain that there was some similarities,” Shellow said. “That is unusual for a prosecutor. I commend him for admitting the similarities.” Shellow said she will not “try the case in the press.”

The next step in the Jason Anderson case will be a preliminary hearing scheduled for Jan. 6. Shellow will continue defending Anderson on the basis that the death was an accident.

“It never seems to surprise us when famous people like Laura Bush and Adlai Stevenson accidentally kill a loved one, but when the ordinary man says it was an accident, the public that came of age watching five different ‘Law and Order’ (shows) on TV has been schooled that all accidents are crimes and law enforcement scurry around looking for non-existent motives,” she said.

Story found in the fdlreporter.com and written by Russell Plummer


The Importance Of Being Resourceful

Many investors think that their success is predicated upon the resources they have at their disposal. That achieving their goals has to do with the things they use. The idea that I want to share with you today is about a critical aspect you need to understand to succeed in your business or at your workplace.

I find it pretty common for many of the struggling individuals is that they’re constantly on the search for more resources, the greatest and latest technique or strategy. They see an email about a new course that is the best thing since sliced bread and they buy the course and read some of it and realize that was not the savior they were looking for and then go on to buying the next course.

Focusing on resources and the latest strategies becomes more of a way to slow you down than anything. It’s a nice escape route when you surrender or fail at a task. It becomes the easy way out to by making the excuse that you didn’t have the right resources. I want to say that success in any business isn’t about the resources you have or the latest strategy. You can make almost any strategy work for awhile and have some success (obviously some strategies don’t work to the extent that others do) but the key is even with the best resources you will fail if you are not resourceful. It is really about the resourcefulness you possess.

Resourcefulness is about figuring out how to make things work. Resources are things that work for you, however resourcefulness, is about you making things happen. Now let me be clear. You do need certain resources. You can’t launch yourself to success entirely out of thin air. However, you cannot be constantly searching for another resource to make things easier to move you closer to your goal, this will not work. You have to be able to search from within and be resourceful enough to overcome any hurdles a lack of resources present to you.

So how do you become more resourceful? You start by being a better problem solver. Thinking through problems, understanding what is between where you currently are and the type of performance you would need be able to get to where you want to go. Resourcefulness is about thinking about all the different ways you might possibly be able to get the outcome you want on your own. Through your own thinking. By finding shortcuts on your own. That’s critical especially when you’re getting tons of emails and messages online with promotions trying to convince you the resource they offer is going to be the single resource that changes everything about your real estate business. It’s a very important distinction and my experiences have taught me that too many entrepreneurs who struggle tend to look for resources instead of using their own resourcefulness.

The way that you can self-check how resourceful you already are, is by looking at what steps are you taking when you approach a problem or when you have a problem in your business. Do you spend time defining the problem, getting clear about what really is the problem and then brainstorm different solutions? Do you think it through or do you quickly go on line and see if someone else has a product or something about that thing? The latter can sometimes be a good strategy, but if it what you do each and every time without thinking it through first then you need to switch to thinking through your problems more thoroughly. Defining what the real problem is and working through that. You need to invest the necessary time to become resourceful. This will be more beneficial to you than having a ton of courses on different strategies in your library.


Recent Changes In Social Security And Medicare

The Social Security Administration’s recently announcement a Cost of Living Adjustment (COLA) in the form of a 3.6 percent increase in retirees’ 2012 monthly Social Security checks. This change, which hasn’t occurred since 2009, means the current average monthly Social Security check will rise from $1,082 to $1121. Not a huge amount but it sure doesn’t hurt in today’s economy. This great news came with the caveat that Medicare, which itself has not raised its premiums for the past couple of years, may end up raising them which would in turn be deducted from Social Security checks and the end result being that much of the COLA increase would disappear on your Social Security check.

The good news is that there will be a nominal increase with Medicare Part B which is physician and outpatient services, but it will be much less than earlier thought. Premiums in 2012 will be raised to $99.90 per month which is a $3.50 increase instead of the $10.20 raise originally projected by Medicare. The monthly premium for Medicare Part A which is hospital coverage will stay the same at $451.00. Of course this only applies to those who pay a premium. In addition, those who took the big leap into retirement in 2011 and are currently paying a $115.40/month for Medicare will actually see their premiums drop to the standardized $99.90 mentioned above. Finally, Medicare Part B’s deductible is dropping as well to $140 and Medicare Part A will rise only $24.00 to $1,156.00. This is pretty darn good news.

However, this all being said, this is small peanuts and really won’t impact your life as much as taking the time to explore alternative investments in a self directed IRA. I find most people hesitate and don’t really know what to do with their money so they stick the bulk of their retirement in stocks and bonds. How is that working for you? Most people think that diversification is put some money in one mutual fund and some in another and so on. This is not diversification, this is suicide. Why? Typically, the when the market moves up all the stocks move up and when the market goes down the entire market heads in the same direction. Even the “international” funds are not a great haven and are tricky.

I find it best to invest in what I know and what I understand. I don’t have to be a “guru” in the area but at least understand the underlying asset and the potential risk and reward. The best thing I ever did was to roll my 401k to a self directed IRA where I am now in control and have opportunity to take advantage of great moves in Gold, Oil, Real Estate, private equity deals and much more. I think you may be surprised at how easy it really is to get double digit returns.


5 Steps To Self Directed IRA Investing

This assumes you already have a self directed IRA setup and are ready to make money. Follow the simple steps below.

1. You need to find out what investments you are passionate about and identify your investment. Most self directed IRA custodians give you are large choice of investment opportunities as long as they follow the IRS rules. However, not all custodians allow all types of investments so be sure to ask before deciding on a custodian that is right for you.

2. With any self directed investment, you must request funds by completing certain investment forms from the custodian telling them exactly what you are looking to invest in, what it cost and where to send funds. In some cases, you will also fill out a signature direction of investment (DOI) in order for the custodian to sign on the behalf of your IRA. For example, when buying real estate you need them to sign the purchase contract, HUD-1, etc. P{lease note that all documents realated to the investment must be titled in the name of your IRA and not you personally.

3. The custodian will then process the investment forms and will send funds for the investment based on your specified directions. Once the transaction is complete, all records such as real estate deeds, original notes, operating agreements for LLC, etc. are retained by the custodian for safekeeping. Always remember your IRA owns the investment, not you personally.

4. Once your IRA owns the investment all expenses, income, and profit related to that investment must come from or go back to your IRA. Managing the investment must be a closed loop.

5. Finally, you can either hold the investment (for long term cash flow, asset appreciation, etc) or you can sell the investment once you find a buyer. When selling as in buying you must fill out a direction of investment form to tell the custodian exactly what to do and when to do it. The custodian will then sell the asset based on behalf of your IRA. The best part is that all the funds are returned to your IRA TAX FREE.


Stock Investing Alternatives

In 1974, ERISA (Employee Retirement Income Security Act) was passed and IRAs came into existence and main idea behind ERISA was to transfer the ownership and responsibility of retirement investing from the employer down to the employee. Since Congress saw alot of poor management of the pension funds they passed this law to give the responsibility back to the individuals and away from the corporations. Most people are not aware of what ERISA stands for but most people do know and are aware of these retirement fund plans. However, most people are not aware of the number of investment choices they have in their retirement accounts. Most people simple have never heard of or have been informed of investing in things like real estate or gold in their IRA. Only about 2%-3% of the entire IRA market is investing in “alternative assets” and the other 97-98% of the IRA market is investing in stocks, bonds, and mutual funds at the traditional providers.

The traditional providers have dominated the market and keep a lid on any talk about investing outside the traditional investments. These providers spend millions of dollars on advertising and keeping the public thinking that all you can do is buy stock, bonds and mutual funds. This is so far from the truth and it is interesting to note that these “alternative assets” have been available for over 30 years. The self directed investment companies and providers have come a long way to educate people on their options and how this is done. However, many people are still in the dark and are afraid. Truthfully, what people should be afraid of is waking up at 65 with no money in their IRA because they invested just in stocks and bonds and the market has been flat or worse yet down.

There is a solution and it includes education and knowing what your real options are and finding out what is right for you and whether it fits your investing personality. Wealth Black Box is dedicated to helping people first decide on the right retirement plan and second choosing investments that really grow, protect and diversify their retirement. Diversification to most people is buying small cap, mid cap and large cap funds. This is what Wall Street wants you to believe. The IRA market is dominated by firms that don’t give you the full bandwidth of opportunity to diversify. They basically will allow you to diversify within whatever set of investments they offer. You have a choice.

One of the main advantages of a self-directed IRA is that they allow their account holders to achieve diversification; account holders can make both traditional and alternative investments within self-directed IRAs. I hope most people have learned the lesson that the stock market can not only crash but worse yet move sideways for 15-20 years. The self-directed IRA allows people to diversify into many different “alternative assets” AND participate in following stock market trends when they happen.

Real Estate is a great tangible asset to invest in your self directed IRA with little to know risk when the property is purchased properly and at the right price. You can buy all cash or leverage your money and use cash and a non-recourse note to improve your returns. Many people who purchase real estate within all cash and renting those properties are generating pure profit back into the IRA which allows them to have consistent cash flow going into their nest egg. Although popular, real estate is just one of many investment options available to holders of self-directed IRAs. Because of the wide range of investments available, self-directed IRA holders can ensure that their retirement funds are spread across diverse investments and markets, making them more secure.

The top 3 investments in self directed IRAs are Real Estate, Private Lending and Notes, and Tax Liens. Many people like a more passive approach to investing and lending money from your IRA is a great way to grow you wealth without all the headaches of owning rentals. Many people are engaging in lending practices such as non owner occupied loans or they’re lending money out to peers for business activity or things of that nature. Finally, many people want to start a new business or buy a franchise and your self directed IRA is a great place to get the funding. It is important that this is property structured and setup to keep your IRA in good standing.


How Do Members Of The Federal Reserve Sleep?

The first ever GAO(Government Accountability Office) audit of the Federal Reserve was carried out in the past few months. What was revealed in the audit was startling: $16,000,000,000,000.00 had been secretly given out to US banks and corporations and foreign banks everywhere from France to Scotland. From the period between December 2007 and June 2010, the Federal Reserve had secretly bailed out many of the world’s banks, corporations, and governments. The Federal Reserve likes to refer to these secret bailouts as an all-inclusive loan program, but virtually none of the money has been returned and it was loaned out at 0% interest. Why the Federal Reserve had never been public about this or even informed the United States Congress about the $16 trillion dollar bailout is obvious — the American public would have been outraged to find out that the Federal Reserve bailed out foreign banks while Americans were struggling to find jobs.

To place $16 trillion into perspective, remember that GDP of the United States is only $14.12 trillion. The entire national debt of the United States government spanning its 200+ year history is “only” $14.5 trillion. The budget that is being debated so heavily in Congress and the Senate is “only” $3.5 trillion. Take all of the outrage and debate over the $1.5 trillion deficit into consideration, and swallow this Red pill: There was no debate about whether $16,000,000,000,000 would be given to failing banks and failing corporations around the world.

In late 2008, the TARP Bailout bill was passed and loans of $800 billion were given to failing banks and companies. That was a blatant lie considering the fact that Goldman Sachs alone received 814 billion dollars. As is turns out, the Federal Reserve donated $2.5 trillion to Citigroup, while Morgan Stanley received $2.04 trillion. The Royal Bank of Scotland and Deutsche Bank, a German bank, split about a trillion and numerous other banks received hefty chunks of the $16 trillion.

Americans should be swelled with anger and outrage at the abysmal state of affairs when an unelected group of bankers can create money out of thin air and give it out to megabanks and supercorporations like Halloween candy. If the Federal Reserve and the bankers who control it believe that they can continue to devalue the savings of Americans and continue to destroy the US economy, they will have to face the realization that their trillion dollar printing presses will eventually plunder the world economy.

The list of institutions that received the most money from the Federal Reserve are shown below..

Citigroup: $2.5 trillion ($2,500,000,000,000)
Morgan Stanley: $2.04 trillion ($2,040,000,000,000)
Merrill Lynch: $1.949 trillion ($1,949,000,000,000)
Bank of America: $1.344 trillion ($1,344,000,000,000)
Barclays PLC (United Kingdom): $868 billion ($868,000,000,000)
Bear Sterns: $853 billion ($853,000,000,000)
Goldman Sachs: $814 billion ($814,000,000,000)
Royal Bank of Scotland (UK): $541 billion ($541,000,000,000)
JP Morgan Chase: $391 billion ($391,000,000,000)
Deutsche Bank (Germany): $354 billion ($354,000,000,000)
UBS (Switzerland): $287 billion ($287,000,000,000)
Credit Suisse (Switzerland): $262 billion ($262,000,000,000)
Lehman Brothers: $183 billion ($183,000,000,000)
Bank of Scotland (United Kingdom): $181 billion ($181,000,000,000)
BNP Paribas (France): $175 billion ($175,000,000,000)
and many many more including banks in Belgium of all places

Information provided unelected.org by Paul Krugman on July 21st, 2011


How To Plan For Retirement When Starting Late

Saving for retirement is tough and many of us have started late.
David Bach says “Don’t give up… save at least $5-10/day”

Pay yourself first faster up to 25%. Save 1 hour of your income per day
and make it automatic. You have to cut what you spend and be honest
with yourself and ask if you have to have or would like to have.


Federal Budget 101

Our national debt is spiraling out of control and most people really don’t
understand the size of the problem since the number are so incomprehensible.
In order to put this in perspective, a managing partner at a law firm in Louisiana
put together an eye opening short letter which really brings this situation to light.