How To Use The Buy Borrow Die Strategy To Build Wealth And Pay ZERO Taxes

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  • เผยแพร่เมื่อ 21 พ.ย. 2024

ความคิดเห็น • 170

  • @TobyMathis
    @TobyMathis  23 วันที่ผ่านมา +3

    If you want to dive deeper into this topic, schedule a free consultation with my team today. Visit: aba.link/aq5

    • @EstatePlanOpposition-u4l
      @EstatePlanOpposition-u4l 22 วันที่ผ่านมา +2

      To keep our wealth, we need more than a Trust, compared to a car a Trust is just the steering wheel needing the NICER Prebate Nickel Crime Interdiction Administration. To prevent the Estate Plan mistakes costing my family a million dollars in Billable Litigation Hours.

    • @PlainEnglishTrustVictim-y3e
      @PlainEnglishTrustVictim-y3e 22 วันที่ผ่านมา +2

      Our free consultation cost a million dollars when we bought the easy to forge estate plan instead of an inheritance administration.

    • @EstatePlanOpposition-u4l
      @EstatePlanOpposition-u4l 20 วันที่ผ่านมา +1

      Estate Planners are dangerous with easy to forge Title Holding Entities, Pragmatic Clients will replace them with NICER Inheritance Administration Trusted Advisors to prevent Financial Elder Abuse and Estate Plan Crime.

  • @patrioticgrind
    @patrioticgrind 23 วันที่ผ่านมา +10

    Holy cow. i knew of this strategy for almost 15 years and still couldn't wrap my head around how it works. I finally understood this a few years ago. And here I am back here refreshing on this concept.

  • @stevendabady7049
    @stevendabady7049 23 วันที่ผ่านมา +20

    You're the kind of uncle we all need, Toby

  • @RobertBullock
    @RobertBullock 22 วันที่ผ่านมา +4

    The part about borrowing against stocks is something I hadn’t thought about. Also the margin interest you pay offsets dividends. It’s like rent paying off the loan.

  • @ChristianJacquet-my3rl
    @ChristianJacquet-my3rl 23 วันที่ผ่านมา +114

    I've set up my retirement to pay as little taxes as possible, thanks to Glen Howard Chester, a NY-based fiduciary. At 58, my wife and I plan to retire at 62 with a diversified portfolio: $620k brokerage account (withdrawing up to $94k at 0% tax), $140k IRA (tax-deferred, using standard deduction), $325k Roth IRA (tax-free), $100k cash, and 15oz physical gold. With Social Security, a $25k pension, and our investments, we'll draw from multiple sources. Glen's expertise helped me optimize our tax strategy, utilizing the $29,200 standard deduction against IRA pre-tax money, aiming for minimal taxes. His guidance proved that a better plan is more important than accumulating more money, and I'm grateful for his education on efficient retirement planning.

    • @JoshawnWilliams-s7b
      @JoshawnWilliams-s7b 23 วันที่ผ่านมา +1

      Out of curiosity, I looked up Glen Howard Chester and found his consulting page. I've got to say his credentials are truly impressive! As I'm in dire need of portfolio rebalancing, I've scheduled a call to discuss further.

    • @itissrinivasan
      @itissrinivasan 21 วันที่ผ่านมา

      Totally legit comment. lol

  • @mplate1792
    @mplate1792 23 วันที่ผ่านมา +7

    Thank you. I'm still trying to get my head around this strategy. I see potential. I'll spend months running the numbers 1st.

    • @priyamd4759
      @priyamd4759 23 วันที่ผ่านมา +1

      As per my understanding - When we sell we have income and when we have income we have to pay taxes. So, let's not sell. We can satisfy our cash requirements by borrowing. Depending on our tax bracket Income tax could be as high as 30% and as low as 10% - if it is nil most probably we are not in the position to buy anything or we are already following this strategy. If we are going to spend the borrowed money then we need to calculate. If we are going to invest it somewhere then the interest on the borrowed capital is at least partly paid off. You would be wasting time calculating pennies and cents. Time is the most important ingredient in compounding.
      The only problem in this scheme is that if the asset we have purchased and borrowed against depreciates in value - like a stock market crash or a real estate crash like 2008. If the bank comes to us for loan repayment because our asset no more covers the amount we borrowed then we can be in trouble. Sometimes the banks ask for payments or loan closure even before the asset depreciates as a matter of precaution / prudence / panic. Happened with overdraft / HELOC accounts in 2008 crash. Banks go after the small folks like us and not Elon Musks of the World. So, we need to borrow carefully and not aggressively based on our perception of the size of the crash - if any. Banks will apply a "hair cut" of about 15-20% depending on the asset already.
      We need to diversify assets so that not all go down at the same time (which mostly they will do as people sell whatever they can to fill the hole of the asset that has crashed first) and stay down for a long period of time. If real estate collapses then may be Gold and Silver is up, etc.

    • @YouAREyoubeYou
      @YouAREyoubeYou 15 วันที่ผ่านมา

      Just use a participating whole life policy, which is different from an IUL. Don’t let anyone tell you different. IUL are subject to the market( not a problem if in the SP500 as it typically goes up). You want a dividend paying policy. Foresters is a good example. I sell insurance for almost 8 years. I have this policy myself.

    • @YouAREyoubeYou
      @YouAREyoubeYou 15 วันที่ผ่านมา

      This was the original Infinite banking model.

  • @10xitall
    @10xitall 2 วันที่ผ่านมา

    Hello Toby- Fantastic content here! Relative to the loans taken against the assets. Would you just pay interest only on the loans taken out and let any principal balances accumulate?

    • @TobyMathis
      @TobyMathis  20 ชั่วโมงที่ผ่านมา

      Great question, to assist you further, I highly recommend you request a free 45-minute consultation to discuss this with my team so we can provide you with an answer that is unique to your situation. Visit: aba.link/aq5

  • @jessicamann684
    @jessicamann684 5 วันที่ผ่านมา

    I love it when regular people get do what the billionaires do. Could you please do a video on the simplest way to set this up on a investment portfolio please. For example, how to set up a profile of ETF index funds (or something else long term) that never has to be sold (including what to do if one of the index funds ceases to operate) and how to set up a load account against the investments in a standard brokerage (e.g. Schwab, etc). The goal is to hold on to investments forever without selling them, but I can't imagine some investments lasting a lifetime so I want to understand how this is structured to prevent the force sale and taxation of investable assets.

  • @danprimavera4759
    @danprimavera4759 16 วันที่ผ่านมา +4

    What about payments on the money you borrow and the additional interest on the loan?

    • @YouAREyoubeYou
      @YouAREyoubeYou 15 วันที่ผ่านมา +1

      Interest on the loan is typically a wash. It’s a loan against the death benefit you don’t have to pay the loan back. It’s settled at death.

  • @markos9751
    @markos9751 23 วันที่ผ่านมา +5

    I would love to learn this on a deeper level. Any book recommendations?

    • @gregm3023
      @gregm3023 22 วันที่ผ่านมา

      @@markos9751 The Value of Debt & The Value of Debt in Retirement by Thomas J Anderson.

    • @Dtansing1
      @Dtansing1 20 วันที่ผ่านมา

      Just keep watching his channel and have a free consultation with his team, them sign them up as your financial advisors.

  • @durial702
    @durial702 23 วันที่ผ่านมา +2

    Thanks for the video. If I execute my plan correctly I'll have a couple million in after tax investments by the time I'm 50. I always figured I'd sell some of it if I needed liquidity, glad to be aware of this strategy now.

  • @alanminer5249
    @alanminer5249 22 วันที่ผ่านมา +4

    What about the interest you have to pay on the borrowed money? Wouldn't that be more than the tax?

    • @JonathanExcels
      @JonathanExcels 20 วันที่ผ่านมา +1

      If the interest rate is higher than the appreciation, it will eat away at your money. But if you can get someone else to pay for the loan (i.e. renters) then you could come out ahead. This falls apart if the economy tanks, nobody rents, and you still have to make the payment.

  • @paullt5111
    @paullt5111 21 วันที่ผ่านมา +1

    Thanks Toby. To buy you have to have income or rapidly appreciating asset to borrrow against it. In my practice working with wealthy people they all have successful businesses, or they are highly paid professionals.

  • @rebeltheharem7028
    @rebeltheharem7028 23 วันที่ผ่านมา +1

    I do generally agree with doing this, especially if you are borrowing on low interest or "Art" if you are an "Artist". (You'd need an "appraiser", but that's a different story). As always, unless you can get some universal life insurance that invests the premiums directly into the stock market with uncapped gains, to never get it (and just pay term life), and just invest in the stock market and borrow against your portfolio.

  • @aaronsmith8265
    @aaronsmith8265 22 วันที่ผ่านมา +1

    But if you borrow against a whole life policy, won’t there be a term on the loan that matures a short time after the loan is taken out?

  • @dalemcleod542
    @dalemcleod542 23 วันที่ผ่านมา

    Thanks Toby. So the secret is getting a low interest rate on borrowed money to prevent a huge interest payment on initial loan. Would the interest be deductible with IRS?

  • @johnhardy2702
    @johnhardy2702 23 วันที่ผ่านมา +8

    Toby...we need those interest rates to come down!

    • @maestroadam
      @maestroadam 16 วันที่ผ่านมา

      hey if market returns stay at 20%, you're still golden :)

    • @eliot5220
      @eliot5220 13 วันที่ผ่านมา

      Why don’t you just buy something for less instead of worrying about interest rates?

  • @TJC6626
    @TJC6626 20 วันที่ผ่านมา +1

    Ok I get the concept but the part I'm missing is making the payments on the loan with real east you can use the cash flow from rent but how do you pay the loan from borrowing against a stock portfolio

  • @tommyboy1653
    @tommyboy1653 23 วันที่ผ่านมา +11

    You might not pat tax on appreciation, buy you sure pay property tax on appraised value updated every year.

    • @mplate1792
      @mplate1792 23 วันที่ผ่านมา +5

      True, on real estate. No property tax on stocks though.

    • @priyamd4759
      @priyamd4759 23 วันที่ผ่านมา +1

      Point is if you need cash and have assets instead whether you sell those assets to raise the cash and pay Capital Gains tax or borrow against the asset to raise the cash and save on taxes.

    • @nolongerhave-couth4771
      @nolongerhave-couth4771 23 วันที่ผ่านมา

      ​@@mplate1792your renters are the ones that pay the property tax

    • @SabrinaDacosta
      @SabrinaDacosta 22 วันที่ผ่านมา +2

      Property taxes on stocks? Lmfaoooo It’s called capital gain dum dum not property taxes

  • @Dtansing1
    @Dtansing1 20 วันที่ผ่านมา

    Great Toby, will this be the same in Australia?

  • @GleezoVision
    @GleezoVision 21 วันที่ผ่านมา +1

    this is amazing, thank you!!!

  • @ThomasBianciotto-vk7tg
    @ThomasBianciotto-vk7tg 23 วันที่ผ่านมา +1

    FYI - If one owns their vehicle outright, he or she can borrow against the title. For example, I’ve got a 2019 Tacoma that I could have borrowed almost $31,000 against at about 6.5% prior to my recent purchase of an investment property with a repayment term of 5 years. My wife and I decided against this but that could have been another 31 k I put down and didn’t have to pay mortgage interest on, long term.

    • @TobyMathis
      @TobyMathis  23 วันที่ผ่านมา +1

      Great comment. Thank you:-)

  • @belmontadventures
    @belmontadventures 16 วันที่ผ่านมา

    Awesome information. I need to get in touch with you to discuss further. Incredible.

    • @TobyMathis
      @TobyMathis  16 วันที่ผ่านมา

      I'm glad you found the information helpful! Feel free to reach out or schedule a consultation with my team. aba.link/aq5

  • @stephenwalsh4253
    @stephenwalsh4253 7 วันที่ผ่านมา

    Could I use this system in UK??

  • @renavartio
    @renavartio วันที่ผ่านมา

    If you sold stock outright it would be taxed at LTCG rates which would be at a max of 20% if held long term.

  • @EduardBobrik
    @EduardBobrik 10 วันที่ผ่านมา

    Hi, but the assets are collateral, and what about the monthly payment to the loan?

  • @jasonandersen1562
    @jasonandersen1562 22 วันที่ผ่านมา +2

    Every time I look to get a loan on my assets, I'm told it's only for renovations, credit card debt, and NOT allowed to be used for investments (i.e. stocks).

    • @METVWETV
      @METVWETV 22 วันที่ผ่านมา +1

      That's correct, so what's your point?

    • @jasonandersen1562
      @jasonandersen1562 22 วันที่ผ่านมา +2

      @@METVWETV That the money can't be used for income generating assets, as was mentioned in the video.

    • @tabbott429
      @tabbott429 11 วันที่ผ่านมา

      I took out a 1st mortgage on my paid off house. No restrictions on what its used for

  • @ZE3kr
    @ZE3kr 23 วันที่ผ่านมา

    I would love to use this strategy. But that only works for taxable portfolios, right? I have access to a mega backdoor IRA. The problem is, once I maxed that out, I don’t have more money to buy.😂

  • @nickthequick
    @nickthequick 23 วันที่ผ่านมา +5

    I think your calculation is wrong at 9:23 - those 4 houses would be worth 1 not 2 million ...

    • @darrellhay
      @darrellhay 23 วันที่ผ่านมา

      saw that also!

  • @ookuitore
    @ookuitore 13 วันที่ผ่านมา +1

    In Europe these kind on loans are not available. For example security backed credit

  • @CoryNorton-e7m
    @CoryNorton-e7m 17 วันที่ผ่านมา

    This is great information and I now see how I could live off the borrowed money from my equity in my traditional investment property. However, I live in California and receive a pension from the City & County of San Francisco. Together with my SS my income is about $120,000 and I’m single. How can I reduce my present taxes? I attended a scheduled meeting with your staff but never received the information they promised about charitable non profit organizations and how this might be helpful to my present situation. Any suggestions on how I can research or connect with someone in your organization to reduce my tax liability this year?

    • @TobyMathis
      @TobyMathis  16 วันที่ผ่านมา

      Great question, to assist you further, I highly recommend you request a free 45-minute consultation to discuss this with my team so we can provide you with an answer that is unique to your situation. Visit: aba.link/aq5

  • @WinnifredJPeacock
    @WinnifredJPeacock 22 วันที่ผ่านมา +3

    However...you have to pay the money back with money that comes from somewhere, like a job. You have to pay taxes on that money, plus interest on the loan. So unless you're borrowing to invest in income-producing property, how do you pay it back? And income-producing property generates income, which produces taxes. What am I missing here?

    • @EstatePlanOpposition-u4l
      @EstatePlanOpposition-u4l 22 วันที่ผ่านมา +1

      You're not missing anything you're listening to an Estate Planner who thinks a Trust is only a title holding entity instead of a service tool to transfer wealth without inheritance hijackers so take it with a grain of salt.

    • @lauriekline8655
      @lauriekline8655 21 วันที่ผ่านมา

      Your tenants are paying it back

    • @WinnifredJPeacock
      @WinnifredJPeacock 21 วันที่ผ่านมา

      @@lauriekline8655 if, and only if, you borrow to invest in income-producing property -- as I said. Not if you're going on vacation, paying medical bills, or putting someone through school.

    • @plus790
      @plus790 21 วันที่ผ่านมา +2

      He's not saying you don't have other *income* or that you wouldn't pay taxes on that. So you would use that real income (or borrow more) to make the payments. The point is that by keeping investments (appreciating assets) that are returning close to the interest rate you are borrowing at, it's pretty close to a wash year-to-year. The benefit comes mostly to the beneficiaries. Because the base resets upon death, essentially no one ever pays the big capital gains taxes.
      Let's say that your initial $5M portfolio appreciates at 5% and is currently worth $10M, but you are paying 6% on a $1M loan. You are paying approximately $60k in interest each year. If you had sold $1M ($500k of "gain") instead of borrowing, you pay an immediate (estimated) 25% capital gains, which is $125k. You also lose out on the 5% return on that $1M for that first year, so you miss out on earning $50k. So the year one net is +125K +50k -60k, or a net positive of $115,000. In year two, there is no longer the capital gains savings, so the +50k and -$60k results in -$10k (those numbers are actually a little bigger on the investment side due to compounding, and a little smaller on the loan side due to payments reducing the principal, but close enough for us). Each additional year, that $10k cost to you will be diminished, plus you already started out $115k ahead. And this is all under the pessimistic assumption that your returns are at a lower rate than the interest you pay.

  • @CFH298
    @CFH298 22 วันที่ผ่านมา

    I use an SBLOC to buy high yield dividend funds for my 30% dividend slice. The dividends pay off the line of credit.

  • @Violet-uh9fj
    @Violet-uh9fj 23 วันที่ผ่านมา +7

    The old adage holds true, you need money to make money.

    • @pooroldgreyhaireddaddy
      @pooroldgreyhaireddaddy 23 วันที่ผ่านมา

      Bought my first house for 13,900 on an article of agreement or "land contract". I lived in it essentially for free while I fixed it up. 20 years later (lived there for 10, rented it out for 10) I sold it for 53,000 and bought a semi tractor in 2017. Made 700k in 3 yrs with it. That house today is over 100k. Crazy?

    • @Chunsoffun
      @Chunsoffun 23 วันที่ผ่านมา

      You can start investing in stocks with as little as $100. A lot of brokers these days will let you buy fractional shares of companies. And reinvest your dividends so you get more stock for free.

  • @jsisbeingcensored
    @jsisbeingcensored 23 วันที่ผ่านมา +26

    Okay I hear ya. Correct me if I’m wrong please. You buy a house in your 30s and live there your entire life. It’s paid off by retirement. It was 500k when you bought it and 30 years later it’s worth 1.5m. You saved for retirement but as your time is coming you realize you’re short. So you take out a loan for half the value of the house @ 15 years and get life insurance. Make your payments live out your life and have insurance pay off the loan balance so you can give the house to your heir?.

    • @mississippiapple1078
      @mississippiapple1078 22 วันที่ผ่านมา +1

      Wow never heard a Strategyqthat way

    • @mississippiapple1078
      @mississippiapple1078 22 วันที่ผ่านมา

      Your sins are forgiven

    • @plus790
      @plus790 20 วันที่ผ่านมา +6

      the insurance is kind of unnecessary for the scenario. To simplify, just leave that out for now. You die in 9 years, with $375k remaining on your $750k mortgage. Your heir inherits a $1.5 million house - $375 payoff. The tax base is now reset at $1.5M (ignoring any appreciation over the next 9 years) and if they sell, they get 1.125M tax free. If you had sold the house 9 years earlier, you would have paid capital gains tax on the $1M appreciation of the house--let's say 30%. Essentially a wash for them, *but* you received $750k cash 9 years ago and paid off an estimated $450k toward the mortgage. All in all, your heir get the same amount, but you pocketed $300k of your initial 750k. And again, that is not counting anything for the 9 years of continued appreciation of the home.
      Keep in mind, you also borrowed quite a large portion of your assets. In other scenarios you might pocket less but the difference for your heir would be far greater (nobody pay the capital gains).

    • @petertopolovec2213
      @petertopolovec2213 19 วันที่ผ่านมา

      Why do you keep stating that after you die, you pay off the loan and are net ahead without paying taxes. Your DEAD! Your not doing anything!!! Its your estate thats left, not you. Again your dead!!!!

    • @YouAREyoubeYou
      @YouAREyoubeYou 15 วันที่ผ่านมา

      @@plus790the insurance is probably a good thing-if one purchases a participating whole life insurance policy. They can essentially do a SPPUA(Single premium paid up addition) (7702 IRS tax code)

  • @ClayJitsu
    @ClayJitsu 23 วันที่ผ่านมา

    also a key thing is that capital gains tax are based on your AGI, so if you can get your AGI way down one year, you can sell stuff for free.

  • @bethhynes787
    @bethhynes787 11 วันที่ผ่านมา

    Can you take the loan against Roth IRA assets?

    • @jhubluejay
      @jhubluejay 10 วันที่ผ่านมา

      Reclaim your principal from the Roth and put it into M1 in high dividend paying funds like MSTY, NVDY, and GOF and reinvest the dividends and use the margin option with M1 to accelerate your earnings and pay low margin rates that your dividends cover. Never sell and never pay taxes on capital gains. Rinse and repeat.Thus, buy, borrow, die.

  • @liuh2006
    @liuh2006 23 วันที่ผ่านมา +1

    You don't pay tax but you pay interest on the loan and it has negative impact on your cash flow just like tax does.

  • @4dscdriver
    @4dscdriver 22 วันที่ผ่านมา

    Is a margin loan the same thing?

  • @johnelliott672
    @johnelliott672 23 วันที่ผ่านมา +4

    Yes but unless ultra wealthy be cognizant of loan payments and interest on borrowing.

  • @Louis-dl3js
    @Louis-dl3js 22 วันที่ผ่านมา

    How about gold or silver? Could you borrow against those so you would'nt have to sell?

    • @plus790
      @plus790 20 วันที่ผ่านมา +1

      Yes, if you're dumb. Gold and silver can be safe in downturns, but long term they get crushed by the returns on stocks and other good investments.

  • @blakeballer6781
    @blakeballer6781 23 วันที่ผ่านมา +1

    Toby, will taxes be owed on that 1M leftover after the house sells for 2M?

    • @priyamd4759
      @priyamd4759 23 วันที่ผ่านมา +1

      I am from India so take this with a pinch of salt. What I understand by the phrase "increased basis" is that for the heirs the "purchase" cost will be the current market price 2Mn $ - since they got it now - and so when they sell it they made zero profits and hence zero tax. I guess that is what he meant by increase in (cost) basis. Hope others will comment here. Regards,

  • @keepitprivate91
    @keepitprivate91 23 วันที่ผ่านมา +2

    I wish I saw this when I was in my 20s

  • @over07ful
    @over07ful 23 วันที่ผ่านมา

    We had 15 years of artificially low interest rates. I want to borrow against my asset to buy more assets and pay back that loan in dollars that are depreciating due to inflation at a faster rate than my interests rate. I can also use the loan as a deduction. Doesn't that make the loan or debt the asset? In other words I'm now being paid to take a loan. These low interest rates given by the govt have not created wealth, but instead have created a wealth transfer from the govt to the asset holders. Is that correct?

  • @AEVMU
    @AEVMU 22 วันที่ผ่านมา

    This method is fairly easy to grasp, but the real buy borrow die methods are far more complex and might involve something like a zeroed-out grantor retained annuity trust, preferred freeze partnerships, and bespoke loan products from financial institutions. What's presented in the video is really just a form of borrowing against a leveraged asset and deferring capital gains.

    • @EstatePlanOpposition-u4l
      @EstatePlanOpposition-u4l 22 วันที่ผ่านมา

      Finally, a voice of reason the Living Trust is 100 times more complex too so maybe Anderson Advisors are Kindergarten teachers.

  • @scottiswatchingtele
    @scottiswatchingtele 23 วันที่ผ่านมา

    Stepped up basis doesn’t work with assets in a LLC unless it is a flow theu. If this right?

  • @yangli5411
    @yangli5411 20 วันที่ผ่านมา

    But you will need to pay interests right?

  • @MA-wy7cr
    @MA-wy7cr 23 วันที่ผ่านมา +6

    The loan is not taxable, but the monthly repayments you have to make on, say, a HELOC are all made with post tax money , and you have to pay it back with interest. Doesn't that negate the benefits?

    • @ZE3kr
      @ZE3kr 23 วันที่ผ่านมา +5

      If the assets grow faster than the interest rate, then it is still a win.

    • @MA-wy7cr
      @MA-wy7cr 23 วันที่ผ่านมา +1

      @@ZE3kr Thank you. I'm aware of how math works. Heloc rates are relatively high, and they may or may not out perform the stock market. The repayments you have to make on the loan are all post tax, they're not tax deductible, so you are saving on taxes by taking the loan, but you are taxed on your income, which is then used to pay for the loan. My point is the benefits of this may be overstated, unless you are a billionaire, in which case the 2% difference between your loan interest rate and your returns will make a difference. What am I missing here?

    • @ZE3kr
      @ZE3kr 23 วันที่ผ่านมา

      @@MA-wy7cr A 2% difference will compound and will have a bigger difference. Right now, the interest rate is high, so loans might not be appealing, but during the time the rate is low, that growth difference is higher.
      But taking a loan on stocks is like leverage and will make the risk higher

    • @plus790
      @plus790 20 วันที่ผ่านมา

      The short version is no. Even if you're borrowing at a higher rate than the investments are returning, you are avoiding a 25% (est) immediate haircut on the capital gains you've realized. Depending on the difference in those rates, it would take a long time to wash out the immediate benefit, if at all.
      *note--when i say "immediate benefit", I'm referring to the preserving and growing the portfolio (which you can't touch). Even though the paper benefit is large and immediate, it is ultimately your heirs who actually get the money, when they inherit $1.3M instead of $1M.

    • @MA-wy7cr
      @MA-wy7cr 20 วันที่ผ่านมา

      @@plus790 let's compare a million dollar investment. Salary vs HELOC. So if you want to net 1 Mil income, and are self employed , you'll need to make maybe 1.5M. You make a 1M investment that grows @ let's say 8 percent on average for 21 years. It'll be worth approx 8 million. So 1.5 mil gross to make 8 mil. You'd be responsible for a 2 Mil tax bill if you sell and cap gains is @ 25 percent. So 1.5M gross gets you to 6 mil after taxes.
      Alternatively, you take out a 1 Mil HELOC @ 8 %. You saved an immediate 500k in taxes vs if you did it with income. But you have to make 8k monthly payments on the HELOC for 21 years. With post tax money. At the highest tax bracket/self employed , that means you'd need to make approx 14k gross to net 8k. Which is 1.26M in taxes over 21 years. And that doesn't take into account the 1.2M in interest you would have paid over the life of the HELOC. And you'll still be responsible for the 2 Mil capital gains bill at the end of the day. So that 1 Mil HELOC will net you 8 mil, minus 2.5M in taxes and interest, minus 2 Mil in capital gains tax. =3.5M. So I don't see how the initial 500k tax savings can justify the interest + taxable income it takes to pay down the loan.

  • @sadams6663
    @sadams6663 23 วันที่ผ่านมา

    I own some rental properties and wish to leave them to my heirs to keep in the family. I love Buy Borrow Die Strategy. My only concern is if I borrow and die, will my heirs be forced to sell those properties because mortgage on the properties? Is there any strategy to Buy Borrow Die (for me) and still keep the properties (for heirs)?

    • @robertweekley5926
      @robertweekley5926 23 วันที่ผ่านมา

      Maybe have the Rental Property buy a Life Insurance Policy on you, of a Value at or above the Mortgage You took on it!

    • @robertweekley5926
      @robertweekley5926 23 วันที่ผ่านมา

      Maybe have the Rental Property Buy a Life Insurance Policy on you, with a Payout at 1x to 2x of the Initial Mortgage Value, that pays the Mortgage as a first, and your estate as a Second consideration?

    • @JonathanExcels
      @JonathanExcels 20 วันที่ผ่านมา +1

      Your heirs would need to employ the same strategy.

  • @sinmayp
    @sinmayp 22 วันที่ผ่านมา

    Do you need to have a brokerage account with Morgan Stanley to qualify for a securities backed line of credit?

  • @Dappertrucker
    @Dappertrucker 23 วันที่ผ่านมา

    Can you borrow against physical silver and gold and numismatics as an graded coins

    • @priyamd4759
      @priyamd4759 23 วันที่ผ่านมา +1

      Loans are definitely possible against physical Gold anytime and anywhere in the World. Here in India Gold is mainly used for that purpose and there are listed companies that deal only in Gold loans (such as Muthoot Finanance or Mannappuram Finance) For reasons not known to me loans are not given against Silver. I am not sure what the other assets you have mentioned.
      There is one argument made against the borrowing against Gold idea. =>
      Say we have 100 gm (or Oz) of Gold and current value is $2785 * 100 = $278,500 The banks are going to give us a max loan of 80% of that value - called "hair cut" to reduce their risk in case the Gold prices fall. So we can raise roughly $220,000 Now we need to pay EMI payments for the loan taken till we pay off the entire amount. The opponents of the Gold loan idea argue that we should not part with 100% of our Gold only to get 80% amount and pay interest on our own money. Their suggestion is instead of paying EMI to the bank and losing that money forever we can sell 80% of our Gold to raise the same $220,000 and keep the 20% remaining Gold with ourselves and not deposit with the bank / lender. We may or may not need to use it but it is always better to have our Gold with ourselves. Now, in the next step, the EMI - monthly payments - we saved must be invested in Gold and we will end up buying all the Gold we sold in due course of time without paying any interest to the lender.
      My thoughts => The idea makes plenty of sense except in the situation that Gold flies off the handle and the price increases very fast. In that case it is better to take a loan against Gold and enjoy the benefit of the price appreciation on the entire 100gm (Oz) we have. I am not talking about interest rates because in India we generally have higher interest rates on both sides - borrowing and deposits - when compared to the States or Western World. I think Gold is in a momentum so at this point of time Oct 30, 2024 I would go for a loan. Or just do a 50-50 of my requirement. If I want to raise $100,000 I will sell Gold worth $50,000 out right and deposit Gold worth $62,500 with lender to raise the rest $50,000 (after hair cut). That way I am not punting on the price action of Gold. Remember I still need to buy Gold of the same amount that I am paying the EMI to the lender every month. Of course, when the money is in my hand I have better control of how I invest etc but discipline on our part is important. When the control is with the bank we are f* for sure. Hope this helps. Regards from India.

  • @tonya.2645
    @tonya.2645 15 วันที่ผ่านมา

    Does step up basis apply to a spouse whose name is NOT on the property to avoid capital gains taxes upon the owner spouse passing or, does a spouse not qualify as an heir for step up basis purposes? Thank you.

  • @RasielSuarez
    @RasielSuarez 22 วันที่ผ่านมา

    The part I don't get is how this works out for a typical tech billionaire. Let's say you need money to buy a house and have a portfolio of 1B in stocks. Ok, you borrow against it and now you have a house you paid for in cash. However, you now have a loan, effectively a mortgage. So what, do you borrow more to pay it and end up with even more loans? This is not sustainable. At some point you have to settle by selling the stocks and paying cap gains so it all catches up plus you're worse off for the interest on the loans. Even death doesn't help here because the debt is attached to the estate.

    • @METVWETV
      @METVWETV 22 วันที่ผ่านมา

      Death is the key to this strategy!
      Your heirs receive their inheritance (Your Portfolio) at a "Step-up in basis"
      This means that, for the purposes of taxation, the value of the stock is now set on the day you die.
      Therefore, when you sell it, there is no Capital Gains.
      No Capital Gains, NO TAXES!
      Your heirs pay off the loan with your enormous Portfolio and inherit the rest

  • @riverat7558
    @riverat7558 23 วันที่ผ่านมา

    Pardon me sir. Doesn't borrow money come with a debt service?

  • @mixingdude
    @mixingdude 5 วันที่ผ่านมา

    I've heard this strategy doesn't work unless you have many millions. The compounding interest becomes a problem after years. Like it won't work with a million in stocks.

  • @The442nd
    @The442nd 23 วันที่ผ่านมา

    I LOVE IT!!!!

  • @alexanderkrichevsky9194
    @alexanderkrichevsky9194 17 วันที่ผ่านมา

    Well you don't pay any tax, but you are paying interest. Sell assets - lose 30% in tax. Borrow money at 5% interest - lose 5%the first year, 5% second year, and so on. If plan to live more than 6 years you may be better off paying the tax. May be a little longer if your interest payments offset other incomes and/or if your stock appreciates faster than the interest you are paying, but it's not something for nothing.

  • @95K-y2n
    @95K-y2n 23 วันที่ผ่านมา

    First, I’m ready to see this video!

  • @denisebagley2342
    @denisebagley2342 23 วันที่ผ่านมา +6

    But then you have to make the payment.. on the borrowed . Which is a lot!

    • @TobyMathis
      @TobyMathis  23 วันที่ผ่านมา +13

      The income being generated on the assets more than pays it. My point is that the appreciation - which you are doing nothing for - is tax-free.

    • @pooroldgreyhaireddaddy
      @pooroldgreyhaireddaddy 23 วันที่ผ่านมา +2

      ​@@TobyMathissome won't see

    • @MrPeterschmit
      @MrPeterschmit 23 วันที่ผ่านมา

      ​@@pooroldgreyhaireddaddy poor old grey haired daddy,.... driving my limousine. Any connection to Dr hook and the medicine show? Just had to ask.

    • @gregm3023
      @gregm3023 23 วันที่ผ่านมา

      Margin loans do not require interest or principal payments - you can cap and roll and interest will compound. Caution here as need to stay well below maintenance margin in case market crash

    • @denisebagley2342
      @denisebagley2342 23 วันที่ผ่านมา

      @@TobyMathis I sold my husband on the idea and we are happy with our investments. It’s the paying on the loan that stretches a person. Doesn’t out weigh the appreciation on our investment s. Just saying when you borrow you add a payment. Unless you use it revolving.

  • @mathew3267
    @mathew3267 18 วันที่ผ่านมา +2

    Nice try but if you start messing around with this kind of thing you'll end up living in an alley somewhere. I've never heard of a loan where you live your whole life without starting to pay them back immediately. How the hell do you borrow something and die before you start paying them back?

  • @mrprfct7069
    @mrprfct7069 20 วันที่ผ่านมา

    Here is something he isn’t talking about. You have $500k property. Somehow in 10yrs it’s now worth 1.5m. You still owe say $400k. It’s a rental property. Now you want to borrow $250k. You have to be able to qualify to the lender. That’s key you have to be able to qualify. The bank isn’t going to lend you another $250k on top of the $500k for a property that’s valued 1.5m unless you can qualify. To qualify you need income. You must still have a job. You ain’t living of these properties. In my case I purchased at $400k 8yrs ago. Value went up to $900k. So I refi at a super low rate and took $150k out. I bought another home with that $150k. I moved to the new home and rented the property I borrowed against. The tenant rents covers the $550k loan and taxes and I have $1k left over every month which I use to pay off that mortgage. I am hoping in 3 yrs rates will be lower so that I can rinse and repeat.

  • @metalgirl
    @metalgirl 23 วันที่ผ่านมา

    Yeah, but there are only certain things you can use the borrowed money for. For example, I was told I could not use it to pay for my ordinary, living expenses…

    • @robertweekley5926
      @robertweekley5926 23 วันที่ผ่านมา +1

      So, get a Personal Line Of Credit, instead of a Loan! Define it as "Emergency & Opportunity Funding", for the "Purpose!"

  • @crisbiz2754
    @crisbiz2754 22 วันที่ผ่านมา

    I laughed so loud while watching this that's the best strategy ever.. I will take that path

  • @gregzoller9003
    @gregzoller9003 23 วันที่ผ่านมา +1

    I'm still lost. You gotta make payments on the loan. Unless you're crazy wealthy and have appreciating assets far in excess of the loan payments that I can just keep borrowing, you'll need to make your loan payments with $ that was taxed, eg salary. So you wind up paying taxes plus interest. I can't imagine anyone's gonna give you $1M and say "No worries, bro--Just pay me back when you die." For this to work you need a repeatable way of paying the loan payments w/o paying tax. Otherwise non-wealthy people might do this one or twice, but you'll quickly borrow money faster than you can add assets.

    • @priyamd4759
      @priyamd4759 23 วันที่ผ่านมา

      When you bought the asset you alone put all the money and when you are selling it, this new partner comes out of nowhere and takes almost 30% of the value! Are you going to pay 30% of the value in interest payments on the loan? That would take quite a while and the property - which you still own - may appreciate further. When you sell you lost the property at 30% less value. Hope this helps regards,

    • @METVWETV
      @METVWETV 22 วันที่ผ่านมา

      You're NOT paying down the Principal, just the interest.
      The day you die, your Heirs inherit your Portfolio at a Step-up in basis.
      They sell what they need, to finally pay the Principal and since there is No profit to the heir.....NO TAX!

  • @metalgirl
    @metalgirl 23 วันที่ผ่านมา

    And don’t you have to make payments on the borrowed money?

    • @robertweekley5926
      @robertweekley5926 23 วันที่ผ่านมา

      Sure, but that payment can be automatically covered, by leaving some of the borrowed funds, in a linked account!

    • @priyamd4759
      @priyamd4759 23 วันที่ผ่านมา

      Better than losing 30% to IRS forever. And of course, you will be responsible with the raised funds. Put that - at least part of it - in some proper investment vehicle.

    • @realniteart
      @realniteart 19 วันที่ผ่านมา

      @@priyamd4759 It's 30% of the profits, not 30% of the total borrowed amount. And if you're doing things right, it should be 15%. Currently, your loan would be at an 8-11% APR. I imagine you need to borrow a lot of money to make it worth the difference, way beyond what is meaningful for average people.

  • @teddzik7843
    @teddzik7843 23 วันที่ผ่านมา

    Think you’re missing the interest that has to be paid on the loan.

    • @robertweekley5926
      @robertweekley5926 23 วันที่ผ่านมา

      😂True, for a "Conventional Loan!" But, have you not heard of a "Balloon Note?" Or any other type of product?
      For example, I have "Personal Lines Of Credit" with different institutions, or Banks. Some charge Interest "TO" the Line of Credit, itself, while others just "Take the Interest" from a linked Savings or Checking Account! (Which could be "Funded" from the Money taken from the Line of Credit itself!)

  • @rightright6582
    @rightright6582 5 วันที่ผ่านมา

    Why we do not apply this? U did not adress that key fact, It sounds simple

  • @mostopenminded425
    @mostopenminded425 23 วันที่ผ่านมา

    So why did my property taxes just go up because my house increased in value

  • @mayandios7021
    @mayandios7021 21 วันที่ผ่านมา

    The easiest way to try this is with an overfunded dividend-paying, whole life insurance policy

  • @peterhazard9284
    @peterhazard9284 23 วันที่ผ่านมา

    Why are Warren Buffet selling into cash now

    • @4dscdriver
      @4dscdriver 23 วันที่ผ่านมา

      He knows something big is about to happen.

  • @paulputin
    @paulputin 21 วันที่ผ่านมา

    The strategy is not expained properly because if I borrow $1M and keep it over 40 years and the interreset rate is 4% per year, I will have to pay over these years $1.6M in intereset and still owe $1M.

  • @briankrohn7482
    @briankrohn7482 17 วันที่ผ่านมา

    How in the world are you not paying taxes on a house or property that is increasing in value. The county/city increase your property taxes every time your property increasing in value!

  • @nfaoussoukouyate1963
    @nfaoussoukouyate1963 23 วันที่ผ่านมา

    Lending club take me to the court right now

  • @hfarthingt
    @hfarthingt 11 วันที่ผ่านมา

    You can’t just borrow money from an asset without the income to be able make the payments. Herein lies the rub… who cares if your house has $1million of loanable value if you only make $2000 a month from your retirement. Banks still adhere to debt to income ratios to determine if they want to lend to you.

  • @KulaGGin
    @KulaGGin 18 วันที่ผ่านมา +1

    Murica. A tutorial on TH-cam how to bypass taxes lmao.

  • @AbqXay
    @AbqXay 23 วันที่ผ่านมา

    How are you going to do any of this if you’re dead?

    • @robertweekley5926
      @robertweekley5926 23 วันที่ผ่านมา

      Transaction able Documents that are activated upon your Death, Registered, and Recorded, it seems! With a Legal Firm, a Funeral Home, and a Trustee, or person with "Power of Attorney"?

    • @priyamd4759
      @priyamd4759 23 วันที่ผ่านมา

      What is there to do?
      Banks have the original title to the property. They will catch hold of the heir and settle the matter. Either heir pays the loan amount out of pocket, gets the property tittle cleared and immediately borrows against it again - no taxes paid - OR just sells off the property, settles loan with the bankers and moves wherever s/he wants to go, again no taxes paid.

    • @METVWETV
      @METVWETV 22 วันที่ผ่านมา +1

      Your heirs settle your debts.
      They also receive your assets at a Stepped-up cost basis, ie: they sell it tax free.
      That's the crux of this strategy

  • @hardmorabia9654
    @hardmorabia9654 17 วันที่ผ่านมา

    5:00

  • @william7427
    @william7427 7 วันที่ผ่านมา

    Leave nothing for your kids 😢

  • @ODYSSEY246
    @ODYSSEY246 23 วันที่ผ่านมา +2

    I need 100k for home improvements. My house is worth 800k and I still owe 400k. Should I get a HELOC for 300k and invest the extra 200k?

    • @markwegner6100
      @markwegner6100 23 วันที่ผ่านมา

      No

    • @salvadorgomez8921
      @salvadorgomez8921 23 วันที่ผ่านมา +1

      You are correct, where do you live.? Depends on your area, sample in Las Vegas Nevada you can buy a four plex = 4 units for around $600k put down 20% = $120k plus closing than save the balance for emergency fund Ok. Hire a broker to manage the fourplex this person will handle the leasing and eviction if needed. Rent money will be sent to your bank. Property will double in the next 6 to 8 years. Tenants will pay for everything Good Luck.

    • @priyamd4759
      @priyamd4759 23 วันที่ผ่านมา +1

      If you know a good investment that pays back more than the interest you need to pay, sure.

  • @fps6612
    @fps6612 8 วันที่ผ่านมา

    Jaajaja the IRS do take donations... 😅

  • @deanmitchell5208
    @deanmitchell5208 23 วันที่ผ่านมา +1

    Bonds pay interest.... hilarious

  • @pnsmexico
    @pnsmexico 21 วันที่ผ่านมา

    the quality of this video made me wonder if it was recorded in 2006. but is was yesterday Oct 2024.

  • @KnowledgeCurse
    @KnowledgeCurse 13 วันที่ผ่านมา

    Can you get loan on 401k account 😂?

  • @nfaoussoukouyate1963
    @nfaoussoukouyate1963 23 วันที่ผ่านมา

    For 4,288.19 us dollars November 4/2024

  • @The442nd
    @The442nd 23 วันที่ผ่านมา +5

    Let's all pray to God Kamala doesn't get shoehorned into The Presidency