WEBVTT

1
00:00:00.000 --> 00:00:03.760
Do you think about them because all the friends that I had that are worth 300,000,500,000,

2
00:00:03.760 --> 00:00:06.400
a billion plus, they think about it differently.

3
00:00:06.400 --> 00:00:09.440
And so if I could change a perspective around it, you'll realize that most of the things

4
00:00:09.440 --> 00:00:11.360
that must be obsessed about actually don't matter.

5
00:00:12.240 --> 00:00:15.120
Welcome to the game where we talk about how to get more customers, how to make more

6
00:00:15.120 --> 00:00:18.320
customers, how to keep them longer, and the many failures and lessons we have learned

7
00:00:18.320 --> 00:00:20.480
alone the way. I hope you enjoy and subscribe.

8
00:00:20.480 --> 00:00:23.920
In this video I want to talk to you about the tax strategies of the ultra wealthy.

9
00:00:23.920 --> 00:00:27.440
And I want to make this because as somebody who is ultra wealthy, I look at a lot of the

10
00:00:27.440 --> 00:00:31.600
videos that I see that are pop getting around YouTube from people who are not ultra wealthy,

11
00:00:31.600 --> 00:00:35.600
describing ultra wealthy strategies despite not being so and doing it based on what they believe

12
00:00:35.600 --> 00:00:39.280
they're doing rather than what people are actually doing. And so I want to use this video as a

13
00:00:39.280 --> 00:00:44.480
way to at least break your beliefs around tax strategies overall. Rather than give you the individual

14
00:00:44.480 --> 00:00:50.000
tax things that may change over time, little tax, you know, tax. But instead if you can shift

15
00:00:50.000 --> 00:00:55.200
the way that you're thinking about taxes and shift the way to that ultra wealthy do think about

16
00:00:55.200 --> 00:00:59.440
them because all the friends that I have that are worth 300 million, 500 million, a billion plus,

17
00:00:59.440 --> 00:01:03.360
they think about it differently. And so if I can change a perspective around it, you'll realize

18
00:01:03.360 --> 00:01:08.800
that most of the things that most people obsess about actually don't matter. Cool. So the first thing

19
00:01:08.800 --> 00:01:15.600
right off the bat is where you live. So where you live is going to affect your tax strategy

20
00:01:15.600 --> 00:01:20.880
simply because at least for US residents, the state that you live in has a certain tax rate

21
00:01:20.880 --> 00:01:26.400
and the country itself at a federal level has a certain tax rate. So number one strategy right

22
00:01:26.400 --> 00:01:30.880
off the top is live in a tax efficient state. All right. And so I would recommend I think there's

23
00:01:30.880 --> 00:01:36.720
seven or eight states that are zero income tax. You should live in those states. Right. Now the next

24
00:01:36.720 --> 00:01:42.560
level below that is is getting out of the United States. And so there's only two ways to avoid

25
00:01:43.280 --> 00:01:49.520
taxes in the US. One is that you stop being a US resident, meaning you become an expatriate,

26
00:01:49.520 --> 00:01:54.560
you renounce your citizenship, which obviously has some ramifications. You actually have to pay taxes

27
00:01:54.560 --> 00:01:59.040
on everything you own at that point as though you had sold all your belongings. So you basically

28
00:01:59.040 --> 00:02:03.840
pay capital gains on everything you own that day. So for example, for me, if I were to expatriate,

29
00:02:03.840 --> 00:02:09.040
I would have to pay taxes on the worth of all of my companies despite not having not sold those

30
00:02:09.040 --> 00:02:13.920
companies. And so it's like if I have to so think think about it like if you and most of like my

31
00:02:13.920 --> 00:02:18.960
net worth, for example, is in my companies. And so I would have to pay the taxes on all of the value

32
00:02:19.120 --> 00:02:24.640
of all of the companies I have with the liquid assets that I have available to me, which would be

33
00:02:24.640 --> 00:02:28.880
you know, almost bankrupt me. So without the money, right. So I could probably raise debt or do

34
00:02:28.880 --> 00:02:32.000
some sort of thing. But anyways, they do it on purpose that way because they don't want people to do it.

35
00:02:32.000 --> 00:02:36.800
But if you don't have a lot of net worth and you want to grow outside, you can do that. So that is

36
00:02:36.800 --> 00:02:42.800
totally a strategy. The second and only other strategy besides that is living on an island. So

37
00:02:42.800 --> 00:02:47.360
Puerto Rico has a 4% tax rate. You can if you choose to live in Puerto Rico for six months or more

38
00:02:47.440 --> 00:02:53.440
of the year. And you source services outside of the United of Puerto Rico. You can pay a 4% tax rate

39
00:02:53.440 --> 00:02:58.880
at a federal level. That also works in USVI, the US Virgin Islands. There's a little bit there's

40
00:02:58.880 --> 00:03:03.280
a lot more hoops. You have to jump through you have to become a professor there. You have to have

41
00:03:03.280 --> 00:03:07.360
at least 10 people who work for you and the island that are originals from the island. It can't be

42
00:03:07.360 --> 00:03:11.040
people who you transport, transplant it over there. And they do that because they want to boost

43
00:03:11.040 --> 00:03:14.800
those economies. They want to make a track for people who have money to go there. All right. So

44
00:03:14.880 --> 00:03:19.600
those are the only two strategies. But you might be thinking, okay, well, you know,

45
00:03:19.600 --> 00:03:23.520
Alex, why are you not in Puerto Rico if you didn't have to pay income tax? And for perspective,

46
00:03:23.520 --> 00:03:29.680
I paid $18 million in income tax the last three years. So like, it hurts. But the thing is is

47
00:03:31.520 --> 00:03:36.000
I've had so many conversations with the the internet entrepreneurs of the world who are like,

48
00:03:36.000 --> 00:03:40.960
man, I'm moving to Puerto Rico. Why aren't you moving to Puerto Rico? And I think that, you know,

49
00:03:41.680 --> 00:03:44.880
decreasing your tax liability makes sense a little bit in the beginning of your career.

50
00:03:45.760 --> 00:03:52.000
But it quickly stops making sense because most of us, at least for me, I wanted to make money to live

51
00:03:52.000 --> 00:03:57.760
where I wanted to live and have the freedoms that money provides. Right. And so I think what it

52
00:03:57.760 --> 00:04:02.880
sometimes does is puts the car before the horse and says, I want to make money so that I can have

53
00:04:02.880 --> 00:04:08.160
freedom. And yet now I'm going to become a prisoner to my money by not by relinquishing my freedom

54
00:04:08.160 --> 00:04:11.520
to live where I want to live so that I can have more money. And so in some ways, it kind of

55
00:04:11.520 --> 00:04:15.120
becomes a backwards equation and we make money, the objective rather than the things that money gives

56
00:04:15.120 --> 00:04:19.280
us because in and of itself, money has no value. Money only has value in that we exchange it for

57
00:04:19.280 --> 00:04:23.200
other things. And so if I want to exchange it for freedom, why would I exchange freedom for money?

58
00:04:23.200 --> 00:04:28.800
So think about that for a second. And so that's for me why I'm not moving to Puerto Rico,

59
00:04:28.800 --> 00:04:32.800
at least anytime soon. I don't think I am unless I'll make a video if I do and I change my mind,

60
00:04:32.800 --> 00:04:37.680
I'll tell you why. But that has been my reasoning around that. Now if you're below

61
00:04:39.040 --> 00:04:43.920
three, four, five million dollars, it does make sense. But the thing is is it very quickly

62
00:04:43.920 --> 00:04:47.600
stops making sense because once you have, quote, enough money, enough passive revenue that's

63
00:04:47.600 --> 00:04:51.920
coming into you, then it doesn't make sense to give up your freedom in order to or like continue

64
00:04:51.920 --> 00:04:56.400
to give up your freedom of living where you want to live. Now if you like love islands or at least

65
00:04:56.400 --> 00:05:00.800
you've convinced yourself that you love islands because you actually like money more, then that's fine.

66
00:05:00.800 --> 00:05:05.200
You know what I mean? But that is that is the first tech strategy around this. Now the reason

67
00:05:05.200 --> 00:05:10.880
that I say this doesn't matter is because if you plug in your wealth into like a retirement

68
00:05:10.880 --> 00:05:16.720
calculator and you say, I want to retire at X amount of money, right? If you plug it in,

69
00:05:16.720 --> 00:05:22.560
what it'll show you is how much you've contributed to the amount of money that you grow over time.

70
00:05:23.120 --> 00:05:28.000
And then how much of the network that you have at the end of your life or by XD is going to be

71
00:05:28.080 --> 00:05:33.520
based on growth. Here's what's interesting. Given the amount of money I have now, I have a lot of

72
00:05:33.520 --> 00:05:39.840
money, right? And despite that, when I plug what I have into the calculator with me contributing millions

73
00:05:39.840 --> 00:05:43.840
of dollars a year to it, the vast majority of the growth still comes from compound interest,

74
00:05:43.840 --> 00:05:48.640
it comes from growth of the assets itself and the wealth itself growing. So here's what's interesting.

75
00:05:49.280 --> 00:05:53.520
This is what the wealthy realize. They realize that all of their net worth is going to come from this,

76
00:05:53.520 --> 00:06:01.440
not from this. And so this grows tax-free, so it doesn't matter because where you're going to

77
00:06:01.440 --> 00:06:05.760
make your money is how you use the money and what you buy, right? So if I buy something that's worth

78
00:06:05.760 --> 00:06:10.080
a hundred dollars and I buy it for thirty dollars, then I instantly tripled my money, right? But

79
00:06:10.080 --> 00:06:14.160
here's the cool part, that tripling of my money I don't pay taxes on. And that's where the vast

80
00:06:14.160 --> 00:06:18.400
majority of this growth comes from. It comes from tax-free growth and it comes from not thinking

81
00:06:18.400 --> 00:06:22.800
short-sighted and thinking I have to buy and flip and flip and flip and flip, which is short-term,

82
00:06:22.960 --> 00:06:28.960
right? The wealthiest people in the world think on multiple decades horizons. They don't think

83
00:06:28.960 --> 00:06:34.320
in these months, six months, one-year type horizons, even five-year horizons are short

84
00:06:34.320 --> 00:06:36.240
for the vast majority of very wealthy people that I know.

85
00:06:38.960 --> 00:06:43.360
Real quick guys, if you can think about how you found this podcast, somebody probably tweeted it,

86
00:06:43.360 --> 00:06:47.760
told you about it, shared it on Instagram or something like that. The only way this grows

87
00:06:47.760 --> 00:06:52.160
is through word of mouth. And so I don't run ads, I don't do sponsorships, I don't sell anything.

88
00:06:52.160 --> 00:06:56.320
My only ask is that you continue to pay it forward, do whoever showed you or however you found out

89
00:06:56.320 --> 00:07:00.960
about this podcast that you do the exact same thing. So if it was a review, if it was a post,

90
00:07:00.960 --> 00:07:03.840
if you do that, it would mean the world to me and you'll throw some good karma out there for another

91
00:07:03.840 --> 00:07:11.760
entrepreneur. And so that kind of leads me naturally to the third bullet here, which is how

92
00:07:11.760 --> 00:07:17.040
slash if you sell. The only reason, you know, capital gains and these other things will affect you

93
00:07:17.040 --> 00:07:21.440
is if you sell. But if you buy with the intention of holding for a very long period of time,

94
00:07:21.440 --> 00:07:26.000
or holding until you die, then you aren't affected by any of these tax things, right? And that's

95
00:07:26.000 --> 00:07:29.440
the things that everyone thinks so short-term. The people who have the most money in the world

96
00:07:29.440 --> 00:07:33.840
realize that life is long and realize that if they just continue to do the game, compound interest

97
00:07:33.840 --> 00:07:40.800
becomes an asset, time becomes an asset instead of a liability, right? And the tax structure is built

98
00:07:40.800 --> 00:07:46.080
for this, right? And so the goal is that you can plow it, is to decrease how much you spend and

99
00:07:46.080 --> 00:07:51.920
how much you live, plow as much as you can into things that are where you buy, below what it's worth,

100
00:07:51.920 --> 00:07:55.680
and then let it continue to grow and never sell it. And here's what's cool about this,

101
00:07:56.480 --> 00:08:00.480
which kind of the fourth point piece was this, the fancy stuff. And there's tons of little things,

102
00:08:00.480 --> 00:08:04.560
you know, there's 1031 exchanges, who knows how long that's going to be around, which is

103
00:08:04.560 --> 00:08:08.880
basically you can buy a piece of real estate, and then sell, sell it, and then take the gains from

104
00:08:08.880 --> 00:08:12.480
that and put it to another piece of real estate that's the same without paying taxes. Candidate,

105
00:08:12.560 --> 00:08:17.760
I think it's a complete farce, it's ridiculous that they let people do that. But I mean,

106
00:08:17.760 --> 00:08:21.680
well, obviously take advantage of it as long as they do, but I can't sell my business and then take

107
00:08:21.680 --> 00:08:25.680
my money and put it into another business and not pay taxes. It's just this weird loophole for one

108
00:08:25.680 --> 00:08:31.200
thing, which definitely was lobbyists do their jobs, I guess. But the other thing that ultra-worthy

109
00:08:31.200 --> 00:08:38.080
people realize is that you can create these assets, right? And then you can take loans against the

110
00:08:38.080 --> 00:08:43.600
assets and loans are tax-free. And loans that you get against assets are secured loans. They're

111
00:08:43.600 --> 00:08:48.800
not unsecured loans. So a secured loan, you can typically get very, very, very low interest rates

112
00:08:48.800 --> 00:08:53.440
on. So like for me, I can get loans against my assets for about one to one and a half percent,

113
00:08:53.440 --> 00:08:58.000
which is crazy love, right? It's essentially free money. And so that's exactly what it is. And so

114
00:08:58.000 --> 00:09:03.440
I can continue to plan my money into these things. They grow at a disproportionate rate tax-free,

115
00:09:03.440 --> 00:09:07.760
and then I can take loans against those things to live on, right? And that is what the ultra-worthy

116
00:09:07.920 --> 00:09:11.840
friends that I know. They don't sell their things. They take loans against them as they've grown.

117
00:09:11.840 --> 00:09:16.320
And so if your assets grow by, let's say, 10 percent a year and you have $10 million in assets,

118
00:09:16.320 --> 00:09:20.560
you don't sell the assets to fund your lifestyle. You take a loan against the assets and you lose

119
00:09:20.560 --> 00:09:26.240
use the loan money. And that is how you live. And so the tax strategies and the ultra-wealthy

120
00:09:26.240 --> 00:09:31.280
are realizing that the little hacks and stuff are not the game, right? The game is understanding

121
00:09:31.280 --> 00:09:35.200
that you're going to buy things below what they're worth. And then you're not going to sell them

122
00:09:35.200 --> 00:09:39.120
because they're going to grow tax-free as long as you don't sell them. And that becomes the

123
00:09:39.120 --> 00:09:43.680
strategy. Sure, if you have something like, if you're good in real estate and you can do the 10-31

124
00:09:43.680 --> 00:09:48.160
exchanges, absolutely use it, you know what I mean? But you can also buy something, hold it,

125
00:09:48.160 --> 00:09:52.160
and then you can refinance it and suck the money back out and buy something else. Again,

126
00:09:52.880 --> 00:09:58.880
tax-free. And so that's kind of the big picture perspective that I think most people don't

127
00:09:58.880 --> 00:10:02.720
understand about the ultra-orthy is that they're just not even playing the game that people think

128
00:10:03.280 --> 00:10:06.320
they are. Everyone's thinking that they're playing putt putt with these six-inch things and

129
00:10:06.320 --> 00:10:10.880
and doing all these little hacks of, you know, captive insurance and easements and things like that.

130
00:10:10.880 --> 00:10:15.680
And honestly, sure, some of those things are a little sketchy. They get flipped back and forth

131
00:10:15.680 --> 00:10:20.560
by the IRS, a good friend of mine. I was like, hey, you should do this captive thing with me.

132
00:10:20.560 --> 00:10:24.080
I looked at it and I was like, I don't know. I mean, I guess it makes sense on paper, but it's

133
00:10:24.080 --> 00:10:29.120
smelled fishy. And guess what? The IRS audited everyone who worked with that company. It's just not

134
00:10:29.120 --> 00:10:34.400
worth it to me, right? And so if you can think in the big buckets, all of the net worth of the

135
00:10:34.400 --> 00:10:40.880
wealthiest people in the world comes from here. Here. It's not because they're fancy with their

136
00:10:40.880 --> 00:10:46.320
tax strategies. It's because they're understanding that they're not even playing the tax game. And so

137
00:10:46.320 --> 00:10:50.560
if you give up, and this is one that I heard from a couple of buddies of mine who are doing the

138
00:10:50.560 --> 00:10:55.200
Puerto Rican thing and there's nothing wrong with that, is that they're like, hey, man, 40 percent,

139
00:10:55.200 --> 00:11:00.320
you know, adds up when you compounds. Well, yeah, but so does also the other 60 percent that is

140
00:11:00.320 --> 00:11:06.800
compounding. You know what I mean? And so no matter what you do, the extra 40 percent is like the,

141
00:11:06.800 --> 00:11:12.240
it's just 40 percent more. So if I die and I never lived in Puerto Rico and I die and I have a

142
00:11:12.240 --> 00:11:16.800
billion dollar net worth, I could have had a $1.8 billion net worth if I had lived in Puerto Rico

143
00:11:16.800 --> 00:11:20.480
because 100 percent of that money that I would have saved over that time. But it's not like you're

144
00:11:20.480 --> 00:11:24.560
going to 10x your net worth because of that. You will increase your net worth by the proportion that

145
00:11:24.560 --> 00:11:30.640
the tax saved you, which is 40 percent. And so that is the idea. And so just a big picture,

146
00:11:30.640 --> 00:11:35.040
like if you look at your own income, and again, I said in the beginning, this makes sense because

147
00:11:35.040 --> 00:11:40.320
the difference between having $4 million and $10 million is significant. The difference between

148
00:11:40.320 --> 00:11:44.480
having, you know, $30 million and $60 million or difference between $100 and $200 million

149
00:11:44.480 --> 00:11:49.840
basically makes no difference. And so for me, I'm not willing to sacrifice where I want to live in

150
00:11:49.920 --> 00:11:56.000
the freedoms that I supposedly started this journey for, which is the freedoms to do X, Y, and Z.

151
00:11:56.000 --> 00:12:01.760
But I will tell you this as my freedom journey has continued to evolve. Now that I have the freedom to

152
00:12:01.760 --> 00:12:08.160
do all of the XYZ things, I think the best thing that I've thought of recently, and this came from

153
00:12:08.160 --> 00:12:13.680
a book that I just read, is that it shifts to freedom from. Because at the end of the day,

154
00:12:13.680 --> 00:12:17.200
money can only solve money problems and most of the problems that we suffer as humans are not

155
00:12:17.200 --> 00:12:21.680
money problems. So as much as I tell you all of these things, I do that with the intention that

156
00:12:21.680 --> 00:12:25.440
you get to the point that you realize that it really won't change your life very much. It'll just

157
00:12:25.440 --> 00:12:29.520
solve the problems that money can solve, and then you'll be left with all the problems that money

158
00:12:29.520 --> 00:12:34.080
doesn't solve, which is two-thirds of the problems in life, which are usually health and happiness.

159
00:12:34.080 --> 00:12:40.560
And so, I hope that, I hope you got value from that, keeping awesome. Maybe I'll do a breakdown of

160
00:12:40.560 --> 00:12:44.640
kind of our wealth strategy and the stuff that we do. There's some cool whole life things that

161
00:12:44.640 --> 00:12:48.320
you can put in here, where you can contribute money into something that has guaranteed income,

162
00:12:48.320 --> 00:12:52.000
that you can take loans against, kind of that fancy stuff. And I'll do that in another video,

163
00:12:52.000 --> 00:13:01.200
but I hope you found value from this, subscribe, and I'll see you in the next video.