Why Investing in Yourself Beats Every Other Investment | Zenhard Podcast with Chris Rivera

In my opinion, typically the cash always does better if you're betting on you. Yeah, you know, putting that money right back into your business is gonna, is gonna, um, get you a better return on investment than, you know, taking your chances with businesses and sectors and people you've never met.

I agree on that until you get to a point where a sure amount of interest covers your expenses. So if you can get to a point where you have like, call it $10 million in something that earns you 6% per year, yeah, and you can live on $600,000 a year, like just keep it in there and then kind of start fresh on other things.

So I agree with you, but from a return on investment standpoint, if you were to sit down and do the math, you're probably talking about a very conservative investment that's going to, you know, yield you 6 to 8%, let's say. Versus if you pump that money into whatever, that, that new business segment in Zendrop, or that new target market, the return on investment most likely— well, maybe not most likely, but if it hits, it's going to be well above that 6 to 8%. So I do agree there is a space for investing in scenarios like that, 100%. Um, well, I think it's— it—

that's like, that should be the goal for everyone from a wealth perspective Well, maybe not everyone. That would— that was my goal, and I think that's a really good goal to have, which is get to a point where your life is free based on the interest on money you have put away somewhere. It's a great place to be in, 100%. You're like, I don't really need to do anything. You still want to do things, but you're not worried about continuing to make money, right? That should be like the first goal for people to get to.

And you can get a little bit more aggressive too because you don't have to pay the bills, you know, you can keep reinvesting that cash in whatever business you're in. Yeah. So yeah, I'm on the same page. I definitely think it's strategic for sure.

Going back to crypto though, crypto is, you know, it's complex. There's different cold storage wallets and different, you know, chains that you can be trading. And it gets very messy when you're going in and out of trades. And the doing the taxes on crypto is like such a mess.

Yeah.

Do you handle any crypto taxes for people?

We do the returns. There's a bit of a rat race right now to figure out how you can automate crypto accounting, but it's highly complicated. There's a ton of companies out there that are fundraising saying that we can fix the crypto accounting problem. But yeah, You know, there's cold storage, there's all kinds of different platforms. Yeah. So it's very complicated because the way it's treated from a tax standpoint is any time you trade, it's a taxable event, right? Well, gains or losses, right? It's a taxable event. So you have to keep track of your basis, which is really difficult. If I trade $1 for 1 Bitcoin, right? Right?

Yep.

That Bitcoin that I bought, its basis is $1. Then if I sell it for 5 ETH, right, you have to figure out, okay, it was $1 before, now it's 5 ETH, what is the gain loss? And then my basis is now 5 ETH. So it's like you're never ending chasing your basis.

Would your 5 ETH be the new basis if you trade for something else, or is it always that $1?

No, so it changes when you pay taxes. Ah, so if you were to trade— yes, exactly. That's what makes it so complicated, is if you keep zigzagging back and forth between dollars and Bitcoin, like a, like a simple investor like me, like I just bought Bitcoin and I sold Bitcoin and got my US dollar back. Right, right. Pretty simple because your basis is what you paid. So like if I invested $30,000 in Bitcoin and I walked away with $150,000 as an example, simple. My gain is $120,000. Where the difficulty comes is if it's at $150,000 and instead of going back to USD, now I trade it in for ETH. Now I have to pay taxes on that gain.

Yeah.

Which I never recognize in US dollar, but still a gain in the eyes of the IRS. And now I have to track the new basis in ETH for whatever that gain amount was.

Yeah. And it gets so complicated because let's say you're starting out, you put, you know, $100 grand into like Coinbase, you buy some ETH, you know, you put ETH into a MetaMask wallet so you can buy some shitcoins. You convert some of that ETH into Solana, you go buy some Solana shitcoins and you're in and out of it on Solana, you're swapping one shitcoin for another and then you're staking certain coins here, right? It's like, you know, Albert Einstein could barely figure that one out.

Yeah, highly complicated. Highly from accounting.

So where does, where does like regulation go? Like, what is it going to look like?

So I don't know. I mean, the IRS, literally, they have a checkbox on your tax return. You may have seen it. That's like, do you trade digital currencies? And it's a yes or a no.

Yeah.

Um, and it's like, really? That's all we've got so far? Um, the bigger trading platforms do have reports that show you what your gains or losses are, right?

Um, once you get out of those platforms and you have different wallets— and dude, like, have you seen, um—

and oftentimes, just before I move on, those platforms can be incorrect on your gains or losses too, because if you transfer from Coinbase out to a platform, then you go back into Coinbase Coinbase doesn't know the activity that happened in that other platform. So Coinbase no longer knows your basis, right?

It looks like more basis. Exactly.

Yeah, exactly. So they don't know what it was worth when it came in. So those reports that these major platforms give you, yeah, are oftentimes not accurate.

So you're saying if you put $100 grand at Coinbase, yeah, and then you send it to a MetaMask wallet and you lose $80,000 and then you put the $20,000 back into Coinbase, it looks like you put in $100 grand, you took it out, and then you put another $20,000 in. It looks like you put in $120,000.

Exactly. That's exactly right. Yeah.

Now it looks like your base is $120,000.

Right, right. Yeah. So it's, it's complicated. Yeah.

And then you got staking. So like I have things staked for like 2 years and it's like this one has 6 months left and it's like, well, does that count as gains yet? Yeah. Like if I didn't pull it out yet, does it? It's massively complicated.

So we tried, um, years ago we tried to build a practice around cryptocurrencies, uh, because we actually had clients that did business in cryptocurrencies. We still have a couple. And, um, I mean like paying contractors in cryptocurrency salaries, you know, um, contracts with other companies, you name it. Um, and We were like, wow, these clients are doing really well and no one really represents them. Similar situation to what I found with you where it's like really no one's representing e-commerce entrepreneurs. But in the crypto front, it's highly complicated. Now there are firms out there that say, oh, we specialize in crypto. Yeah. And in my mind, I'm like, I hired one of them and it sucked.

Really?

Yeah. And there's softwares that tell you the same thing, like, oh, we, you know, we have it figured out. And what's funny is we've partnered with a handful of them.

Yeah.

And the same issue we have, they're like, oh yeah, yeah, we'll automate everything. And they're like, oh, but you have to enter in your basis. And it's like, wait, so who's going to calculate that? Because I know my client's not.

You know what they're really good at? They're really good at sending you an invoice.

Yeah, yeah, right, exactly.

I remember I paid this company, and then for a year I got nothing out of it. And I just kind of gave up on it.

Don't you love it when that happens?

Love it. Or spending way too much time on something and paying them. It's great. So do you have any clients or have you had clients that have been very successful in crypto from trading?

Um, marginally. I mean, nothing to write home about. Like, I probably have never had a client make more than, let's say, $1 million profits in crypto.

Gotcha.

There was the— what was it, GMC or GME or GameStop? GameStop. And then what was the other company? The AMC.

Yeah.

One of our clients made um, like over a million dollars in gains, and then he thought he was a big stock trader, and then he kind of squandered it the next day.

I have a friend that put a million dollars into GameStop and turned it into $40 million.

Wow, that's crazy.

When the new CEO came in, the new CEO basically was like, all right, GameStop is not really a gaming company anymore, it's now a hedge fund. Yeah, they're— they have all this cash, now they're just turning into more cash.

Got it.

He turned a million into $40 million.

Yeah.

Shocked me when I heard that.

In my experience, um, with our clients that are entrepreneurs and they're very, very bright at what they do, marketers, you know, branding, you know, they're really, really good at their subset of skills. Um, typically when they invest in other things, sometimes it goes well, sometimes it goes bad, but it's not really polarizing. Like I've never had a client that like, oh my God, I lost everything. Or like, ah, I can give up on e-commerce now because I really crushed it selling stocks.