TFM-episode1
Welcome to the first episode of the Tax Free Millionaires podcast. I'm your host, Reed Scott, and in today's episode, we'll be doing three things. First, we'll introduce you to what the tax free millionaires community is all about, what our mission is and why you should care about that mission. Then I'm going to also tell you how you can get a free copy of the book Tax Free Millionaires, which shows you exactly how dramatic of an impact our disruptive investing system can have on your finances and your lifestyle. And finally, I'm going to share with you what I believe is an incredible stock in one of the most dynamic, high growth industries happening today. So make sure you stick around till the end, because I promise you, you're going to be blown away by the stock I'm going to share with you. Now, before I explain what tax free millionaires community is all about, I'd like to share with you a quote that I believe sums up why we should exist. And the quote is by Robert Kiyosaki. Author of Rich dad, Poor Dad. And he says most people struggle financially because they take advice from salespeople, not rich people. And nowhere could this be more true than in the financial industry, where we have so-called financial advisors who are truly just salespeople, telling us that we should be happy with single digit annual returns on our investments. And that's why I felt it was important to do something about it. And that's why we formed the Tax free Millionaires community, which is a group of like minded investors that do not follow the herd and are not satisfied with mediocre single digit annual returns that the big banks and financial institutions tell us we should be happy with. Where a group of investors who refuse to turn our financial destiny over to someone else and want to take advantage of our own investments because we're convinced we can do better, and we are developing a systemized and safe approach for making consistent double digit returns on our investments. Now, often when people find out I'm a tax attorney, they think I'm going to talk about tax free investment alternatives like oil and gas drilling or solar energy or some other type of esoteric and risky investment. But that's not what tax free millionaires is about. Again, we are a community of investors, and we're learning how to use a systemize approach to take advantage of when the greatest legal tax shelters we have left to us today as taxpayers. An advantage I'm talking about is that we can invest without tax consequences inside our tax deferred and tax free retirement accounts. You know, your four, in one case, your traditional IRAs and your Roth IRAs, you can buy and sell stocks and options inside your retirement accounts as often as you like. And unlike a taxable account, you don't have to worry about short term, long term, or any type of capital gains. There's no tax on any of your trades. Now, this unique advantage over a taxable account should change the way we approach investing in our retirement accounts. And yet imagine my surprise as investment analyst and tax attorney, when I found out that no portfolio managers I talked with considered this in their investing approach, especially not the portfolio managers at the large financial institutions that are responsible for managing trillions of dollars of America's retirement accounts. I was also shocked to discover that many of the portfolio managers I talked with were not using some very simple risk management tools to protect their clients portfolios from devastating market downturns. In fact, most portfolio managers I talk with didn't even invest in individual stocks at all, but instead invested in exchange traded funds, ETFs, or index funds. They also did not treat portfolios inside a retirement account any differently than they treated their taxable portfolios. This meant that they were ignoring and not taking advantage of the incredible advantage of investing capital gains tax free in retirement accounts. They treated all their investment portfolios the same. And in my tax law practice, I researched many wealth management companies because I was considering adding wealth management to my practice. But what I found made me unwilling to work with any of the wealth management firms I talked with. Instead of actively managing individual clients retirement accounts to leverage this tax free advantage and protecting individual accounts with options and stop losses, most portfolio managers were dumping clients funds into one of several large, multibillion dollar portfolios and managing all clients money in the same way with a passive investment approach. Sure, they would treat clients funds differently based on each client's self-determined risk profile, but after the client told him what level of risk they were willing to accept, the client was then dumped into one of the correspondingly large ETFs and index funds that treated. And they were treated like one of the thousands of other clients that were lumped into that same risk category. There was very little attention paid to an individual client account other than funds under the auspices of risk management, through diversification, instead of active management of a client's retirement account. The financial industry was spending enormous amounts of time, energy and money convincing clients they should be happy with average returns of between 6 to 8%. In my opinion, convincing clients to accept a rate of return that a client could easily achieve themselves by passively investing in ETFs and index funds, allowed the industry to put more money under management, charging fees on larger and larger amounts of money more than they could ever amass if they had to actively manage individual accounts. Now, while I certainly understand why the financial industry would want excuse me, why the financial industry would want to do this from a business perspective, I personally found such an approach unacceptable. The large financial institutions teach their salespeople who they label as financial advisors, to convince you that you can can't beat the market, so you should be happy with average market returns. They remember your birthday, they take you to lunch and golf, and they try to get you to think of them as friends you can't fire instead of professionals who need to be held accountable when market indexes are up like they are this year, they tell you what a great job they did managing your account. And when the market crashes and your portfolio goes down with it, they tell you not to worry. It will all average out in the long run. Combined with this passive approach, many portfolio managers let your money ride passively up and down with the entire market, often ignoring even the simplest risk management techniques that could protect your investment from huge market corrections. Why do they do this? In my opinion, it's because trying to apply risk management techniques on your portfolio would require too much individual active management of each account. So let's look at the truth about what accepting market averages and taking a passive approach to investment is really doing to your financial security. The average annual return of the S&P 500 index over the last 20 years was around 7.6%. Now, if you took out the market crashes in this same 20 years, your average annual return would have been 12.36%, which means $100,000 invested with a passive approach would have been worth about $432,000 over 20 years. Whereas if you took that same $100,000 and actively managed it at that 100,000 with simple risk management techniques to keep your portfolio from going down as much as the market. That same 100,000 would have been worth over $1,028,000 today, an increase of almost $600,000 over 20 years, more than double just by using simple risk management techniques. Now you might be saying at this point, but read how I know when the market's going to go down so I can avoid the down years. And the answer is with good risk management systems that we teach in our courses and we talk about in the book and active management, you don't have to be able to predict the market. You only need to be able to protect your portfolio from market corrections. It's actually easy to do, but not with a passive investment approach. And doubling your portfolio is just by just using risk management is only half of the picture. Imagine the even bigger impact you can have on your portfolio by also implementing a system that leverages the tax free nature of your retirement accounts, and invest in the best companies in the index instead of just passively investing in the ETFs and index funds themselves. So far this year through July of 2024, the S&P index is up about 17%. But that increase in the index is primarily due to only seven stocks. The other 493 stocks that make up the index have been moving sideways or down. Why, then, would you want to decrease your returns by following a passive investment approach and let the dogs in the market weigh down the superstars? The financial industry will tell you they use ETF and index funds for your safety, because it diversifies your money across more industries. But what diversification and safety are they talking about when they leave your entire portfolio exposed to the whims of the market with little or no risk management protections? You know, Warren Buffett tells an interesting story and funny story, I think, when he talks about this concept of investing across 30 or 40 different industries to get a diversification. And he tells the story of the Three Little Pigs, right? Everyone remembers that story where the Three Little Pigs one built his House of sticks, one bidder's house of straw, and one builds his house entirely of bricks. Well, if you remember that story, the two little pigs that built their houses out of sticks and straw had to go run to the third Little Pigs House, which was built of bricks. And there they were safe, because that pig had used a safe material. The best bricks, right? The best building materials. Warren Buffett says, what would have happened if all the three little pigs had diversified their building material and built it out of sticks, straws and bricks? That means that only one third of their homes would be good building materials. The other two thirds would have been subject to the big bad wolf blowing down the houses. And the big bad wolf would have had three little pig dinners at night instead of none because of diversification. Now, in a tax free millionaires community, we show you how leveraging tax free investing can beat future tax inflation increases, which is incredibly important. And I'll show you why in just a minute. And we demonstrate how the difference between average versus active management can make a huge impact on your family, yourself and your own and your family's lifestyle. We also introduce you to an asset class that you probably never heard about, and we also show you how to leverage that asset class or that investment to achieve even higher tax free double digit returns. No, it's not real estate and nothing wrong with real estate, but this is not what we're talking about here. So why is it so important to not settle for average returns, and to have a portion of your wealth in tax free wealth? Because investors who are deferring taxes today are facing a tsunami of tax and inflation increases that will impact their retirement accounts when they need them the most. Recently, the United States Treasury released a report stating that the national debt had hit $33 trillion. The report projects that the federal government spending in the coming decades as a percentage of GDP, will be much higher than it has ever been in our nation's history, and yet our federal tax rates are historically low, the highest federal tax rate in our country from 1944 through 1963 was over 90%. And throughout most of the 70s, the marginal federal tax rate was as high as 70%. Yet our highest federal marginal tax rate today is 37%. Today's federal tax rates, on average, are half of what they were over 60 years ago. The federal tax rate on $6,000 in 1973 was 24%. However, today, on the same equivalent amount of wages earned, which would be 41,000, you would only pay 12%. You would not pay 24% until you made more than double that equivalent income, which is actually $95,000 before you pay 24%. And these are not just tax rate changes due to bracket creep. These are real tax rate differences based on equivalent incomes. So if you believe that you have a raw deal on taxes today, it can be a lot worse. And as someone who has studied the history of taxation in this country, I'm willing to bet it will be, especially over the next two decades. And it won't matter what political party is in charge. The United States government is going to have to address this increasing deficit. Now, why were the federal tax rates so high from 1944 through 19, the 1970s? Simple. The federal government had to raise money to pay for the debt created by financing World War II and the Vietnam War. In those war and post-war years, our federal spending was historically high as a percentage of GDP, but not as high as our spending is today as a percentage of GDP. Now, our federal spending is at a record high as a result of two historic events the Great Recession of 2008 through 2010 and the Covid epidemic. We increased spending by 12% of GDP to deal with the Great Recession. And then in response to Covid, we increased spending by 26% of GDP. We didn't have a chance to recover from one event before the next one hit. Even though debt as a percent of GDP is higher than ever and projected to be significantly higher over the next decade, we have federal tax rates that are one half of what they were after World War two. Ignoring this evidence and the fact that high government debt result in not just higher taxes, but inflation as well. We're told by our financial advisors in the financial industry that a passive investment approach inside a retirement accounts is all we need. Is this really true, or is it just that they have no real answer? They can't tell you the impact of taxes and inflation on your retirement dollars because they don't know. So instead of reasonable projections and trying to get you a higher rate of return, they tell you to blindly follow the plan of maximizing tax deferral. Now, when we have historically low rates and plug along with average returns on a passive investing approach, and that you'll probably be in a lower tax bracket anyway when you retire, and they tell you not to worry about inflation. And it will probably remain low when you retire. So everything will even itself out. Or they tell you not to worry because you probably won't have all the expenses in retirement you have now, so you won't need as much after tax money anyway. I don't know about you, but I don't want a plan that says I have to tighten my belt and live frugally in retirement because I couldn't do the math today. Now, I'm not telling you this information to alarm you, but to show you alternatives to a hope and a prayer for financial planning. I'm going to demonstrate how even a modest increase in tax rates and inflation can ruin your ability to live comfortably in retirement. But more importantly, I'm going to show you how to do something about it by creating tax free wealth in ways that your financial advisor never told you about. That's why I wrote a book, Tax Free Millionaires, and why I formed a tax free millionaires community. I'm going to tell you how to get a free copy of the book in a minute. So hang on, because in the book and in our community, I demonstrate how leveraging your investments inside your retirement accounts to get even a small increase in your average rates return can create such life changing results on your portfolio that it won't really matter what the tax rate is when you retire. Even higher rates of inflation won't affect invasive investors, who have taken advantage of the leverage provided by tax free investing. In the book, I give two examples using two people who are employees earning a salary and receiving a wage. One example vocal industry advice and takes the passive investment approach advocated by the financial industry. The other example shows what happens when you use active management and leverage the tax free advantage of your retirement accounts to achieve even a modest increase in your average annual rates of return. Now if you have some type of income or assets to management, this book is for you. The book is written to give you strategies for great wealth, even if you don't make a lot of money today. But if you do have a higher than average income, the book will be especially enlightening because high income earners will save the most taxes by using the tax free investing principles illustrated in the book. I even have a chapter specifically for business owners and entrepreneurs. I demonstrate in the book what even a small increase in your average annual returns can have on your life, not just your wealth. And the book is not just about gaining wealth, it's about gaining freedom. The kind of freedom you can have when you are no longer restricted by finances. I believe that by actively managing your accounts and using sound risk management techniques, you can increase the probability of doubling, tripling and even quadrupling your annual returns. In the last chapter book, I also demonstrate how significantly better returns were achieved using the tax free investing system. This book will be available in the next 60 days, and if you'd like to be one of the first people people to get a free copy of the book, Just go to Tax Free Millionaires, our Facebook group, and join us at facebook.com, forward Slash Group's forward slash tax free millionaires. The Facebook group is free, and for those people signing up now, you'll be able to get a free copy of the book once it's released. Join in. Our Facebook group will also give you access to our live weekly trainings, our podcasts, and our opportunity to be a part of a community of like minded investors who refuse to accept, accept, average, and want to take control of their financial destiny. Once again, that address is facebook.com, Forward Slash Group's forward slash tax free millionaires. I'm confident that once you get a copy of the book and join our community, that you'll learn some things that are new to you, or at the very least, the combination of these techniques will be new. But more importantly, whether these techniques are new to you or not, I'm confident that if you apply these techniques to your own portfolio, you will be head and shoulders above the typical investor who blindly places their money and mutual funds or index funds and hopes for the best, irrespective of tax or inflation consequences. So now that we talked about what the tax free community is all about, and I've told you how to get a free copy of the book that demonstrates the power of tax free investing inside your retirement accounts. It's time to get our stock of the week segment. Now, before I do that, I do need to give you the following disclaimer. The stocks I discuss on my podcast are for entertainment and educational purposes only, and I'm not making a recommendation to buy or to sell. You should do your own research before purchasing or selling any stock or options, and you should never rely upon anyone else's opinion, including mine. Any losses that you may incur if you purchase or sell any stocks or options that are discussed on this program are your responsibility alone. And neither I read Scott Tax Free Millionaires, Scott Wealth Advisors or anyone affiliated with me this program or these companies will not be liable for your losses, if any. I very often own the investments I discussed on this program, and could personally benefit if the market price of a stock increases. However, I am not paid by anyone for mentioning a stock or company, and I'm not being paid a commission or endorsement fee for discussing any stocks or investments on this program. So with that out of the way, I want to discuss an interesting stock in what I believe to be one of the the next big growth areas for the market. And that growth area is the field of quantum computing and specifically manufacturers of quantum computing chips and quantum computers. So first of all, for those of you who aren't familiar, what is quantum computing and why is it a big deal? Well, quantum computing leverages the principles of quantum mechanics like superposition and entanglement to solve complex problems significantly faster than traditional computers by utilizing quantum bits or qubits, which can exist in multiple states simultaneously, allowing for parallel processing on a massive scale. Quantum computing essentially harnesses the unique behavior of quantum physics to perform calculations beyond the capabilities of classical computers. In traditional classical computing, you have digits of one and a zero, and the possible combinations of one and zero. In quantum computing, because of superposition, which enables a qubit to exist in both states at the same time. This increases the possibilities exponentially and enables parallel processing and the solving of extremely complex problems at incredibly fast speeds. Now, some of the major players in this field, you've heard of companies like IBM, Microsoft, Intel and Alphabet or Google, and Google has even had a breakthrough on their own quantum chip called Sycamore. Some other companies you may not have heard of smaller players like Rigetti computing, D-Wave systems. Origin. Quantum. Quantum. But the company I want to talk about today is a company by the name of Iron Cube or Iron Cube. And Iron Cube is a leading quantum computing company specializing in hardware development, aiming at commercializing quantum technology. The company went public by a special purpose acquisition company, or Spac, in 2021, and since then they've doubled their revenues every year. They're focused on developing quantum applications for industries such as cryptography, energy savings in AI, and machine learning, with plans to commercialize these applications in the near future. They're also commercializing that technology by building a factory that produces quantum computers on an assembly line, allowing for rapid scaling. And I believe this is a huge advantage. The upcoming launch of its Forte Enterprise Quantum computer can operate with without ultra low temperatures that are required by most quantum computing chips. Inc. has consistently doubled their revenue every year since 2021, highlighting their strong growth potential. But I believe in my opinion, the stock still remains discounted relative to the other other major players. Some upcoming catalysts include their November earnings call, where they're expected to announce their first quantum application, and in December, the launch of their most powerful system in Switzerland. With projections for quantum computing to become a multibillion dollar industry. I think leadership in this space, combined with its technological advancements, could see substantial returns heading into 2025. They've also just won a multi-million dollar quantum computing contract with the US Air Force, and they recently also demonstrated a breakthrough in quantum computing by successfully linking two quantum computers together to work in parallel. This was a big deal, and in fact their stock has shown the results of these breakthroughs on October 14th. The stock was at $10.84 today on October 28th at the time of this broadcast, and their stock is a little bit over $17 a share. So they have a huge upswing in the past month. Is the stock going to continue its upward trajectory or is it going to crash and burn? I don't know, and neither does anyone else. That's why I always teach. You should never go bare on a stock. In other words, always use strong risk management techniques, whether that's a stop loss hedging with puts or urges, never investing more than you can afford to lose. But always use good risk management. And would you believe, and it's one of the reasons we have the tax free millionaires community, that a lot of professional portfolio managers don't have any risk management techniques on their clients funds. That's why I always teach managing your own investments. Why would you leave your financial destiny in the hands of strangers? Okay, so that's it for today's show. Thanks for listening. And make sure to tune in to our next show, where I'm going to discuss some unique ways to leverage your returns inside your retirement accounts. And I'll also be giving you my stock of the week pick. Be sure to catch it. And if you want to make sure to get on our podcast schedule and sign up for our free eBook. Be sure to join! Join the Facebook community at facebook.com Forward Slash Group's forward slash tax free millionaires. Thanks for listening, and I hope you'll tune in to the next show. Take care.
