Money is the #1 cause of divorce, and a great source of anxiety for people of all ages. In this episode Tom explains how you can overcome the fear of money and take control of your life.
00:54 – Why Do We Worry About Money?
03:01 – How Does Wall St. Offer False Promises?
07:42 – What Is Stress-Free Wealth?
12:13 – How Can You Legally Pay No Taxes & Take Control Of Your Wealth?
18:09 – Tom Offers Additional Resources To His Listeners
Welcome to The WealthAbility™ Show with Tom Wheelwright, where we talk about how to make way more money, and at the same time, pay way less taxes. If you're like me, there's been times in your life when the biggest worry in your life was money. And it may be now. It may be every single day. What if you could stop worrying about money? What if you never had to worry about money again? This sounds like Nirvana, right? This sounds like, “Oh my Heavens.” This sounds like it's not even possible. I will tell you there are many, many people, myself included, who don't worry about money. We don't worry about money.
The reason we worry about something is because it's out of our control, right? So if we're invested in a 401(k), if we're invested in Wall Street because we're an employee of a business that is invested in Wall Street, whatever it is, there's something out there that is out of our control. And it's being out of control is what makes us scared to death. It's like, “Am I going to be able to send my kids to college?” College gets more and more expensive every single year. “What do I do about saving for retirement? What am I gonna do? How am I possibly gonna stop working? What if I get sick? What if I get sick and I can't work anymore? What if my spouse gets cancer? What happens if my kids don't do well in school? What if I had to take care of them? What if they're living with me when they're 35 years old,” like some of us have kids living with us that are 35 years old. What do we do about that? Can we handle it?
To me, it's the number one issue in most people's lives. We know it's the number one reason for divorce, right, is that there's conflicts about money. So the idea that money's not important, that's bologna, of course. We know that. That's ridiculous. Money affects everything. The idea that Wall Street doesn't affect us, that's bologna. I mean, Wall Street affects everything else, right? It affects real estate. It affects oil and gas. It affects gold and silver. So we can't ignore Wall Street.
But here's the thing. The reason I get up in the morning, the reason that I started WealthAbility™, the reason before that that I started my CPA firm, the reason I do this is because I hate the idea that somebody is going to tell me that I'm stupid and that they're smarter than me, and therefore I should let them handle it. I don't care what it is. But the most important for me, most important one is money, because that's the thing we worry about the most. We worry about our health, but you know what, we don't, we're really, most of us, we're worried about paying our bills. So we're worried about money. Well what is Wall Street telling us? Well, what's the government telling us?
So many times, what do we hear? “Well, you're not smart enough to take care of your own money, so you should turn it over to us, 'cause we know better how to handle your money.” Your employer's probably telling you that. They're saying, “Look. Here's this great 401(k). We'll match your 401(k).” That's like the bait, right, to get you into Wall Street. Here's the bait. “We'll match your 401(k) contribution.” Well where does that 401(k) go? It goes to Wall Street. What most people don't realize is they're thinking, “Oh, well that's okay. The market always goes up.” Really? Okay, anybody listening here have any concerns about the volatility in the market this year? I mean, it's been up 600 points, down 500 points, up 300 points, down 700 points. I mean, this thing is, it's the biggest roller coaster in history. And it affects everything, because look, when the stock market goes up, gold goes down. What happens to the dollar? What happens to inflation? All of these things are affecting our money. We don't have any control whatsoever over it.
What if you could be in control and actually make more money and have less risk than turning it over to Wall Street? What if you didn't have to worry about your kids' education? What if you could … Okay, so here's one of my goals in life. My kids went to public school. My wife, their mother, was a public school teacher, and she insisted they go to public school. And they got, I felt, horrible educations. My decision, after they were getting this, what I believed to be a terrible education, was that my grandchildren would never have to go to public school. I wanted to make sure that they had plenty of money so that they could go to whatever school they wanted to. When they started kindergarten, they'd go to a private school, okay? So that was one of my goals. Because I'm going, “Look. I don't want the government to control the education of my children.” I wanna control the education of my children. I don't want the government to control where I invest my money. Realize that …
You know, my friend Andy Tanner wrote this great book called 401(k)aos, and he explains this in great detail. So go get his book for sure. Andy Tanner. 401(k)aos. Absolutely terrific book. What he explains in this book is that you don't have any control when you put your money in a 401(k). What are they gonna, what happens to the money? It goes into Wall Street, right? It goes to a mutual fund or an EFT, or wherever it goes to. We all just know, because we don't have a choice. It has … I mean, that is the plan of the 401(k) is that it goes to Wall Street. We're going, “Yes, but its diversified.” Diversification is a horrible idea. It's a horrible idea. We're gonna talk about this in another program, about just how bad diversification is when you're trying to make money. Do you know the average stock market investor, the average investor in that EFT, that mutual fund, this great plan that the government and your employer is promoting, and Wall Street's promoting, average return, three percent.
Okay, and I'm gonna put this in perspective, 'cause I'm an accountant and I like numbers. In order to double your money at three percent, it will take you 24 years to double your money. If you put in $10,000, 24 years later, it'll be worth $20,000. That is the average return in the stock market. What's the average rate of inflation over the last 20 years? It's more than three percent. You've lost purchasing power, just by putting it into the stock market. And you're out of control. When the stock market tumbled in 2008 … Okay, now the stock market tumbles about every 10 to 15 years. If you look at it, the stock market tumbled in 1999. It tumbled in 1990. It tumbled in 2008, okay, 2009. It's due. When that tumbles, do you have control over that? Now some of you are saying, “I still wanna invest in the stock market.” That's okay. We're gonna teach you in WealthAbility™ how you can control your investments in the stock market. The 401(k), the EFT, the mutual funds, not a way to do it. Do you know that when you put your money in a mutual fund, 80% of your earnings go to the mutual fund. The owner … Not you, not the investor, but the promoter of the mutual fund.
And don't believe me. Believe John Bogle, who invented the mutual fund. He's the one who goes, I mean, he, on Nightline years and years ago, he said, “Look. 80% of your …” He walks you through it. There's actually a great interview on Nightline. Absolutely go. Go look it up. John Bogle. So why do we keep doing it? Well we keep doing it because we keep believing the lie. We keep believing this idea that “Money, it's so complicated. Math is so complicated.” Look, what we're about in WealthAbility™ is how do you make math less complicated? How do you make investing less complicated? We actually, we have a term for it. We call it stress-free wealth. Because to me, the most stressful thing in the world is being out of control. The reason I started my own business …
So little story. I was the tax advisor for what then was a Fortune 500 company. And the very first thing I had to do was reduce my staff. This was my very first task, was reduce my staff by 50%. This was not because the staff was bad. It's not because they weren't doing their job. It was because there was a company-wide reduction in force. We know what that is, a RIF, right? Company-wide reduction in force, and we were supposed to reduce our tax staff, our in-house tax staff by 50%. So I had to let people go. They'd been there for 10, 15, 20 years. They'd done a good job, but guess what? They were the bottom 50%. So they had to go. I'm going, “This is crazy.”
Think about it this way. You're an employee, you have one client, and if that client fires you, you're done. You have to find a new job. The reason I got in business is because I now have hundreds and thousands of clients and customers. So now, if one fires me, it's not the end of the world. Now I don't want any of them to but my point is, how can you get control over your future? How do you get control over your money? You do it by taking control of it.
You've gotta have some plan of action, some strategy to do this. A 529 plan is not the plan of action to saving money for your college. Are you kidding me? The average return of a 529 plan is like .02%. Seriously? You're gonna save for college at .02% in a 529 plan. Here's what happens in a 529 plan. A lot of you know it's called a Coverdale IRA or an Education IRA. A lot of you know about these 529 plans. And I know this is U.S. here, but I guarantee other countries have similar type plans. It's kind of a way to save for your child's education, right? Only guess what? It's what is called a qualified plan.
Whenever you hear a government say it's a qualified plan, what you need to hear is it's a government controlled plan. That's what it is. It's a government controlled plan. 401(k) is a qualified plan. It's a government controlled plan. The government controls how much money you put in. They control how that money is taxed. They control what you invest it in, when you can take it out. 529 plan is the only government controlled plan that's worse than a IRA or 401(k). And here's why. ‘Cause in a 529 plan, you're gonna defer that money. You're gonna have to put that money in. You're gonna get this tax benefit. But guess what? If you don't use it for education, you must take it out. “Well that's okay. I'm just gonna pay the tax when I take it out.” No, no, no. You're gonna pay tax and a penalty if you take it out. So in other words, if I don't use it for education, I have to take it out. And if I take it out, I pay taxes plus a penalty for taking it out, for doing what you told me I had to do. That's exactly right. Now Canada, much better plan. Their RSP, they don't get that penalty when they take it out. But our 401(k), IRA, if you take it out before you're 59 and a half, you pay a penalty on top of the tax that you pay for taking it out.
Now it gets worse. When you turn 70 and a half, if you don't take it out, you pay a penalty. So you have basically 11 years to really start taking the money out of your IRA. If you don't start taking money out, you pay a penalty for not taking it out, for leaving it in. This is the government controlled plan. This is, Wall Street loves this, because they're going, “Oh yeah. Just keep feeding us.”
I remember an interview with Robert Kiyosaki, my friend Robert, and Jean Chatzky on CNN a number of years ago, and Robert was predicting the collapse of the real estate market back in 2006. And Jean Chatzky, she's beside herself. She goes, “We need to feed the system. We have to keep putting money into the system, or else the whole system collapses.” She's right. The system, it's a house of cards, if it doesn't get fed. But the question is, do you want to be in that house of cards? Do you want your house, your financial house, to be a house of cards?
Let me give you some ideas of how you could change that, okay, because that's really what we're about at WealthAbility™ is how you can take control of your money. And it doesn't matter what you invest in. You can be invested in real estate. You can invest in the stock market and still have control. You can invest in business. You can invest in commodities like oil and gas, or wind, or solar. And on top of that, if you take control, you get a better tax benefit than if you turn it over to Wall Street. Wall Street, what's the tax benefit? We talked about this in a previous show, right? We talked about deferral. So you put your money in a 401(k) or 529 plan, you're deferring taxes to a later year. “Well that's kinda nice.” What if I didn't have to pay taxes at all?
Well look, when you have a non-qualified, meaning non-government controlled plan, we just call it a simple wealth and tax strategy. When you do that, now what happens? You don't ever pay tax and you have complete control. On top of that, your rate of return, your rate of return should be 20% to 30%, tax-free. And if your rate of return is not 20% to 30% tax-free, it's simply a lack of financial education. That's what this program's about. Go to wealthability.com/radio. Listen to this over and over again, because what we wanna do is we're building this. We're building how do we take control of our money? How do we not have to worry about money on a daily basis?
Let me give you an example. Let's say, okay, in a previous show, I talked about paying your kids. Let's say you pay your child $12,000 to do their marketing, and you get this great tax benefit. Let's say we take that $12,000 and we go get some bank financing, and we buy a house. We may use a limited liability company or whatever, but we buy this house. Alright, now this $12,000, we borrow from the bank, we borrow $48,000. We buy a $60,000 house in Indianapolis, someplace Midwest. We get cash flow from that every month, non-taxable cash flow. We have control over that. We can put money in. We can take money out. As that builds, what happens? We can keep buying more assets.
Let's say your daughter's 10 years old, and she's a master of social media. She probably is. She's 10 years old. She's probably a master of social media. You're having her doing your social media. You're paying her $12,000 a year. You retain that money. Now you're starting to build her a real estate portfolio. She's not paying taxes on it, 'cause we're gonna talk about later, on another show, about real estate and great tax benefits in real estate. She's not paying taxes on it. You have control over it. Guess what? By the time she's college age, you can send her to Harvard. You're not relying on Wall Street. You're doing … She's doing 20% to 30% and not paying tax on it, because the government wants you to invest in real estate.
Real estate's just one example. What if instead you go, “Okay, she wants to start a little business.” Get her started in a social media business or a marketing business. You get your daughter, your son, started in a little business. Guess what? Every dollar that gets reinvested in business is deductible. That's what this last tax bill was about, the Trump tax bill. It was all about every dollar that you reinvest in your business is now deductible. So you can reinvest it in equipment. You can reinvest it in furniture. You can reinvest it in computers. You can reinvest it in research and development. Whatever you reinvest, it's deductible.
What if you go, “Okay, I'm not in business, so I got this job. I don't wanna reinvest there. I kinda like the idea of energy. I like the energy idea.” Okay, commodities, okay. Okay, so the traditional one would be oil and gas, right? In the U.S., with this last tax bill, if you invest $100,000, and you can invest $10,000, okay? If you invest $100,000 or $10,000 into an oil and gas drilling project, it used to be you got an 80% deduction the very first year. But the government says, “That's not enough.” Now it's 100% deduction. So if you're in a 30% tax bracket, and you invest $100,000, that's like the government giving you $30,000 immediately, immediately, okay?
On top of that, when you start producing income from it, 'cause they're producing the oil, right? When you start producing that oil out of those wells, the government only taxes 85% of the income. Well, okay, what if your education fund for your child was a bunch of oil and gas wells? I had a client a number of years ago, an elderly couple. By the time they were my client, they were an elderly couple. And they had been investing in oil and gas their entire life, literally for 30, 40 years. And it wasn't a lot. But guess what? They had not paid taxes in 30 or 40 years, legally. They had plenty of cash flow. And guess what? When they died, their kids and their grandkids had these oil wells that continued to produce, because oil was produced 30, 40 years, on average.
So here's the thing. This is an annuity, but this is an annuity you have control over. This is an annuity you're not paying tax on. This is something you're not turning it over to somebody. You're not turning it over to Wall Street. You're not turning it over to some financial advisor who's out to make the biggest bonus in commissions they can. You're turning it, what you're doing is you're investing in the infrastructure of the country.
Clean energy you get tax credits on top of your deductions. So it's even better. You buy windmills, okay, or you buy a little piece of a windmill. You put $10,000 in. You buy a windmill. You get a $10,000 deduction, means the government is your partner in that windmill. You get credits on your tax return. We're talking about solar and wind later, and we'll get more specific. But now what happens is it's producing energy. And guess what? The wind never stops. I mean, you put solar at the southern tip of the big island of Hawaii where there's solar out there. You put it, and it doesn't matter if it's basically in the ocean, right? We've seen windmills out there. Whether it's on the mountains in California, doesn't matter, okay? You get the tax benefits. And every year, every month, you're getting the income, because guess what? Wind is renewable energy. It just keeps coming.
So my point is that look, you have all these opportunities. So there are ways to do this. My point is that you don't have to worry about money. You don't have to worry about the ups and downs of the stock market. You don't have to worry about the ups and downs of your job, because when you have passive income, when you have control, if something happens and the job goes away, you still have money, because you've got the assets. The assets are producing the income. Wall Street tumbles. Doesn't matter. You've got control over your assets.
This is why we do WealthAbility™. This is why I get up in the morning. This is why we're so passionate about you taking control of your future, but also taking control of your now. Take control. Enjoy life. Enjoy it now. Don't wait until you're 65. Enjoy it now. Live your dream. We're gonna talk in future shows about how do you even reach that dream in as little as seven to ten years. How do you do this? Because when you are taking control of your money, when you're not buying into the Wall Street lie, you have way more money. You have way less taxes.
You've been listening to The WealthAbility™ Show, with Tom Wheelwright. Way more money. Way less taxes. To learn more, go to wealthability.com.