Live Off Other People’s Money and Never Pay Taxes

[@inDefEE]

Really stretching the truth on this one. No bank is going to loan you the cash at lifetime terms unless you are already worth orders of magnitude more than what you’re borrowing. So this isn’t really teaching you anything that you can use unless you’re already worth 10s to 100s of millions or more. In which case your financial advisor is already doing this for you without you even knowing about it. You can’t just walk into a bank and get a 2% loan for living expenses unless you’re either a celebrity or have a portfolio that will make them cream their jeans. Also, when you die, your kids can sell all your assets right away and pay 0 taxes because their cost basis is what the assets were worth when you died. This has been how the families that run the country have operated since the 1800s and why they never lose any wealth.

[@millionaire-millennial]

Its not from a bank. Like I said it'll be more likely from a broker. I cited 2 brokers in the video that offer 2-3% loans on your portfolio with no payback requirements. Plus, I don't need to stretch any truth as plenty of wealthy people already do this 😅 You're completely right about the step up basis for heirs! Right when you die is the only chance they have to sell shares with no tax liability AFAIK. After that, they will pay tax on any gains after that step up.

[@inDefEE]

@@millionaire-millennial the requirements for the loans from those brokers are wayyyy beyond what anyone watching this video would be able to fulfill in order to LIVE off the loans. Unless you’re talking about someone already worth 1-2 million dollars and only spends like 30-50K a year. I guess then that’s true… but that’s a realllllly limited group of people. There’s also the fact that this strategy is unbelievably unethical in that the rules were purposefully written this way to make it impossible to remove generational wealth from the < 100 families that control everything. The value that is created for these families is siphoned off the hard work from their work forces, 70%+ who are people who can’t afford their bills and are in a lifetime of debt. The system is built to siphon global value to the top all the while ensuring that they can buy whatever they want without ever having to contribute back to society in any meaningful way. Overall, the strategy is not realistic for anyone who isn’t already extremely financially well off. And even if it was, I don’t necessarily think promoting a highly prejudicial and unethical system is the take we as the younger generation should be taking. If you can borrow against your wealth, you should be taxes against your wealth. Plain and simple. We do it for homes, time to do it across the board. It’ll never happen of course. 99% of people are unaware that this exists and most people still believe hard work made Elon and Jeff, as 2 people, worth more than 135 million people in the US COMBINED.

[@millionaire-millennial]

😳

[@SumanthLazarus]

Truth bombs, I've never heard of before. Crazy 🤪

[@paulp6752]

Its not the borrowed money that is subject to tax but the tax that your S&P returns are going to yield so you definitely will pay tax unless the country you reside doesn't impose capital gains tax. Now on the borrowing side wouldn't you need to have some strong collateral (ie. more money in other assets) to get this 2% loan?

[@millionaire-millennial]

You only pay taxes if you sell your assests (at least in the USA). Since you never sell, you don't pay taxes. You don't need anymore collateral than the stocks themselves as you can typically only borrow up to 50% of your total portfolio value.

[@paulp6752]

@Millionaire Millennial thanks for the answer! That makes sense - in that case you don't close the pisitions and withdraw. But then how do you actually "live off this money"? I've heard about this scheme but in a context not of "living off other people money" but more in a context that you engage in borrow-buy-die and people that inherit after you sell your assets at a special (inheritance) tax rate. Btw even if these schemes are a bit complex to pull off I like the thought provoking nature of your content.

[@millionaire-millennial]

My goal is to just get people thinking, so I appreciate your comment ❤

[@toom2141]

Insane and first time I heard about this. Yeah I was first sceptical but after a brief moment of thinking this is so cleverly true. Though, I think 10% longterm avg roi is unrealistic. 7-8% before correcting for inflation is more reasonable. S&P500 longterm roi is pretty much exactly 7%. Not 7-10% my networth is 8 million euros and i live in germany. taxes on capital gains are 25% flat. so this would save me 25% each year and my equity would be more than enough to back all those loans

[@jordixboy]

But is that cash you're getting kinda leverage you get for CDF's? or is it more kinda like a loan that you get from a bank?

[@Mr.Los305]

Hey where you been? And did you leave your high rise apt?

[@radicalhealthcareguy]

You know you just described life insurance. Except with life insurance you get guarantees and you'll never experience a loss.

[@millionaire-millennial]

This is probably what life insurance companies do with your premium. Then the profit off the extra heh

[@radicalhealthcareguy]

@@millionaire-millennial No... You can actually do this strategy using life insurance. The policy just needs to be structured the right way.

[@millionaire-millennial]

🤔 can you send me some info on this? I wanna look into it

[@1Lovelife11]

Since you’d still have to pay some kind of payment for what you borrowed and this would constantly grow even though it’s only 2% (which also is unlikely to continue in the financial environment and meltdown we are experiencing now and going to be over the next few yrs) how would they pay this constantly growing payment without any income or realizing any gains?

[@millionaire-millennial]

You don't have to pay any payment on a regular basis. That's the crazy part... You only pay when you die

[@1Lovelife11]

@@millionaire-millennial Wow! I misunderstood that part. I thought you just meant they would be constantly carrying the balance so when they died it would be payed from the estate. I'm curious what will happen with all of this as the financial system is moved over to CBDC's and some (maybe a lot) of banks start failing. Idk what really happens to debt like this if the bank fails. Great video though - I knew of something like this, but didn't know all these terms they got for this kind of debt. :)

[@paulp6752]

I can see there is a general consensus here that S&P500 gives pretty consistent gain. If this is the case why people don't just buy at some high leverage?

[@millionaire-millennial]

The issue is in the short term. If you leverage 50% and the market goes down 50+% in a few months (like has happened many times before), the leverage will wipe you out as most brokers will margin call you and sell all your assets to cover the loss. Over the long term, it has consistent gains, but short term shocks can be lethal when you're overleveraged.