GMB Ep #147: Expanding Your Estate to Other Countries with Mikkel Thorup

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If you’re interested in the advantages of foreign diversification for asset preservation and estate planning, then this is the conversation for you. This week’s guest on the show is Mikkel Thorup, the CEO of Expat Money™, a consulting advisory organization that assists individuals with foreign asset diversification. Mikkel assists clients in relocating their wealth out of the United States by helping them establish offshore trusts and foundations and facilitating foreign investments. In this episode, we explore how you can expand your estate beyond your home country’s limits.

Show Notes

[02:34] Background – Mikkel summarizes his journey thus far by discussing his work, his clientele, and the source of his exposure to the industry in which he currently works.

[15:37] Asset Protection – Mikkel goes over the basics of asset protection, including what it is and how it operates.

[21:12] Trust vs. Foundation – Mikkel discusses trusts and foundations, as well as how his consulting firm helps its clients with these types of frameworks.

[26:46] Be Aware – Cross-border issues and scammers are a perennial concern in modern society. Mikkel outlines where people go wrong, what mistakes might be made, and what must occur to move assets overseas.

[32:28] Residency vs. Citizenship – Mikkel offers a comprehensive breakdown of the concepts of citizenship and residence in a foreign country.

[39:36] Opportunities – Mikkel explains his overall philosophy and strategy, as well as the process by which he sources opportunities for clients.

[43:35] Selections – Mikkel outlines how he decides which jurisdictions to work on or within.

Resources

Do You Need a Budget in Retirement?

You saved diligently, invested carefully, and now you have a sizable nest egg that can most likely replace 80% of your pre-retirement income. Why should you go through the tiresome process of creating a budget?

No matter how carefully you plan, many things are out of your control that can impact the income your plan can provide:

Market volatility
Extended market downturns
Increased taxes
High inflation

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September Market Commentary: If the Fed Is Having a Goldilocks Moment, Is the Economy Baby Bear?

August Recap and September Outlook

After the bear market rally in July was extended for the first few weeks of August, Federal Reserve Chairman Powell used the Fed’s annual Jackson Hole symposium to clarify the Fed’s position on future rate increases.

Powell was clear that there would be no “Fed Pivot” until improvements in the inflation rate are sustained.

He acknowledged the costs of reducing inflation. Slower growth, higher interest rates for consumer loans, and a softer labor market are all part of the ongoing reality.

The Fed’s priority is to avoid entrenched consumer expectations of higher inflation, which partly caused the runaway inflation of the 1970s. The Fed needs to act decisively to bring inflation down quickly, which Powell described as a “forceful and rapid” approach to rate increases.

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GMB Ep #146: Here’s What Happened During the Meme Stock Rally of 2021

You may recall that at the beginning of 2021, the stock prices of AMC and GameStop skyrocketed. There were numerous news articles about people driving up the prices of companies that were not otherwise exceptionally profitable investments. This week on the podcast, Grant dives deep into what caused the Meme Stock Rally of 2021, as well as the importance of investing our portfolios as prudent, long-term investors.

Show Notes

[03:20] Meme Stock Rally – Grant recalls the events that transpired during the 2021 Meme Stock Rally involving AMC and GameStop.

[10:41] Two Options – Grant explains how short-selling stocks and the options market are the two most common ways to wager against a company.

[21:05] Changes – Grant outlines in broad terms how AMC and GameStop have changed as a result of this chain of events.

[26:22] Research – Grant presents the conclusions of the in-depth research that was conducted on the Meme Stock Rally at both the SEC and Harvard.

[34:30] Lessons – Grant explains how the Meme Stock Rally serves as an excellent lesson on time horizon and irrationality, illustrating how wise investors should consider investing in their portfolios.

Resources

Did Pandemic Stimulus Funds Spur the Rise of ‘Meme Stocks’?: hbswk.hbs.edu/item/did-pandemic-stimulus-funds-spur-the-rise-of-meme-stocks

How AMC rode the meme stock rally to revitalize its business: cnbc.com/2022/01/26/how-amc-rode-the-meme-stock-rally-to-revitalize-its-business.html

Robinhood almost imploded during the GameStop meme stock chaos: techcrunch.com/2022/06/27/robinhood-report-meme-stock-gamestop/

Robinhood and CNBC’s Jim Cramer fuel stocks for “stimmy” rally: cbsnews.com/news/robinhood-jim-cramer-stimulus-stock-market/

Stock Market Stimulus: hbs.edu/faculty/Pages/item.aspx?num=62111

GMB Ep #145: Everything You Need to Know About Biden’s Student Debt Forgiveness

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Last week, President Joe Biden announced a new student loan relief program that promises to cancel $10,000 of student debt for low- to middle-income borrowers. Since then, this topic has become somewhat controversial and has ignited a fair amount of debate online. This week on the podcast, Grant dives into the provisions of this new student loan relief program, eligibility criteria, and some of the planning opportunities that have emerged from the program.

Show Notes

[03:31] Background – Grant shares the details of President Biden’s new executive action and why it’s considered controversial.

[06:35] Qualified Loans – Grant explains the types of loans that are qualified under the provisions of the student loan forgiveness program.

[08:42] Income – Income is the most prominent factor that determines eligibility for loan forgiveness. Grant breaks down the numbers of the income levels that qualify for this program.

[14:05] Income-driven Payments – Grant shares his thoughts on the differences between income-driven payment programs that were introduced earlier and President Biden’s new program.

[20:00] Planning Opportunities – Grant discusses some of the tax planning opportunities that may allow you to qualify for the new loan forgiveness program.

[29:58] Earlier Programs – Grant shares some highlights of the provisions that were included in the income-driven payment programs that were introduced earlier.

[35:00] Enrolling in a New Program – Grant shares his take on the pros and cons of enrolling in a new income-driven repayment program.

Resources

Staying Stable With Sudden Wealth

Even when the influx of a large amount of money is a happy event, it can provoke many uncomfortable feelings. There can be even more emotions at play when it is an inheritance, a sale of family property, or even a business exit.

And then there’s the cash itself – what do you do with it? Should it change your financial plan? Should you gift it to others? Charities? Splurge wildly? Pretend it didn’t happen?

There’s no right answer to what to do with the money, but some sensible steps can put you in a better position to make good decisions that are right for you now and in the future.

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GMB Ep #143: The Back to Front of Cryptocurrency Taxation With Micah Fraim

Cryptocurrency as an investment is relatively new, especially compared to other investment vehicles such as stocks and bonds. Because of this, there is a lot of confusion and a lack of guidance around how taxation applies to cryptocurrency-based investments. This week on Grow Money Business, we are joined by Micah Fraim, a Certified Public Accountant who specializes in crypto taxes. Throughout the episode, we take a dive deep into the tax aspect of cryptocurrencies, NFTs, and other blockchain-based assets.

Show Notes

[02:01] Getting to Know Micah – We start the conversation with a brief look at Micah’s career and how he got into his current line of work in taxation for cryptocurrency.

[04:12] Taxation for Crypto – Micah dives into the limitations of our current tax system in relation to cryptocurrency and virtual assets, as well as some of the attempts that have been taken to introduce legislation related to cryptocurrencies.

[10:45] Tax Basics – Grant and Micah discuss some of the most basic tax concepts related to investments and how they apply to cryptocurrencies.

[15:47] Opportunities – Micah shares some of the opportunities that arise along with a crypto bear market.

[25:31] NFTs – Micah explains the current tax code’s application to NFTs and how the wide range of use cases available for NFTs will call for more advanced tax rules.

[30:44] Play-to-earn Games – Micah shares his thoughts on how games are introducing new in-game economies and how they are connected to crypto investments.

[35:38] Tracking Crypto Transactions – Micah discusses how to track crypto transactions across multiple trading platforms for taxation purposes.

[42:06] Audit Risks – Micah dives into the risks that could arise from irregularities in crypto transactions that are reported to the IRS.

[44:41] Crypto as Payments – Grant and Micah discuss some important considerations for business owners who are accepting payments in cryptocurrencies and how it may affect business operations.

[50:00] Future of Crypto – Micah shares his thoughts on how cryptocurrency projects may evolve in the near future, as well as how the regulations may be adjusted to match the innovations in the crypto space.

Resources

Avoiding the Penalty for Early Roth IRA Withdrawals

The advantage of the Roth IRA is that you pay the taxes before you contribute, so your money grows tax-free, and no taxes are due on withdrawals. The problem is that the account is considered a retirement account, so there is generally a 10% penalty for early withdrawals before 59 ½.

Roth IRAs are also subject to something called the “five-year rule” that determines if taxes are due.

However, there are some situations where you can withdraw funds before the minimum age without paying the penalty. This can come in handy if you need cash to buy a first home, pay for college, or if your family grows.

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Love Is Looking Together in the Same Direction

Marriage is, for many people, the foundation of a happy life. But modern living puts pressure on us in so many ways, and money is often at the core. Finding a way to build trust and openness can be difficult. We all have complicated relationships with money, which begin in our childhoods and reflect our parents’ attitudes and beliefs. There are often hidden sensitivities and danger spots that neither partner is aware of – until something crops up that creates a problem.

In addition, it can be hard to navigate through all the things that Gen X and Gen Y will potentially face:

Multiple careers, multiple 401(k)s
Complex equity compensation
Blended families
Family wealth
Moving to a new city or state
Leaving the workforce
Starting a business

Having a road map that begins with honest, structured conversations and allows each partner to weigh in on decision-making and feel heard can be the best way to build a long-term, respectful relationship.

The resulting document is called a prenuptial or pre-marital agreement. It was originally conceived to protect each partner throughout the marriage and simplify the proceedings in the event of a divorce.

There are still a lot of situations where a prenup is necessary. But even for couples without those factors, the process of being thoughtful about money and respectful of each other is a normal part a relationship. It can be a springboard to allowing each partner to build a professional life that satisfies them while also keeping the family and marital life on track.

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Eggs in How Many Baskets? Prioritizing Building Wealth While You Build Your Business

Employees of publicly traded companies are often granted company stock as part of the compensation package. From a portfolio management perspective, holding outsize amounts of stock in the same company that provides income can increase risk. If the business were to become wobbly, not only would the stock decrease in value, but the employee could also potentially find themselves out of a job. Employees who are granted stocks often mitigate this risk by selling some of the company stock and reinvesting it in other assets, to diversify growing wealth away from the source of income.

But what about when you own your business? The situation becomes more complex. One strategy that’s often followed is to put everything except living expenses back into the business while you are growing it, and then sell part of the business or take on a strategic investor to help you begin to diversify elsewhere. Retirement planning is put on the back burner until the business has grown to a point where the business can be monetized.

We think there is a more thoughtful approach that may work for business owners.

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