Spilling The Tea On How Billionaires Are Made

Foreign. This is Busy Getting Better, the podcast for women who are committed to prioritizing their own personal growth. I'm your host, Madison J. A mindset and money coach, a first generation wealth builder and a woman on a mission to help you master your finances and live your best life. Money is not all we are covering though, because in order to live your best life, you have to become your best self. So we are diving deep into all things personal development and bringing you the mindset set shifts, money tips and inspiration. You need to go out there, be bold and build the life you can't stop daydreaming about. It's time to get busy, babe. Busy getting better. Oh my God. I just got done at a three day money conference where I spent my entire weekend learning exactly what the heck the wealthy, like the 1% I'm talking the billionaires are doing in order to grow wealth and avoid paying taxes. I am not gonna lie, my brain feels a little bit like mashed potatoes right now after sitting through three days of learning all about wealth building and tax saving strategies. But I had to record this the morning after because one obviously it's fresh and I feel like I needed to just talk it through and make sense of everything that they're doing. And also because I just had one of these like, what the heck mom? Sitting in this room being like, oh my goodness, this makes so much freaking sense. So I am going to share with you, of course, everything that I learned. I want to break down for you all of the key takeaways, the key messages that were continuously hammered home about what the wealthy are doing and just like ways that they are living life and the ways that they are prioritizing their money. And then I'm going to share with you the top five accounts that they are utilizing in order to build wealth and avoid paying taxes. And then I'm going to share with you what they're actually doing within these accounts that is so different than what traditional investing advice is. And at the end, I'm going to obviously share with you how you can take this information and implement it into your own life. Because while I don't necessarily recommend running out and trying to attempt to do the strategies that they're doing because they are complex and they require a high level of not only investment knowledge, but business knowledge, tax knowledge, high level friends that are just like doing different shit, there's, there's so much complexity to this. And so it obviously makes sense that as they have access to more money in different circles and different people, they are understanding how to do things differently. But I do still think that there are are some key things that the wealthy are doing that all of us can implement and prioritize in our own financial journey. So I'm going to go ahead and do some takeaways from there. So let me go ahead and dive on in. And I just want to preface this with, this was three days of me just sitting in a cold ass conference room by myself. I went to this event knowing absolutely nobody, just totally nerding out in the back of the room with like literally my jaw on the ground most of the time because I was just like, whoa. I've never thought about how the wealthy are actually building wealth and like how the billionaires are being made. And I've always known that they're playing a different game. Right? I mean it just makes sense. Like you don't amass that amount of wealth with doing things like, I don't know, the same way that everyone's doing them. Anyway, I'm sitting in this cold room and there is just literally three full days from 9am to 6pm of just talking and teaching and whiteboarding and yeah, I made sense of it and I, I obviously am going to consolidate that down to the key takeaways here in the best of my ability and I hope I make it make sense. So I hope that you are picking up what I'm putting down as I'm walking through trying to explain all these concepts and all of these accounts that you can utilize. This is definitely like deep in the personal finance world. So if you have no understanding of investments, like that's totally fine. You'll be able to kind of understand like what they're doing in order to save money on taxes. And if you are a personal finance person, I would love for you to tell me what you think about what the heck these people are doing because this was definitely very interesting to learn about. Okay, so this conference that I was at, it's called the Money is Mastermind. That's the name of it. And so it's all, it's obviously talking all about money. And this guy who runs it is sharing essentially all of the strategies that he's learned and all of the things that he's uncovered throughout his own journey in building wealth in just how different the money game is on two sides of the world. So we obviously have an understanding that there is the concept of the 1%. The 1% in the world are billionaires. They have amassed so much money that their financial situation is just so wildly different than Majority of the population, right? There's the 1% and then there's the 99%. And so the whole premise of this conference is essentially talking about how the 99% of the population, which is going to be you and I, are playing a game from a contributor standpoint, and the 1% of the population is playing the game from a creator standpoint. So throughout this entire conversation and the entire conference, he's really talking about here is how the contributors, aka A, the 99% of the population, aka you and I, approach personal finance and approach investments and approach wealth building. And then you've got the 1% over here in everything that they do on the 1% side is completely opposite of what the 99% are doing. And so that is how he talks about every single one of these strategies. He talks about how you and I approach things, and then he talks about how the 1% approach things. So I'm going to do my best to point out kind of all of the differences, but I really want to highlight some of the key stats that they talked about that were really interesting to me that I wasn't aware of in regards to just like how many billionaires there are and how their wealth has grown, especially over the last four or so years since the pandemic. So one of the stats that they shared is that right now there are 30 new billionaires being created each quarter. That's a lot of billionaires that are being created each quarter since the pandemic. $2 trillion have been added to billionaires pockets. And that stat continues to rise. And now that money is specifically being added to billionaires pockets, not millionaires pockets. And so obviously why? How? All of the questions. Right. So another key thing that they shared in here was, you know, we're obviously thinking, okay, well, they're making money, they're investing it, they're investing their money just so wildly different than how the average person is investing their money. And this is something that's going to come up, but as a quick stat here of the money, the $2 trillion that was created since the pandemic, 42% of that money was from private equity and 28% was real estate related investments. So private equity is going to be something to really focus on here because this is definitely something that the average investor is not partaking in. And private equity is essentially ownership stake within a company without the company being public. So once a company goes public, we're able to purchase shares on the stock market and you and I are able to now be part owners in that company. But 42% of these $2 trillion was in private equity, meaning that these billionaires are owning parts of companies that aren't available to the public. This private equity piece is a huge, huge component to wealth building. So hold on to that as I kind of share more about what is going on in here. But those are just some interesting stats. I mean, I think to hear the fact that obviously billionaires are just making a shit ton of money on the rest of the population in such a short amount of time, like $2 trillion in the last four years, like, I don't know, that is bananas. And 30 billion Nairs being made every quarter. That's a lot of people starting to get access to a large chunk of change. The difference between a millionaire and a billionaire is insane. A billion dollars like you, that's so much money. And the fact that there's so many people now reaching and obtaining that amount of wealth is crazy. And how do they get there through all of these strategies and tools that I am about to break down for you? All right, so the key takeaways, I wrote six down here, kind of boiled it all down to six key takeaways. Again, these are messages that were continuously hammered home throughout the entire weekend. And first up is this idea that there's two teams being played. The contributors and the creators. And again, the contributors are the 99%. That's us, the majority of the population. The creators are the 1%. The overall message is essentially that the system is rigged in favor of the ultra wealthy. They continue to talk about how all of the laws of the money game were created for the wealthy by the wealthy via lobbying. They are literally going in and structuring laws and creating laws and controlling the way that the game is played. That is huge because obviously, again, I know we all understand, like, there's obviously a different game being played, but, like, they are literally changing the laws of the game of how money is played to be in their favor. And there were just so many examples of how this has taken place and how much money the wealthy spend on lobbying and on different tax strategists, tax architects, in order to be able to structure their finances and structure their deals in a way that makes them compliant by really, really playing in the gray area. And that was a really big thing that kept getting hammered on too, is just this fact that, like, you know, there's the white, there's the black, and then there's the gray. And if you can play in the white and in the gray, then you're Going to be just fine. You just obviously want to avoid what, like, is clearly illegal. But for the most part, they're playing this white and gray area, and they are paying an exuberant amount of money to go towards people to actually look at how to structure shit so that they can get away with it. That's literally it. Like, they talked about how in certain families and certain wealthy families, people will pay like $150 million to tax architects, tax attorneys and CPAs, like all these different people, to essentially go and structure their finances in a way that if they do get audited, if they do get in trouble, they're going to be just fine. So that's really interesting. So point number two was that your goal with your money should be to create it, to keep it, and to protect it. I think that's pretty standard. I think that's a great message. No matter whether you are in the 1% or you were in the 99%, you absolutely should not only be focused on creating money, you need to understand how to keep it, how to grow it, and then how to protect your money. So those are the three key categories that kind of everything fell back into is creating money, keeping money, and protecting money. And then on top of that, the next component of that, that was a big, big talking point, which I totally agree with and totally back up, is that money needs movement in order to grow. Which this makes sense, right? We know that money needs to be moving into investments. It needs to be moving into something that is growing, that is appreciating in value. Money cannot spend, stay stagnant. If you keep money in the same place. If you're going to go take your dollar bills and dig a hole in your backyard and bury your money there, and you are just going to keep it hidden and keep it still and not do anything with it, that money is going to continue to erode. It's going in value, it's not going to be worth as much because you've got inflation working against you. And so in order to grow your money, your money needs to be in movement. The basis of the word money is currency. Currency comes from current, and current is water moving. So if you think about literally what currency is, it's movement. It is movement. Money needs to move. And so I love that that was one of the key takeaways. Because no matter, again, where you fall in the spectrum of money, that is something that needs to be ingrained, is that if you want to move forward with your finances, if you want to build or do anything, your Money needs to be in movement. Money hates being still. It does not want to be stagnant. It needs to be invested. It needs to be changed and extreme exchanged hands. Like it's just, it's it. That's how it's meant to be. It needs to be a movement. So that was a big key takeaway from this, was that you need to be moving your money. Okay, next on key takeaways, number four. Your financial IQ is so important. So your financial IQ is going to equate to your net worth. So a big topic of conversation this weekend was also just like, the more that you understand about money, the more that you are going to be able to create it, keep it and protect it. And you should constantly be finding ways to increase your financial IQ so that you can better understand what is going on with your money, what you need to do with it and what your opportunities are. So as you continue to move up the ladder in understanding what you need to be doing with your money, whether you're budgeting or learning to invest your money or learning to find new streams of income to create money and everything that you're doing to grow your wealth, like your financial IQ needs to continue to increase. And if you stay stagnant there, then your financial situation is going to remain stagnant. Like, you cannot outpace your financial IQ when it comes to growing your net worth. And so if you are looking at your net worth, if you're looking at your bank account, if you're looking just your overall financial situation in life right now and you don't like it, a great place to start is figuring out how to increase your financial iq. If you have a high financial iq, the likelihood of you being absolutely broke is like impossible. If you truly understand how to create, keep and protect your money, if you continue to expand your knowledge as it relates to money and how it works, there is no reason that you're not going to hit your financial goals, but you are going to cap your net worth growth ability when you cap your education around money and how money works. So that was another big, big takeaway that if you want to continue to expand your knowledge and grow your net worth, then yeah, you just need to be focused on raising your financial IQ and learning more about money. So look at you. You are already doing that. Kudos to you. By just listening to this episode, your financial IQ is going to rise. Because I promise there's going to be something in this episode that you are going to learn about money. Because again, this is like unknown stuff that I'M about to break down for you of what the heck the 1% are doing in order to build their money. So you are already increasing your financial iq. So yay, gold star for you today. Okay, so next up, number five is you. I love this one because this is like what I preach. You need to be in control of your finances. Let me say that again. You need to be in control of your finances. You've got to be in the driver's seat of your financial future. If you are just continuously outsourcing financial decisions, then you are not in control. Somebody else is in control. So one of the big things that they talk about here is just the differences between the contributors and the creator side is this, is that on the contributor side, we are programmed as a society to outsource our financial decisions to other people. What do I mean by this? We are essentially set up like it is very common practice that you go and you start making a lot of money. And the next step that you usually do is, oh, go get a financial advisor and just give them your money to manage so that they can invest it for you and start to help you grow your net worth. And listen, I don't think all financial advisors are bad people. I don't. I want to say that first, before I get into this. I just think that the financial world was built and this exact weekend confirmed. My whole thought behind all of this is that the financial world was created to monetize off of people that don't want to prioritize financial education and be in the driver's seat of their money. They have created an entire structure. And one of the examples that this guy used was literally Charles Schwab as an example. But all of them fall under the same bucket. So if you think of Charles Schwab. Charles Schwab is a creator. He is on the 1%. But what they do is they create these systems in place to then go capture all of the money from the contributors and. And say, hey, don't worry about it. We'll take your money and we'll invest it. And then the person that's making the absolute most profit on this scenario is the 1% is the Charles Schwab in this example. Because they're literally taking your money and they're doing all of the work for you. Because they are saying, like, hey, no worries, I got it. Just you go work hard, you make money, you bring it to me, we'll invest it for you. You'll be growing your net worth. But really, at the end of the day, if you were to actually break down the math and look at it, after all the fees and everything, the person that's winning is the bank, right? It's like when you go to Vegas and you are playing the lottery, who always wins the house? The house always wins. And that is exactly what these financial structures are that have been created are essentially to go take money from the contributor side, take money from us, all the hard earned money that we have created, put it into a system that is essentially rigged against us and in favor of the 1%. Now, I don't want to say that investing your money is bad out of all of this. That's the goal. You definitely need to be investing your money. But what I think we need to focus on and take away from this is that just completely throwing your money to someone and just being like, cool. You sound really smart and educated. You obviously know better than me. You take my money, you go invest it for me and just show me the return at the end of the year and let me know if we're doing a good job that you can't. Like, that's gotta go. That's a no, no. Like, you need to fully understand what your money is being invested into. And again, if you want to use a financial advisor for that, that is your own prerogative. But I also think that you can go out and learn some things that are going to make you feel more confident and more, I don't know, supported in making your own financial investments where you can save money on fees and essentially keep more of the wealth and more of the return in your own pockets. And if you do that again, if we raise your financial iq, if you go and raise your financial IQ and you start to take more and more control over your money and what you're investing and actually understand what the heck is going on with it. You are just going to win more and more throughout this. So being in control of your finances. And I'm going to highlight how in control the 1% are in comparison to how in control we are with our money in a second. But just, just again, consistent theme throughout the entire weekend was just to make sure that you are in the driver's seat of your finances and you're not outsourcing it. And I don't even mean just to like financial advisors. I mean like if you're in a relationship or if you're in a situation and somebody else is making all the financial decisions, like, stop doing that, start getting in the seat, start figuring out, start asking questions, being like, why are we invested in this. What are we invested in? What is our investment plan? What is our investment strategy? Like, what are we working towards? What are our goals? Like, start to ask some questions and just slowly and surely start to raise your financial IQ and get in control of your finances so you know what the heck is going on. Because you work hard for your money and you deserve to understand what is going on with it and what it is doing to grow and how that money is actually going to help you hit your goals at the end of the day and give you the life that you want. So enough on that point for now, and we'll circle back to the control over the finances piece in a second. But the last key takeaway that was continuously hammered home was this concept that you need financial friends that are playing the same game as you. You need people in your circle that are going after the same goals, that are learning similar things, that are talking about different types of conversations, that are working towards similar goals, that have similar values and priorities when it comes to money. Like, the 1% are not hanging out with people that don't give a shit about their finances. The 1% are hanging out with people that understand the importance of prioritizing their finances and building wealth. And I think that's really important. Obviously, we hear the saying all the time, right? Your network is your net worth. You are the sum of the five people that you surround yourself with. Like, I think as you move up the chain in regards to your finances, like, this becomes even more true because you are just striving for different goals. You're working hard towards bigger things. And you want people that you can talk to that get it, that understand why you are or aren't spending your money in a certain way, right? Even on a scale of like, hey, you're working on your budget and you're trying to get out of debt. Like, you want people that understand that, that aren't frivolously spending money. You want to be surrounded by people that are like, dude, good for you. Yike. Glad you said no to this. I'm happy that you're sticking to your boundaries, that you're prioritizing your own financial goals. I'm proud of you. So again, no matter where you're at in your financial journey, this is super important. You need financial friends. You need people that are playing the same game as you, that understand your goals and values and that you can chat with about this stuff, right? So that was the other key takeaway. Okay, who, what I'm going to share now are the five accounts that were broken down all weekend, these are the five accounts that, you know, I can't say this is like what all of the 1% are using. I'm sure there's other accounts, but it's. These are the key five that were broken down into different ways that they essentially are building wealth and again avoiding taxes legally. So I'm going to list the five accounts and kind of talk a little bit about what they are. But then the accounts aren't necessarily what's important because these accounts are going to sound exactly the same as accounts that you and I have access to. These accounts might be accounts that you're currently investing in. These are common accounts that are talked about in personal finance. But it's what they're doing with these accounts that sets it apart, that makes it so different. So let me break down the five accounts and then I'm going to get into like what the heck are they actually doing that's different than what you and I are doing in order to be able to accomplish all this money growth. So the five accounts that were broken down were a Roth ira. So an IRA is an individual retirement account. This is again an account that is touted as one of the best wealth building vehicles. Because a Roth account is something that is post tax dollars. You put money into it and it grows tax free. And then you're able to pull it out at 59 and a half in retirement and all of your money has already been, all the taxes have already been paid and so you get to pull it out tax free. And the Roth component is something that is consistent throughout all of this. So I'll just mention this first, A big, big sticking point was that you, if you are going to pay taxes on it, you would rather pay taxes on the money now on smaller amounts of money. And also when we know that the taxes are likely going to go up. So all of these accounts, the goal is to get them into essentially like a Roth situation where you've already paid taxes on the money. That's a key component. So Roth IRA is one, the second account. And this is like the most powerful account in this entire wealth building strategy. And this account is a 401k account, but not a 401k account that you and I may have with our employer. This is a solo 401k account. So you can open up a solo 401k account. When you are a business owner. Solo 401k accounts have significantly higher contribution limits than a 401k account that you would have with an employer, I think the employer one is 23,000. And then if you have a solo 401k, your max contributions for the year is 69,000. So different. And then within your solo one 401k, you have a traditional section and you have a Roth section that you can contribute to. So again, traditional is an account where you would not pay taxes on the money this year and you would pay taxes on the money when you go to pull it out. And then the other side of it is again, here we are, another Roth situation where you're going to put money in, pay taxes on it up front, and then all the money in that account grows tax free. And then when you go to pull it out in retirement, all that money is tax free. Okay, so the third account is an HSA account. So this is a health savings account. Again, you and I likely have a health savings account. If you have a high deductible medical insurance plan, you have access to a health savings account, which is a great account that people utilize. It's actually one of. It's the only account that is a triple threat. Right? So you can put money in tax free, you can invest it and grow it tax free, you can spend it tax free, and then you can pull it out tax free. So hsa, I've had one for years. Most people have them. If you have a high deductible account, it's a really great opportunity. And again, it's the only account that has three tax advantage strategies to it. So a great account that many people have. But reminder, it's not necessarily the account, it's what the heck these people are doing with them. So HSA is number three. Number four is called a Coverdell account. A Coverdell is another type of education account. Think of like a 529 plan is a really common one that people talk about when you're investing for education, for your kids. So the other one is a Coverdell. So that's the fourth one that was mentioned. This is all for, again, education expenses. And then the fifth one that was talked about was something called a golden Roth or an inherited Roth. And this is essentially an IRA account that is passed down to you. You are the beneficiary of somebody else's IRA account. When they pass away, you now inherit the money in that account. Okay, so again, really quick, the five accounts that we talk about are the Roth IRA, a Solo 401K, an HSA, a Coverdell, and then an inherited or a golden Roth account. So those are the five accounts. Now let's talk about what they are doing in these accounts that is different than what you and I are doing with our investments. And before I dive in, I just want to add this little notation in, again, not financial advice here. All of this is for the purpose of education. And I definitely don't think that the majority of people should run out and go start to implement these strategies. These are definitely high risk changes that they are focused on. And it is something that like not everyone's going to have access to. And again, they're paying a lot of money from like a tax perspective, like on tax architects and tax attorneys to make sure that things are structured okay. So this was something that was also mentioned throughout it. Like, do not just go run out and make all these changes to your account and be like, cool, I'm going to start doing this now. Like, you would definitely need to do a lot of research, a lot of education and like get connected to people that have done this before. So just for the purpose of education here, please do not go run out and make all these changes to your account and start to do these things. Because what's at risk here is all of the funds that you have put into these different accounts. So I think, you know, hopefully, I mean, my wheels were definitely spinning on maybe how I could try and, you know, utilize some of this stuff. Once I get to a place where I don't know, you know, I'm like, okay to risk some of the money because again, these are obviously significantly higher rewards opportunities, which means it's also a significantly higher risk opportunity. Okay, let me get into it now. So the key, one of the key things that they are doing that is so differently and I'm going to circle back to that whole be in control of your finances perspective. They are utilizing all of those accounts that I just listed as a self directed account. So self directed IRAs, self directed 401ks, self directed HSAs, yada yada, yada, you got it. What is a self directed account? A self directed account means that you are keeping your funds in not a traditional IRA or 401k account. A self directed account means that you are able to go utilize that money to invest in things that are not standard investments. So you can go invest in, you know, the stock market and you buy index funds. That's like the standard approach to investing in your 401k or your IRA account. They are moving those funds or they're putting those funds into self directed accounts, meaning that they can go utilize the money that's in those accounts to invest in anything. So I did a little bit of research. Thankfully I was like on my laptop as this guy was talking throughout the entire weekend and just like googling, because if you know me, you know I have like a million questions on like every talking point. So I'm like Google and left and right. And one of the things that I was curious about was just like how common some self directed retirement accounts are. Like how often are people utilizing the strategy where they are in truly directing the funds for their finances. And I found that only 3 to 5% of retirement accounts are self directed. But this is a growing strategy among savvy investors. So it is a little known fact that you can utilize self directed accounts, but it is something that is becoming more common knowledge. And obviously this guy is now going around and sharing so much information about how they're utilizing it that I obviously believe that this is going to be something that we see more people utilize. But self directed accounts essentially mean that you are responsible for the investment you go in and you can utilize the funds in those accounts to invest in anything. You can invest in significantly different things. The biggest thing that is different that I'm going to talk about here is that they are utilizing the funds in here to invest in private equity. That is what is going on here. So let me just talk about like what this means. So let's say you've got some funds in your IRA account. So you've got, you know, $7,000 for example, is the max that you can put in your Roth IRA this year in 2024. So let's say you have $7,000 in your Roth IRA and you move that and it's in a self directed Roth ira. So instead of going and buying index funds or buying individual stocks or whatever, you, you know, tickles your fancy here that you want to invest your money in in your retirement account. You decide to go invest that money into private equity, which is essentially shares in a company that is not for the public to purchase. So what they're doing is they're going and they're taking that money, that $7,000. They're going to buy shares in private equity. And then as that company grows in value in revenue, they now are part owners of this company. All of the money that they profit from being an owner in this company goes directly back into your Roth account and stays in there. And you pay no taxes on the profit. Right. It's the same in our world when we take our, you know, investments and we go and buy index funds and Then they grow in profit, they grow over time. In your Roth account, you've already paid taxes on the money that's in there. You invest in the stock market, the stock market goes up, your value of your portfolio goes up, and then you aren't paying taxes on that money again when you go to pull it out. Right, that's the benefit of the Roth. But the thing that they're doing is they're going and they're buying private equity with that money in businesses that grow to millions, to hundreds of millions of dollars in some examples. And then all the profit that they're making on that is going back into their Roth account and they're not paying taxes on that money again. So remember when I said that private equity is where all these billionaires are being created and you know, $2 trillion have been put in their pocket over the last four years. It's because they're investing their money in private equity. They're not investing their money in the stock market like this. I'm sure they are. But like some of their money, like, right, it's all about diversification. I'm sure they've got money invested in the stock market. But like how they're jumping from like millionaire to billionaire status, like how these people are actually making a shit ton of money is through this strategy. So I'm going to share a story of somebody who is very well known that utilized this strategy and kind of break down for you. You what? I mean? And like how this is crazy, crazy, crazy. Okay, before I get into story time, I need to introduce this other concept that was taught to us. This is like, this is the, this is it. This is the meat and potatoes of how they are essentially getting away with growing such ridiculous amounts of money by investing in private equity. And this is not an account that they are utilizing, but it's a structure that they put into place so that they can do it all, so that it's all legal. And this structure is called a robs structure. R O B S. It's a rollover business startup. So rollover business startup robs. And what a robs does for you is allow you. It's actually the only legal way that you are able to utilize your own retirement funds to start a business. So these are, you know, utilized for someone who maybe had Money in a 401k, let's say at an old employer and decided to leave corporate America and utilize all of their retirement funds. Maybe not all of it, but utilize their retirement funds to go and start a business. And you know, that's all the money that they have. It's, it's put into place to be able to help those individuals and utilize the money that they've already put aside for retirement and instead reallocate those funds to go and start their own business. Obviously, anytime you are talking about taking your retirement funds and putting it into a business, that's pretty high risk, right? So you really want to make sure that you are not just willy nilly going out and setting this thing up. But it is a really great opportunity for people if that's what they want to do with their money. Because again, it's your money. So this was really cool. I honestly had never heard of a Rock robs before, so I was not aware of how this was set up for you to be able to go and take your retirement funds to fund your own business. So I thought that was super cool. So let me talk about how they are utilizing it. So in A robs they will start a solo 401k or move any sort of, you know, 401k retirement fund into a solo 401k. This is key. You want it in a solo 401k, you want it in the Roth section of your solo 401k, then you are going to start your business and your business is going to be a C Corp. Usually when we start LLC or whatever, like normally their S corps is the thing everyone talks about. C Corp is what you want to start your business as. And then you also have to go and hire yourself as a W2 employee in your business. Your business, your C Corp is now going to open up a company for 401k. Okay? So right now you've got your solo 401k, you've got your company 401k and then you've got your C Corp. Your business. This is where it gets juicy. So what they do is they will take the funds from their Solo Roth 401k and fund the company for a 1k. Let's say they move over $10,000 from their Solo Roth 401k to their company for a 1k and they fund it. Now that company 401k is going to go buy shares in their company. So they're going to go buy 99% because you can't do 100%. So the company 401k goes now and buys 99% of the shares in the C Corp of the business. So now the company 401K is essentially owning the C Corp. It owns all of the shares in the C Corp. Okay. And so what happens now is the company can go up in value and then the company shares can be sold for a high value, high profit. When those company shares are sold, the profit from that share or from that revenue goes back into the company 401K. And then that fund goes back into the Solo Roth 401K. All of the money that is accumulated through the growth of the business since it came from a Roth account is tax free money. So let me tell the story now because this is where it gets juicy. This is who made this? I don't know if he made it famous, but like it's. You can definitely find stories online about how this gentleman, his name's Peter Thiel. Peter Thiel, you may or may not know the name. He is the creator of PayPal. And so Peter Thiel went in funded. At the time, the max amount that he could put into an account was $2,000. So he went and funded an account and then he used the funds in the account to buy all the shares in his company, PayPal. And then three years later he sold PayPal for $3 billion. And then all of the profits from him selling the company, he sold all the shares of that money, all the profit went back into the Roth account tax free. So all the profit that normally you would be paying taxes on on all these situations is just going back into the Roth accounts completely tax free. So this is what I'm saying about how they're utilizing all the same accounts, but since they're self directing the funds, going to use the funds to invest in private equity, either in your own company or in other people's companies. I'll give an example of other people's companies here in a second. Then all of the profits from that money, since they were initially funded from a tax free account, a Roth account, any profit that you make goes back into these accounts tax free again. So this is how they are avoiding paying taxes on large sums of money. Wild. Okay. Another famous story is Mitt Romney. So Mitt Romney, I think we probably all know that name. He is someone who also grew, I think it was like $60,000 to $100 million with his retirement account. Do the math. You cannot contribute your way to $100 million within your retirement account. You have to move the money, I guess in these ways. And so what Mitt did is he went and he met up with all of his friends. Friends, I don't, I don't know who these people were, but he essentially took that money and they all just exchanged investments in their different businesses. And so he invested in a business in his retirement account out of a Roth account into somebody's business before it was started. So again private equity invested funds into this business and then the business was a software startup company. That software startup company ended up going public and making a ton of money. And the funds for that he invested now all come back into his account. All his profit, all his revenue that he made from that investment go back into his account tax free. So he went and took that $60,000 in his retirement accounts and turned it into $100 million by investing in private equity. Another way that they're utilizing this rob structure is again like to run their own business. So if you go and you use your retirement funds to go set up your own business and then you are the owner of the shares in that company, like you're going to get paid out on the profit and on the revenue and all the profit and revenue goes back into these Roth accounts and you're making all the money tax free. So like it is just, it was just crazy and I hope I'm explaining this and like the mind blowing capacity that like it hit me in when I was sitting in these rooms about the differences. So to summarize, right, they're utilizing self directed accounts and they are investing in private equity and they're utilizing this robs structure to set up their businesses in a way where they keep all of the profits in tax free accounts and everything continues to grow tax free. Crazy, crazy. I don't know, I just, this is just mind blowing to me of everything that they broke down and how different it is in regards to, to what they're investing in. So something else that I just want to add in here that they talked about is this concept of family offices and family banks because these are two things that I have heard about and I find very interesting and very fascinating. But they really broke them down. So let me just talk about family offices and family banks really quick. So these were created first by John D. Rockefeller, which if you know the name, if you know who he is, he essentially is like the wealthiest person ever. He had more money than America at one point. Like this dude, his family so rich, so Rockefeller and there was the Vanderbilt family. These are two really wealthy families back in the day. And there's really interesting studies that have been done on both of them because Rockefeller's family is still one of the wealthiest families around. Vanderbilt family went broke in three generations, like had more money than America, like trillions of dollars in today's Money and they went broke in three generations. And the differences between the two family essentially boiled down to creating family offices and creating a family banking system. And so the Rockefeller family did this, the Vanderbilt family, they might have created a family office, but they did not create a family bank. And because of that, they essentially went broken. So I'm going to try and explain this simply. I hope I can. And so a family office first I'll start. There is something that wealthy people utilize across the board. A family office is essentially a bunch of people that they are hiring to manage their finances for them. In order to start a family office, your net worth needs to be around $150 million. So like we are talking again, we're talking about the 1% across all of this. So the 1% are creating family offices, they're hiring CPAs, tax attorneys, lawyers, like, like 15 different job titles to essentially just manage their finances for them and continuously look out for like new tax laws, new tax strategies, new tax loopholes. Like everything is being managed by this family office because there's so much money that they need to continue to circulate. Because again, the goal is not, they're not just like housing this money somewhere, they're like moving it to continuously keep it in circulation and growing. And obviously moving that amount of money takes a lot of management. So they create literally a company that is a family office that is just responsible solely for managing their hundreds of millions, if not billions of dollars. So really interesting. I thought that was really interesting. A family bank, on the other hand, is what they are structuring to essentially not need to leverage a normal bank. Like you or I would go and take out a loan from a normal bank. If you're in the family, you can take out a loan from the family bank. And how they have this set up is essentially it is a life insurance policy set up. And I want to say this, it is not a normal life insurance policy. This is not like a standard. You and I go out and get a life insurance policy. These are like life insurance policies for high net worth individual. So essentially what Rockefeller did is he would go and open up life insurance policies against the family members. If they wanted to borrow money, they were allowed to borrow money. As in take out a loan and they could just pay the interest that they needed to pay against borrowing money from the life insurance policy. Then what they did to protect themselves was if you were a family member, you wanted to borrow money, you had to take the life insurance policy policy out. Let's say it was a $20 million life insurance policy. Again, right? Rockefellers are super wealthy people, we're not talking like the average Joe here. And someone in the family wanted to go borrow a hundred thousand dollars, they could borrow the money at cost of what it took to take the money out of the policy and go utilize it. If that family member did not pay back the loan, they were no longer able to borrow more money from the bank. If that person literally just ghosted and they never paid back the money, then when that person dies, the life insurance policy pays out the family bank that's housed in a trust and just deducts the balance of what is owed to them. So let's say, you know, $200,000 is owed back to the life insurance policy for the balance that was never paid back. This now one point, I don't know, $9 million goes back into the family trust and they are just like nine, never running out of money. So that's what Rockefeller put in place was this family banking system. The Vanderbilt did not. So the Vanderbilt family just would go and take money, they would just utilize the money. Oh, you need 100 grand, here's a hundred grand. Where again the Rockefeller side created the system and structure in place to protect the money. And it obviously worked out really well. There is one other key thing that's different that I forgot to mention that I'm just going to add in here on the back end that I found really interesting. So on our side of the world when we go and we take our money and we want to go invest it, you're going to work with something, someone called a financial advisor. And these financial advisors are essentially salespeople that are trying to sell you on investments that you can invest your money into that are, you know, supposed to be good for you and for your benefit. But if you, you don't look closely enough and you don't know, they could just be selling you stuff that is essentially more beneficial and more profitable to them in their situation because they are making money on commissions on the things that they sell you to invest in. If you didn't know that. What I found so interesting is that when you start to move your money into self directed accounts, you are no longer utilizing financial advisors as the intermediary. You're utilizing something called a custodian. And the difference between a custodian and a financial advisor. Are you ready for this? A custodian is legally not allowed to provide financial advice to you. Isn't that so interesting? Here's why. Because the 1%, the people that are Going and self directing their money. When they want to go and utilize their money to invest in something, they don't want to listen to a financial advisor sell them on what they should be putting their money into. Their financial IQ is so high they understand what they are investing in on such a level. They don't want somebody to try and like block their situation or advise them on something else or be like, hey, that sounds great, but just came across my desk this morning. Let me tell you about this investment and see if this would be interesting to you. No. So the wealthy passed a laws that say custodians are not allowed to provide financial advice. All they are doing is executing on the order that you put. If you go and you call your custodian and you say, hey, I want to move $100,000 into this investment, all they say is okay, got it, I'm on it. And then the order gets executed and the deal is done and that is it. So the custodian is just there to essentially help you actually complete the transaction of moving your money. But you are in charge, you are self directing those funds and nobody is giving you advice. Okay, I feel like I got all of the key points in here that I wanted to hit on again. Three days of just sitting in this conference room was a lot of information. So those were the key takeaways of really what the heck the 1% are doing differently and how they are avoiding paying taxes. Now again, I just want to reiterate the fact that I don't think that everyone should just go run out and start moving your accounts into self directed accounts and finding a family member or a friend that's starting a business and being like, yeah, I'll use my retirement funds to fund it. No, I don't think that's what you should do. But I think there are some really important lessons of how the wealthy are treating their money that I absolutely do think you should think about and prioritize and definitely had me thinking. So some of my key takeaways and just kind of like overall thoughts around all of this is like it is so unbelievably critical that you get in the driver's seat of your financial future. Like this is, we are not outsourcing financial decisions anymore. Like you have got to understand what is going on with your money and raise your financial IQ like we all do. Because if you think about again 30 billionaires being added every quarter, like the access to this information is just getting more wildly known now. And with that like the wealth gap is going to consistently increase. Like it's not going to get smaller, it's just going to get wider. And as more and more people start to understand these different tactics and start to understand how to grow and build wealth on a different level, like that wealth gap is just going to increase at greater and greater speeds. What that means is that our side, you and I, like, we need to make sure that we are also prioritizing growing our own wealth so that we can just stay in the freaking game, right? Like I'm not out here with any sort of goal or objective to go be a billionaire. But what I will say is I do think that reaching millionaire status is like almost a non negotiable in today's society. Like if you want to be able to retire and not work, like we've got inflation on our side, taxes are going up, up, like all of these things and the wealth gap just keeps getting bigger. Like everything's getting more and more expensive. Like there is no time like the present to start controlling your future from a financial perspective and understand that like you need to be raising your financial iq, getting in the driver's seat of your future and just taking control and not outsourcing financial decisions. That is like so, so, so important. So I feel like if that's like one thing that you could take away from all of this, that would be it is find ways to start raising your financial iq, start ways to get, get in the driver's seat and start controlling your finances. And I know sometimes that can feel scary, but what I would love for you to have the perspective of is like how empowering it can be for you to be the one that actually is in the driver's seat. And if you're sitting here and you're like, I'm utilizing a financial advisor and you want to keep using them like, like that's not like that's fine but like step one is like do you know what's going on with your investments? Do you know what you're invested in? Do you know what your returns are? Do you know what sort of fees you're paying to your financial advisor? Like so many things could go on here. Or you could also just invest in your accounts on your own, go and buy index funds and go create, you know, your own portfolio and invest on your own. And like that is you being in the driver's seat of your future, being in control of your investments. That's a great step in the right direction. Again, I, I don't use self directed accounts. This was like very eye Opening to me. I'm not necessarily gonna go change that right now, but I'm interested. I'm definitely going to learn about it and keep it in the back of my head. But I'm not saying you need to go self direct like that, but just like know your, know your numbers, know what you're invested in, know what you're working towards. And yeah, that would be like a huge key takeaway from this is to just make sure you know what's going on with your money. Another key takeaway I think that we can learn from the 1% is just that the lesson that you're, you are who you're surrounded by, your network is your net worth. And so if you're trying to break through a new financial goal, if you're trying to move forward in a way and you're surrounded by people that think and act and have the same spending or investing habits as you are and you want to be doing something different, find friends that are doing something different, get yourself surrounded by people that are talking the same talk, working towards the same goals and helping you expand your mind for what is possible, but also help you believe that you can accomplish, accomplish it too. That. That's it. Those are my two key takeaways. Raise. Well, I guess that's maybe three. Raise your financial iq. Get in the driver's seat of your financial future and surround yourself with people that are going after similar things as you and just watch how your finances start to transform. Okay, I think that's it. I feel like I just rambled for like. Okay, it's been almost an hour now. This is hands down the longest episode I've ever recorded. I hope you are still hanging with me. If you are, can you just shoot me a message? Shoot me a dm. What is something you found fascinating about this episode? Because I need someone to talk to about this with again. I sat in this room for three days by myself with my jaw on the ground trying to make sense of this whole thing. I hope I did an okay job re articulating back to you some of these key differences. So let me know what you liked. Let me know what landed with you. If you have questions, if you're like, Madison, you made absolutely no sense on this section. Shoot me a TM and let me know. I'd love to hear your thoughts about this and hear what you're going to take away from this and maybe something that is going to help you either, you know, make a change in your financial situation, get in new circles, like whatever it is I would love to hear from you on this episode so we can chat about it in the DMs. So that is it. I will leave you with that until next time. I hope you have a wonderful day. Hey, before you go, I just want to go ahead and say thank you for spending a little bit of your time with me today. And also congratulations for finding a chunk of time to carve out and focus on you and moving the needle and becoming a better version of yourself. If there is anybody that you think could benefit from this podcast, please share it with a friend, share it with a family member. Feel free to share it on your socials and help me spread the word about busy getting better. Thank you so much and I will see you on the next episode.