Day 9 of The 14-day Passive Income Challenge - Tax efficiency vs non-Tax efficiency - Chaim Ekstein

[Music] welcome to day number nine in the 14 day passive income challenge today we're going to discuss number six in the leverage part of the alm model which stands for attract leverage and manage which is tax efficiency versus non-tax efficiency is it something important for you to consider in your passive income planning or is it something that's not so important stay tuned tax efficiency versus non-tax efficiency it's something that's mind-blowing when you think about it how much money is going to waste in texas when you don't need to pay the taxes all you need to do is be aware be focused try to find ideas try to find strategies that you can implement in your passive income planning that's tax efficient and don't think it's something that you should be passive about as you're gonna learn in a minute i'm gonna take for this example somebody who invests money and has a portfolio of one hundred thousand dollars again i'm just taking this as an example same thing as a million the same thing is a billion it doesn't really matter and also what i'm going to assume for this conversation that the person is paying 50 in texas now i know i know most people are not paying exactly 50 maybe 30 maybe some people 25 but for this example just for simplicity reasons understand we're going to talk about taxable income that's taxed at a fifty percent rate now let's assume this person took is one hundred thousand dollars and it grew to a certain number how much did it grow to let's take an example the rule of 72 you take 72 you divide it by the interest rate on the money and that will tell you how long it will take for the money to double so that is let's assume we're talking about a rate of return of so you take 72 divided by 10 equals 7.2 that means that in 7.2 it initials 100 after 7.2 years that should be worth 200 000 the question is how much of the 200 000 is yours versus how much belongs to our rich uncle uncle sam and i'll tell you how much because we are assuming a 50 which makes it easy for me to show it to you but the concept is true with any number that you're gonna tell me if it's fifty percent that means that one hundred thousand dollars belongs to uncle sam and one hundred thousand dollars belongs to you okay thank you so much for being such a great partner of course you're gonna tell me now that you don't have to pay taxes in a lump sum you can pay every year which you might be right depends on the investment strategy you do but even if you pay it every year the end of the day this is what ends up costing you if it's a non-tax efficient strategy if you do it in a tax efficient strategy if you delay the taxes you defer it you you you have strategies that will help you end up taking out the money tax-free something like that where it gives you tax benefits along the way tax deductions things like that then you come out so much far ahead of the game it's very important when you plan your passive income life foundation that you should consider tax efficiency as being very important in your passive income life foundation thank you for being with me in this day 9 of the 14 day passive income challenge i'm looking forward being with you throughout the 14 days you