Thread
What is something you learnt about money or personal finance that you wish someone had taught you earlier?
I'll share some of mine and consolidate the best responses
👇👇
I'll share some of mine and consolidate the best responses
👇👇
1 - You really only become wealthy by owning assets
These assets are typically small pieces of companies, but any asset that can appreciate tremendously in value works
This is super obvious now but I could have used a primer when I was 18
These assets are typically small pieces of companies, but any asset that can appreciate tremendously in value works
This is super obvious now but I could have used a primer when I was 18
2 - Compound interest + the power of tax-free compounding
We all know how compound interest works but what made it click for me was running 10, 20, 30 year scenarios in Excel
Then learning how retirement accounts work in America and the ability to compound tax-free was a 🤯🤯
We all know how compound interest works but what made it click for me was running 10, 20, 30 year scenarios in Excel
Then learning how retirement accounts work in America and the ability to compound tax-free was a 🤯🤯
3 - Some oddly specific, yet very important tax benefits you gotta plan around
Look up:
- QSBS
- 1031 Exchange
- Primary residence tax exclusion
No one teaches you about these, but they can each be life-changing!
I missed some of these, almost missed out on others
Look up:
- QSBS
- 1031 Exchange
- Primary residence tax exclusion
No one teaches you about these, but they can each be life-changing!
I missed some of these, almost missed out on others
4 - Trusts!
Almost everything fancy in personal finance happens via a trust
A 401k, a Health Savings Account etc. are all special types of trusts
Rich people have lawyers & accountants setting these up but this info is really hard to come by for everyone else!
Some examples:
Almost everything fancy in personal finance happens via a trust
A 401k, a Health Savings Account etc. are all special types of trusts
Rich people have lawyers & accountants setting these up but this info is really hard to come by for everyone else!
Some examples:
4.1 A Solo 401K Trust
Did you know if you are self-employed you can set up your own 1-person 401k plan?
And you can contribute pre-tax income up to $50k annually AND have it compound tax-free?
And invest in literally any asset (crypto, startups if accredited etc.)
Yeah, crazy
Did you know if you are self-employed you can set up your own 1-person 401k plan?
And you can contribute pre-tax income up to $50k annually AND have it compound tax-free?
And invest in literally any asset (crypto, startups if accredited etc.)
Yeah, crazy
4.2 Charitable Remainder Unitrust
This one is ridiculous
You can donate money to a trust that pays a charity or foundation at the end of the term (typically 20 years)
But in the interim, it pays YOU a % of assets (10% a year) for 20 years
And all your $$ compounds tax-free
This one is ridiculous
You can donate money to a trust that pays a charity or foundation at the end of the term (typically 20 years)
But in the interim, it pays YOU a % of assets (10% a year) for 20 years
And all your $$ compounds tax-free
4.3 Dynasty Trusts
This is the classic use for a trust - you transfer assets to the trust, and name your family as a beneficiary
As assets in there compound, everyone you named as a beneficiary gets access to them and you pretty much entirely circumvent estate + gift taxes
This is the classic use for a trust - you transfer assets to the trust, and name your family as a beneficiary
As assets in there compound, everyone you named as a beneficiary gets access to them and you pretty much entirely circumvent estate + gift taxes
4.4 Some trusts are plain sketchy & obscured in complexity
Consider a DING - "Delaware Incomplete Gift Non-Grantor Trusts"
Literally exists for people in high-tax states to transfer assets to this entity in a low-tax state to bypass state taxes
As I said, trusts are ridiculous
Consider a DING - "Delaware Incomplete Gift Non-Grantor Trusts"
Literally exists for people in high-tax states to transfer assets to this entity in a low-tax state to bypass state taxes
As I said, trusts are ridiculous
5 - Tax loss harvesting
Usually, the best move is to avoid selling assets unless absolutely necessary
But if you want to SELL an asset on which you made $$, it's best to sell another asset where you lost an equal amount
You only pay capital gains taxes on the NET gain
Usually, the best move is to avoid selling assets unless absolutely necessary
But if you want to SELL an asset on which you made $$, it's best to sell another asset where you lost an equal amount
You only pay capital gains taxes on the NET gain
In crazy bull markets, you sometimes don't have losing assets
But invest long enough, and everyone does (especially after this year)
People just hold onto these for a long time, and strategically sell them along the way whenever they take gains off the table
But invest long enough, and everyone does (especially after this year)
People just hold onto these for a long time, and strategically sell them along the way whenever they take gains off the table
Read up on Roth IRA's
One of those things that seems too good to be true, but somehow still is ?? May be repealed eventually
You have to earn under $125K to use them BUT even beyond that you can "backdoor" into it by converting a traditional IRA to Roth
One of those things that seems too good to be true, but somehow still is ?? May be repealed eventually
You have to earn under $125K to use them BUT even beyond that you can "backdoor" into it by converting a traditional IRA to Roth
If you follow only one piece of advice from this entire thread, I'd make it this one
Put aside some % of every pay check, and just buy $SPY, $VOO or a similar fund and forget about it for decades
Put aside some % of every pay check, and just buy $SPY, $VOO or a similar fund and forget about it for decades
Talk about money!
If you are a part of any group that finds it uncomfortable to talk about money, it ends up hurting you!
The fact that so much of this information is gate kept to already wealthy groups propagates a lot of the systemic issues
If you are a part of any group that finds it uncomfortable to talk about money, it ends up hurting you!
The fact that so much of this information is gate kept to already wealthy groups propagates a lot of the systemic issues
6 - I put off learning how to use credit card points effectively until too long
This stings because you can literally learn how to do this in an hour but I put it off for so long
Since then, I've flown biz / first class almost everywhere purely off points
The TL;DR here is:
This stings because you can literally learn how to do this in an hour but I put it off for so long
Since then, I've flown biz / first class almost everywhere purely off points
The TL;DR here is:
Not all travel partners are created equal!
Some airlines (esp international carriers) charge a fixed # of points for a certain route no matter how busy it is
Transfer points from your bank to the airline's program directly (super important!) and only spend your points there
Some airlines (esp international carriers) charge a fixed # of points for a certain route no matter how busy it is
Transfer points from your bank to the airline's program directly (super important!) and only spend your points there
Something else that should be illegal but isn't:
No wash sale rules in crypto
You can sell any crypto you have a loss on, register a loss & immediately re-buy the same asset
You still own the same assets but now have a "loss" to offset other gains with
No wash sale rules in crypto
You can sell any crypto you have a loss on, register a loss & immediately re-buy the same asset
You still own the same assets but now have a "loss" to offset other gains with
7 - Rich people borrow money super cheaply
Once you have 7-figures+ in stocks, you can borrow up to ~70% at really low rates!
If you have $10M in stocks, you can access up to $7M in debt at ~1% + fed interest rates
This way you don't have to interrupt compounding to get cash
Once you have 7-figures+ in stocks, you can borrow up to ~70% at really low rates!
If you have $10M in stocks, you can access up to $7M in debt at ~1% + fed interest rates
This way you don't have to interrupt compounding to get cash
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Sam Parr @theSamParr
·
Jun 27, 2022
this blew my mind