Author Topic: REALWEALTHMANAGEMENT  (Read 45677 times)

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Offline Bullsback

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Re: Wealth Management Process
« Reply #15 on: January 06, 2016, 06:04:10 PM »
By the way Panda, I should point out, I fully expect to fall somewhere in the penta and deca range (in today's dollars) when I am in my 50's and 60's.  So I would like to think I will fit into the topics you are pointing out, I'm just saying that I'm leveraging what I feel are my best skills to get their (while also considering risk) and in my case at the current point in time, I feel that I'm best suited working a job in Corporate America. 

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Offline qwerty

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Re: Wealth Management Process
« Reply #16 on: January 06, 2016, 06:07:07 PM »
Panda - you seem to think an S-Corp itself is the pathway to riches? The S-Corp is just one of the mechanisms for legal/tax reasons to protect the monetary benefits generated by a business with a good/great idea. The key is having the idea to make the money, the s-Corp has nothing to do with it.

Like bullsback said, many business owners are slaves to their businesses - it takes a certain personality to own your own business, thats why there aren't many business owners relative to w2 workers.

Offline Panda

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Re: Wealth Management Process
« Reply #17 on: January 06, 2016, 06:16:56 PM »
Congratulations Bullsback,

You seem to be very healthy financially. If you are penta by the time you in your mid to late 40s, your net worth is in the top 1% of wealth.

In opinion, a penta can retire and live a very nice and comfortable lifestyle even in the nicer parts of Irvine. As a penta, you would not have to worry about being hit by a 40% estate tax like a deca would. I like the penta.

By the way Panda, I should point out, I fully expect to fall somewhere in the penta and deca range (in today's dollars) when I am in my 50's and 60's.  So I would like to think I will fit into the topics you are pointing out, I'm just saying that I'm leveraging what I feel are my best skills to get their (while also considering risk) and in my case at the current point in time, I feel that I'm best suited working a job in Corporate America. 
« Last Edit: January 06, 2016, 06:26:08 PM by Panda »
James Park, MBA
Investment Real Estate Broker
CalBRE# 01894781, NMLS License # 1572291
Direct: (678) 865-6250
Email: jpark@johnscreekrealtypartners.com

http://www.biggerpockets.com/users/Panda
http://www.johnscreekrealtypartners.com

Offline Panda

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Re: Wealth Management Process
« Reply #18 on: January 06, 2016, 06:22:53 PM »
Qwerty,
You are right that most businesses fail. I am not qualified to tell people what innovative entreprises to start as their own business. I would assume for one to have the best chances to succeed, the business they are in is a vocation of love that would fully utilize his or her passions, aptitude, and abilities. 

Corps, Stocks, and Real Estate are all just vehicles and asset classes to build wealth. I just think that Corps have the highest velocity to build wealth.

You can also lose your shirt investing in stocks and even real estate if you don't know what you are doing. And yes, you can also fail in your own business if you are not passionate about the business you are in. If you do your research on what a millionaire's wealth profile looks like, you will see that many are successful business owners who operate as a corporation. 

Panda - you seem to think an S-Corp itself is the pathway to riches? The S-Corp is just one of the mechanisms for legal/tax reasons to protect the monetary benefits generated by a business with a good/great idea. The key is having the idea to make the money, the s-Corp has nothing to do with it.

Like bullsback said, many business owners are slaves to their businesses - it takes a certain personality to own your own business, thats why there aren't many business owners relative to w2 workers.
« Last Edit: January 06, 2016, 06:30:46 PM by Panda »
James Park, MBA
Investment Real Estate Broker
CalBRE# 01894781, NMLS License # 1572291
Direct: (678) 865-6250
Email: jpark@johnscreekrealtypartners.com

http://www.biggerpockets.com/users/Panda
http://www.johnscreekrealtypartners.com

Offline eyephone

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Re: Wealth Management Process
« Reply #19 on: January 06, 2016, 06:50:57 PM »
I like Panda's insights.

From a liability perspective, a business should be incorporated or LLC.


Offline i1

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Re: Wealth Management Process
« Reply #20 on: January 06, 2016, 07:49:07 PM »
The hurdle is high to make a Corp worthwhile for many w2 workers. The return on whatever capital you put into your own business would have to replace both your w2 income/benefits plus whatever that capital was earning passively while you worked. Most startup biz can't do that for a long time.  A private Corp you can invest in (but run by someone else competent) makes a lot of sense though. 
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Offline bones

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Re: Wealth Management Process
« Reply #21 on: January 06, 2016, 08:57:21 PM »
Too long didn't read. But saw that w2 jobs = slavery?  Hmmmm.

Offline AW

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Re: Wealth Management Process
« Reply #22 on: January 06, 2016, 10:33:02 PM »
In real estate, you can borrow hard money, talked to folks who've done it for rehab/flip, so it can be done without a hand me down from someone, even in SoCal, even in the market right now, just probably won't be Irvine.

Quote
So I work a J.O.B. as you describe it. Working a job does not prevent me from getting in real estate, but as you put it, I should never have gotten a job and just went into real estate.  How exactly do you go about this without starting with a big hand me down from someone, how do I go about obtaining the capital to just begin buying up real estate? Just curious? If I don't work a J.O.B. and leverage that JOB to accumulate capital, how exactly do I launch my own business or buy a bunch of real estate (outside of having a skillset to innovate and come up with a creative invention...which is not my forte...I'm a numbers guy). 

Offline Paris

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Re: Wealth Management Process
« Reply #23 on: January 07, 2016, 12:21:39 AM »
Interesting topic. I think many Americans in general believe that it's either a job/w2 or you are a small business owner or you own income properties. I am a big proponent of diversification as the building block to wealth.

My husband and I both work"jobs" - he's a W2 employee in corporate America, I am a partner in a medical practice. So technically we both have a certain subset of skills and utilize these skills everyday, and enjoy it. But we also own rental properties within a LLC (outside of the state of California for obvious reasons) and have an Scorp for small business. The small businesses are run by employees and is well managed. And I have to say that getting involved in a small business was the biggest risk which for us has reaped the greatest rewards in asset building and additional cash flow. But it took a lot of work to get the business up and running, a lot of sweat and sleepless nights. But once up and running, it's independent and probably now looking back one of the best decisions we made. We definitely support Scorps as a wealth building tool and plan to expand this investment avenue but from personal experience it's not easy to embark on it and you often have to be a risk taker and not afraid to just go for it. And no you don't have to have a huge amount of liquid cash to get started - remember that the founder of Spanx Sarah Blakely started with just $5k dollars in her "idea" and Her net worth is now over $1 Billion.

Scorps definitely come with additional responsibilities. No we are not at the businesses daily or weekly but we have to deal with employees and all the headaches that come with that. I know many people that just want a salary and don't want to deal with these additional headaches. So in the end to each their own. Everyone has different goals, aspirations, lifestyle visions so just do what makes you happy.

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Offline Paris

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Re: Wealth Management Process
« Reply #24 on: January 07, 2016, 12:32:01 AM »
I forgot to mention that one of the biggest advantages of our Scorp is the significant tax write offs that help hedge against our 40% or so tax rate.

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Offline peppy

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Re: Wealth Management Process
« Reply #25 on: January 07, 2016, 10:32:58 AM »
As a penta, you would not have to worry about being hit by a 40% estate tax like a deca would. I like the penta.

This argument always boggles my mind. I'd much rather have more money and deal with the federal estate tax on the portion that exceeds the exemption. Wish that would be the things I'd have to worry about ...

Offline eyephone

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Re: Wealth Management Process
« Reply #26 on: January 07, 2016, 05:04:03 PM »
I forgot to mention that one of the biggest advantages of our Scorp is the significant tax write offs that help hedge against our 40% or so tax rate.

I hope you segregate your business expense and personal expense.

Offline Panda

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Re: Wealth Management Process
« Reply #27 on: January 07, 2016, 06:07:04 PM »
Paris,
Thanks for sharing. You guys seem to be in the fast lane to become financially independent and look to be great shape financially. You have a profitable S-Corp which is treated like an investment vehicle just like your real estate and equities. You also have a portfolio of rental properties that is generating passive income for you that you can transfer down to your next generation. I would guess that your SCorp is growing at a faster rate that your real estate investments and equity positions over a longer term horizon.

One of the great benefits of an SCorp vs W2 is the tax shelter. The two greatest tax benefits providing by the IRS to us are to 1) business owners since they create jobs and 2) real estate investors as they create housing.

Suppose you make $100k in your W2 job. Your paycheck will be taxed : Federal, State, Medicare, and Social Security right off the bat. Both Medicare and Social Security accounts for 15.3%, therefore $15,300 in FICA taxes. As a Software consultant who makes $100k, he can pay himself a W2 of $30,000 - $50,000 and rest will be considered as K1 which will flow in your personal 1040. You are now paying Medicare and Social Security on the $30k - $50k rather than the full $100,000. Once your K1 (net profit) flows into your personal taxes you can now offset this income from any real estate losses you incur via your schedule E.  Depreciation on your rental properties is a very nice thing to have.

 

Interesting topic. I think many Americans in general believe that it's either a job/w2 or you are a small business owner or you own income properties. I am a big proponent of diversification as the building block to wealth.

My husband and I both work"jobs" - he's a W2 employee in corporate America, I am a partner in a medical practice. So technically we both have a certain subset of skills and utilize these skills everyday, and enjoy it. But we also own rental properties within a LLC (outside of the state of California for obvious reasons) and have an Scorp for small business. The small businesses are run by employees and is well managed. And I have to say that getting involved in a small business was the biggest risk which for us has reaped the greatest rewards in asset building and additional cash flow. But it took a lot of work to get the business up and running, a lot of sweat and sleepless nights. But once up and running, it's independent and probably now looking back one of the best decisions we made. We definitely support Scorps as a wealth building tool and plan to expand this investment avenue but from personal experience it's not easy to embark on it and you often have to be a risk taker and not afraid to just go for it. And no you don't have to have a huge amount of liquid cash to get started - remember that the founder of Spanx Sarah Blakely started with just $5k dollars in her "idea" and Her net worth is now over $1 Billion.

Scorps definitely come with additional responsibilities. No we are not at the businesses daily or weekly but we have to deal with employees and all the headaches that come with that. I know many people that just want a salary and don't want to deal with these additional headaches. So in the end to each their own. Everyone has different goals, aspirations, lifestyle visions so just do what makes you happy.
« Last Edit: January 07, 2016, 06:13:30 PM by Panda »
James Park, MBA
Investment Real Estate Broker
CalBRE# 01894781, NMLS License # 1572291
Direct: (678) 865-6250
Email: jpark@johnscreekrealtypartners.com

http://www.biggerpockets.com/users/Panda
http://www.johnscreekrealtypartners.com

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Offline Panda

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Re: Wealth Management Process
« Reply #28 on: January 07, 2016, 06:17:19 PM »
I am not big fan of Whole Life insurance or a Variable Universal Life Insurance or any variable life insurance products. I do not believe that Insurance and Investments should be mixed.

There are only two situations where I am in favor of Life Insurance. #1 is a Term Life Insurance to insure the breadwinner who is just starting to build assets and #2 is Life Insurance as estate planning tool for the Upper Class Millionaires with a net worth greater than $5M.

As a penta, you would not have to worry about being hit by a 40% estate tax like a deca would. I like the penta.

This argument always boggles my mind. I'd much rather have more money and deal with the federal estate tax on the portion that exceeds the exemption. Wish that would be the things I'd have to worry about ...
James Park, MBA
Investment Real Estate Broker
CalBRE# 01894781, NMLS License # 1572291
Direct: (678) 865-6250
Email: jpark@johnscreekrealtypartners.com

http://www.biggerpockets.com/users/Panda
http://www.johnscreekrealtypartners.com

Offline Cornflakes

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Re: Wealth Management Process
« Reply #29 on: January 07, 2016, 06:56:43 PM »
Amen.

If you take the monthly $ diff between whole life and term life premiums, and invest money in a 'random' stock/mutual fund, you'd come out ahead over 30 year term.

The way you pick random is, throw a dart each month on a wall where you have arbitrarily picked stocks/funds.

Just saying...

I am not big fan of Whole Life insurance or a Variable Universal Life Insurance or any variable life insurance products. I do not believe that Insurance and Investments should be mixed.

There are only two situations where I am in favor of Life Insurance. #1 is a Term Life Insurance to insure the breadwinner who is just starting to build assets and #2 is Life Insurance as estate planning tool for the Upper Class Millionaires with a net worth greater than $5M.

As a penta, you would not have to worry about being hit by a 40% estate tax like a deca would. I like the penta.

This argument always boggles my mind. I'd much rather have more money and deal with the federal estate tax on the portion that exceeds the exemption. Wish that would be the things I'd have to worry about ...

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