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🔥How The Heck Do You Get Free?
You’re already at an elite level of performance in your career. You’ve spent years developing your skills, making savvy financial moves, and doing everything right. So why haven’t you reached escape velocity yet?
Is the American dream dead?
It can’t be, because you’ve seen other people living the lifestyle you want. You hear their stories and see them on TV. Somehow these people are able to get free, but you haven’t been able to figure out how they are doing it.
It isn’t for lack of trying…
You’ve read the books, watched the webinars, attended the masterminds, and networked with all the right groups.
The only thing you’ve actually learned is that everybody is asking the same questions, but nobody has the real solution.
You’ve already tried working harder. At one point you believed there must be a tipping point, but the only thing that tipped was your confidence that there was an end in sight.
It’s evident to you by now that the only person who can teach you to be free is someone who has not only done it for themselves, but also knows how to help others replicate their success.
The question is: how do you find this person? Who is going to help get out of the rat race once and for all?
The reality is you don't just bump into these kinds of high performers accidently. But even if you did, how are you going to extract all their secrets in the few moments you have with them?
This is why finding a mentor, someone to really show you exactly what you need to do step-by-step over extended periods of time, is so difficult and so necessary.
The Good News
If you resonate with this so far, then I have good news: your suspicions about this whole situation are dead on accurate.
The simple truth is you can reach escape velocity in a matter of just a few years by making high performing investments with a Private Foundation.
The only thing standing between you and total freedom is that nobody in your life knows how to do this and, if anything, they are constantly telling you to do the opposite.
But let’s face it, normal investment strategies are about easing into a mediocre death instead of growing into an incredible life.
If you want that exceptionally great life, then it’s time to veer off the common course and do something uncommon, but demonstrably better.
Money Isn’t Everything, But I Prefer It To The Alternative
My story is similar to yours in all the ways that matter.
I originally believed if I made 6-figures and had a respectable job, I would win the game.
What I discovered is that what originally seemed prestigious actually turned into a pair of golden handcuffs that held me captive. I found myself constantly daydreaming about ways to escape.
So I came up with an idea to double my income through passive investing. Surely that would allow me to leave my depressing job.
I dove into real estate and scaled to 10+ doors in a blink. Finally, I was on the right track. Or so I thought…
The only problem was, my bottom line growing at a snail’s pace. My profits were eaten up by roof repairs and new AC units. My free time turned into managing renters, stressing about lawsuits, and navigating complicated taxes.
Time to pivot again and build a business, surely that’s the answer…
Thousands of clients later, after making my millions and buying the houses and toys, I was actually more stressed out and frustrated than ever before.
How was this possible?
It’s like earning more money and spending it on a bigger lifestyle, the way society had taught me, was making me less happy. …
By that point, I really didn't know what to do. I just knew my old way of thinking wasn't working.
So I decided to go a different direction…
I spent a month with the Yawanawa tribe in the heart of the Amazon jungle, living in a shack the size of my closet and ate more green bananas than in the rest of my life combined. To be honest, I was genuinely excited about a chance to unplug from civilization and connect with my true self.
What did I learn?
Well, you might not see this coming…but I really, REALLY like having money and comfort and technology. But I also liked the simplicity.
The question was how to get both…
Up until then, my life had always felt out of control. Every day brought a mountain of new challenges to solve that I could never seem to outrun, and it was making me miserable.
After months of reflection, I adopted a new purpose of finding a simple way to control my time AND finances.
Almost overnight, I made a sharp 180-degree turn and stepped out of the active management of my business for the first time since founding it eight years earlier.
It worked! The money kept coming in and I had all the time in the world.
And this time it was actually what I wanted.
The passive income from my business gave me time, money and control over my life. I used that to hire the best coaches, join the top mastermind groups, explore the best retreats, and experiment with new ventures of all sorts.
This newfound freedom to relax, explore, network, and learn in a completely unbounded way was incredible, and I was enjoying every moment.
You Don't Need A Business To Get Free
Now, while you may resonate with the philosophy I’m laying down, I recognize that none of what I’ve said so far actually helps you unless you also have a business you can magically automate overnight.
That’s where alternative assets come into play…
My company originally focused on helping real estate investors, and we built a client base of over 2,000 investors across the country.
As you might imagine, these folks helped raise my awareness about not just real estate investing, but all kinds of alternative investments that I didn’t even know existed.
Turnkey properties. ATM machines. Self-storage syndications. Apartment complex rehabs. The list goes on and on.
One of the striking things about these deals is that they perform much better than traditional stock market investments and sometimes provide additional tax benefits.
After seeing these deals and testing many of them with my friends and family, it’s become very clear to me that other people don’t have to build and exit a business to gain control over their time and money.
The only thing you actually need to rapidly achieve true freedom is access to a good tax and investment strategy.
MINI CASE STUDIES
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🔥Step #1 - Protect 30% Of Income From Tax
Most businesses try to achieve a 30% profit margin. When this happens, the company is able to grow quickly and is throwing off cash life crazy.
Isn’t it strange that you are paying a 30% tax rate? It’s almost like the government is siphoning off all your profitability and slowing your growth to a crawl.
Now, I won’t get into politics here, but I will get into numbers so you can see what’s happening for yourself and what to do about it.
To do this, I’m going to compare a handful of different investor personas so you can see the impact of different strategies.
Average Abe is a great guy and works very hard, but he doesn’t use any special tax or investment strategies. He just does the average things he hears about in his local investing circles and gets average results.
Clever Chris researched what the exceptionally high performers were doing. He discovered if he creates a Private Foundation, he is able to shelter up to 30% of his income tax free each year.
Abe and Chris each make $250,000 per year and pay 20% income tax. The only difference is that Chris creates a Private Foundation and donates $75,000. In return, he saves $15,000 in taxes at the end of the year.
| Income Tax Comparison | Taxable Income | Tax Bracket | Income Tax Paid |
|---|---|---|---|
| Average Abe No Foundation |
$250,000 | 20% | $50,000 |
| Clever Chris Foundation |
$175,000 | 20% | $35,000 |
| Chris’s Income Tax Savings | $15,000 | ||
Pay 5% Annual Mandatory Donation To Another Charity
Chris is thrilled to have an extra $15,000, but his CPA informs him that his Foundation is required to donate at least 5% of its total value to charity each year.
That isn’t a problem. Chris is a charitable guy and he doesn't mind passing on some of his tax savings to those in need.
He writes a check for $3,750 through the Foundation instead of his with his personal finances, then starts planning how to spend the remaining $11,250 of tax savings.
| Total Tax Comparison | Income Tax | Foundation Donation | Total Taxes & Fees Paid |
|---|---|---|---|
|
Average Abe No Foundation |
$50,000 | $0 | $50,000 |
|
Clever Chris Foundation |
$35,000 | $3,750 | $38,750 |
| Chris’s True Tax Savings | $11,250 | ||
How Much Can You Save?
The following table outlines tax savings based on different income levels and tax brackets.
These numbers are based on a 30% donation of annual income to the Foundation, which is the maximum amount that qualifies for tax savings.
| Income | Tax Savings Using The Foundation | ||
|---|---|---|---|
| 20% Tax Bracket | 25% Tax Bracket | 30% Tax Bracket | |
| $150,000 | $6,750 | $9,000 | $11,250 |
| $250,000 | $11,250 | $15,000 | $18,750 |
| $350,000 | $15,750 | $21,000 | $28,250 |
| $500,000 | $22,500 | $30,000 | $37,500 |
| $750,000 | $33,750 | $45,000 | $56,250 |
| $1,000,000 | $45,000 | $60,000 | $75,000 |
Is Your Money Trapped In The Foundation?
Some people worry that once they donate to the Foundation, they won’t be able to get their money out.
That isn’t the case.
Unlike other tax saving vehicles, like IRAs or 401ks, there are no penalties for withdrawing funds.
With the Private Foundation, you can withdraw funds at any time by paying yourself (or your spouse or children) a director’s salary. In that case, you would just pay regular income tax on the money you pull out.
In other words, the worst case scenario is the taxes you are already paying. There is only upside to using a Private Foundation.
Can You Use The Money In Your Foundation?
People use traditional retirement vehicles, like an IRA or 401k, to place investments and grow their money tax free.
This is what I recommend doing with the Foundation as well, but it has additional benefits compared to other tax vehicles.
Here are some of the most common ways people use money inside a Private Foundation:
👉 Invest in stocks, syndications, and a wide variety of other investments.
👉 Take business trips, buy meals for work, or even purchase a company car.
👉 Purchase a home and rent it. You can even donate your house for tax savings, then pay the Foundation rent at a fair market value.
👉 Set up scholarships and grants for non-family members.
👉 Donate to other charities.
The only rule is that you can’t self-fund your own businesses or family members.
No other tax shelter has such a broad range of options or tax benefits.
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🔥Step #2 - TRADE CAPITAL GAINS FOR 1.39%
Average Abe and Clever Chris both decide to get serious about building their wealth. So they each invest $75,000 into the stock market at an average 10% annual return.
Abe puts $75,000 into the market and earns $7,500. He has to pay $1,500 (20%) tax on his personal tax return, which leaves him $6,000 in profit.
Chris invests the same amount through his Foundation, which only has to pay 1.39% excise tax and a 5% mandatory donation, or $479. He ends with an extra $1,021 in profit.
| Investment Tax Comparison | Investment Return | Investment Tax | 5% Foundation Donation | Net Profit |
|---|---|---|---|---|
|
Average Abe No Foundation |
$7,500 |
($1,500) 20% capital gains tax |
$0 | $6,000 |
|
Clever Chris Foundation |
$7,500 |
($104) 1.39% excise tax |
($375) 5% donation |
$7,021 |
| Chris’s Investing Advantage | $7,500 | |||
Skip Capital Gains For A 1.39% Excise Tax
Leveraging the Private Foundation strategy has allowed Chris to save $11,250 in income tax and earn an additional $1,021 by only having to pay a 1.39% excise tax instead of capital gains.
What would you do with an extra $12,271 each year?
| Income & Investment Comparison |
Average Abe
No Foundation |
Clever Chris
Foundation |
|---|---|---|
| Income | $250,000 |
$250,000
$75k donated to Foundation |
| Income Tax |
($50,000) 20% tax on $250k |
($38,750) 20% tax on $175k |
|
Investment Return
10% ROI on $75k |
$7,500 Personal funds |
$7,500 Foundation funds |
| Investment Tax |
($1,500) 20% tax on $7,500 |
($479) 6.39% fees on $7,500 |
| Total Profit | $206,000 | $218,271 |
| Chris’s Income Advantage | $12,271 | |
Accelerate Growth Over 5-Years
In essence, Chris got a 6% raise simply because he read the right article. Can we agree that's the easiest raise ever?
And this isn’t just a one year thing either. He can claim this every year moving forward.
Take a look at what happens to Abe and Chris’s respective net worths after only 5-years.
| 5-Year Net Worth |
Average Abe
No Foundation |
Clever Chris
Foundation |
|---|---|---|
| Year 1 | $206,000 |
$218,271
+5.96% |
| Year 2 | $418,480 |
$444,219
+6.15% |
| Year 3 | $637,958 |
$678,565 +6.37% |
| Year 4 | $864,995 |
$922,093 +6.60% |
| Year 5 | $1,100,195 |
$1,175,663
+6.86% |
| Chris’s Net Worth Advantage | $75,468 | |
After five years, Chris walks away with $75k more than Abe thanks to the added benefit of tax free compounding inside the Foundation.
That’s a pretty big advantage considering these guys started in the exact same position and the only difference is the Foundation, which requires almost no extra work. It’s an easy win.
Does It Cost To Operate The Private Foundation?
During year one, you will need to pay the set up fees to form a 501(c)3 non-profit organization. This includes state fees, registered agent costs, and filing your beneficial ownership report.
Annual maintenance includes state compliance fees, ongoing registered agent costs, and the annual tax return. This is state specific, but averages around a couple thousand per year.
What Can You Invest In?
People often wonder whether they will have limited options when investing through the Private Foundation.
You are free to invest in stocks, rental properties, businesses, alternative asset classes, and more.
You just can’t lend yourself money or use funds in a way that provides a direct benefit to you personally. If you need access to the money in your Foundation, you would need to take it out as a director’s salary and pay ordinary income tax on it.
2,000 CLIENTS NATIONWIDE
WATCH CASE STUDIES FROM CLIENTS FROM ACROSS THE COUNTRY
“WORKING WITH YOU WAS EASY ALL AROUND. 10 OUT OF 10.”
Christopher Pound
Entrepreneur | Phrish Holdings
"THE POSITIVE BENEFITS CANNOT BE UNDERESTIMATED. I’D RECOMMEND YOU 110%."
Connie Finch
W2 | Director
“I'D RECOMMEND YOU 10/10. IN FACT, I ALREADY RECOMMENDED SOMEONE TO YOU.”
Chris Tubbs
W2 | IT Analyst
🔥Step #3 - MAKE +20% ROI ON INVESTMENTS
Abe made $6,000 more than his friends who put their money in the bank. He is feeling pretty good about his decision to start investing. Chris is also excited. He made an extra $18,000 over his bank loving friends thanks to the Private Foundation.
These guys are in a good spot, but they are still moving way too slow to hit escape velocity anytime soon.
Let’s bring in Savvy Sam to show us a way out…
Like Chris, Sam uses a Private Foundation, but he also knows how to source high performing investments.
Let’s see what happens if we run another 5-year comparison, only this time we’ll let Sam showcase his deal finding ability:
Average Abe invests $100k into a 10% deal in his name.
Clever Chris invests $100k into a 10% deal through his Foundation.
Savvy Sam invests $100k into a 20% deal though his Foundation.
| 5-Year Trajectory |
Average Abe
No Foundation |
Clever Chris
Foundation |
Savvy Sam
Foundation |
|---|---|---|---|
|
Total Income $250k per year |
$1,250,000 | $1,250,000 | $1,250,000 |
|
Investment ROI $75k per year |
$125,243 at 10% ROI |
$127,565
at 10% ROI |
$282,295
at 20% ROI |
| Total Taxes | ($275,049) | ($201,901) | ($238,382) |
| After Tax Profit | ($149,805) | ($74,337) | $77,402 |
| Net Worth | $1,100,195 |
$1,175,663
+6.86% |
$1,327,402
+20.7% |
I don’t know about you, but I couldn’t believe my eyes the first time I ran these numbers and saw the after tax “investment ROI.”
After 5-years of investing, two of the three guys actually LOST MONEY to tax because they didn’t have access to strong investment options.
Is it any wonder why most people feel like they are treading water? Without having access to both advanced tax strategies AND high performing investments, nobody can get ahead.
Average Abe is not a dumb guy. He’s actually doing all the “right” things, and yet after 5-years of diligent investing his investments lost $150k compared to his total tax bill. All his hard work was dwarfed by what the government took.
Clever Chris used the Private Foundation to squish his tax bill, but his investments still ended up losing $75k to taxes. He couldn’t outpace tax even with an advanced tax savings strategy. Crazy!
Savvy Sam is the only one who has a chance of living a different life in the near future. By using his Private Foundation to invest in a high performance deal, he managed to generate over $75k in after tax profit.
Clearly the trick to accelerating toward financial freedom is in combining tax savings strategies with high performance deals.
What Are High Performance Deals?
Most people have heard of investment doing +20% ROI – usually through unsolicited emails or a get rich quick Facebook Group.
A lot of these are scams and should rightly be ignored.
However, these scams are based on an underlying truth, which is that high yield investments do exist.
In fact, there is an entire hidden universe of alternative asset classes that legitimately offer returns of 20% and sometimes even higher.
How To Find +20% ROI Deals?
You can always search for investments in alternative asset classes on search engines or social media. There is an abundance of information out there.
Here are some of the more common deal types that can legitimately offer +20% ROI with diligent research and vetting…
When you work with my company, Royal Legal Solutions, you will get access to a syndication list that includes deals in oil & gas, real estate, RV parks, car & truck washes, algorithmic forex, and more.
Can You Trust These Deals?
You should always do your own due diligence.
That said, any of the deals that make it onto our list are ones that myself, my team or my clients have either already invested in or are actively researching as potential investment opportunities.
Furthermore, neither I nor my company receives any kickbacks or financial incentives of any kind for offering you this list.
We do this simply as a way to help you narrow your investment research from the Wild Wild West of “get rich quick” claims to a more curated list of deals used by actual investors and high net worth individuals.
Personally, what I love is finding high risk deals and finding ways to de-risk them and integrate them into the context of my broader portfolio.
For example, here’s a screenshot of a recent experiment in algorithmic trading:
You can see I’m running about $1MM at around 8% per month, which compounds to over 100% annual ROI.
This is obviously the high risk part of my portfolio, which should be a small percentage in the broader context of your portfolio. The rule with high risk deals is don’t invest any money you aren’t willing to lose.
The reason I’m sharing this particular deal is to show you what is possible. Not only is a 20% annual return very achievable, it is really only the beginning of what high performance deals are capable of doing.
What Should You Invest In?
While we do have CPAs and financial planners on our team, we are not going to recommend any particular investment or touch your money.
That’s your job.
Our job is to educate you about advanced tax and investing strategies you didn’t even know exist, so that you can decide what fits best with your personal interests and goals.
We accomplish this by helping you model different investment options so you can see how each move would impact your overall financial trajectory, just like we’re doing in this article.
The right decisions become obvious very quickly when you can see them on paper.
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WE SAVE CLIENTS +$20K TAX IN YEAR ONE
🔥Step #4 - FOCUS ON Cash Flow, NOT NET WORTH
So far we’ve been focusing on growing our total dollars through tax savings and investment returns. And that’s great, but trying to save for retirement is a depressing game.
In fact, we just watched as two of our three guys lost a 5-year race to taxes.
What if there was a different way?
We all know that building passive income is important in theory. The problem is the types of “passive” investments most people have access to aren’t truly passive and don’t provide enough cash flow to set them free.
But we’ve just solved those problems by using tax shelters and truly passive, high yield investments.
With that in mind, let’s reformat our calculations to focus on cash flow instead of net worth. This means we’ll be looking at the amount of revenue generated by our investments after tax is removed.
This is exactly the same as the last graph:
All three guys are making $250k and investing $75k.
Chris and Sam both have Private Foundations.
Only Sam is using high performance deals.
Here’s how that looks when changed to show cash flow growth over a 5-year period…
| Annual Passive Cash Flow |
Average Abe
No Foundation |
Clever Chris
Foundation |
Savvy Sam
Foundation |
|---|---|---|---|
| Year 1 | $6,000 |
$7,021
+17% |
$14,042
+134% |
| Year 2 | $12,480 |
$14,699
+17.8% |
$30,712
+146% |
| Year 3 | $19,478 |
$23,095 +18.6% |
$50,503
+159% |
| Year 4 | $27,037 |
$32,278
+19.4% |
$74,000
+174% |
| Year 5 | $35,200 |
$42,320
+20.2% |
$101,896
+189% |
Financial Freedom Timeline
I don’t know about you, but those numbers totally rewired my brain…
Up until now, it felt like our guys were struggling to survive, let alone get ahead. But that’s because they’ve been trying to stack, and the way they have been doing it is combating 20% income tax with 10% investment returns. That math doesn’t math…
Luckily, it turns out things aren’t so dire from a cash flow perspective.
Average Abe actually is creating a wealth gap between him and his bank loving friends. He’s managed to generate an extra $35k per year in income. It’s nice, but not life changing.
Clever Chris has used his Private Foundation to squeeze out an extra $7k per year over Abe. That’s a 20% performance boost over what Abe is doing, and this lead will continue to grow over time, but it won’t set him free…
Savvy Sam is a different story. His 20% ROI deal combined with the Foundation has helped him generate over $100k per year in after tax revenue. He’s halfway to true freedom in only 5 years.
Now we’re talking…
What these guys really want to do is replace their active income with passive income without having to cut down on the quality of their lifestyle.
In other words, everything stays the same, except that they will start getting more and more of their time back to spend however they want.
How long would it take each guy to replace his full $250k per year in passive income at their current trajectories?
| $250K Passive Income Timeline |
Average Abe
No Foundation, 10% ROI |
Clever Chris
Foundation, 10% ROI |
Savvy Sam
Foundation, 20% ROI |
|---|---|---|---|
| Years To Freedom | 20 Years | 17 Years | 9 Years |
How Does It Work In Practice?
There are a huge variety of deals out there, so it’s impossible to model out any one scenario.
For the purpose of this conversation, there are two main types of deals you should know about:
Depreciation deals tend to offer a tax benefit in the first year, provide a small cash flow throughout, and return your money and interest at the end of the hold time of the investment which is typically around 5-years. These deals have large payouts at the end of 5 years when the deal “exits”, but low cash flow during.
Cashflow deals don’t have tax benefits or large payouts, usually have a lower overall rate of return, but provide a higher cash payout on a quarterly or even monthly basis and oftentimes allow you to pull your money out relatively quickly.
Let’s compare these two deal types side-by-side using some very doable numbers for each:
| Deal Type | Depreciation | Cash Flow |
|---|---|---|
|
Internal Rate of Return Annual ROI paid at end of hold |
20% | 0% |
|
Cash Flow Paid annually, quarterly, or monthly |
5% | 15% |
|
Hold Rate
How long they keep your money |
5 Year | NA |
| Investment Returns | $100,000 | $100,000 |
| 1 Year | $5,000 | $15,000 |
| 1 Year | $5,000 | $15,000 |
| 2 Year | $5,000 | $15,000 |
| 3 Year | $5,000 | $15,000 |
| 4 Year | $5,000 | $15,000 |
| 5 Year | $105,000 | $15,000 |
| Performance | Depreciation Stats | Cash Flow Stats |
| Total ROI | 25% | 15% |
| Ending Net Worth |
$225,000 +$50k |
$175,000 |
How To Choose The Best Deal?
As you can see, the depreciation deal outperforms the cash flow deal on paper. However, this type of deal also locks your money up and prevents you from using that cash flow to free your time.
So the real question is whether you want to grow your net worth (using a depreciation deal) or if you want constant access to your capital as it grows (using a cash flow deal).
Why Do You Want Liquidity?
One of the problems with investing in syndications or funds with long hold times is that you won’t be able to get out of those investments early.
Many syndications and alternative deal funds have lock up periods for 3-5 years.
It’s always better to have liquid investments, all things being equal.
Oftentimes liquid investments will have lower performance. They may also have a higher risk profile, so buyer beware!
Regardless, liquidity is definitely something you should factor into your investment strategy.
Near-passive investments that won’t lock up your money include things like real estate (where you can use mortgages rather than hard cash), crypto, options trading, algorithmic trading, and small business growth funds.
TAX SAVINGS ANALYSIS
WATCH CPA ANALYSIS FOR EACH SITUATION
RICHARD IS A BUSINESS OWNER. HE SAVED $73,957
RADU IS A REAL ESTATE INVESTOR. HE SAVED $44,771
KENJI IS A DOCTOR. HE SAVED $88,813
🔥Step #5 - MINIMIZE your freedom TIMELINE
We’ve helped clients go from being stuck as an Average Abe to enjoying Savvy Sam levels of growth over and over again.
Sam is going to reach financial freedom in 9 years, which is amazing! That’s twice the speed of Abe.
But can it be done faster?
Let me introduce you to Dynasty Dave, an experienced investor who not only knows how to find great deals, but also knows you can overfund the Private Foundation.
Dave understands that while overfunding doesn’t give him extra tax savings this year, it will roll over to following years.
But more importantly, Dave wants to use the Foundation’s reduced 6.39% effective tax rate to bypass capital gains tax and grow his investment ROI even faster.
All our guys happen to have $250,000 sitting in a savings account. They were keeping the money safe for a rainy day, but now that they know the name of the game is about growing cash flow as quickly (and safely) as possible, they decide to put those funds to work.
They stick to their existing strategies, except now they are investing invest their savings:
Average Abe invests his $250k in the market at 10% returns.
Savvy Sam invests his $250k into a high performance deal.
Dynasty Dave donates his $250k into the Private Foundation first, then invests in a 20% ROI deal through the Foundation for extra tax savings.
| Cash Flow Growth |
Average Abe
No Foundation, 10% ROI |
Savvy Sam
Foundation, 10% ROI |
Dynasty Dave
Overfunding, 20% ROI |
|---|---|---|---|
| Years 1 | $26,000 |
$54,042 +109% |
$60,847 +134% |
| Years 2 | $34,080 |
$77,112
+126% |
$86,280
+153% |
| Years 3 | $42,806 |
$104,327 +144% |
$116,474 +172% |
| Years 4 | $52,231 |
$136,436 +161% |
$152,322 +192% |
| Years 5 | $62,409 |
$174,321 +179% |
$194,882 +212% |
| Timeline To $250k | 17 Years | 7 Years | 6 Years |
Jump Starting Growth
It looks like Dynasty Dave is onto something here. He shaved off an entire year just by investing everything through his Private Foundation and letting it compound at the 6.39% tax rate.
Dave knows that if he really needs the money for an emergency, he can just pull it out and pay the same income tax that Savvy Sam is paying all the time.
As you can see, the bigger the first year investment is, the greater the impact this tax strategy will have.
The graph below shows how much cash flow each guy can achieve by making a one-time overfunding contribution.
You will see that for each person and each amount of overfunding, I have also listed how many years it would take for that person to achieve financial freedom. Here are the different one-time overfunding amounts:
Starting with no additional investment beyond their base income
Then comparing that to starting with an extra $100k investment
Then starting with an extra $250k - this is the same as the above table
Then starting with an extra $500k
Then starting with an extra $1million
| 5-Year Cash Flow Growth |
Average Abe
No Foundation, 10% ROI |
Savvy Sam
Foundation, 10% ROI |
Dynasty Dave
Overfunding, 20% ROI |
|---|---|---|---|
| No Extra Funding |
$35,200
20 Years |
$101,896 9 Years |
$101,896
9 Years |
| $100k Extra |
$46,084
18 Years |
$130,866 8 Years |
$139,090
8 Years |
| $250k Extra |
$62,409
17 Years |
$174,321 7 Years |
$194,882
6 Years |
| $500k Extra |
$89,619
14 Years |
$246,747 6 Years |
$287,867
5 Years |
| $1m Extra |
$144,039
10 Years |
$391,598
3 Years |
$473,839
2 Years |
Is your mind blown yet?
The power of using more sophisticated tax and investing strategies to achieve time freedom is vastly more important than mindlessly growing your net worth for a rainy day or retirement.
I feel bad for Abe. He’s legitimately trying, but even if he had an extra $1MM laying around, it will take him 10 years to fully replace his $250k in active income.
Compare that to Dynasty Dave, who can achieve his 250k cash flow goal in only 9 years without using a dime of his savings. His worst case scenario outperforms Abe across the board, and if he had access to an extra $1MM, he could be free in only 2 years.
Having knowledge and access is more powerful by far than having money but lacking sophistication.
How To Find Cash Flow Deals
Safe, high performing cash flow deals can be challenging to find. This is because you are basically scaling something that is already profitable instead of funding something in order to make it profitable.
Three common types of cash flow deals include:
🏠 Real estate is able to cash flow through rental income. You can find turnkey real estate deals or hire a property manager to help jump start this process.
🏢 Small business funds invest in operational businesses that are already generating revenue in order to help them become more efficient and scale.
💹 Market investments range from crypto to options trading to algorithmic trading. These can be high-risk investments due to unforeseen shifts in the market, so you’ll want to be extra careful with this investment type.
Where To Get Resources
How does one go about finding an extra million dollars?
We have lots of clients who come in and are “stuck” in the sense that they have no additional cash to get the investment snowball rolling.
There are dozens of ways to find extra income, ranging from implementing tax savings strategies to rolling over retirement accounts and so many more.
When you become a Royal Elite member with my firm, we will help you find all kinds of money you never knew you had.
Most clients save $20,000 in tax during the first year alone and can achieve a 0-10% tax rate within a couple years if they choose to implement all the strategies we provide.
How To De-Risk Investments
It looks like a no-brainer to push a ton of resources into deals in order to reach financial freedom as quickly as possible, but don’t be so hasty.
The number #1 rule of investing is to NEVER LOSE MONEY!
Losing money is also inevitable, regardless of what activity you perform. So the real #1 rule is to do everything in your power to limit the amount of money you can lose.
This means de-risking your portfolio.
A good rule of thumb is to:
1. Only invest an amount of money that you are comfortable losing.
2. Once your earnings reach your original investment, pull that money out.
You can then repeat that process with other types of investments. It’s always a good idea to diversify your portfolio across a couple different types of investments so that if something bad happens in one area, you will still be moving forward in other areas.
Don’t get attached to a particular vision of how you will achieve financial freedom. Things are constantly evolving and what works this month or this year may stop working overnight for no apparent reason.
Be flexible, be smart, protect yourself from greed, and you’ll do fine.
BOOK AN INTRO CALL
WE SAVE CLIENTS +$20K TAX IN YEAR ONE
FAQs
Why should I trust you with my financial life?
You shouldn’t.
It’s important to vet everyone, especially when it comes to your money.
Our process is structured so that you can get your tax strategy meeting right away. This will help you see what we recommend and how much you can save. There is a 14-day refund window where you can get your money back if we aren’t able to save you at least $20k.
In terms of our ability to execute these strategies, you can refer to our home page which has dozens of case studies and tax analysis videos from real clients like yourself. This is evidence of our ability to execute.
You can try to vet our strategies with other CPAs or legal experts. Here’s what you will discover:
Most CPAs will tell you that the Private Foundation is risky if not outright illegal. This is because they aren’t familiar with high-level tax law and are afraid to recommend anything touching legal entities they don’t understand. However, there are many firms and providers offering Private Foundations, not to mention many famous examples of these, such as the Bill and Melinda Gates Foundation. If you want to work with that CPA instead, then go for it. Otherwise, recognize that these CPAs have a financial incentive to protect themselves and try to get your business by fear-mongering.
Most attorneys will tell you the Series LLC doesn’t have a sufficient track record. The reality is that it has been in operation since the 90s and has never been challenged. We take this to mean it is an exceptionally strong structure as it hasn’t been challenged in 30 years of use, with dozens of states offering their own Series LLCs. Keep in mind there is an underlying financial incentive at play, which is that other firms want to sell you multiple LLCs as a way to increase their setup fees, maintenance fees, and wrap you into a tax service. The Series LLC actually undermines that business model, which is why most attorneys are threatened by it.
How do I take a director’s salary?
Everybody is initially worried their money will get “locked up” in the Private Foundation because they are used to being penalized by their IRAs and 401ks.
But the reality is you can pull money out of the Foundation whenever you want by taking a “reasonable” director’s salary.
The easiest option is to ask your attorney or CPA to help you find a safe number and solid justifications for whatever number you decide makes sense.
However, the actual rules for how to calculate this are highly variable, including but not limited to the following:
1) The wages you make in other employment situations.
2) The wages made by particular Foundation directors.
There are a few different ways the IRS calculates this. For example, in 2023 Bernard Tyson of the Kaiser Foundation Health Plan took a wage of $15,798,853.
3) The typical wage for Private Foundations directors on average.
This is currently benchmarked at $159,000 per year.
4) A percent of the Foundation's total net worth.
10% is a common number.
5) Based on the value of your efforts.
This is an actual company and you are the director. So have you been helping the Foundation raise funds or improve how it executes its charitable purpose?
Does this work for W2 / 1099?
Yes! The great thing about the Private Foundation is that it works for every income type imaginable.
Not only can you donate cash regardless of whether you are a W2 or a 1099.
You can also donate assets like stocks, syndication investments, vehicles, properties, precious metals, etc…
This gives you a large number of ways to fund the Foundation and capture tax savings. However, cash is always best if you are trying to scale cash flow through investments.
Is this really legal? My accountant / attorney / investor friend told me I’ll end up in jail.
This is one of the most common objections we hear.
It’s ridiculous, quite frankly, and those people should be ashamed of themselves for providing such firm recommendations when they actually have no idea what they are talking about.
There are two types of 501(c)3 Non-Profits:
👥 Public Charities are funded by a large group of donors.
👤 Private Foundations are largely self-funded or have a small number of donors.
The Private Foundation is a very common and well-known strategy at higher levels of income and net worth.
In fact, you hear about Private Foundations all the time, you probably just didn’t realize it. Some of these include:
➡️ The Bill and Melinda Gates Foundation
➡️ The Ford Foundation
➡️ The Getty Foundation
➡️ The W.K. Kellogg Foundation
➡️ The Bloomberg Family Foundation
➡️ And countless more…
We and many other reputable companies help clients form Private Foundations. These companies are often law firms with licensed attorneys and CPAs who could be fined or disbarred for performing illegal activities.
Obviously none of these professionals would bother selling a product that could lead to them losing their livelihood. That would be lunacy.
No, there is nothing illegal about using a Private Foundation.
Here are the real reasons people tell you not to do it:
Most CPAs do not proactively look for ways to save their clients on taxes and are conservative by nature, especially when it comes to legal matters. Anything outside their comfort zone or scope of knowledge is typically mocked and disregarded.
Most attorneys are not familiar with IRS code or tax issues. They also need to protect themselves from potential lawsuits where you could claim they gave you advice. So they will be extremely cautious about any type of legal strategy unless they are well versed in that particular strategy - and even then they might be cautious about providing free advice.
Most investors will not be aware of the way CPAs and attorneys behave. So if they have researched a strategy and brought it to one of their professionals for advice, they may have been told it was risky or illegal. They are just repeating what they heard, but they most likely never thought to challenge the professional or get a second opinion. Why would they? You can trust CPAs and attorneys, right?
Hopefully by now you see that the Private Foundation is a perfectly legal entity that is formed with the permission of the state government in which it operates. It operates like any other business, pays taxes, has tax returns, and is used across the country by savvy investors who understand how to use it to accelerate their timeline to financial freedom.
I can’t afford a big expense right now / I can’t afford to make investments
I understand not wanting to spend money, but the simple fact is that you’re spending 20-30% of your paycheck on taxes.
Is that really something you want to keep doing? How much is that slowing you down? What if you were able to pocket most of that? What if you re-invested it into safe, high yield deals?
Royal Elite clients think like CEOs. Expenses are inevitable, the question is what are you getting with that money?
Are you building the future you want, or are you treading water?
I don’t have time to set up a program like this
That’s exactly why we offer this service, because busy people like you simply don’t have time to research and implement all these strategies.
When you work with us, you will go through an onboarding process where you sit on a few strategy meetings, fill out some intake forms, and look through investment opportunities.
That said, we try to keep your workload as light as possible throughout the process. Our system is designed to allow you to make key decisions through bi-annual meetings with your dedicated attorney and CPA. From there, we take your objectives and turn them into realities.
BOOK AN INTRO CALL
WE SAVE CLIENTS +$20K TAX IN YEAR ONE
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