Tom Nash
patreon
How Peter Thiel Turned $2,000 To $7,000,000,000 (and got it tax free)
🕑 Added 2022-12-14 11:30:00 +0000 UTCPeter Thiel grew his fortune from 2,000 dollars in 1999 all the way to 7 billion dollars in 2022. In this Patreons exclusive article, I will show you how he did it, and more importantly how you can implement the same system that he used and build a fortune from the ground up without paying any taxes.
Now, Peter Thiel is mostly known for co-founding PayPal and Palantir but he invested in a whole bunch of other companies. One interesting story about Thiel is that he was an early investor in Facebook. In 2004, Thiel made a $500,000 investment in the company, which seems like a little investment in 2022, but at the time it was a 7 employee startup which nobody heard about. Obviously, that investment turned out well for Thiel. Some other examples include LinkedIn, Airbnb, SpaceX, and Asana just to name a few. All multibillion dollar companies today, but small startups when he invested. You get the point. Peter Thiel is knows what he is doing, the man is like Steph Curry, he can’t miss.
Here is the good part, it wasn’t luck. It can’t be when you hit it right every time, again and again. This wasn’t some lucky one off Tesla investment, the man has built a significant personal fortune through his multiple successful investments. The question is, what was his system, so buckle up, I am going to share with you exactly that.
Now to be fair, its not like Peter Thiel ever publicly published his definitive set of investment rules, however, he has spoken extensively about his approach to investing and has offered some key insights into his thought process and I have compiled all those interviews and articles into a short 10 point summary so you don’t have to.
One of Thiel's key investment principles is the idea of "contrarian thinking." This involves going against conventional wisdom and making investments in areas or companies that are often overlooked or underestimated by the common investor. Thiel believes that this approach can lead to more profitable investments, as it allows him to identify opportunities that other investors may have missed. It's tempting to buy stocks that are popular or have been recommended by friends or social media influencers. But just because a stock is popular doesn't mean it's a good investment. It can be tempting to try to chase after hot stocks or attempt to time the market, but this is generally a losing strategy. Instead, you should focus on investing in high-quality companies and holding them for the long term. Do your own research and make decisions based on your own analysis, not the opinion of others.
Another key principle of Thiel's investment strategy is the idea of "risk tolerance." Thiel believes that successful investors must be willing to take calculated risks in order to generate significant returns. He has said that he is willing to invest in companies or projects that have a high potential for failure, as long as he believes there is also a high potential for success. To do that type of analysis, you have to put in the hours and grind it out. You have to spend time thoroughly researching a company. You have to study the financial statements, you analyze its management, its competitors, and understand its business model to evaluate its true potential.
Now Peter Thiel is also known for his emphasis on the importance of building long-term wealth. He has said that he focuses on making investments that will generate returns over the long term, rather than trying to generate quick profits. This approach allowed him to build a diverse portfolios of investments that have generated over 7 billion dollars in the past 20 years. This is not as easy rule to follow, since it includes multiple steps. The first one is having a plan before you even invest a single dollar. This should include setting investment goals, determining your risk tolerance, and deciding on an investment strategy. This includes understanding the potential volatility of the company and the industry it operates in. This means not putting all your eggs in one basket, or not investing only in one or a few stocks. Look at Peter Thiel, he invested in multiple companies in multiple industries, that is no accident. Having a diversified portfolio should include a mix of stocks, bonds, and other assets. Then comes Patience. Investing in the stock market can be a roller coaster ride, with ups and downs along the way. It's important to have patience and not get discouraged by short-term market fluctuations. Emotions can play a big role in investing, and it's important to keep them in check. This means avoiding impulsive and impatient decisions based on fear or greed, and instead focusing on your investment plan and strategy over the long haul.
Overall, Peter Thiel's investment approach is characterized by his willingness to take risks, a focus on contrarian thinking, and having a long-term view of wealth building, but the craziest part about his strategy, is that he managed to pay no taxes on almost all of his profits through the past 20 years, and you can do the same with your investments, here is how.
Peter Thiel absolutely hates paying taxes. I mean, what kind of a billionaire doesn’t? right. Well, he hated paying taxes when he had a couple of thousands of dollars in his portfolio back in 1999 as well. The problem is that investors really ignore taxes until they actually make some real money, and by that point its already to late.
When it comes to taxes, different types of investments can have different tax implications. For example, stocks held for less than a year are generally taxed as short-term capital gains, which are taxed at your ordinary income tax rate. Stocks held for more than a year are taxed at a much lower long-term capital gains rate. So paying attention to holding period of your stocks can save you 20% to 30% in extra taxes. But that is just scratching the surface of what Peter Thiel has done. Hi literally pays no tax at all, and he is doing it completely legally.
You see, Peter Thiel is a billionaire but he doesn’t have a secret off shore account to avoid paying taxes, he doesn’t live in a tax haven, he lives in the U.S. and his money is right here above board, but guess what, 70% of his multi billion dollar fortune which he accumulated over the past 20 years, was and still is, absolutely tax free, and it ain’t ever going to change. And the crazy part, is that you can use the same loophole he uses to not pay taxes on a big chunk of your income, and the even crazier part is, that its 100% legal, its incredibly simple, its totally free and anyone can do it.
Over the last 20 years, Peter Thiel has turned his Roth IRA into a tax-exempt piggy bank. A Roth IRA is a type of individual retirement account (IRA) that allows you to save for retirement on a tax-free basis. its very similar to a 401(k) account since both these accounts can be a useful way to shelter your wealth from taxes and as long as you don't withdraw before you are 60 years old, it will remain tax free forever.
For the 2022 tax year, the contribution limit for a Roth IRA is $6,000 for individuals under the age of 50, and $7,000 for individuals 50 and over. The contribution limit for a 401(k) account depends on whether the plan is a traditional 401(k) or a safe harbor 401(k). For traditional 401(k) plans, the contribution limit for the 2022 tax year is $19,500 for individuals under the age of 50, and $26,000 for individuals 50 and over.
If you max out your contributions to these accounts every single year, your investments in these accounts will remain tax free until you withdraw it at 60 and that can shelter your wealth from taxes.
Now it's important to understand the rules and restrictions around these accounts and to consult with a financial advisor before making any decisions about how to use a Roth IRA to shelter your wealth from taxes, but this is completely legal and above the board and this is exactly how Peter Thiel did it and it is available for anyone out there.
Legal disclaimer: It's important to pay your taxes as required by law. Not paying taxes can have serious consequences, including fines, penalties, and even imprisonment in some cases.
Comments
Seal7razor
Another great article! Thanks.
Generico Fakero
Glad you liked it
Grégory De Roeck
Very interesting Tom!! Thank you
