If I were Filthy Rich
By putsandcallsoption+54 Using the Borrow against assets method
Hey future lottery winners
I was lurking on this sub and saw a lot of portfolio allocation
But when you win a significant sum say $10M + net of taxes
The smart thing is to invest the money and not sell the shares to get your cash flow
Because if you do that you will pay this pesky little thing known as taxes
Instead what you wanna do is borrow against that portfolio like the rich boys do
The loan will have your principal plus interest amount and you can get it renewed every year and leave your money in a diversified portfolio of stocks, bonds, real estate, infrastructure ( think utilities, pipelines, farms), art pieces, crypto and anything else you want
Also make sure to utilize this product called Private Placement Life Insurance
This is what will hold the diversified portfolio for you and when you die it will give you an amount that's the cumulative of the loan that you have against these assets so your kids and spouse get the portfolio without any loans against it and they can just continue the method
And you dont pay any estate or inheritance tax
Also If you win big dont just hand over massive chunks to friends and family but rather set up trusts with them as beneficiaries and put the amount you were supposed to give them in cash flowing assets in the trusts
This would ensure they dont foolishly spend all the money and come to ask you for more and you dont have to pay taxes on that
Do the same for any charity givings you can get them deducted from your taxes
Edit 1:- A lot of people are overindexing on the US stock market I would recommend you shift your allocation from local to global for a better hedge and also add real assets that produce cash flow Great examples are utilities like gas, electricity and water
Edit 2:- Consider yourself building a team of estate lawyers, wealth managers, accountants and other professionals Have meetings with them atleast once monthly to see performance reports on your investments Also you can negotiate fees with them and its best if you have a fixed fee one
Edit 3:- A few exotic investments you guys should consider is PE/VC funds, distressed debt and asset deals, angel investing, liquidation sales, buying rights on tariffs and other receivables
Edit 4:- Instead of buying houses and cars in your name you can have your wealth management firm make you a family office and you be the director of that and you can buy everything as the director needs it for business which can help you secure your assets in any unforseen event
Recent responses
+26 @NATEDAWG9111 I feel like 10M is not enough to do this, typically the ones that borrow against assets are founders and CEOs of multi billion dollar company with a net worth of minimum 100+mil. In my state with 10M net I could buy a very decent home, let's say 2 mil. Then if I truly wanna live tax and interest free I can invest in municipal bonds with the other 8mil and generate 350,000-400,000$/yr federally tax free [Edit] I say municipal bonds because they are federal tax exempt and my state doesn't have state taxes but if you wish to avoid state taxes then U.S Treasury bonds are state tax exempt.
+16 @throwawayfromPA1701 Yeah I dont even borrow money now. I have zero debt lol. Took a good long time to get here. I already have a plan. Something that collects 4% interest or more, and I live on the interest. I'm single with no kids and no spouse. That should do nicely for me.
+13 @shinn497 I have no interest in doing most of this, as the thought of tens of millions of debt makes me physically sick .
+12 @Restil You've completely missed the point. The reason this is a feasible strategy for certain rich people, is because they have virtually no cost basis. Musk, Gates, Bezos and the like were issued all of their stock when it had nominal value. They will pay capital gains on 100% of the sale value of their shares. Unless something you buy grows dramatically in value, you'll have no such tax disadvantages that would justify the interest rate. Also, you won't have a voting interest in any of the corporations so there's no need to maintain a significant percentage of the voting shares, because even at 10 million, you won't have enough for anything other than penny stocks, and why would you care about those?
+11 @Prince_Kaos I would rather pay tax on my investment earnings than Interest on some work-around loan. No thanks, sorry OP. You do you
+11 @TashaT50 * I’m not interested in creating fictions to avoid taxes. I intend to pay taxes because it’s the right and fair thing to do. I complain about the rich not paying their fair share of taxes. I’m not going to become one of them. * Trusts for family and friends makes sense and is in my plans. They get money while I’m alive through these trusts. When I die any money left goes to the charities I supported while I was alive so my family won’t have to worry about the pesky estate or inheritance taxes. * I’m setting up a charitable foundation and plan to fully deplete it within 5 years. The money shouldn’t keep sitting in the bank. It should be out there doing it’s job. * Yes diversified investing is a good idea so split the investments up a bit. * If we are planning on living a comfort life, have set up trust, and aren’t trying to avoid taxes, I don’t see the point to needing a full team and monthly meetings but I might change my mind after the first year. For the first year I do plan on having a team as you can see from my plans I’ll be needing attorneys and accountants to help set things up.