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Montoya
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My exit plan is to liquidate 7,500,000 when my stack is worth 8MM.  After long-term cap gains that leaves 6MM cash.  I'll buy 4MM worth of real estate diversifying across large and mid-size multi-family, mobile home parks, single family homes and syndication deals aiming for a passive income of 320-400k not counting the appreciation and long-term gains these assets afford.  I love that with real-estate it's largely inflation proof and taxed outrageously better than ordinary income.  Also, with the right team in place (property manager, proven sponsors, wholesaler, agents, attorney, accountant, etc) I won't have to make more than 10-20 phone calls per year to do basically whatever I want for the rest of my life.  AND most importantly, my children lives.  I'm aiming not just for legacy wealth but to positively impact people around the globe with this money via a host of philanthropic ventures suitable for another thread.  Because I'll likely only need 250-300k per year the excess will of course be reinvested into Real Estate and other start-up ventures.  The other $2M is to build the house I want for me and my family without financing.  As for the 500k of digital assets remaining, I'll use that as liquid savings where I can jump on great investment opportunities as they arise.  I think AI, Machine Learning, Robotics and such will likely be a focus.  

 

I'm no financial advisor but to those who are thinking of cashing out only to live off of that money every year- why not buy assets with that money and let those assets pay for your lifestyle?  Doing this smartly you'll never dip into the principle and should only increase that principle as I've outlined above.   There are plenty of great assets available which are almost totally passive.  My favorite thus far appear to be syndication deals as a limited partner with sponsors who have great track records.  

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22 minutes ago, aavkk said:

My exit plan is to liquidate 7,500,000 when my stack is worth 8MM.  After long-term cap gains that leaves 6MM cash.  I'll buy 4MM worth of real estate diversifying across large and mid-size multi-family, mobile home parks, single family homes and syndication deals aiming for a passive income of 320-400k not counting the appreciation and long-term gains these assets afford.  I love that with real-estate it's largely inflation proof and taxed outrageously better than ordinary income.  Also, with the right team in place (property manager, proven sponsors, wholesaler, agents, attorney, accountant, etc) I won't have to make more than 10-20 phone calls per year to do basically whatever I want for the rest of my life.  AND most importantly, my children lives.  I'm aiming not just for legacy wealth but to positively impact people around the globe with this money via a host of philanthropic ventures suitable for another thread.  Because I'll likely only need 250-300k per year the excess will of course be reinvested into Real Estate and other start-up ventures.  The other $2M is to build the house I want for me and my family without financing.  As for the 500k of digital assets remaining, I'll use that as liquid savings where I can jump on great investment opportunities as they arise.  I think AI, Machine Learning, Robotics and such will likely be a focus.  

 

I'm no financial advisor but to those who are thinking of cashing out only to live off of that money every year- why not buy assets with that money and let those assets pay for your lifestyle?  Doing this smartly you'll never dip into the principle and should only increase that principle as I've outlined above.   There are plenty of great assets available which are almost totally passive.  My favorite thus far appear to be syndication deals as a limited partner with sponsors who have great track records.  

Unless you put in a ton of work to get experience (and probably fail a few times), those asset classes are going to require a lot more work than you think.  For many, living off of low cost index funds is much easier and the difference isn't that great in most cases.  

Can they be better?  Yeah sure.  But I'd rather not deal with the hassle if I can get 'enough' in other ways.

I think if you have the entrepreneurial spirit, go right for it!

Edited by mrhat75
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2 hours ago, Montoya said:

now the follow on question...say you reach your amount...how much do you keep in crypto and how much do you put into other investments?...would keeping some of your net worth in something as potentially volatile as crypto change your amount?

The biggest issue to consider, IMO, is the taxes.  The second you sell (in the US on a long term capital gain), you have a 15% tax on your gains.  So, you have to ask yourself: if I sell, how can I recoup that loss and make an additional market return?  For example, if you sold a $1 million gain in long term XRP, you'd have a tax bill of $150,000.  How are you going to recoup that $150,000 plus get, say, another 5-7% annual return on the balance?  You most likely won't get that anywhere.  So, in some sense, if XRP is appreciating greater than the rate of inflation and average market returns, it may not make sense to liquidate except as needed for expenses.  Conversely, there is something to be said for diversification and mitigating the risk of losing significant value due to volatility or some other unforeseen cataclysmic event.  It really depends on your appetite for risk and what sort of annual returns you need to meet your goals.

Edited by MatinMontreal
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58 minutes ago, MatinMontreal said:

The biggest issue to consider, IMO, is the taxes.  The second you sell (in the US on a long term capital gain), you have a 15% tax on your gains.  So, you have to ask yourself: if I sell, how can I recoup that loss and make an additional market return?  For example, if you sold a $1 million gain in long term XRP, you'd have a tax bill of $150,000.  How are you going to recoup that $150,000 plus get, say, another 5-7% annual return on the balance?  You most likely won't get that anywhere.  So, in some sense, if XRP is appreciating greater than the rate of inflation and average market returns, it may not make sense to liquidate except as needed for expenses.  Conversely, there is something to be said for diversification and mitigating the risk of losing significant value due to volatility or some other unforeseen cataclysmic event.  It really depends on your appetite for risk and what sort of annual returns you need to meet your goals.

You hit the nail on the head. Although the tax situation is even worse than you describe. The tax rate for the numbers we've been discussing will be at least 20%. Plus you have to add in the net investment income tax which is another 3.8%. Then you have state taxes which can vary anywhere between 0 and 13%. Depending on the state you could be paying almost 37% for long term gains. If you bought and sold any time during the last year then your taxes will be even more terrifying. You can expect a minimum of 40% all the way up to 53%. As you can see those profits that you think you have dwindle very quickly in the land of the free. 

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1 hour ago, MatinMontreal said:

The biggest issue to consider, IMO, is the taxes.  The second you sell (in the US on a long term capital gain), you have a 15% tax on your gains.  So, you have to ask yourself: if I sell, how can I recoup that loss and make an additional market return?  For example, if you sold a $1 million gain in long term XRP, you'd have a tax bill of $150,000.  How are you going to recoup that $150,000 plus get, say, another 5-7% annual return on the balance?  You most likely won't get that anywhere.  So, in some sense, if XRP is appreciating greater than the rate of inflation and average market returns, it may not make sense to liquidate except as needed for expenses.  Conversely, there is something to be said for diversification and mitigating the risk of losing significant value due to volatility or some other unforeseen cataclysmic event.  It really depends on your appetite for risk and what sort of annual returns you need to meet your goals.

Although agreed with your general sentiment, a note on taxes.  If you sold $1 million gain in long term XRP you would pay more like 30% in long term capital gains taxes, not 15%.

US IRS tax code:  Over $428,000 long term capital gain is 20% (if head of household threshold is slightly higher).  Plus 3.8% Net Investment income tax applied to high income earners (over $428,000) from ACA, plus 0%-13.3% state capital gains taxes.  In 9 states it's 0%.  Everwhere else you will pay mostly 5%-8%, with California being 13.3%.  All long term capital gains STATE tax. 

For most Americans this puts us at somewhere around 30% long term cap gain tax.  20% Federal, 3.8% ACA, about 6% State = about 30%. For many it's more. Very unfortunately. 

However, if we were to do short term capital gain it would put us around 45%-50% for most of us, so holding til after a  year still pays off for said $1 Million pay day. 

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35 minutes ago, xrphilosophy said:

Although agreed with your general sentiment, a note on taxes.  If you sold $1 million gain in long term XRP you would pay more like 30% in long term capital gains taxes, not 15%.

US IRS tax code:  Over $428,000 long term capital gain is 20% (if head of household threshold is slightly higher).  Plus 3.8% Net Investment income tax applied to high income earners (over $428,000) from ACA, plus 0%-13.3% state capital gains taxes.  In 9 states it's 0%.  Everwhere else you will pay mostly 5%-8%, with California being 13.3%.  All long term capital gains STATE tax. 

For most Americans this puts us at somewhere around 30% long term cap gain tax.  20% Federal, 3.8% ACA, about 6% State = about 30%. For many it's more. Very unfortunately. 

However, if we were to do short term capital gain it would put us around 45%-50% for most of us, so holding til after a  year still pays off for said $1 Million pay day. 

And this is why the rich play shell games by setting up off shore companies. Trying to hide their money and evade taxes. 

Or you could check out this guy - http://nomadcapitalist.com/

However, I don't want to end up in the panama papers 2.0 and I like where i live so Ill pay up to uncle sam

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