Speaker 1: An illegal alien from Guatemala charged with raping a child
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Speaker 1: Under President Trump, America's laws, border and families will be protected.
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Speaker 4: Yeah, yeah, we're back, Happy Thursday, Happy Thursday.
Speaker 5: Yes, Yes, welcome back to the educational series. This is
Speaker 5: another one. I might even sure where number we're at.
Speaker 4: I probably would throw around six, but I could be wrong.
Speaker 5: We've covered a lot, we covered how to buy a call,
Speaker 5: we covered things to know before buying a home. We
Speaker 5: covered you know, process of buying a home, credit covered taxes,
Speaker 5: we've covered artificial intelligence, so stocks. So this is one
Speaker 5: that's always vitally important, you know, for everybody, but especially
Speaker 5: for people that have a family, have children, thinking about
Speaker 5: having children, have grandchildren, niece, nephew, god children, whoever, you know, anytime.
Speaker 6: You want to plan for young people's future.
Speaker 5: The term generational wealth is something that gets thrown around
Speaker 5: a lot, but what does that really mean?
Speaker 6: Right?
Speaker 5: It means to create wealth for generations to come. So
Speaker 5: today we're going to do the first step. We're going
Speaker 5: to teach you how to make your child a millionaire.
Speaker 5: I think we've already taught you how to make yourself
Speaker 5: a millionaire if you follow the principles. But we're going
Speaker 5: to teach you how to make your child a millionaire.
Speaker 5: And we get five steps. This is gonna be five steps.
Speaker 5: It's not the only five steps with five five steps
Speaker 5: that you can utilize in your life to achieve that goal.
Speaker 7: Yeah, yeah, it's one of these things. And it takes
Speaker 7: me back when we were looking at the notes for
Speaker 7: the episode. It took me back to being twenty four
Speaker 7: years old, twenty five years old, sitting in your office
Speaker 7: and you actually breaking this down for me at that
Speaker 7: age and at the time I had no kids, wasn't
Speaker 7: engaged and have a wife obviously, and part of me,
Speaker 7: like a small piece of me, was like, yo, why
Speaker 7: do I need to do this? But being educated on
Speaker 7: it very quickly, I was like, oh, this makes perfect sense.
Speaker 4: Right.
Speaker 7: I always say my favorite line is if you plan
Speaker 7: for now for the future, right, like, think about your trajectory, right,
Speaker 7: it's that sheet line plan for the future, because you're
Speaker 7: gonna be older a lot longer than you're gonna be younger, Like,
Speaker 7: here are the strategies now while you're young. So this
Speaker 7: is like a selfless actor if you're an adult, but
Speaker 7: it's a necessary act. So hopefully you got your pens
Speaker 7: in your pass ready because it's going to be an educational.
Speaker 5: Session, yes, sir, So before we start, definitely have to
Speaker 5: extend our condolences to EYO alumnist alumni. Absolute actually a
Speaker 5: brilliant person when it comes to the world of business
Speaker 5: and ALTHO philanthropy and just a legend junior Bridgeman. We
Speaker 5: covered his story actually at the beginning stages of early leision,
Speaker 5: somebody that was an NBA player and then you know,
Speaker 5: became a number one franchise owner for Wendy's and Chili's
Speaker 5: in the world, and then purchased a Coca Cola bottling
Speaker 5: plan and became you know, a billionaire. Over the course
Speaker 5: of time, owned Ebony magazine, owned Jet magazine of other
Speaker 5: different things. So he passed away a few days ago.
Speaker 5: We had him at Investvest a few years ago. He
Speaker 5: spoke on stage with Rich Paul. Great conversation. So definitely
Speaker 5: want to extend our condolences to his family, to you know,
Speaker 5: the Louisville community, the Milwaukee community, the East Chicago community.
Speaker 5: It was part of a few different communities, but all
Speaker 5: the lives that he's impacted, and hopefully, you know, people
Speaker 5: can learn even more about his story now that he's
Speaker 5: passed away and use it for education and information and
Speaker 5: motivation inspiration. So you know, to honor to be able
Speaker 5: to have him shared a stage with him, ask some
Speaker 5: questions somebody that we we you know, we highlighted early,
Speaker 5: so that was a full circle moment. So definitely before
Speaker 5: we started the show, wanted to extend our condolences to
Speaker 5: Junior Bridgeman's family and friends.
Speaker 4: Opportunity to actually meet his family.
Speaker 7: Beautiful family, beautiful man, and I'm happy we got to
Speaker 7: give him as flowers at the time that you know,
Speaker 7: when we were covering the early stories, when it was
Speaker 7: just you and me, uh, and people were like, oh,
Speaker 7: we didn't understand who he was. People started to get
Speaker 7: familiar with him, and then obviously at Investmvest, our community
Speaker 7: for sure got a definite feeling of what he's done
Speaker 7: inside of business, but who he is as a man.
Speaker 7: And even you know, up into his untimely passing, he
Speaker 7: was still giving back, right, he was still doing philanthropy,
Speaker 7: was actually at an event. So it's untimely, it's it's
Speaker 7: a tragedy. But I'm glad we got to give him
Speaker 7: as flowers. And hopefully, like you said, people will now
Speaker 7: look into his business acumen and the legacy that he's
Speaker 7: left and hopefully emulated that to a certain extent. So
Speaker 7: againdosis to the family, and I thought, some prayers are
Speaker 7: with you.
Speaker 5: Okay, So now let's get into it. Okay, First, you know,
Speaker 5: why is it important to do this right? Well, I
Speaker 5: think the number one thing is it all comes down
Speaker 5: to math, and there's a thing called compound and interest,
Speaker 5: and I think Warren Buffet at the compound and just
Speaker 5: one of the windows of the world. And you know,
Speaker 5: the earlier you start to invest, the better chance you
Speaker 5: have of achieving wealth. That's just as easy to explain
Speaker 5: as possible. If you start to invest at ten, you
Speaker 5: will achieve wealth quicker than somebody that invests at forty.
Speaker 5: If you invest at twenty, you'll achieve wealth quicker than
Speaker 5: somebody that invests in fifty. So the good thing with
Speaker 5: children is that they have time on their hands, right,
Speaker 5: So as a parent, even small amounts of relatively small
Speaker 5: amounts of money can lead to huge nest eggs. We'll
Speaker 5: talk about some examples, but that's the probably the biggest
Speaker 5: thing as far as why it's important to start thinking
Speaker 5: about how you invest for your child and set your
Speaker 5: child up is because time is on the side of
Speaker 5: the child, so you want to take advantage of that.
Speaker 5: Another thing is the preparation aspect of generational wealth. As
Speaker 5: we said before, if that's the goal, then the earlier
Speaker 5: that you prepare, the easier it is for you, because
Speaker 5: the less money that you actually have to put out
Speaker 5: that goals in the other way. So one way for
Speaker 5: the compounding interest is that you start early and you
Speaker 5: have a lot of money later. The other side of
Speaker 5: that coin is that the earlier you start, the less
Speaker 5: money you actually have to put away to have that
Speaker 5: million dollars or the two million dollars or whatever you want.
Speaker 5: So it all comes down in time. It comes down
Speaker 5: to being a good steward and just really the responsibility
Speaker 5: of any any parent, I think is to not only
Speaker 5: better their life, but better that their children's lives for sure,
Speaker 5: and then even their children's children's right, you really want
Speaker 5: to create legacy for yourself. So these are things that
Speaker 5: you can actually, you know, start today, and you don't
Speaker 5: have to be a millionaire to start. We're going to
Speaker 5: talk about different strategies where you can start with minimal
Speaker 5: amount of money but still achieve that long term goal.
Speaker 7: Yeah, and I think it's important right on top of
Speaker 7: the savings part from obviously from the adult to the child.
Speaker 7: But it's the educational process and there's no age to it, right,
Speaker 7: Like we always talk about financial education in the sense like,
Speaker 7: oh when should I start?
Speaker 4: Where should I start?
Speaker 7: We should start now and the educational process is great
Speaker 7: if parents don't know, because this is a great place
Speaker 7: for you to know, but it's also a great place
Speaker 7: for you to learn with your children.
Speaker 4: And so we're talking about investing.
Speaker 7: What does that look like when you're getting a brokerasure account, right,
Speaker 7: you're learning that, but you're teaching your child at the
Speaker 7: same age and at a certain point when your child
Speaker 7: has those lessons at ten, eleven, twelve, by the time
Speaker 7: the eighteen and be able to own their own brokerasure
Speaker 7: account and have their own investment accounts with a brokerage,
Speaker 7: they're familiar with it. And that familiarity only can breed
Speaker 7: success in the future. And so yes, from a financial standpoint,
Speaker 7: but also from the mindset standpoint of this is not
Speaker 7: something that is foreign to me. And we see that
Speaker 7: in a lot of communities and we're starting to see
Speaker 7: a shifting ars, but we need to see it more.
Speaker 4: So, Yeah, let's get let's get to it.
Speaker 6: Let's get it going.
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Speaker 4: Don't waste any.
Speaker 6: Time, Okay. So let's start with the first and easiest way.
Speaker 5: To make sure your child is a millionaire. And by
Speaker 5: the way, this is a millionaire, not like necessarily tomorrow,
Speaker 5: but at some point in their life they will be
Speaker 5: a million.
Speaker 7: I think we got to get out of that mindset, right,
Speaker 7: like success takes time, wealth takes time. Generational wealth obviously
Speaker 7: takes time, but you have to start somewhere, but it's
Speaker 7: not going to happen tomorrow. I think people get that exception,
Speaker 7: like we're so used to saying all right, let's get
Speaker 7: rich quick. No, let's get wealthy and stay wealthy, funds
Speaker 7: saying amount of time.
Speaker 5: So the first, the first thing and the easiest pathway
Speaker 5: is life insurance. Think that that's something that everybody should have,
Speaker 5: whether you're a parent or not, but definitely every parent
Speaker 5: should have for sure. So by now you probably heard
Speaker 5: life insurance. So I don't think you need to actually
Speaker 5: have an explanation of what life insurance is. Right, it's
Speaker 5: pretty self explaratory. It's insurance on your life. And everybody's
Speaker 5: going to pass away at some point. So when you
Speaker 5: do pass away, your beneficiaries will get money when you die. Right,
Speaker 5: you buy a policy, you pay a premium, your beneficiaries
Speaker 5: get money when you die. That's pretty self explanatory, pretty
Speaker 5: easy to understand. But there are some things that you
Speaker 5: need to know about life insurance. So there's different types
Speaker 5: of life insurance. This is important, Okay, So we're going
Speaker 5: to talk about three types of insurance, term insurance, universal
Speaker 5: life insurance, and whole life insurance. They all have different
Speaker 5: mind you, this is a video that we're going to
Speaker 5: cover five different topics, so it's not just an insurance video.
Speaker 5: So we're not going to go for forty minutes into insurance,
Speaker 5: even though we could. But we have other videos on
Speaker 5: our YouTube channel about insurance. But this is just the
Speaker 5: overview to kind of get you on track. So, okay,
Speaker 5: insurance is vitally important obviously when you're creating generational wealth,
Speaker 5: because that is a guarantee that your family or your child,
Speaker 5: whoever you provide beneficiary for will get upon your death right.
Speaker 5: So term insurance is the easy way to go about it.
Speaker 5: As far as premium is concerned, right, it's the lowest premium.
Speaker 5: It lasts a turn. So if you have a twenty
Speaker 5: year term policy for a million dollars and you're thirty
Speaker 5: five years old, and that might be thirty dollars a month, right,
Speaker 5: if you're healthy, that might be thirty dollars a month.
Speaker 6: So you.
Speaker 5: The benefit of that is that you're able to get
Speaker 5: a larger policy for a low premium. Right, because a
Speaker 5: lot of times. What stoles people from getting large policies
Speaker 5: is the premium, So that's the benefit. Now you might say, okay, well,
Speaker 5: why do I need a million dollar life insurance policy
Speaker 5: if I make one hundred thousand dollars a year?
Speaker 4: That was really my question.
Speaker 6: So yeah, rule of.
Speaker 5: Thumb is that you should get at least ten times
Speaker 5: your salary, some say twenty because let's think about this rationally.
Speaker 5: If you make one hundred thousand dollars a year, right
Speaker 5: after taxes, that's probably around seventy So most people income
Speaker 5: usually increases over the course of time, but let's say
Speaker 5: it doesn't. Let's say it just stays at seventy thousand.
Speaker 5: So now if you have one hundred thousand dollar policy,
Speaker 5: then your seventy thousand dollars contribution to your family will
Speaker 5: be done in a year and three months, right, and
Speaker 5: they still have to live for another eighteen years.
Speaker 6: Of if you have a baby, or ten years if
Speaker 6: you have a tenure.
Speaker 5: Right, So you want to make sure that your income
Speaker 5: is provided for at least ten years. So if you
Speaker 5: have a million dollar policy and you make ten one
Speaker 5: hundred thousand dollars a year, then that million dollar policy
Speaker 5: now invested into the stock market, you could probably pull
Speaker 5: around five percent safely seven percent if you want to
Speaker 5: be a little bit more aggressive. But now you can
Speaker 5: you can really pull almost almost close to the amount
Speaker 5: of money that you made as yearly, right from just
Speaker 5: the growth from the stock market. So that's how you
Speaker 5: come up with that number. You want to have a
Speaker 5: larger number death benefit as opposed to just the amount
Speaker 5: of money that you actually are making per year.
Speaker 7: And this is one of those I mean literally, that
Speaker 7: was a conversation that we had we sat at the table.
Speaker 4: I'm not even thinking of it in terms.
Speaker 7: I think most people in that age that that twenty
Speaker 7: three to twenty four to twenty five, they're thinking, like
Speaker 7: why should I be thinking about when I'm going to die?
Speaker 4: Right?
Speaker 7: And it's one of those things that I remember the
Speaker 7: answer you gave me. You're like, well, everybody's going to die,
Speaker 7: so you should start thinking about it.
Speaker 4: And I was like that was harsh.
Speaker 7: But yeah, you were right, right, Like I don't have
Speaker 7: a family now, right, I don't have any responsibilities other
Speaker 7: than myself.
Speaker 4: This is the perfect time.
Speaker 7: Number One, I was in the best shape of my life,
Speaker 7: which is important. I'm sure youre going to talk about that. Right,
Speaker 7: I was healthy, I didn't smoke, I didn't drink. All
Speaker 7: these things are positive for people who are trying to
Speaker 7: give me policies. And when I realized it, right, that
Speaker 7: million dollar number sounds like a lot, but the way
Speaker 7: it was, like, Yo, if you do a term like
Speaker 7: it could be low cost. It could cost you twenty
Speaker 7: nine or thirty nine or forty nine dollars a month,
Speaker 7: which I don't think most people understand.
Speaker 4: Right.
Speaker 7: They think, if it's a million dollars, I can't afford
Speaker 7: to have a million dollar policy, But when you break
Speaker 7: it down, it's like, wait, twenty nine dollars among that's
Speaker 7: my phone bill is triple that, right, Like these are
Speaker 7: the things that that mindset and the education that we
Speaker 7: don't have and we kind of miss.
Speaker 4: And this is how sometimes wealth is passed without us
Speaker 4: even know.
Speaker 5: Or they think that they don't need a million dollar policy. Right,
Speaker 5: It's like I'm not that much. And this is a
Speaker 5: common misconception as far as like to say, like I
Speaker 5: don't need that much or I don't want to leave
Speaker 5: too much money. You can't be over insured, So there
Speaker 5: are guidelines and how much insurance that you can actually get.
Speaker 5: So if you make fifty thousand dollars a year, you
Speaker 5: cannot get one hundred million dollar life insurance policy, right,
Speaker 5: you can't get a fifty million dollar life insurance policy.
Speaker 6: So being at this guidelines.
Speaker 5: That lets you that lets you know that you should
Speaker 5: get to the max of what's allowable because there is
Speaker 5: no such thing as being over and shurt or having
Speaker 5: too much insurance. The insurance company is not even going
Speaker 5: to ensure you for things that don't make sense financially,
Speaker 5: Like if you make fifty thousand dollars a year, you
Speaker 5: you don't need a hundred million dollars policy. So that
Speaker 5: lets you know that they in their mind already has
Speaker 5: a number of what you actually need for your family.
Speaker 5: That's a great point, So you're not you shouldn't go
Speaker 5: against something that's already set for you as far as
Speaker 5: the insurance company, like, don't under insure yourself.
Speaker 4: And that's a great point.
Speaker 7: The other part of it is as you start to
Speaker 7: accumulate more money, then that should change. Right, So like
Speaker 7: if I started out making sixty thousand, then I made
Speaker 7: one hundred. Now by the time I'm finished teaching, I'm
Speaker 7: making one hundred and fifty. Yeah, that needs to multiply
Speaker 7: by ten. So my policy probably needs to be updated
Speaker 7: to a point where it now matches the money that
Speaker 7: I was making because my family is relying on that.
Speaker 6: Yep.
Speaker 5: So the pros and comers with term insurance. The pros
Speaker 5: or that is low costing premium. That's the biggest pro.
Speaker 5: The con The biggest knock against term insurance is that
Speaker 5: it's for a term and expire. So if you get
Speaker 5: twenty year term insurance and you're twenty five years old,
Speaker 5: it's going to expire expire when you're forty five. Now,
Speaker 5: most people that are healthy when they're twenty five are
Speaker 5: still going to be alive when you're forty five. So
Speaker 5: in that scenario, you would have paid for twenty years.
Speaker 5: And some people will say, well I have nothing to
Speaker 5: show for it, like it's just a waste of money.
Speaker 5: But in any that that's true with any insurance. If
Speaker 5: you have a car for twenty years and you never
Speaker 5: get into a car accident, you don't look at it
Speaker 5: like while I paid car insurance for twenty years, I
Speaker 5: wasted it. No, you have to have the insurance just
Speaker 5: in case something happens, or fire insurance or flood insurance.
Speaker 6: If you think about it, every insurance that you have.
Speaker 4: You can't get a phone without insurance.
Speaker 5: Yeah, the point of it is to not ever use it.
Speaker 5: So life insurance is the only thing that we look
Speaker 5: at where it's like I have to use it. Right,
Speaker 5: every other insurance, you just have the insurance and you
Speaker 5: hope that you never have to use it, and if
Speaker 5: you do have to use it is there for you.
Speaker 5: That's how That's how you should look at the life
Speaker 5: insurance the same way. But it will expire. And now
Speaker 5: at forty five, if you want to get new insurance,
Speaker 5: you're going to be you're going to pay a higher
Speaker 5: premium because you're twenty years older, and then you might
Speaker 5: not even be able to get the insurance if you
Speaker 5: have some medical issues or you know, something like that.
Speaker 5: So that that's some level of negative that can go
Speaker 5: along with the term insurance. But the alternative de term
Speaker 5: insurance is what we call permanent insurance. That's insurance that
Speaker 5: lasts fever. So there's two types of permanent insurance for
Speaker 5: the most part, Universal and whole life. As I said,
Speaker 5: there's different types of Universal, but we won't go to
Speaker 5: in depth because it's not a life insurance class. But
Speaker 5: you just it's important for you to know whole life
Speaker 5: insurance is the oldest when it comes to permanent insurance,
Speaker 5: it's the most conservative. It's guaranteed, how the money. So
Speaker 5: there's money that grows inside of a policy, which is
Speaker 5: called cash value. This is important to understand because that's
Speaker 5: a double edged sword. You have a death benefit, but
Speaker 5: you as you pay a premium, portion of that premium actually,
Speaker 5: over the course of time grows into cash that you
Speaker 5: can actually borrow from. So you might have a million
Speaker 5: dollar whole life insurance policy and in twenty years you
Speaker 5: have two hundred thousand dollars of value that's grown inside
Speaker 5: of that policy. You can borrow from that if you choose,
Speaker 5: and that's money that you can actually utilize to go
Speaker 5: for your child as well. You can pay that college tuition,
Speaker 5: or you can do anything. You can put it down
Speaker 5: payment for a house, you can start a business. You know,
Speaker 5: if you need money, then you can take money from
Speaker 5: a life insurance policy while you're still living. The whole
Speaker 5: life insurance as far as premium, is the richest, so
Speaker 5: that's going to be the highest premium on the chart, right.
Speaker 5: But once again, it's guaranteed, So how the money grows,
Speaker 5: it's through dividends that the company play pays and through
Speaker 5: set interest rate. So over the course of time you're
Speaker 5: probably earn around five percent. If you look at it
Speaker 5: from a long term perspective, your boy to earn like
Speaker 5: five percent interest on the money as it's grown inside
Speaker 5: your account. The alternative to that is universal life insurance.
Speaker 5: So universal life insurance is like a hybrid where it's
Speaker 5: whole life in the sense of that it lasts your
Speaker 5: whole life. But there's different ways how the money can grow.
Speaker 5: One way the money can grow it's called variable where
Speaker 5: you can invest in the stock market, and that's variable.
Speaker 5: It can go twenty five percent one year, or it
Speaker 5: can be negative eight percent one year. Another way is
Speaker 5: through an indexed account where that's usually capped in like
Speaker 5: two percent floor and then twelve percent attract the S
Speaker 5: and P five hundred. That's the way to invest in
Speaker 5: the stock market, but you have guardrails on it. And
Speaker 5: then another way there's a hybrid to this whole thing,
Speaker 5: which is called guaranteed protection universal life. So this is
Speaker 5: good for people that say I don't want to invest
Speaker 5: money in life insurance.
Speaker 6: But I don't want something that's going to run up.
Speaker 5: Universal life insurance is pretty much like a lifelong term
Speaker 5: policy where it lasts your whole life, but that is
Speaker 5: not designed to build cash value. So you pay a premium,
Speaker 5: you have a death benefit. That's going to be the
Speaker 5: lowest costing permanent policy that you can have, So all
Speaker 5: of those type of policies. The good thing with term
Speaker 5: insurance also is that you can usually convert it. So
Speaker 5: if you need a million dollars of insurance, but your
Speaker 5: budget is two hundred dollars a month that you can
Speaker 5: pay for insurance, a million dollars, a whole life might
Speaker 5: cost one thousand dollars a month. A million dollars a
Speaker 5: term might cost twenty dollars a month. So you're probably
Speaker 5: not in a position to pay one thousand dollars a month,
Speaker 5: but you could do more than twenty dollars a month.
Speaker 5: So what you can do is a combination. You can
Speaker 5: do two hundred thousand dollars of or one hundred thousand
Speaker 5: dollars of whole life, right, let's say, and that's one
Speaker 5: hundred dollars a month, and then you do nine hundred
Speaker 5: thousand dollars of term insurance.
Speaker 6: Right.
Speaker 5: So now this whole package might cost you one thirty
Speaker 5: a month. Right, So the benefit with that is that
Speaker 5: you still have some money that you're actually saving. You
Speaker 5: have some portion of your portfolio, just like investing, you
Speaker 5: have a portfolio, some portion of your portfolio that's gonna
Speaker 5: last forever, but then you have another portion that over
Speaker 5: the court of time, you can transition that to the permanent.
Speaker 5: So life insurance step one vitally important cooking, easy to
Speaker 5: do cooking, and that's a that's the easiest way to
Speaker 5: ensure that your child becomes a millionaire.
Speaker 7: So there's a strategy here too, right, And we've seen
Speaker 7: it happen in plenty of communities, and I think we
Speaker 7: broke it down in like one of our early classes.
Speaker 4: But insurance is important.
Speaker 7: But yes, your family for yourself, But what about getting
Speaker 7: insurance on family members said that might be older than you,
Speaker 7: Because that might be a strategy too, when we see
Speaker 7: our elders and people as a family decide that we're
Speaker 7: going to get a plan knowing that at some point
Speaker 7: that family members going to pass, and now that can
Speaker 7: be trickled down to the beneficiaries.
Speaker 5: Yeah, that's definitely something that's beneficial and helpful. Sometimes it
Speaker 5: could be a little difficult because you know, if you're older,
Speaker 5: you might have some medical issues and just being old period,
Speaker 5: premium is gonna be higher. That's the strategy that can
Speaker 5: be used also for adults. Okay, so now let's go
Speaker 5: to number two. You want to start with this the
Speaker 5: wroth ira.
Speaker 7: Now this is your will basketet. I want you to
Speaker 7: cook and then I'm just gonna like chef up with you.
Speaker 7: So the wroth ira is another one of these strategies
Speaker 7: that we talk about that can be beneficial for not
Speaker 7: only for the adult, but for the child. So there's
Speaker 7: a few types. There's the roth ira uh, and then
Speaker 7: we have ah.
Speaker 5: There's a traditional ira and the direct So traditional IRA
Speaker 5: is you put money into a retirement account and you
Speaker 5: get a tax deduction for the money that you put in,
Speaker 5: but it's taxable when you're in retirement.
Speaker 6: So IRA stands for individual retirement account. That's what it
Speaker 6: stands for.
Speaker 4: Right.
Speaker 6: So people are familiar with four one K that's what
Speaker 6: your job provides, and.
Speaker 4: The four O three B if you work in some
Speaker 4: other same thing.
Speaker 5: Yeah, but if you want to do it for yourself
Speaker 5: as a self employed personal just a regular you know, employee,
Speaker 5: you can do an IRA and IRA is an individual
Speaker 5: retirement account. So the regular individual retirement account is what
Speaker 5: we just described, and then there's a rough the wroth IRA.
Speaker 5: You're able to put money in for your retirement, but
Speaker 5: you don't get a tax deduction. But the benefit with
Speaker 5: the rough hiray is that the money's tax free when
Speaker 5: you take the money out. So one of the good
Speaker 5: things with being an entrepreneurs that you can employ your child.
Speaker 5: We talked about this before, yep. But even if you
Speaker 5: don't employ your child, you can set up a rough
Speaker 5: IRA for your child as long as your child is working.
Speaker 5: So this year, how much money can you pay your child?
Speaker 6: This year?
Speaker 7: I think we got up to fourteen thousand, three hundred
Speaker 7: fourteen thousand, three hundred, and we get this question a lot,
Speaker 7: a lot, And yes, I'm glad that people are asking
Speaker 7: the question of like can I The child has to
Speaker 7: be of working age. So if you have a two
Speaker 7: year old that is not classified as a working age,
Speaker 7: I believe the working age is between seven to seventeen,
Speaker 7: and they have to be doing something that's functional. We
Speaker 7: work in a platform that actually has functioned, right So
Speaker 7: for my son, right when we actually record, he'll come down,
Speaker 7: he'll set up, he'll sweep, he'll clean the area. That
Speaker 7: is an actual functional duty that he is doing to
Speaker 7: help the business. So if you don't have a functional
Speaker 7: activity or a purpose for it, then it makes it tougher.
Speaker 7: But it has to be between the ages of seven
Speaker 7: to seventeen. You can't have your three year old performing
Speaker 7: function or maybe you can' maybe you got a super child,
Speaker 7: but that's the age range.
Speaker 5: So the benefit okay, So the benefit with paying your
Speaker 5: child is that it's a tax deduction for you as
Speaker 5: an entrepreneur for your company, and it's tax free income
Speaker 5: to your child up to that amount. So if you
Speaker 5: pay your child ten thousand dollars, right instead of giving
Speaker 5: them allowance, right Because now when you give somebody allowance,
Speaker 5: that's after tax money. You've already paid taxes on that money.
Speaker 5: So if you've given them allowance to buy sneakers or
Speaker 5: to you know, do whatever, you don't get any benefit
Speaker 5: for that. But as an entrepreneur, if you can give
Speaker 5: them ten thousand dollars or five thousand or whatever you're
Speaker 5: giving them and it's salary, now you get a tax deduction. Right,
Speaker 5: you save money on taxes and it's fee they don't
Speaker 5: they don't have to pay taxes on that income. So
Speaker 5: that's beneficial for any entrepreneur. Now, where the raw firay
Speaker 5: thing comes into play is that you can contribute to
Speaker 5: a raw fira or an ira, but we'll talk about
Speaker 5: the royal fira for now, which you can contribute to
Speaker 5: a row firara for your child that's working up to
Speaker 5: your amount that they're actually getting paid. So if they
Speaker 5: if they have a regular job, they work in CBS,
Speaker 5: and they got paid five thousand dollars, then they can
Speaker 5: have a raw fira up to five thousand dollars if
Speaker 5: you pay them. If you are an entrepreneur, you pay
Speaker 5: them five thousand dollars, then they can contribute up to
Speaker 5: five thousand dollars. Right, So the limit for this year
Speaker 5: is UH seven thousand, seven thousand, that's the most right.
Speaker 5: So Okay, this has beneficial for people to know and
Speaker 5: understand because once again it's just relatively short periods of
Speaker 5: time that could lead to large moneys over the course
Speaker 5: of time. So if you are an entrepreneur, right and
Speaker 5: you have a business in mind, you you can be
Speaker 5: an entrepreneur and still have a job. Also, but if
Speaker 5: you if you're an entrepreneur, you have a business. Let's
Speaker 5: say that you you you paid your child seven thousand
Speaker 5: dollars right for the year. Now you can that's a
Speaker 5: tax deduction. You're going to save money seven thousand dollars
Speaker 5: only taxis Now you can take that seven thousand dollars
Speaker 5: and put it into a rough IRA. Now, the benefit
Speaker 5: with that is that now the money is actually invested.
Speaker 5: You're invested in the stock market. So let's just use
Speaker 5: an example. Usually working age is around twelve, so if
Speaker 5: we picked the ages from twelve to seventeen, to seventeen
Speaker 5: will be probably a last year in high school and
Speaker 5: then you know, after that point they're put there an
Speaker 5: adult eighteen years old.
Speaker 6: So you go from twelve to seventeen, which is six years.
Speaker 5: Right, Let's say that you put seven thousand dollars into
Speaker 5: a row IRA every year for a child. Mind you
Speaker 5: you're getting a tax deduction for this money. Anyway, you
Speaker 5: put seven thousand dollars away every year for six years, right,
Speaker 5: and let's say you invested it in QQQ.
Speaker 6: Right.
Speaker 5: Historically, over the last fifteen twenty years, I think it's
Speaker 5: average over ten percent, so we can use ten percent
Speaker 5: as something that should possibly be a realistic number.
Speaker 4: That might and that might be conservative at this point.
Speaker 5: So let's say you invested that money ten percent a
Speaker 5: year untouched. Because the thing with the IRA is that
Speaker 5: it's for your retirement, right, so when they retire, they'll
Speaker 5: have three point five million dollars. So the benefit with
Speaker 5: that is that you already made your child a multi
Speaker 5: millionaire in their retirement. Now to pushback for someone say okay,
Speaker 5: well the child has to wait till sixty years old
Speaker 5: to get it. Well, my question is if somebody had
Speaker 5: a million dollars, two million, or three million dollars for
Speaker 5: you right now and said, and you're forty, and said
Speaker 5: at sixty you will you will get this money. Would
Speaker 5: you be mad and you did nothing for it a
Speaker 5: couple of years of work when you was a child.
Speaker 5: Would you be mad at your grandparent for doing that?
Speaker 5: Or would you look forward to the opportunity? Mind you, you
Speaker 5: can take money from a row fire eight early in
Speaker 5: the net. There's some penalties that you have to pay,
Speaker 5: but you don't have to wait till your sixty.
Speaker 7: You don't have to wait till you sixty and again
Speaker 7: this is a conservative number, right, so we're talking about
Speaker 7: ten percent. There's years obviously we saw over the past
Speaker 7: three where the QQQ was trashed, the technology sector has
Speaker 7: gone up twenty five ers.
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Speaker 7: Right is going up to twenty six percent, and then
Speaker 7: it's going down to twelve. If we just take those
Speaker 7: averages over the past five years, you're talking about way
Speaker 7: more than ten percent. And the one thing that we
Speaker 7: know about the stock market is that it is going
Speaker 7: to appreciate eighty two percent of the time. The SMP
Speaker 7: has increased over the course of the market's history, and
Speaker 7: so ten percent is a conservative number. So you're saying sixty,
Speaker 7: but that number could hit three million by fifty, right,
Speaker 7: And so it's all about deferring the gratification, right, just
Speaker 7: knowing that it's there and letting it compound, like it
Speaker 7: is the eighth wonder of the world. For a reason
Speaker 7: that money doesn't get touched, you'll be a millionaire. This
Speaker 7: is not something that's hypothetical. At that number, at a
Speaker 7: conservative ten percent, that's what it's going to average.
Speaker 6: And it's one of these things that it's not even.
Speaker 5: It's just basic math, right, This is that's like life
Speaker 5: assurance is the easiest way, but this is another damn
Speaker 5: guaranteed way to make your child a multi millionaire. Now,
Speaker 5: once begin we never said when we said make your
Speaker 5: child a millionaire. We never said that there's gonna be
Speaker 5: a millionaire tomorrow. But once again, we talked about generational wealth.
Speaker 5: So the whole point of it is that the child
Speaker 5: should be equipped to be earning money, to be doing
Speaker 5: things as an adult.
Speaker 6: Right. Everything that they've given is.
Speaker 5: Extra add ons for them, right, So this isn't like
Speaker 5: the only thing that they should be like relying on
Speaker 5: as a twenty five year old. But like I said,
Speaker 5: if you can, one of the biggest problems that we
Speaker 5: have in a society is retirement. And they're already talking
Speaker 5: about cutbacks on Social Security. So if you don't have
Speaker 5: to worry about retirement, how much more free? I know
Speaker 5: people that take jobs just for retirement benefits. Yep, you
Speaker 5: work a job for thirty years just because it has
Speaker 5: a good pension.
Speaker 7: People will retire and go back to get a part
Speaker 7: time job because they need the insurance.
Speaker 6: Yeah.
Speaker 4: Sure.
Speaker 7: And here's the thing, right, like, yeah, fifty sounds if
Speaker 7: you're sitting in your twenties and your thirties, Like, sixty
Speaker 7: sounds like a long wait, Like we just I just
Speaker 7: turned forty three years ago.
Speaker 4: You just turned forty a year ago.
Speaker 7: At that same rate, you're still at that ten percent, right,
Speaker 7: just from them five years from twelve to seventeen, that
Speaker 7: ten percent compounded turns to nearly six hundred thousand by forty. Yeah, Like,
Speaker 7: what did you get a six hundred thousand dollars take
Speaker 7: in forty? I might have missed it. No, I wasn't
Speaker 7: sitting there for you.
Speaker 5: So yeah, on five hundred and thirty one thousand dollars
Speaker 5: bout forty. So like I said, you don't. It's not
Speaker 5: like a locked up and a trust. You can take
Speaker 5: money out of the IRA whenever you want you'll pay
Speaker 5: you'll pay an early penalty if you take it out
Speaker 5: before your retirement. That's important to notice. But if you
Speaker 5: need money, like let's say you've got a brilliant idea
Speaker 5: you want to start a business, you can take the
Speaker 5: money out. It's never been taxed before, so you pay tax.
Speaker 5: You'll pay taxes on it, you'll pay a penalty tax.
Speaker 5: But ideally it's better to wait because you'll pay no tax.
Speaker 5: And like I said, keep in mind that money at
Speaker 5: sixty three point five million is tax free. So when
Speaker 5: you get your four one k, you're paying state and
Speaker 5: federal taxes on it. So your million dollars is really
Speaker 5: six hundred thousand dollars. This is three point five million
Speaker 5: dollars tax free money. So I mean, that's just that's
Speaker 5: just the trim minut. And like I said, for a
Speaker 5: very short period of time, you just you paid seven
Speaker 5: thousand dollars a year for six years, and that that
Speaker 5: could be two thousand. Of course it's going to be
Speaker 5: a lower, but you know, you could use the calculator
Speaker 5: to see, Okay, if I put a thousand dollars and
Speaker 5: if I put two thousand dollars, and if I put
Speaker 5: fifteen hundred dollars in right, what is that equal? But
Speaker 5: the bottom line is that relatively small amounts of money
Speaker 5: in a short, relatively short period of time equals huge
Speaker 5: amounts of money later on in lifeact.
Speaker 4: This is a fact.
Speaker 6: So that's another way.
Speaker 4: So we got the life insurance, we got the IRA.
Speaker 7: This is one of my favorite ones because it's something
Speaker 7: that we've actually been practicing, and that is creating an
Speaker 7: up my account for your child, right and UPMA stands
Speaker 7: for a uniform transferred to minus act and this allows
Speaker 7: you to hold access in your child's name up until
Speaker 7: eighteen to twenty one. And this is important, right, Like
Speaker 7: we talk about investing all the time on market Mondays,
Speaker 7: we talk about it here on Eolisia, and we're doing
Speaker 7: it for ourselves, right, And that's all great, But having
Speaker 7: that asset for a longer term. Right, So I'm forty
Speaker 7: three years old, right, if I have at my hew
Speaker 7: for my son and my daughter, right, that account was
Speaker 7: open when he was seven and when she was ten.
Speaker 4: Right.
Speaker 7: I just told you about the history of the market.
Speaker 7: Eighty two percent of the time it has seen appreciation.
Speaker 7: If they start if I started investing at seven, what
Speaker 7: would my account look like now, knowing what I know,
Speaker 7: they have the advantage of knowing what I know, plus
Speaker 7: having the time that's factored into their lives.
Speaker 4: Right.
Speaker 7: So we're talking about somebody that's investments in seven, what
Speaker 7: does that look like at forty?
Speaker 4: What does that look like at fifty?
Speaker 7: Now the difference between that and UGMA, which we're talking about,
Speaker 7: is that you can have different type of assets. Right,
Speaker 7: So we're talking about cash, we're talking about real estate.
Speaker 7: We're talking about stocks that can all be held into account.
Speaker 7: What does that mean? That means that you can manage
Speaker 7: that account. Again, educate your kid during the process. And
Speaker 7: so this is one of those things when we're talking about, Hey,
Speaker 7: our kids know what is hot, right, So when Microsoft
Speaker 7: is creating a product, or Metas coming out with a product,
Speaker 7: or TikTok is the hot thing. Or I remember a
Speaker 7: few years when we were talking about Rodblocks when that
Speaker 7: became a public trading company. These are now conversations that
Speaker 7: we can have with our children. Educate them about what
Speaker 7: the publicly traded company is, but also allow them if
Speaker 7: they want to to.
Speaker 4: Invest over the long term.
Speaker 7: Now, the beautiful thing is that at eighteen, they now
Speaker 7: become owners of that account. So hopefully they've been practicing
Speaker 7: with it, right, They've been watching you invest, They've been
Speaker 7: watching transactions happen, they've been watching appreciation. I know for
Speaker 7: the past couple of weeks we've seen something depreciation. But
Speaker 7: that's why we're talking about long term holds. And so
Speaker 7: I know when we talk about two tech two index
Speaker 7: and says that this is why. Right, if we have
Speaker 7: two tech companies and we have two indexes that track
Speaker 7: the market overall, that's a great basis to start for
Speaker 7: a child to have a long term investment. If we
Speaker 7: want in great invest in great companies, well we have
Speaker 7: that ability to do that as well. And so what
Speaker 7: I've done is like I'll start to match. Right, if
Speaker 7: I see a good company at a good price in
Speaker 7: video which hit one hundred, not only am I adding
Speaker 7: that into my portfolio, but I'm adding into my child's portfolio.
Speaker 7: And the fact that I have too, when they can
Speaker 7: mirror it, it makes it even better because they're watching
Speaker 7: this appreciation go. The other part is the UTMA account.
Speaker 7: Now there's some differences here, right. You can put real estate,
Speaker 7: you can put jewelry, you can put commodities inside your UGMA.
Speaker 4: Your UTMA, you can only this is key.
Speaker 7: You can only have cash, stocks, bonds, mutual funds, and ets.
Speaker 4: That's the biggest difference.
Speaker 7: The UTMA allows more flexibility where you can have more
Speaker 7: different types of assets. And I know some people have
Speaker 7: collectibles that can be also passed down. At twenty one
Speaker 7: or eighteen, they now controlling This is no longer something
Speaker 7: that you can manage and is handed over to them.
Speaker 7: Hopefully you've given them enough guidance, You've given them enough education,
Speaker 7: enough resources to make positive decisions and good decisions inside
Speaker 7: that account. Because again they've had it for ten years.
Speaker 7: Like I said, my son was seven when he started.
Speaker 7: By the time he's eighteen, i'll be eleven years for him.
Speaker 7: That has hopefully in it thus far as appreciated pretty nicely.
Speaker 7: Now at eighteen, if they've decided they want to start
Speaker 7: a business, this now becomes the seed for their business.
Speaker 7: Right If they decide that they want to go to college,
Speaker 7: here startup money now that.
Speaker 4: They can pay towards tuition or whatever their endeavor is.
Speaker 7: If they decide that, hey, I want to take a
Speaker 7: year of dad, and I want to work for you,
Speaker 7: and I want to use this to invest in my
Speaker 7: own form of real estate.
Speaker 4: They can do that.
Speaker 7: It allows your kids flexibility to have decision making power
Speaker 7: at a young age that can affect them for.
Speaker 4: The long term.
Speaker 7: So those are two accounts that if you're adult and
Speaker 7: if you're watching market mondays and you're trading now and
Speaker 7: this is easy to do, right, you go to your brokerage. Right,
Speaker 7: there's a tab it says UMA or UGMA. You can
Speaker 7: open the account. You can start deposit money to into
Speaker 7: that account now, and you can invest right. You can
Speaker 7: invest like I said, in indexes, you can invest in ETFs,
Speaker 7: you can invest in equities. These things are how you
Speaker 7: build wealth. We talk about generational wealth. Well, somebody has
Speaker 7: to do it right. So if you're doing it now,
Speaker 7: you might as well create the habits that can be
Speaker 7: sustained and passed down for your next generation. Those are
Speaker 7: two positive ways to make sure so that you have generational.
Speaker 6: Well, that's a fact.
Speaker 5: And then there is so we do want to talk
Speaker 5: about something that Okay, depending on state law, you have
Speaker 5: to the child has access at eighteen or twenty one.
Speaker 5: But so how to make your child a millionaire? This
Speaker 5: is where this comes into play. Adding a trust, putting
Speaker 5: the UTMA in a trust account, so you can override
Speaker 5: that by having a trust account, right, because you're probably
Speaker 5: not going to have a million dollars by eighteen. But
Speaker 5: that same rule applied for the raw FIRA can be
Speaker 5: applied for the UTMA right with no restrictions as far
Speaker 5: as when you can actually take the money. But now
Speaker 5: you can actually set stipulations and restrictions based on how
Speaker 5: you want based on a trust. So, once again, for
Speaker 5: the context of this video, we're not going to go
Speaker 5: into deep detailed about trust because that could be a
Speaker 5: video within itself. But there are some different types of
Speaker 5: trust that you should be aware of with this too.
Speaker 5: In particular that are most prevalent when we're talking about
Speaker 5: these type of situations is yeah, revocable trust, which is
Speaker 5: also known as a living trust, And the reason why
Speaker 5: it's called revocable is that you can make changes throughout
Speaker 5: the cost of your life, right, and then there's an
Speaker 5: irrevocable trust, which hence the name is pretty much you
Speaker 5: can't change over the course of your life, right, So
Speaker 5: one is kind of set in stone and one is
Speaker 5: more flexible. But the benefit with the trust period is
Speaker 5: that it's asset protection as far as it takes the
Speaker 5: asset out of everybody's name, right, so it's out of
Speaker 5: your name, out of your child name. The trust. The
Speaker 5: trust is the owner of the situation, and that's great
Speaker 5: for asset protection. We talk about a state planning for sure,
Speaker 5: but this for this conversation, we'll focus on rules and
Speaker 5: stipulations as far as you know, setting parameters so one
Speaker 5: of the you can go back to the regular One
Speaker 5: of the things about the UTMA that people are concerned
Speaker 5: about it is like, okay, well if I save us
Speaker 5: money and I put this and I give my child
Speaker 5: this money, well they're not gonna be ready for the
Speaker 5: eighteen and most eighteen year olds are not responsible enough
Speaker 5: to handle six figures or seven figures. That's kind of
Speaker 5: even twenty one year old. Most twenty one year olds
Speaker 5: haven't have enough information, haven't had enough life experience, so
Speaker 5: it could lead to making bad decisions. If wasting the money,
Speaker 5: that defeats the whole purpose. So having it in a
Speaker 5: trust is beneficial because you get to dictate when and
Speaker 5: how that money is dispersed.
Speaker 6: So you can say, okay, well.
Speaker 5: The money I have a let's say you have two
Speaker 5: hundred thousand dollars in the first fifty thousand will be
Speaker 5: given to my child when they complete college.
Speaker 6: But they have to complete college.
Speaker 5: So if you don't complete college and you don't get
Speaker 5: the fifty thousands, the next fifty thousand will be granted
Speaker 5: upon on marriage. Right, you don't get married, you're not
Speaker 5: getting fifty thousand. Or there's a provision that they can
Speaker 5: take fifty thousand out of the trust at any time
Speaker 5: that they're an adult if they want to start a business,
Speaker 5: but the business plan has to be reviewed by my accountant,
Speaker 5: and the accountant has to say that it's a legitimate
Speaker 5: business plan, and then they could get fifty thousand dollars
Speaker 5: that way. Meanwhile, this whole time, the money is still
Speaker 5: growing because we're still invested over the course of time.
Speaker 5: So that's something that a lot of parents find attractive
Speaker 5: because it provides you a certain level of authority still
Speaker 5: over the money, the access to the money, what they're
Speaker 5: using the money for, you could be as detailed as
Speaker 5: as you want to be.
Speaker 4: Yeah, that's an important fact.
Speaker 7: Right, This is almost like putting the bumpers up right,
Speaker 7: So when we're talking about generations, yes, if you've taken
Speaker 7: these steps, yes, You're not going to be a millionaire
Speaker 7: at eighteen or twenty one, but the steps are now
Speaker 7: being prod for you to get to that level.
Speaker 4: The problem is a lot of times.
Speaker 7: We see when we get money and we don't know
Speaker 7: what to do with it, we tend to spend it
Speaker 7: and be frivolous. This is a system that it now
Speaker 7: has put up the bumpers, right, So you still have
Speaker 7: to work towards something in order to have that money, right,
Speaker 7: which is a huge incentive. I could imagine being eighteen
Speaker 7: years old and knowing that if I complete this task
Speaker 7: or if I've done this, that there is going to
Speaker 7: be that waiting for me. I mean, this is a
Speaker 7: game that the wealthier plan that we haven't had access to.
Speaker 4: But fortunately enough that is changing.
Speaker 7: So these are parameters, right, This is the key to
Speaker 7: sustainable wealth. Putting parameters in place that make sure that
Speaker 7: you won't ruin this, right. We want to make sure
Speaker 7: that this is sustained.
Speaker 6: Yeah, so that's something that's vitally important to take.
Speaker 5: And you can invest the money, like you said, you
Speaker 5: can invest the money in stocks, you can invest the
Speaker 5: money in ETFs, in deck funds, all that type of
Speaker 5: they even bitcoin through the ibit ye, So you know,
Speaker 5: you have different ways you can invest in money. So
Speaker 5: that's the third way that you can make your child
Speaker 5: a millionaire.
Speaker 7: Now number four, This one feels like it's the obvious
Speaker 7: almost right, if we look at how wealth is built
Speaker 7: throughout America, is built through entrepreneurs creating business and having
Speaker 7: stock in that business.
Speaker 4: The other way is only land own in real estate. Right,
Speaker 4: owning real estate.
Speaker 7: And owning it and having it in a way that
Speaker 7: in a manner that now becomes beneficial for your children
Speaker 7: is number four for sure. But it feels like it's
Speaker 7: the obvious way that most people build wealth in our country.
Speaker 7: And we've seen that over the history, right from reconstruction
Speaker 7: to the Industrial Revolution to post war to Redline, and
Speaker 7: we've seen appreciation in homes over time being passed down
Speaker 7: to families has created wealth not only for the owner
Speaker 7: of the home, but for generations of families thereafter.
Speaker 4: So let's talk about some ways that can better fit
Speaker 4: your children.
Speaker 5: Yeah, real estate, So I mean real estate is pret
Speaker 5: self explanatory as far as if you're a home owner
Speaker 5: or if you're a real estate investor, but you can
Speaker 5: going back to the trust, you can you can buy
Speaker 5: real estate and a trust and have your child as
Speaker 5: the beneficiary of the trust. So you can buy real
Speaker 5: estate in both as the purposes for your child right.
Speaker 6: In the trust. And once again you can utilize.
Speaker 5: That as leverage later on to a have them own
Speaker 5: the property outright or they can take over. As far
Speaker 5: as rental income, so like let's say you have a
Speaker 5: real estate property that gives you two thousand dollars a
Speaker 5: month rental income. Right, you can say, okay, when my
Speaker 5: child turns twenty five, they will be the recipient of
Speaker 5: that income, but they have to be the landlord on
Speaker 5: the property and these are the list of things they
Speaker 5: need to check on the tenants. Now you're actually helping
Speaker 5: the child learn real estate in real time because it's like, okay,
Speaker 5: now this is actually out for you. So you are
Speaker 5: going to receive the rent or part of the rent.
Speaker 5: But part of the stipulation for you receiving part of
Speaker 5: the rent is that you need to collect rent. You
Speaker 5: need to talk to the tenants once a month, you
Speaker 5: need to check on the property once a month. So
Speaker 5: now you're actually grooming the child and be a property
Speaker 5: manager and to learn about real estate in real time.
Speaker 5: You're forcing them as opposed to them just collecting rent,
Speaker 5: you know, and not knowing anything. That's not really helpful.
Speaker 5: Like the more you learn, the better you'll be. So
Speaker 5: structuring your real estate purchases, especially for real estate investors,
Speaker 5: having you know a property to how many you want
Speaker 5: in that trust, for the child to actually be the
Speaker 5: owner and set point or to be the beneficiary as
Speaker 5: far as rent or have some level of control, that's helpful.
Speaker 6: It's beneficial as well.
Speaker 5: So that's another way as far as you grow money
Speaker 5: with stocks, but you also grow money with real estate,
Speaker 5: and you can buy property. You can actually buy a
Speaker 5: property in the up account as well, that's what I'm saying. Yeah,
Speaker 5: but you could buy a property for your child, just
Speaker 5: like you could buy stocks for your child.
Speaker 7: Yeah. And that's the beauty of the UPMA is that
Speaker 7: it allows diversified assets. We talk about stocks, to talk
Speaker 7: about bonds, but it also allows you to have the
Speaker 7: real estate piece. So those rates you can put them
Speaker 7: in your portfolio, you can put them in your child's portfolio.
Speaker 7: So whether it's I know, a lot of assignment properties
Speaker 7: is a huge one.
Speaker 4: PK. There's another one.
Speaker 7: Crown Castle has been one that's performed, well, all those
Speaker 7: rates can now sit inside your child's portfolio and watch
Speaker 7: that appreciation over the time, and that can be passed
Speaker 7: down and passed down. So these are the ways when
Speaker 7: we're talking about, Yeah, if I can't buy a home,
Speaker 7: or you don't have to buy a home, right, that'd
Speaker 7: be great if you can have land ownership, But there's
Speaker 7: other ways to own real estate that we need to
Speaker 7: take advantage of.
Speaker 5: Yeah, And that's the good thing about real estate is that,
Speaker 5: like I said, especially if you're an investor, you can
Speaker 5: buy let's say you buy a two hundred thousand dollar
Speaker 5: condo as an investment property, So you buy a condo
Speaker 5: in the trust trust owns it and you're the owner
Speaker 5: of that property. As far as like when the rental
Speaker 5: income comes, you can stipulate from the trust that you
Speaker 5: actually get the rental income. So now every month you're
Speaker 5: getting rental income over the course of twenty five years, right.
Speaker 5: But that what also is happening over the twenty five
Speaker 5: years is that the property is appreciated, So you're benefiting
Speaker 5: in your lifetime or as long as you want because
Speaker 5: you're actually you brought the property and then you're actually
Speaker 5: getting rental income from the property. Now the property is
Speaker 5: actually increasing over the cost of time, and it's in
Speaker 5: the trust and it's designated to go to your child
Speaker 5: at said age. So now when the child, let's say
Speaker 5: that two hundred thousand dollars property in twenty years is
Speaker 5: now worth five hundred thousand dollars. So now the child
Speaker 5: at that point in time is handled the property. But
Speaker 5: you've correct you collect the rental income all this time.
Speaker 5: What you can also say is that part of the
Speaker 5: transfer is that we have to do a refinance, and
Speaker 5: I have to I'm going to take two hundred thousand dollars.
Speaker 5: You're going to refinance the property, and there's probably at
Speaker 5: that point in time there's three hundred thousand dollars equity
Speaker 5: in it. So two hundred thousand dollars is going to
Speaker 5: be paid to me. Why would you do that, Well,
Speaker 5: you've paid. You've paid yourself as far as what you
Speaker 5: actually have paid into the property, right, and so you
Speaker 5: won two ways. Let's say you like, and we're just
Speaker 5: using a cash example, you pay twenty thousand dollars cash
Speaker 5: for this property, and you're getting two thousand dollars a month,
Speaker 5: so you've gotten two thousand dollars a month for twenty
Speaker 5: or thirty years. You won in that scenario because you've
Speaker 5: had income coming in every single month, and then you're
Speaker 5: getting your two hundred thousand dollars that you paid for
Speaker 5: the property back before you transfer ownership to your child.
Speaker 5: So your child is still benefiting because they're receiving an
Speaker 5: asset and the rent is probably now four thousand dollars
Speaker 5: a month, So even though they're refinanced, the refinance is
Speaker 5: probably like eighteen undred dollars a month, but they can
Speaker 5: cover that from the four thousand dollars a month rent
Speaker 5: that they get, so they're still netting. They're still netting
Speaker 5: twelve hundred dollars a month tax not tactical, but they're
Speaker 5: still netting two hundred dollars a month, and they now
Speaker 5: have a property that is worth five hundred thousand dollars.
Speaker 5: So in that scenario, nobody lost because you didn't lose
Speaker 5: any money. You actually made money from the rental income
Speaker 5: and you got your money that you paid for it back,
Speaker 5: but you also left something to your child. Well that's
Speaker 5: that's even better than the stock situation, because in the
Speaker 5: stock situation, you're just putting money into stocks. You're not
Speaker 5: getting that money back unless you put a stipulation in
Speaker 5: the trust that Okay, I'm gonna have to take money
Speaker 5: out of your brokates account. But in this what you
Speaker 5: could do that if you want. But in this situation,
Speaker 5: you actually got all the money back. You made money,
Speaker 5: the child's making money on the rental, and they have
Speaker 5: an appreciating asset. So you know, there's different ways that
Speaker 5: you can you can go about it. But before you
Speaker 5: set up a trust, of course, you you have to
Speaker 5: talk to a lawyer. That's important, so you know, seektly
Speaker 5: counsel see which trust is best for your situation. But
Speaker 5: you know, this time to kind of get some ideas.
Speaker 7: I mean, it's important, right setting up a trust, having
Speaker 7: an attorney, setting up in a state a plan is important.
Speaker 7: And that can't be expensive, right, Like that's something that
Speaker 7: people like. It sounds good, but you have to prepare
Speaker 7: for that, right, Like, I know, I just did one
Speaker 7: for my family. You did one for yours recently as well. Yeah,
Speaker 7: it cost us a couple thousand dollars, but we prepare
Speaker 7: for it. But it's important to lay the guidelines down
Speaker 7: because yes, I mean, we've done pretty well but he
Speaker 7: wants to make sure that his grandkids and his legacy.
Speaker 4: He's continued on.
Speaker 7: I think the interesting part about what you just explained
Speaker 7: is that the same thing that you just did, your
Speaker 7: child can now do for their children at less of
Speaker 7: a cost. Right, because if it costs you to two
Speaker 7: hundred thousand up front twenty years of paying a rental
Speaker 7: income to get it back, well, they didn't have.
Speaker 4: To go through that part. They've skipped that part.
Speaker 7: They've jumped into the equity play, and now that could
Speaker 7: be passed down because the one thing we know about
Speaker 7: property is that it's going to go up.
Speaker 4: Right.
Speaker 7: The cost of living has gone up every year for
Speaker 7: the past ten years, and so that's going to continue.
Speaker 4: Right.
Speaker 7: The amount of land that's available to be built on,
Speaker 7: especially in the environments that we live in, is becoming scarce, right,
Speaker 7: and so property values go up, comps are going to
Speaker 7: go up. That now creates another chain of success for
Speaker 7: their children, but for your grandchildren as well and their
Speaker 7: children after that.
Speaker 6: Yep.
Speaker 5: Okay, So the last one that we'll talk about is
Speaker 5: stock gifting.
Speaker 7: Remember that that post you put up like that was
Speaker 7: years ago when we were like yo instead at a
Speaker 7: baby shower getting gifts we should be Brian stocks that
Speaker 7: really didn't pick up.
Speaker 4: People really didn't take advantage of that.
Speaker 7: But that's one of these things, right, Like, if we
Speaker 7: know the advantage of investing in the market, right, and
Speaker 7: we have a child that is coming into this, wow,
Speaker 7: and it doesn't even have to be a baby shower.
Speaker 7: It could be any type of holiday. It could be
Speaker 7: a birthday, it could be Christmas. Yes, it's cool to
Speaker 7: have cool toys and have nice items, but the one
Speaker 7: thing we know about those items is that they're gonna
Speaker 7: hold no value after we open and they're not going
Speaker 7: to appreciate in time, even if it's a collectible like
Speaker 7: a sneak or something. A child at seven eight not
Speaker 7: they're wearing that shoe and they're gonna wear that thing
Speaker 7: to death and it's gonna be worth nothing after it
Speaker 7: was purchasing one. Whereas if we put it into an
Speaker 7: investment like a stock or on a etf on index,
Speaker 7: we know long term that that's going to appreciate, and
Speaker 7: so we need to get in the habit of at
Speaker 7: least thinking that way, right, we can now gift an
Speaker 7: asset that's going to appreciate over the course of someone's life,
Speaker 7: and even if they don't know, I think that's the
Speaker 7: perfect part of it. A lot of times and we've
Speaker 7: seen people be gifted stock and they're like, what is this?
Speaker 4: What do I do with this?
Speaker 7: It now becomes a teaching lesson again, Right, you always
Speaker 7: have to have an inflection point in any point of education.
Speaker 7: The fact that you've done something that is completely different
Speaker 7: than buying a PlayStation. Right, maybe you buy Sony stock
Speaker 7: in addition to it. Right, so now it's best of
Speaker 7: both for us. Well, here I invested it in the
Speaker 7: actual item, but here we invested in the company too.
Speaker 7: Here's why we did it, and here's how long you're
Speaker 7: going to hold it. It's an inflection point. Now to
Speaker 7: increase the intelligence of a child that you know, that
Speaker 7: becomes contagious. Right, the kid now gets to explain to
Speaker 7: him his peers and his cousins and his friends what happened,
Speaker 7: and hopefully they explain to their parents. That's how you
Speaker 7: build education in the community. That digress, Yeah, for sure.
Speaker 5: And the irs allows tax free gifts of eighteen thousand
Speaker 5: dollars a year.
Speaker 4: HW.
Speaker 5: So we have never really talked about gifting too much,
Speaker 5: but you can gift eighteen thousand dollars a year tax free.
Speaker 5: So we talked about the tax benefits as far as
Speaker 5: you know if you're a self employed person, but this
Speaker 5: is another way to kind of a tax purposes benefits
Speaker 5: is you know, when you're talking about stock gifting, the
Speaker 5: tax aspect is a major part of it.
Speaker 6: So this is a you can you.
Speaker 5: Can gift tax free up to eighteen thousand dollars a year,
Speaker 5: right and it doesn't have to be just stocks, but
Speaker 5: we're talking about stocks right now, so that's the main focus.
Speaker 5: But it's the same principles that apply when we talked
Speaker 5: about all of the other stuff. Right, you you can
Speaker 5: literally take ten thousand dollars a year and gifted to
Speaker 5: your child or to your grandchild, and that's tax free
Speaker 5: and that same compounding interest growth will occur. So that's
Speaker 5: another benefit of you know, gifting is that the tax
Speaker 5: aspect of it, like, that's a great way to utilize
Speaker 5: the tax system in America and to still benefit the
Speaker 5: next generation.
Speaker 7: Yeah, and and somebody's going to ask, well, how do
Speaker 7: I gift it? It goes back to the third way
Speaker 7: that we said that you can create a millionaire situation
Speaker 7: for your child, open the up my account. Right, that
Speaker 7: up my account is super important number. Again for the
Speaker 7: tax purposes, but again this is now something you can
Speaker 7: put assets inside of, whether it be collectibles, whether it
Speaker 7: be real estate, whether it be ibid us to invest
Speaker 7: in bitcoin. This is a definite must if you're trying
Speaker 7: to build wealth for your children, right, you have to
Speaker 7: have a up account. In fact, I encourage everybody after
Speaker 7: they watch this video or tomorrow morning, go to your
Speaker 7: broker's account, whichever one you use. And I've done it
Speaker 7: on each one of them. So Fidelity has it, Schwab
Speaker 7: has it, e Trade has it, Open an up my
Speaker 7: account and just open it. Put five hundred dollars in there.
Speaker 7: In the same way we talk about dollar cost averaging. Right,
Speaker 7: this is another key things the same way we talked
Speaker 7: about dollar cost averaging. Make sure that you have a
Speaker 7: plan into putting money into that up account. Don't just
Speaker 7: leave it at the five hundred that you did to
Speaker 7: open it and thinking that it's going to grow. We
Speaker 7: told you the threshold from a tax standpoint, we told
Speaker 7: you the things that you can invest inside of it.
Speaker 7: Make sure that there's a plan to put assets until
Speaker 7: it can accumulate to something that's going to be worthwhile
Speaker 7: in the future.
Speaker 6: So there you have it.
Speaker 5: It's five ways you got life insurance, growth, ira UTMA,
Speaker 5: trust account, real estate, and stock gifting. And once again,
Speaker 5: this isn't something that you don't You're not making a
Speaker 5: child a millionaire tomorrow, but within their lifetime if done correctly,
Speaker 5: just one of these can make them a millionaire. And
Speaker 5: now if you do multiple can one of them can
Speaker 5: make them a multi millionaire. If you do multiple of these,
Speaker 5: then they could become extremely wealthy. You can set your
Speaker 5: child up to become extremely wealthy within their lifetime. That
Speaker 5: might be at forty, that might be at sixty. But
Speaker 5: the whole point is that it's a marathon. So you
Speaker 5: can set your child up to be wealthy in their
Speaker 5: lifetime by taking steps in actions early on.
Speaker 4: That's a fact. That's a fact.
Speaker 7: There's going to be two types of people in the world,
Speaker 7: the bosses and the people that work for them.
Speaker 4: De sidewise.
Speaker 5: And another great resource personal finance is this book right here,
Speaker 5: Deserve to Be Rich New York Times bestseller. So I
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