Jul 22, 2022
You Need to Control 3 Things in Investing – Taxes, Capital & Assets
- BRT S03 EP34 (133) 7-22-2022 – Wealth for Life
Things We Learned This Week
- Control Taxes - Tax Protection, move $ to Tax Free position, must reduce taxes to grow wealth, every $1 lost to taxes = $8 lost wealth
- Control Capital - Access to Capital, use w/ Leverage of 4:1 to grow Capital, & Protect Principal, Lock in Gains, grow wealth efficiently
- Control Assets – Acquire Assets like real estate, or stocks, or pull $ from biz income, & redeploy for passive investing to Grow Wealth more - then Repeat
- FED Stimulus Money $ props up Zombie Cos (weak debt ridden co’s) in S&P Index, drags good biz down
- Business Owners concentrate on Earning $, need Good Advisors to Protect & Grow wealth after, reduce taxes, structure LLC right
*** This Show is a Replay w/ Clips taken from:
BRT S01 EP28 8-16-2020 - Cannabis Investing is Growing w/ Alan Brochstein, CFA of New Cannabis Ventures
Co-Host: Denver Nowicz, President - Wealth For Life
https://wealthforlife.net/brt/
https://twitter.com/denvernowicz
Denver is an advisor with nearly 20 years experience working with clients in investments and insurance, designing retirement plans with a combo of both. He takes us through different strategies for clients to get the best allocations for their money over the long term. It is the Combo Strategy of both Offense and Defense, the synergy of the mix, not ‘All or Nothing’.
Notes:
Market was up 27% in 2019, but average investor not up as much,
2020 market recovered quick from Covid dip of March 2020
S&P Index carried by 20% of top companies - 80/20 Pareto Principle
S&P market breakup, maybe 20-25% are worth investing in, 50% not good, bad companies, some underwater (15-20%) living on debt – Zombie companies (cost of servicing debt eats at profit), not growing.
Rebalance Portfolio – Investors do not want to be too top heavy, so they sell some winning stocks (and losers) and take profits to balance overall portfolio.
Buffett & Vanguard tell people to buy Index Funds, whole market because average investor not doing research, study and work . Catch is, Buffett does not do this and most financial advisors don’t do research either, just put clients in ETF.
FED put stimulus money into system and helps prop up Zombie companies in S&P. If invest in 15-20 good companies, get best of S&P.
Opportunity Cost – if you put money in bad companies, you lose money, but putting money in good company & company grows faster = more profits. Some companies are propped up and kept alive by FED cheap money vs. good companies who take free money, grow faster.
Investing plan for Top 10% of income earners ($150K +) or top 5% ($250K +)
Need different strategies, not just 401K or stocks, not like other 90% of population
Wealthy diversify their assets / investments, stock market is just 25% of their investing
Control taxes – protect money from taxes
Control Capital - access to capital – use leverage properly at 4:1
Control Assets – acquire assets to create passive income streams
Wealthy does not put all their money in the stock market.
Every $1 lost to taxes = $8 in lost wealth
$1 at 7% (rule of 72), at 10 yrs = $2, at 20 yrs = $4, at 30yrs = $8
$50K lost = $400K (x8) lost over the long term
If you earn over $500K / year +, top 1% of income earners
The ultra wealthy know that you have to control taxes.
401K does not reduce taxes, it defers taxes, and at $25K /yr, this will not move the needle enough, need major changes to reduce taxes, and propel wealth
Control Capital – protect principal, no losses, lock in gains
Use Leverage well at a 4:1 multiple, Control $4 with $1
Just like you finance your house thru a mortgage, finance your retirement (mortgage leverage is typically 3:1, loan is 3x your yearly income)
Deploy different strategies to grow wealth and make $ millions, really scale wealth from $1 to $5 mil, or $5 to $10 mil
Assets –pull money from passive income & use for more investing
Create investing cycle and repeat to grow wealth
Tax advantage loop to grow money wealth, reduce taxes, and redeploy gained $ for more investing to grow wealth faster and more efficiently
Opportunity to compound up vs. reverse of losing $
Opportunity cost where you lose money to taxes
Have to reduce taxes – you will not make enough money in ROI to mitigate taxes & the money lost
The more your income grows, more advantages to tax deductions
Typical business owner needs to learn this, get good advisors to limit.
Tax Code provides guidelines, rich get richer.
Tax exposure lessoned, then put money in right place to maximize LLC and business corporate structure - move money properly
Advanced Tax Reduction Strategies – Conservation Easement, Foundations
Most CPAs do not know these strategies because 90% of their clients have 1040 / W2 tax return. Do not have business income. You need the right CPA, right advisors to handle your growing situation.
Business Owners concentrate on making money (sales) and grow business, need advisors to protect their money and grow it passively + protect from taxes.
*** This Show is a Replay w/ Clips taken from:
BRT S01 EP28 8-16-2020 - Cannabis Investing is Growing w/ Alan Brochstein, CFA of New Cannabis Ventures
https://www.newcannabisventures.com/
Alan covers the Cannabis industry, from investing ideas, to news
Full Show: Here
More Info on WFL and Tax Free Matching: HERE
Wealth For Life Topic: https://brt-show.libsyn.com/category/Wealth+For+Life
Link to Taxes Show on 10/31/2021 w/ Denver: Here
Link to Offense / Defense Show on 6/6/2021 w/ Denver: Here
Link to Shows, Denver was a Guest: Here
Investing Topic: https://brt-show.libsyn.com/category/investing
More - BRT Best of: https://brt-show.libsyn.com/category/Best+Of
Thanks for Listening.
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