Regarding The Safety of Your IRA or Other Cash

At American Estate & Trust (IRACentral.com)

July 15, 2010

American Estate & Trust, LC (AET) is the sole owner and operator of the web site, IRACentral.com. AET is a Nevada licensed, bonded and regulated trust company. Our regulatory supervision is under the Financial Institutions Division of Nevada, the state's bank regulatory authority. (Click About AET - for more company information)

Since there is so much uncertainty regarding the safety of the financial industry and of many investment classes we are providing this message to inform our clients and prospects of the safety measures which AET employs in holding any cash you may place and leave with us. Any IRA or other type account with AET can be self directed, meaning you may direct your money into any investment you choose, and the variety of legal investments is huge (click the "IRA Investment Options" button at the top center of this page for more info). If you choose to self direct, the safety of your money is up to you since you have full control over the investment choice.

But, by default we place all client cash in the AET Quick Access Fund⁽¹⁾ until or unless you direct that your money be invested elsewhere. This is an interest bearing fund which generally pays a higher rate of return than money market and savings accounts (an even higher yield can be earned with an AET Hi-Yield Account). A great number of our clients choose to leave some or all their IRA or other account money in the Quick Access Fund or in the Hi-Yield Account, and it is the safety of these accounts and their underlying investment portfolios which we address below.

The Quick Access Fund and Hi-Yield Account cash holdings are divided into a well diversified array of high grade fixed income securities, including: Investment grade or better corporate bonds, A to AAA U.S. government and government agency bonds and notes, bank money market accounts, bank CDs, bond mutual funds, municipal bonds, high grade preferred stocks, exchange traded funds and notes (ETF, CEF & ETN). Up to 15% of the total investment portfolio can be in investment quality real estate, and up to 5% can be in carefully selected private placements.

All securities are held with highly regarded, registered securities brokerages and are protected by Securities Investor Protection Corporation (SIPC) coverage. All cash and bank money market accounts are held in highly regarded banking institutions where FDIC coverage is available for some amount of these bank account balances. The assets of these investment portfolios are professionally and actively managed by AET. Individual client account statements and statements detailing the underlying investment portfolios are readily available on-line for clients' inspection. All yields paid to clients from either the Quick Access Fund or the Hi-Yield Account are classified as interest or ordinary income (tax deferred for Traditional IRAs and 401(k)s and non-taxable for Roth IRAs and 401(k)s).

The main reason for the diversity of investments is to protect the investment portfolios from the possible misfortunes of any one institution or investment which the portfolios are invested in. In other words, we have spread the money over many different investments as a risk containment measure, a common and effective strategy used by most other investment funds. None of the investment funds are invested in a troubled institution or one that we deem to be at risk of failure. We have never held investments in the sub-prime mortgage markets, exotic derivatives or swaps. Safety of principal is our utmost concern with the investment portfolios.

In addition, AET has its own state regulated capital reserves. Those reserves are all in cash, certificates of deposit and highly liquid securities, also held in highly regarded banks and registered securities brokerages. The company's reserves equal approximately 5% of the total client cash we hold.

No client assets were lost or at risk during the financial crisis of late 2008 thru early 2009, nor in the severe market corrections of April and May, 2010. We are confident that client IRA and other cash in the AET Quick Access Fund or Hi-Yield Account⁽¹⁾ is held and invested with excellent standards of prudence and safety, and that only a system wide financial meltdown of extreme proportions would seriously deplete the value of the underlying investment portfolios.

⁽¹⁾ Footnote:

An investment in the AET Quick Access Fund or Hi-Yield Account does involve risk. American Estate & Trust, LC (AET) is regulated by the Financial Institutions Division of the State of Nevada. But underlying investment portfolios are only partially covered by FDIC insurance and the underlying investments are not regulated under the SEC Investment Company Act of 1940. There is Securities Investor Protection Corporation (SIPC) protection for all publicly traded securities, and these securities comprise up to 80% of the total underlying investment portfolio value. The safety of principal and the return of interest are guaranteed and backed only by the reserves of this portfolio and the quality of its investments. To minimize risk in the investment portfolio, portfolio funds are spread across, invested in, a large number of investments so that the poor results of any one investment, if any, should have a limited effect on the overall portfolio, and AET maximizes safety with thorough research, analysis, and close monitoring of the investments. AET assumes no liability for losses in the underlying investments, if any, though the company’s only means of compensation for on-going management and administration of the investment portfolio is to maximize the safety of principal in the portfolio.