Two weeks ago, my wife, Tanja, and I set sail on a Carnival Cruise out of Galveston, Texas headed for three Caribbean islands. This was our second cruise ever, lasting 7 days — twice as long as our first one.
I am not normally a nervous traveler, and the ship rocking at sea doesn’t bother me at all. But this trip had me worried because 3 ½ out of 7 days would be at sea, with 2 of them being the very first days before arriving in Jamaica. What the heck was I going to do stuck on a floating hotel for 2 days?
I am just not a pool guy. Lounging poolside is fun for about 10 minutes. Of course there was food, and some more food; there was bingo and someone pitching jewelry, if that is what you like. Lucky for me, I had a secret weapon to keep me occupied. I only went on this cruise for one reason: a group called Financial Friends Network.
This group was represented on the ship by over 200 people that came to learn, share their business with others, invest, network, and get better at what they do. All of you, investors and readers, could also be a part of the group any time you want to cruise and learn. Not a bad way to go. The next one is in September, cruising to Alaska…
On each of the sea days, there were presentations starting at 8:00am and lasting until about 4:00pm. We would then reconvene at 7:00pm, before heading off to dinner at 8:15pm. The dinners were a terrific time to meet others in the group. We switched up our seating arrangements every night, and I still think I only met about 25% of the group.
Most of the people on the cruise had a propensity towards either real estate or notes. Each presentation was only 20 minutes long, so if it wasn’t something you were interested in, you knew it would be over soon. After 3 people presented, we took a break and the 3 presenters went into 3 separate corners of the room to talk more with the audience members who had questions or wanted to hear more.
To me, it’s all about the little gold nuggets; you only need to pick up one or two to make the time and money spent well worth it. I got a little bag full of nuggets on this trip, and I’ll share my largest one with you.
If you own a Roth IRA, and you leave it to a beneficiary other than your spouse upon your death, there are tremendous benefits to this type of inheritance. The person/people you leave it to will have the opportunity to invest the entire value of the Roth IRA, tax free, over their lifetime. Let me repeat that: for the rest of their life, they get the benefit of tax-free investing with that inherited Roth IRA. Pause and let that sink in…
Why is this so powerful? The largest cost you have as an investor is your tax burden. If you invest into some asset and make a $10,000 profit, you may owe $2,500 to $5,000 in federal and state income taxes, depending on where you live and the asset you made the profit on. Let’s say that $10,000 of profit represents a 10% return. If you pay $2,500 in taxes on that, your return just dropped down to 7.5%. Even worse, paying $5,000 in taxes leaves you with only 5%. You get the picture.
How do people normally pass down their Roth IRAs? Most leave it to their children, letting them distribute as they see fit for themselves and maybe for their grandchildren.
The more efficient way would be to break up your Roth IRA, and leave a portion to the youngest people you can find, because they get the greatest benefit of tax-free investing for their lifetime. The beneficiary can’t contribute to it, but if they invest it in the right ways, they could be set for life — especially when received at a young age. Remember the compounding of money?
There is so much more to this, and you could literally set your grandkids and great grandkids up for life, but we don’t have room to cover it all here.
On March 11th, we are hosting “InvestX: Shortcuts to Savvy Investing” — an all-day educational event with a variety of speakers discussing subjects just like this. We like to say that “great minds think differently,” and these great minds have some mind-blowing investment tips. Join us for a chance to get outside the box and collect a few gold nuggets.
P.S. Tanja did get me to stay on a beach in Jamaica for about an hour and a half with nothing to do but float in the water. There’s hope for me yet.
To find out more about the March 11th InvestX event, the cruise coming up in September, or Inherited Roth IRA’s contact us at (775) 297-4970 or email us at Stacy@HughesCapital.com.