Author: Heather MacKay

November 1, 2022

The Jobs Report was GREAT – and that’s BAD

I just want to give you a quick update on what’s going on in the market today we had our jobs report. And in this market, good news is bad news. And bad news is good news. So, you can’t really figure out what’s going on except I’m going to try to explain what’s going on. So, the market reported the unemployment was three and a half percent, it’s pretty good. Everybody was expecting worse, it came in better. If the Fed sees that unemployment is still good, they’re going to keep raising rates. So, the market is like “Ha, they’re going to raise rates, that’s bad for the market. That’s bad for housing.” And that raises the rates of mortgages and debt instruments of finance businesses and throws us into a recession. So that’s bad for the market, right, do you get it? 

So, good stuff for the economy. And unemployment is bad for the stock market. So that’s what’s going on right now. And so, you’re seeing a big plummet, by the end of Friday. Right now, we’re seeing a big plummet in the stock market. Why? Because they think that the Fed is going to continue to raise rates aggressively. And that’s really bad for the market.  

Now, the Fed has a history of doing a really lousy job of raising rates, they raise them too much, you saw that they lowered them too much for too long. That’s why we’re in this inflationary funk that we’re in right now. So, the Fed is never good at doing what they’re supposed to do, we might as well just get rid of the Fed, they suck, right? Having the Fed, all it does is it exacerbates problems on both sides of the pendulum. And so, we need to get rid of the Fed. But that’s beyond the scope of this. What we need to understand is that bad news is good news right now, and that’s continuing to happen in this market. So be careful, protect yourself because the Fed is not going to make it easy for you going forward.  

October 15, 2022

Markets Are Going Crazy Anticipating the Fed

I’m just going to talk to you about a follow up to a video/audio podcast that I did a couple of days ago. And it was about the Bank of England, and the collapse of the currency or the seeming collapse at the time and the currency. And now it’s kind of recovered. But I don’t think we’re out of the woods yet. I think when you start to see systemic problems, you start to see cracks in the system now whether the central bank will just be able to print money in England, and fix the problem. Well, that’s what they’ve always done, I just don’t think it’s going to continue to work. It might work short term, it is certainly working short term, the pound has gone from $1.03 per pound to $1.14. Just in a week. It’s good, actually pretty amazing. But it’s certainly of note that there are some problems with the pensions, there’s problems with inflation, there’s problems with printing money out of thin air, there’s when you get something for free, it’s just not worth it. Think about the last time you got something for free.  

And so, let’s fast forward to what’s going on around the world the last few days, we’ve had rapid increases in the market. So, the market has said, “Well, if the Bank of England is going to print money, that means that the other central banks in the world are going to print money.” Well, that’s probably true, right? We’ve been kind of waiting for the Fed to “quote unquote”, “pivot” after before they broke things. So that’s what the market is thinking.  

Okay, look, if they’re going to print money, then we’re going to print money in the United States, we’re going to print money in Japan, and we’re going to print money in Europe, then we’re going to print money everywhere, and that’s going to make everything go up. So, what it’s always done, so I guess it will always happen.  

So, the markets are loving that but the problem is that I’m not seeing a huge amount of volume on that. So when there’s not a huge amount of volume, it’s generally the people that are knee jerk reaction to news that drive those events. And not necessarily the big smart money. Now, I don’t know if there is any smart money in the world anymore. But generally, when you see these moves, you have to watch this big move. So, the last couple days, like 5- 6%, in the market going up? And that’s often, you know, pretty recent bottom, we tested the lows from back in June. But will it sustain? I don’t know, I’ve always believed that we’re in a bear market, at least since last November when the Fed came out in the US and said, “Hey, listen, we’re going to be tightening soon, so get ready.” And since that nine-month period has gone by, we’ve essentially started a bear market. And I think we’re going to continue the bear market. Sure, we’re going to have some bear rallies in here. And I don’t try to predict the markets, I try to play them as they come every day. So, you’ve got to do the same thing.  

The reason we have this wealth architect podcast, and maybe the reason you tune in is because it’s more than just, “Hey, give your money to a broker and let them just do the thing,” right? But it’s this buy and hold and, you know, 10 years from now, 20 years from now we’re looking at our portfolio, and the market goes up, right? Well, it doesn’t always go up. I mean, it took, if you look at the prices in 2020, the markets were basically flat, at least the NASDAQ was flat. And if you factor in inflation, you’re going backwards. And so, you need to kind of be aware of what’s going on the world doesn’t mean you need to knee jerk react on everything that’s going on around the world either. But you should at least be aware of what’s going on to the you could take action if you need to.  

And that action means not giving up your power and your health, your wealth of your time. And so, if you give your money to a broker who’s not paying attention to world events, who doesn’t know what’s going on in the Bank of England, who doesn’t know how to react? Well, then you’re giving up your power. And I hate to see you do that. I want to see you take control of your money, at least, you know, trust, but verify. You may want to trust somebody but verify that they’re doing the right things with your money. Listen, if you’re watching this here in 2022, you probably gotten hammered giving your money over to somebody else. You might have even gotten hammered if you’ve been handling your own money, because it’s too easy to click a mouse on the screen and invest $100-$200 $300,000. And pretty soon if you don’t know what you’re doing, you’ve given up a lot of money. And then you say, “well, I’ll just wait. And it’ll come back.” That’s what most investors do. And I don’t want you to be one of those investors. I want you to take control and know that there are strategies, there are things that you can do if you understand the information, and you can apply it to your own portfolio.  

I believe that there’s lots of different assets that you can invest in, that are prudent in this market. People are like; “what do I invest in?” Well, if you look at it from the outside, you say well real estate’s about to go down and get crushed. You look at mortgage rates are at 7%. Okay, real estate, you look at gold, it hasn’t done anything for 10 years, you look at Bitcoin has gotten hammered over the last year, year and a half. And you know, the evidence is there that there’s not a lot of stuff the stock market has gone down for the last 9-10 months. The bond market is just the safest money in the world. The US Treasury market has gone down 20-30% We’ve lost money, so where do you put your money? You can’t put it in bank. Where do you turn? But there are smart places to put your money. And I can’t tell you that right now on this podcast, because I don’t know, you’d be imprudent for me to say, you definitely got to buy Bitcoin or you definitely got to put your money in the stock market. But I can tell you, you got to have a system, you got to know what’s going on. And that system is going to allow you to take the emotion out of the market, we have a system called the cash flow machine that I talk about, it’s my system, very proud of it, it’s my life’s work. And I believe in creating cash flow in your investing rather than just sitting there and waiting and hoping that the money drives it up, because a lot of people put their money in GE 30-40 years ago. And they don’t have much shuffling. Same with for, you know, with Sears. So, a lot of times these big blue chips that you think are going to be around forever, they got a business. In fact, there’s not a single stock that’s in the Dow Jones Industrial Average, that was created more than 100 something years ago, but still Industrial Average, the last one was GE and they took that out of I don’t know, seven or eight, nine years ago. And so, there are no stocks left, that lasted 100 years. Think about it, it’s pretty bad. That tells you that most stocks are going to go out of business over time, because of competition, because of bad management, because of, whatever the market. So, you need to take control. And I wanted to bring this to you because I don’t think this bear market rally is going to last forever. Hey, I can be wrong. But I react to the markets, not just on a daily basis, I can let the markets tell me what they’re doing. But if they’re not telling me an accurate story, I’m a little skeptical. I raised some eyebrows here and there and I hope you do too. 

September 29, 2022

The FED is breaking things. Are we DOOMED?

Hey everybody, Mark Yegge coming to you from Athens, Greece right now. And I’ve got a lot to say about what’s going on in the world and how I think the Fed is kind of breaking the world economy.  I help seven and eight figure investors play offense and defense in their finances, and now is a great time to be playing defense. Because let me tell you what’s going on. And you’ve probably heard me say this before, and it’s kind of the mantra on the street, the Fed is out there raising rates at an unprecedented rate, three quarters of a point, so, 75 basis points, they’ve done it three times in a row. And I think what they’re trying to do without saying this, and this is what the street believes, is trying to break the economy.  They’re like a kid that goes into the store, and he starts breaking little things, and he sees if anybody’s noticed, and then he’s like, “let’s break this little bigger thing”. And pretty soon somebody notices, and it’s too late, they’ve already broken so many things. I think that’s what’s the Fed is doing, they screwed us up all the way down, they lowered rates and kept them low, way too long. And then now they don’t have any bullets left, the only bullet they have is to raise the rate. And they’ve done it three times in a row. at an unprecedented rate, it’s gone up 13 times. Even Paul Volcker, in 1980, only raised it a fraction of that I think it was three times, actually, I think it was even less. And so, whatever it is, they are raising it.  

The problem is, there is so much debt, over almost $31 trillion, that the US owes and every time you raise it, you owe more in interest because of the refinancing of the new bonds. And so, when you put out something that creates extra overhead, you’ve got to print even more money to pay the interest on those bonds, that’s going to end up catching up. You can’t have something for nothing. It’s just a law of physics. And the Fed apparently is following this MMT, this modern monetary theory that basically says, “Don’t worry, dollars just fall from the sky.” And you just keep creating zeroes in people’s accounts, and bank accounts, and they lend more money and create even more debt. And all that’s fine. Eventually, it comes home to roost. It has in the 700 plus currencies that I’ve studied, it has every time in history that we’ve ever had fiat currency and Fiat means by decree. And when a government does something by decree, eventually people wise up, and they don’t value it anymore. And that’s what’s going on now. You’re starting to see things break.  

So let me just give you some quick glossing over because I don’t want to go too far into this. But it’s important to know. And maybe you don’t care about what’s going on in Japan, or China or Europe or Britain, maybe you don’t care. And it’s okay not to care, you can go on with your life. But if you know a little bit, maybe you can prepare, and my investors are people that like to prepare. And so that’s why I make these recordings because I want them to be prepared for it, I want you to prepare as well if you’re not one of my investors. So let’s start with the Bank of Japan.  

So, the Bank of Japan, the Yen is crashing, the Yen has crashed, so are other currencies against the dollar right now, in the land of the blind, the one-eyed man is king. And so, we have the dollar, which is the nicest house in a crappy neighborhood. And that happens to be where everybody’s moving to because we’re the world’s reserve currency. So, we’re losing that. But that’s what everybody trades in around the world. And so, as the dollar increases, these other currencies are all rushing to get to the dollar. Well, they need more and more and more of them to buy the dollar. Because nobody wants to accept these currencies. For example, the Turkish Lira, they have 100% official inflation rate, it’s about 400%, because I just visited, so their unofficial, but now officially they’re saying. “Hey, we got 100% inflation, which means that everything doubles in cost every single year.” In fact, when I was there, a lot of places didn’t even have menus that had prices on them. You would just go in and they would tell you what the price is for that day. Because the next day would change it would have to go up because of the devaluation of the lira. It’s happening around the world. And we don’t know about it in the United States, because we don’t get the press from around the world. One of the reasons I travel is I get to see what is happening on the ground, what’s going on in these different countries. So, the Yen is crashing. Why is the yen crashing? Well, the Yen has been in the recession, basically, for 30 years, they’ve been just they don’t have population increase. They don’t have workers, their population is aging, they have problems. And so, what they’ve been doing, especially lately is they just been printing money. Well, that money printing presses accelerating, the money is becoming worth less and less and less. And so, what is the Bank of Japan doing? They’re buying more bonds; their own bonds and they’re using their own money to do it. It’s like they’re taking it out of one pocket and put it in the other. The problem is they’re losing. And when you do that, it devalues and the bond people are like, “oh, I’ll just keep buying the bond, they’ll just keep printing money into oblivion and at infinity, and at the end of the day, they’ll buy our bonds.” Well, that means they’re worth less and less. So, the currency recognizes that. And the 20-year yield in Japan is over 1%. The first time it’s happened since 2015. Okay, data point number one.  

Data Point number two, the s&p 500. Our own s&p 500 is down 23.3% this year, that’s the fourth worst start in history. So, if you think everything’s going along great, like they’re telling you, I don’t know the data is starting to pile up.  So that’s just another one that’s over here. Then we’ve got mortgages, you could have gotten a mortgage a year ago, for 2%, 2 ½%, 3% mortgages are now 6.3%, they’re almost a 7%, they’re pushing 7%, and they will be at 7% soon.  

And so, the housing prices are now starting to feel it because people are not buying houses, why? Because their mortgage cost is going to be almost 7%, when just a year ago, it was like 2%, 2 ½%, 3%, whatever you want to call it. And so now prices are starting to feel like you’re going to start seeing a rollover in the real estate market. It’s going to crash when the real estate market rolls over, it crushes everything. Remember, 2007 2008 Everything got crushed, because real estate got crushed. So, I don’t know if it’s going to be that bad. I don’t even know what all this stuff means. All I can know is things are bad right now. And they’re starting to break. And I think it’s because the Fed and all the other central banks are purposely breaking them.  

Okay, so then we’ve got the 10-year yield our own 10-year yield has had a surge. That’s been the worst since the COVID crash. So back in, you know, early March or February, we had this big crash back in the beginning of 2020. And that was the bellwether time for the yield on the bonds. And our 10-year yields on the bonds just surged at a record rate. So that’s another.  

So, now we’ve got the British pound. And the GBP is now crashing, because they’re doing more money printing, money printing over there, you know, they had exited a few years ago, Brexit, they called it, and they exited the European Union. And I happen to do it at a pretty lousy time, because now there’s a global recession going on, because of some trade wars, because of supply chain issues, because of Putin’s invasion, because of the embargo on gas to Europe, and costs are going to go up incredibly, and Europe’s going to go into this big recession. And so, the pound is decreasing as well, they’re crashing, they’re printing more money. And they basically said, “you know, what, we’re not going to do anything for two or three years.” And the markets like, “Oh, you’re not?”, and so they just started selling off all their bonds. So, the pound is crashing, and I’m here in Europe right now. And a year ago, when I was here in Europe, it was it was $1.17 to buy a euro. Now it’s 96 cents. So, the Euro is crashing as it is down 20% in a year. That’s because what I just mentioned, the European economy is I think they’re coming apart. But they’re coming apart because of energy.  

Now, energy has always been the measure of a healthy economy. We don’t grow our economies in the world we never have in society’s history, unless we have quality energy products and our energy has gotten more and more debts. So, we used to have sun and wind, 1000 years ago, that’s how we sailed around. And we used to use the sun to heat our water and things like that. And then we started to find different fuels wood, and then we moved to other fuels, petroleum and kerosene and lamps, and then candles and things like that. And then we found oil and oil is a very dense form of energy and we’ve got nuclear which is another dense form of energy. And so apparently, we want to go back to the Middle Ages and use solar and wind because apparently that solves all the problems. But you’re seeing the problems because we’ve tried to go back to solar and wind, Germany moved their whole economy to solar and wind and started to shut down their nuclear power plants and France did the same thing. And now they can ‘t get energy. Putin is basically saying, “Well, you want gas, well, maybe we’ll sell it to you. But it’s 10 times the price it was last year.” And so, these big companies that want to produce cars, they need dense energy, they can’t smelt metal and melt down molds for Mercedes in Germany, without really solid hot fuel which doesn’t come from Sun and doesn’t come from a little turbine, turning and generating a little immunity dense energy. So they want to take us backwards with this ESG environmental, social and governments crap. That is chopping the legs off at the knees of all these economies in the world.  

And now Europe is having trouble. You just saw it yesterday; this is the last point I’ll make. Because it’s I think it’s important is Italy, who’s perennially been having problems, or I think the third largest economy in Europe, they’ve been borrowing and living nice and eating their pastas and pizzas and enjoying their life. And that’s what they do in southern Europe. Meantime, Northern Europe has been working really hard to pay for all that. And now they’ve been okay with it. The Germans are industrious, and the Northern Europeans are industrious, and they’d like to work. But now, because of what is happening with energy, there’s going to be massive layoffs in some of these manufacturing companies that need a lot of energy because they can’t afford it. And they’re also telling the people, “Hey, we’re going to have to ask you to cut back on your energy snuggle up a little bit more, take fewer showers, turn your thermostats down this winter, so that you don’t use as much fuel, burn wood.,” Burn wood? That’s like what we did 500 years ago. And by the way, when you burn wood, it puts out tons of co2 and other emissions into the atmosphere. It’s not like it’s better than gas or hydrocarbon. So, we’re going backwards, we’re just not smart. As humans, we do stupid things. So, all of this is starting to reflect itself into the system. And now, it’s not just a recession in the United States. It’s not just a recession in Britain. It’s not just a recession in Japan, it’s not just a recession in Europe, it’s contagious. And it’s happening everywhere. I don’t know where it’s going to shake out. I’m just giving you a warning that it’s going to shake out. And so, I think at the end of the day, the big corporations, the big banks, the big government policies, are doing this on purpose. I really do. They can’t be this stupid, right? You and I could look at each other and go, that doesn’t make sense. Just print money out of thin air. And it’ll all be okay. You and I could look at each other and say that, but apparently, they can’t. I don’t believe it. I think they’re smarter than that. And I think they’re making stupid decisions upon stupid decisions upon stupid decisions, and they’re breaking the entire system. Sorry about the bad news. I’m really an optimist.  

So, let’s talk optimistically, really quickly about what you could do about it. Well, the best thing to do really, is to be in hard assets, things that are going to hedge inflation. You know, if you live in a house, you live in a house, a house is worth one house, whether the house is worth $400,000 or a million dollars, it doesn’t matter. If you’re living in a house, if you have an asset that’s paying you cash flow, which I believe you should have, then that cash flow keeps coming in. Now the cash is worth less, because we’re debasing our currency. That’s a different issue, but at least you have cash flow coming in so you can pay your bills. We have a program called the cash flow machine, and I talk about it every once in a while, about how you can make safe reliable income in the market. I think you need to have something that builds you cash, because our economy is faltering. And there may not be the jobs that we think that there are coming up soon.  

All right, other assets that are hedging inflation. Well, a lot of people believe in gold but gold has been relatively flat for 10 years. So, I don’t know why people still believe in gold. I think we have a new form of gold now called Bitcoin. And I think that’s the digital gold. And I think maybe everybody should have a little of that. So be smart be in assets, I wouldn’t be in bonds right now guys, bonds have declined, I don’t know, 20-30% this year, and the more they raise rates, which are telling us they’re doing, the more those bonds are going to decline. So why be in bonds if you can help it; it’s been a 40-year bull market to be in the US Treasury bond market. And I think that the bull market is over. And I think the Fed is telling us it’s over. Why don’t we listen to them. So de-emphasizing bonds is what I’ve told a lot of my clients to do, I’m not necessarily saying you should do it, you should seek some professional advice. But I think you need to be in something that hedges inflation, that’s assets, you need to be in something that gives you cash flow. That’s some kind of a program that is a high dividend program, but watch out for that because high dividends can chop you off to when the companies start to fail. And when the economy starts to fail, those types of dividend things, as we’re starting to see, are not good. All right enough for me. I wanted to give you the news of the World about what’s going on in economies. I find it really interesting and I hope it comes down to a macro scale for you, and you can decide what to do about it in the future and in your own finances. Thanks for tuning in to this edition of the wealth architect podcast. Hope to see you next time remember, never give up your power in your health, your wealth or your time. Have a great day.  

September 29, 2022

Buy the Rumor, Sell the News

For those of you watching, I thought I’d come to you from the Adriatic Sea today here in Montenegro. You can see it behind me, pretty cool stuff. I’m doing a motorcycle trip through Montenegro and just having the time of my life, but I thought I’d take a second just to talk really quickly about something that happened last week. And everybody was waiting for it for like two or three years, some long period of time, and it happened. So there’s the saying on Wall Street, buy the rumor, sell the news, and I think this might have been a buy the rumor sell the news event. But in any case, the number two cryptocurrency, arguably Ethereum, just did what’s called a merge or a fork. Basically, there’s now a couple of theorems, basically, what Ethereum itself did is they transitioned from a proof-of-work system, which is, well, I’ll explain in a second proof-of-work system into what’s called a proof-of-stake system. And so, you know, there’s like 20,000 cryptocurrencies out there, Bitcoin being the only one so far that’s really a proof-of-work system and totally decentralized. And all the other ones are what are called Proof-of-stake. So, here’s the way to think about it. It’s essentially proof-of-work is basically like a de-centralized database. So, proof-of-stake is anything that’s centralized. So, if you think about Amazon, they probably have one big huge database that runs everything. Same as FedEx, they probably have one huge database that runs everything. Think about the federal government, they’ve got one huge database that runs the whole thing. And it’s centralized, it all happens out of Washington DC, the same thing is true with anything that’s proof-of-stake. So, anything centralized, I should say, is coming from one central place. Pretty, pretty simple, right? And then anything, that’s what’s called Proof-of-Work is decentralized. In other words, it’s coming from many different places, there’s no single point of failure. 

So, what does that mean? Well, in bitcoins case, there are 21 million Bitcoins that will ever be made, that’s already written in the code. And everybody agrees on that. And what they do is they go around, and they prove it every single time they mine a block, it’s called proof of work, they prove that there’s actually some verification of the prior blocks, and they make a new block, then everybody proves that. And so there’s no “one” person, there’s no board of directors, there’s no “one” guy, there’s nobody pulling the strings, there’s nobody that can take control. And that is the first time in history that’s ever happened. And now it’s got so many million nodes, that there’s no way they can coordinate any kind of attack on Bitcoin, and make it fail. On the other hand, anything that’s centralized can fail. And so Ethereum just became centralized. And when they became centralized this week, they went to proof-of-stake. Basically, that means that anyone with 51% of the control of the theory becomes their tokens, the coins, has control of the entire ecosystem.  

And so, what essentially has happened is everybody was excited about this. And I think it’s got a lot of utility other than currency, it’s got utility as a smart contract platform, which basically means you can build lots of utility on top of it, which is great. It’s a different thing. It’s like the HTTP that you put in front of the website. You know, when you type that into your URL, that’s the protocol. Well, Ethereum has kind of a similar protocol, which is cool. But I think they blew it. They went to this proof-of- stake. And they basically made it centralized. And everybody thought, well, Ethereum, which was about $1,800 per token, right before the merge is now $1,300 a token. So, everybody kind of selling the news. And basically, people are saying, “you know, what, we’re not so sure that this proof-of-stake, centralization of this coin is a good thing, because the people that control 51% of it now can ruin it, they can send it to zero.” So, a lot of people think in theory, the Ethereum could go to zero now, and so you’re seeing a lot of selling and selling the news. So, I don’t know what’s going to happen with it. I still think it’s the number two. But I think the king mac daddy is Bitcoin. It’s been around for 13 years, and it’s not been breached. And it’s the other scarcity to it and there’s a whole bunch of really cool things. You probably heard me talking about Bitcoin before. Ethereum was number two, but I think they kind of blew it. And so, I think by going to that proof-of-stake away from proof-of-work, and you’ll hear a lot more about this in the future, it kind of sealed their fate as just one of the other typical cryptocurrencies. And now they’ve got some utility, but now they’re also proof-of-stake, not proof-of-work, so maybe not the best thing that was possible.  

Anyway, I thought you might want to hear a little bit about what’s happened in the Ethereum in the cryptocurrency. world you’d normally hear me talking about Bitcoin but in this case, you should know what’s going on in Ethereum. Hope it helps you to understand this complicated little cryptocurrency market. And I’ll see you on the next edition of the wealth architect podcast. T 

September 29, 2022

Downsize Your Life

Ever think of downsizing your life? I did this thing a few years ago, I decided that my life shouldn’t be tied up with stuff and it should be tied up in experiences. My guest today is known in the industry, she’s the downsizing coach, she helps you downsize. She has all these credentials, has a podcasts on the go (Downsize Your Home & Life Radio Show) and has so much experience, you won’t want to miss this episode!

 

Links to reach Anne: https://www.thedownsizingsystem.com & https://www.thedownsizingcoach.com/

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Cash Flow Machine Mentorship – http://www.cashflowmachine.io
BECOME A CLIENT -https://go.destinycreation.com/application-page

September 14, 2022

From Humble Beginnings To Massive Success

Today’s guest I am excited that you meet him because he comes from a very similar background to me, I don’t know if it’s a good thing or a bad thing. But in his case, it’s probably a pretty good thing. And you know what I love about this guy, his humility, he is so humble, because he’s come from a lot of failures. But you know that failure is not a really a “thing.” It’s you either win, or you learn, you don’t fail, because every “fail” you will learn from it and that is really a success. Tune-in to hear more from me and my special guest, Casey Stubbs.

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Link to Casey’s information: https://tradingstrategyguides.com/podcast

September 7, 2022

Success Mindset – Beyond Medicine

I am excited and thrilled today to have a special guest. He’s a good friend, we’ve done some fun and exciting things over the years that we’ve known each other, and you’re in for a real treat when it comes to wealth and knowledge, as he is somebody that is trying to think out of the box and suggest some really exciting things. Our guest today is an ear, nose and throat physician and has been practising for 27 years and not to mention, he’s really good at it. Please welcome my good friend, Dr. Brett Levine.

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Dr. Brett’s resources:
Website: https://www.boommindset.com
Course: https://www.boommindset.com/course

September 1, 2022

Don’t Charge your Car; NVidia Stock getting rekt

Hey everybody, Mark Yegge host of the wealth architect podcast. It is just a quickie today to bring up a couple of points in the news that I thought were interesting. If you live in California, you probably know about this, maybe you don’t. But if you don’t live in California, you’re probably not seeing much news on it, but California just voted to eliminate the sales of gas-powered vehicles in the state by 2035. I find that really interesting. Like that’s pretty aggressive, have you seen pictures of those traffic jams? They’re going to take all those cars off the road. Now, of course, they’re not going to be off the road all at once, but they’re not going to sell any new ones, because they want to drive everybody to electric vehicles. Well, I suppose if you’re green, and you think green is going to change the temperature of the world, which it isn’t, but you’re not making practical decisions. You know why? Because yesterday, the power companies who have a very poor grid and they have blackouts, and brownouts in the state of California, came out and said, “Hey, can you do us a favor? Don’t charge your electric vehicles.” Now imagine this, everybody’s got electric vehicles, so I guess that means nobody moves because we want to save the planet or some crazy thing?! Let’s send everybody back 1000 years, we can all cook on woodstoves and we’ll just stay home, and then maybe we get a horse or something. And then we don’t charge our electric vehicle that we have sitting in the garage. But at least we have solar power generating something for somebody. I don’t understand. I don’t get it. Like none of the decisions that these green people are making line up. And believe me, I think there’s room for solar, there’s room for the internal combustion engine, there’s room for electric vehicles, there’s room for hybrids, there’s room for all this stuff. Why would you eliminate something that has brought our society to this point, if you don’t have a viable alternative? And then telling people they can’t charge their electrical vehicles? Then saying, “Hey, we don’t have a viable alternative yet, because our grid can’t handle it”. And they don’t have the money to pay for another grid. Let me tell you that the grid has been built up over the last 80 or 90 years, and it probably needs repair, but they don’t have the money. That’s why we have all these fires in California, they’ve already proven that the poor grid is causing transformers to blow up and creating all these fires in California. They just don’t get it.  

All right enough of the rant. But the bottom line is you need to be aware of the craziness that people are passing. And I can’t even make this up. Like if I were joking. I couldn’t even be able to write that joke.  The next thing is Nvidia. So, if you’ve been watching the chart on Nvidia, and I watch the charts every day, and I think Nvidia is a great company, they make cameras and chips. And you know, we’ve been having a chip shortage. So, you think, well, chip shortage. Let’s buy chip companies like Nvidia, this stock has declined from about $350 to right now where it is at $138. Today alone it’s down 9%, why? Because the US government said “okay, we’re going to eliminate an American company’s ability to sell chips in China. Now, that’s a little overreach, isn’t it, like when an American company now has to suffer and the shareholders have to suffer? Because we don’t want to send chips to China? Now I know we have a chip shortage and I don’t really know what the rationale behind it maybe that if we don’t send them to China, we get to use them ourselves. But if we use them ourselves, then the stock wouldn’t be down. 9%. Basically, what the market is telling us is that they cut the legs out from under Nvidia, just by regulatory Fiat, I use that word Fiat, very intentionally. Fiat means by decree. And the government just signs a thing by decree that says this company and other companies that are sending chips to China could no longer do that. We don’t care about the shareholders. We don’t care about the stockholders, we only care that we’re not going to send them to China, because we want to send in some kind of a message. Now, whether you agree with it, or whether you don’t, I thought I’d bring it to your attention. 

So, there’s two interesting issues there. And Nvidia has some major problems right now, because of the chip shortage, which you’d think would be positive for them. And now because the government is getting in the way of them sending things to China, I guess the theme of this whole podcast is get the hell out of the way government! Like, why do you need to go and get involved in everybody’s business? You’re clearly not competent to do it. Look at our inflation. Look at our gas prices. Look at the stupid ideas that they have, you know, going green. Look at Germany. I’ve mentioned this in a past podcast, but Germany basically said about 1520 years ago. “You know what, that nuclear power that we have that’s really dirty.” Now, it’s not really dirty, but they deemed it to be dirty and this little petulant, Swedish or Netherlands girl, what’s your name? Thunberg or whatever. I guess everybody listens to her because now she’s saying, “Well, you got to get rid of nuclear, it’s dirty.” And so, you get rid of nuclear. And now you have got to buy your gas and your oil from Russia. And now Russia is pissed off at the Germans. They’re pissed off at Europe for supporting Ukraine. And so, they’re cutting them off. And so, Germany is now, you know what they’re doing?  I think I’ve mentioned this in the past, well I’ll mention it again, they’re going back to coal and they just voted today to keep one of their nuclear power options open. This is one of their nuclear power plants that they were going to close down. And you know, so they’re going back the other way, unfortunately, they’re going to freeze this winter, it doesn’t make any sense?! Oil prices have gone up 10 times, and power, your power bill, if you live in Europe, especially Germany has gone up an incredible amount like 10 times. Imagine waking up tomorrow, getting your power bill, and it’s 10 times what it was last year, it’s just crazy. All in the name of this crazy green stuff, because we think that we’re going to change the temperature of this ball of molten lock and raw lava. You know, going through space, at a really fast speed with the sun shining on it and asteroids covered, we think we’re going to change the temperature of that by eliminating greenhouse gases. 

Now, one last thought, if you’re reading the science on this, okay, you’ve got to really dig into who’s paying for the science because the only people that are getting funded are the ones that are coming up with this green stuff, this conclusion that we’re causing the rise of co2 and we’re causing the sea levels to rise. By the way, I’m not seeing the sea levels rise. I went to the beach a couple of weeks ago, in the same place where I grew up, the sea levels are exactly the same, exactly the same, nobody’s building higher sea walls, and nobody’s making their houses go up higher. So, this is all a bunch of “stuff.” I remember when I was a kid, we were supposedly in an ice age. And we were going to run out of food.  Now we’re not in an ice age, all of a sudden, that science apparently changed because we, you know, whatever we do, whoever is getting funded, decides that they want to have a different narrative and eliminate our ability to drive combustion vehicles.  

So now we’re in a heating crisis, right, we’ve got a greenhouse problem and sea levels are going to rise. And notice how they never say the sea levels are going to rise by next year by an inch, they always say, you know, by 2050, or 2100. So, we can never have to measure those people, they are all dead by the time that “doesn’t” happen. So, they’re never held to account. And you know, they make the world change based on some pseudoscience, that is funded by the people that that make money from it. The very people that are making money on or flooding these scientists. That’s why you’re seeing all the stories say that we have global climate change, and that it’s humans that are causing it. It’s not humans that are causing it, we’re not going to affect this big ball hurtling through the world, through space.  I should say, not like the scientists who can’t even keep their blood pressure in check who are trying to keep our world’s temperature in check with their pseudoscience. It’s just crazy. And now you’re seeing it start to affect you. You’re seeing inflation, you’re starting to see stupid decisions from governments. It’s eliminating the best technology that we’ve had for moving people around for the last 100 years. In exchange for some other technology that is clearly not better. Now, I don’t believe you just get rid of it. But it’s clearly not better. You don’t do an all or nothing switch. That’s the problem when you have too much government. All right, enough for me today. Hope you have a fantastic day. 

August 31, 2022

Bed,Bath & Beyond, stay away! (BBBY)

Bed Bath and Beyond is in trouble.  This is a meme stock that was driven way up, you probably heard this guy Cohen made like $100 million on a $25 million investment. And there were a bunch of young people that made money. It was a meme stock, kind of like AMC, and GameStop. And they drove those things up, and then they pulled the rug out from under the retail investors and those things started to crater. Well, there’s a good reason that Bed Bath and Beyond is cratering. Today, it’s down 24% In premarket trading, and they just reported they’re going to close 150 stores. Now this is bad news for a retailer. Retailers can be a great investment when you’re getting involved in them on the way up. And that can be a horrible one on the way down when they’re closing stores.  

So, think about Starbucks, as Starbucks was expanding and growing stores and moving them all over the world, their stock was just cranking up. But think about also Sears, as they were starting to decline, they were closing stores. I’m looking at Bed Bath and Beyond, I’m looking at their chart. And it’s been all over the place. Like just lately, it was in a major decline. And then it spiked way up, and then it spiked way down. And it’s just crazy how much money is being made and lost in the stock. Don’t be involved in this. It’s a loser. It’s going out of business, I believe. But you can look at the earnings in 2021. Right, they were a loss of $1. One a share 2022 it was 97-98 cent loss per share. But in 2023 next year, they’re looking at losing $6 per share. And I’m looking at this company, they got about 677% debt. So, they have got all this debt, they’ve got declining sales, they’ve got declining earnings, and people are still owning the stock. I don’t get it?! Those two things, sales and earnings are the lifeblood of a company. And when you look at it on a fundamental level, you’re talking about opening stores is the lifeblood of a company. Closing stores is draining the lifeblood out of the company. I don’t know why anybody would buy this.  

The company came out this morning and said “you know, we may issue some stock from time to time”. What do you think that does to the investors, it dilutes them, it makes their shares worth less, not worthless, which is I think, where it’s going, but worth less. Now, let’s talk about Bed Bath and Beyond. Because I think it’s a pretty cool store. I was just there the other day. But most people know now that if you’re going to go to Bed, Bath and Beyond, you need to have a 20% off coupon, right? They send these coupons out, like they’re “frickin free”, and you get a 20% off coupon you go and then you get 20% off your off your purchase.  If you don’t have the 20% off coupon, you’re kind of an idiot, because everybody knows that you should have it. Well, let’s analyze that… is that a good model for businesses to give everybody 20% off, but if they don’t have the coupon, they know that they should? And they instead of going into the store go “well, I’ll just come back when I have a 20% coupon.” Now, I guess you can get them online. But a lot of people aren’t really willing to go online and get a 20% off coupon, when they’re on the spur of the moment getting ready to go buy some sheets or some cookware. So, it’s probably a pretty bad model to discount your price. It’s basically the hallmark of a commoditized company, right? It’s the you’re only able to compete on price, you’re not competing on promotion, you’re not promoting competing on quality, you’re not competing on people, you’re just racing to the bottom on price. And that’s always the worst possible kind of business to be in. And they’ve chosen that path. 

If you look at the stock, it’s gone for basically 50 bucks in 2016 and it went down to $3 just earlier this year before it popped up to about $26 bucks. Of course, now it’s down to $15 or $10. And it’s dropping in the pre-market on this announcement. And also, the announcement is that they’re going to close stores and also part of the announcement is that they’re going to dilute shareholders. So, stay away from this stock guys, this is not a stock that you want to play with. It’s not even for a quick buck. They’re going to pull the rug out for about a year. Stay away from Bed Bath and Beyond.  

But it’s an interesting stock to watch if you want to learn about the stock market. Have a great day.  

August 31, 2022

Conservation Easements

Hey everybody, Mark Yegge Here, wealth architect and host of the wealth architect podcast and I help seven and eight figure investors and entrepreneurs create safe, reliable income in their investments. But I also show people some interesting types of investments that maybe they’re not aware of and today, we’re talking about conservation easements. It’s a tax deduction, and a way to create a really cool return on your investment.  

Listen, if you’re listening to this, as a wealth architect podcast listener, you’re going to probably want to watch this on video because I got a pretty slick little presentation set up and ready to go that’s got lots of slides and lots of examples and numbers, it’s hard to follow by just listening but I’ll do my best to walk you through the numbers.  It’s still pretty interesting. But if you can zip over to our channel, at Mark Yegge Team, and watch the podcast there, or you go to wealth architect podcast.com, you’ll probably get a better idea what I’m talking about. So fair warning.  

This is really a presentation for some of my wealthier investors. And if you’re not a wealthy investor, that is all good, just a little insight as to what wealthy investors do to hold on to their wealth and create outstanding returns. And I’m going to show you all about that now. So let’s get going.  

Alright, so today we’re going to be talking about conservation easements, investing in conservation easements, so what the heck is a conservation easement? Well, first of all, I help people navigate the waters of beneficial investing. What does that mean? It means that I talk about things that are a little bit out of the box, but I want to get you to succeed.  I always say, “Never give up your power and your health, your wealth or your time”. And if you’re paying too much in taxes, it’s the biggest thing that we ever pay in our lives. If you’re paying too much in taxes, you can really save and give yourself a lot more wealth by saving those taxes. And in this case, we’re not just saving taxes, but creating an investment by saving those taxes. And I’ll show you what I mean. So, here’s a problem. And maybe this applies to you. The problem is your taxes are too high, I think we can all agree that we want to pay less in taxes and most high net worth investors, high income investors, they pay taxes that are higher than they need to be, they just do because they’re busy making money. They don’t seek out investments that can give you some deductions. So that is the case, not enough deductions, you know, you don’t seek them out; lack of awareness, sometimes you just don’t know. And your financial professionals don’t understand that the IRS creates tax loopholes that are beneficial for deductible investments. And then finally, some of those financial professionals, and maybe even individuals who make that income, are closed off to anything but the most standard types of investments. So, if you if your investment, if your financial professional is looking at you going “well, it’s not insurance, and it’s not a mutual fund, and it’s not real estate, and it’s not life insurance, and bonds and gold, then we really shouldn’t invest in it because it’s risky,” you probably need a new financial professional. If you’ve got a financial professional that brings you ideas on how to create deductions on your return so they can save you taxes, you’ve got somebody that’s worth their weight in gold. And that’s what I want you to have. But a lot of people, because they have financial professionals that are closed off to these new ideas, don’t get exposed to them, which is a real shame. But there’s a solution. And there’s a solution to every problem in life, right? And so, in any kind of solution in this area, this category, you’ve got to have some advanced preparation. Anticipating tax costs is something that you should be aware of, and you should start looking at alternatives of ways to bring it down. You’ve have to seek out deductions, and evaluate those deductions, you have to evaluate those investment opportunities, those profit potentials, and then you’ve got to invest in them. You can’t just watch them and let other people take advantage of them, you have to take action.  

So, who is the ideal candidate for a conservation easement? Well, first of all, you should have a minimum income of about $500,000 a year or more, to really take advantage of this. Otherwise, you’re in a lower tax bracket, you really can’t take much advantage of this, you have to have a desire for lower taxes. If you’re paying too much in taxes, there’s a way to lower them through a conservation easement. I’m going to show you how we do that in just a second, you’ve got to be pretty financially savvy. In other words, you can’t just leave everything to your financial advisors, you have got to at least understand a little bit of the concept of risk and reward. And then finally, if you have a green bent, you’d like to conserve things for the future. You want to have a desire to make the world a better place, in this case, by making it green and creating property that the public could benefit from. You don’t have to have all of them but the ideal candidate will.  

Now what is the solution to those things? Well, I want to talk to you about conservation easements today. And so, the first thing about it, without getting really wonky and deep into it because it’s not that complicated, is first of all you have to find a project that protects land from development. So that’s really the essential thing we’re doing here is we’re protecting land from development. And by donating property or an easement on the property, you can preserve land for future public use. By doing so, you create a tax incentive for yourself, of up to 50% of the adjusted gross income, and you get to use it for 15 years, not the five, that’s associated with most charitable deductions. And by the way, let me say here, I’m not a financial tax professional. I’m a wealth architect, I run hedge funds, and I help wealthy people do things, but you really need to get the people on your team, the tax professionals on your team to weigh in on this as well. But you know, at least if you bring it to them, at least they’re aware of it. And they can you guys can have a conversation about it. So, seek your own advice on this. But, you know, you really should, you really should take a look at it.  

It’s an incentive covered totally by IRS tax code 170. H, and it was first enacted in 2006, and made permanent in 2015. And it’s really popular with the wealthy, as we’ll see as we go forward. So what’s the history of it? Well, it has a long history, going back to 1891. The first conservation easement was done in Boston, in 1976. There was tax reform that allowed landowners to report the easement value as a deduction on the return. In 2006, Congress raised the limits on deduction amounts in the carry forward years, which is really important, making them a 15-year deduction. And then 2015, Congress said, “Let’s enhance the tax incentive, let’s make this law permanent.” And they did. So, this law has been around for a long time. And it’s codified by Congress. It’s been around and it helps wealthy investors take incentives and deductions and maybe make some returns that they wouldn’t otherwise make. If you don’t own land, well, that’s okay. Because there are projects out there. I have one, by the way, it’s to invest in an easement. So, you have to locate suitable property and a suitable investment. And that’s pretty easy to do, once you know that they’re out there. And then you have to get third party evaluations, that’s a major part of what we are talking about here. And that you have to determine the donated value, you have to determine the value of what the property would be if it were developed. And then you get to deduct the difference.  I’ll show you what that means right now. So, here’s how it works. You’ve got an LLC, that donates a piece of property or an easement on the property to a nonprofit, you know, most of the time, it’s a governmental entity to preserve that property for perpetuity. So, you might want to preserve that property or let’s say, a park, then what you do is you determine what the appraisals are. You can’t do the appraisals; you have to have a third-party appraiser do them. But you determine what the property is worth before you donate it. In other words, if you donate it as a park, what would it be? If we did a development on this project? What would that project be worth? Would that easement be worth if we developed it? In other words, if we didn’t donate the easement, then you take the difference between the two, and you can deduct those for the next 15 years. So, here’s an example. First of all, you appraise it for the development potential, then you appraise it for the donated value. In this case, let’s call it a park. And then the difference is the tax deduction. So, let’s say you want to do a development on this property or this property could support a development like a housing development or apartments or something like that. And if you do that development, this particular project is worth, say, $10 million. But if you were to donate it, what would the project be worth if you gave it as a park to the county or the city or something like that? Maybe it’d be worth $100,000. Well, that difference is 9.9 million. That’s your deduction that you get to deduct on your tax return. Okay.  

So now that you have this, now, you can show I can show you how wealthy investors have done it and I’m going to pick out Donald Trump because he’s the one that’s in the news. And like him or hate him, he certainly knows his way around the tax code. And he’s got a team of people that help him with this. So, Trump created a $39.1 million deduction in 2005. Basically because of the high taxes the state, local and federal in New Jersey, he was able to create a $20 million deduction in New York to a $20 million deduction approximately right about 50%. So just by creating a deduction, he saved himself $20 million in taxes. Here’s how it worked. He bought this property called Bedminster Country Club and he turned it into Trump National Golf Club Bedminster. And when he did that, he said, “Okay, I agree, because there’s a lot of development on golf courses these days. I agree not to turn my golf course into a housing development. I could make a lot more money if I developed it as a housing development and just bulldoze all the greens of the fairways, but I’m going to keep it as a golf club because if I do that, I get to conserve it forever as a golf club.” Well, the public benefits from that, because they get green space, the county benefits from that, because it’s not developed and creates infrastructure problems on the roads. Everybody kind of wins there, Trump certainly won because he saved $20 million in taxes. 

Here’s how he did it. He got an appraisal for 49 and a half million dollars as 33. Lots if he were to develop this 18-hole golf course, into 233 Lots, but he left it as a golf course, at $10.4 million. That’s the conservation of green space. Now, that’s what it would be worth if he left it as a golf course, the difference was a $39.1 million deduction. And he took that on his tax return, pretty smart, right? Love him or hate him. He’s a smart business person when it comes to getting tax deductions. And Mar a Lago has been in the news a lot lately, but a $5.7 million deduction for designating certain historical features at Mar a Lago as just that, historical features. That’s a conservation easement use. And so, he got tax savings of approximately $2.8 million. At the time, he did this several years ago, when he was not a Florida resident. And so, on four properties all together, Trump used $119.3 million in tax deductions. And he saved himself $60 million in taxes using IRS code 170 H.  

And so, this is a legitimate incentive that the IRS puts out there, because they want people to designate things for future use for future green use and use cases. And it benefits the public, but it also benefits the donor.  

Okay, so how does it lower your taxes, now I’m going to get a little wonky. And here, you’re going to have to look at some numbers. If you have this on video, it’s easier to look at the numbers, but each dollar into the project is going to create a $5 deduction, that’s the profile of this example investment. So that means every $100,000 you invest in the project is going to create a half a million dollars’ worth of deductions. Now, a half a million dollars in a high tax state is going to be about $250,000 worth of taxes, saved at a 50% rate. Okay, got that, it’s a five to one deduction. All right. So, let’s take the example of investor one here. So, he’s got an income of $750,000. And he’s got a pretty good tax team, because he can take about 15% off that income, with deductions, bringing him his adjusted gross Income down to$ 633,007 50. That brings his total tax cost to $222,000. Now, I don’t know about you, but that’s a big tax bill. So, we’re paying big taxes $220,000, that’s a big amount of tax, leaving him with $527,000 in net income, still pretty good. Now with the easement investment, he brings his adjusted gross income, because remember, you can deduct up to 50% of your adjusted gross income for up to 15 years, he brings his Adjusted Gross Income down now from 633 to 316. And that basically cuts his total tax costs, and this includes the value of the easement for this particular year, this includes that value. The tax costs now become instead of $222,000, they are $140,000. Bringing his total net income to $609,941. So, he took his net income from $527,000 to 609,000, if you’re not watching the graphic here, basically, this conservation easement saved him $82,000. So, he got more, they got to keep $82,000 more, which basically brought the return on the conservation easement and investment 230%.  

Okay, by the way, it brought his tax rate down from 29.7% effective tax rate to 24.2% effective tax rate. But the bottom line is that his return on investment was 130%. Now, I don’t know about you, but some investors go 10 years without creating 130% return. This gets 130% return immediately, as soon as it’s taken. Pretty cool, right?  Well, let’s go through some more. Same profile, a $1 investment in gets you a $5 deduction out. But now we’ve got an investor who is making a bit more money at $2.6 million. And his tax team again saved him about 15% of his gross. He’s got his AGI down to $2.19 basically, meaning he’s paying taxes of $980,000 Huge amount of taxes, right? What if he could save those tax costs by some amount by using an easement? Well, if he does, then he brings down his million his 

$2.6 million is AGI goes down from 2.2 million out now to 1.098 500. So, one basically 1.1 million instead of 2.2 million in AGI. He brings his total tax costs, and this includes the value of the investment he made to get the deductions down to $599 781. So, from $980,000, he’s now paying basically $600,000 In total tax costs, that brings his net income up from 1.6 million to 2 million. So, he ends up making about $380,419, just by doing this investment, so he gets an income gain, otherwise, that he wouldn’t have gotten without the investment of $380,000. That’s 173% return on his investment. Pretty good, right? So, if you find these deductions out there, that fit the profile and fit your profile, you can actually end up keeping $380,000 more than you would have. Now, I don’t know about you, but I would like to have $380,000 more to keep than to give to the IRS. I just think that’s fair. And you know, what’s fair, it’s legal. It’s an incentive that the IRS carves out so that you do this, it’s an incentive, they want you to do this.  

All right, let’s change the profile. Instead of being you put $1 in and you get a $5 deduction. Let’s say you put $1 in and you get a $3 deduction. Okay? So basically $100,000 invested will create a $300,000 deduction. So now we’ve got a gross income of $2.1 million. So, you got investor two, A is making $2.1 million tax team brings it down to 1.774 500 million. Okay, which makes the investor have to pay a tax cost of $703,500. Now, with the easement, your adjusted gross goes from 1.7 million to $880,000. So, you basically cut that AGI in half. And now instead of paying $700,000, in taxes, you’re paying $550,000 in taxes, which brings your net income up from 1.4 million to 1.5 and a half million. Basically, you got to keep an extra $150,000 by doing this investment, all in, which basically is a return on investment of 85% still pretty darn good, right?  

How many investments do you have that are making you 85%? At the time that you make them, you know, you’re going to get that that return. You know, they’re going to get that return on their investment of 85%. Immediately, you don’t have to wait 10 years to get it or five years or even a year to get it, you get it right now, as soon as you make the investment.  

All right, same investment profile, three to one or one to three, we could say. And now we’ve got an investor that makes $3.4 million a year and has the potential to make that in the future. And he’s got a tax team that brings his AGI down to 2.8 million, pretty good. But he’s still paying $1.2 million in tax. That’s a big tax burden, right? So, she says, ”I’m going to invest in a conservation easement.” And so, she brings her adjusted gross down to $1.4396, which drops her tax bracket down from 35 to 32, by the way, and so instead of paying $1.2 million in total taxes, now she only has to pay only $945,000 in taxes, basically saving herself $247,704 in taxes, that’s money she gets to keep by doing this conservation easement. It’s an 86% return on the investment. 

 

So hopefully by those examples, you can see that there’s some significant savings when it comes to using a conservation easement strategy. 

So, using the deductions, let me just reiterate some of the key points about the deduction. First of all, you can deduct up to 50% of your AGI. If you’re a farmer, and you make more than 50% of your income from farming, you could deduct all of it, all your AGI not just 50%. But most people aren’t farmers. And if they aren’t, call me and I’ll hook you up, but you can deduct up to 50% of your AGI. You can also carry forward the unused portion of the deduction. So, let’s say you take a $10 million dollar deduction and you want to use all of it. And you’re making $3 million a year well, in six years, you’ll be able to use that all up, because you’re only taking half of it against your AGI. So, you can carry that up to 15 years. That’s pretty cool. Because if you have the expectation of making money in the future, you can tap into this investment for the future. So, it’s really actually quite simple. It’s almost like donating furniture to Goodwill. But there’s a couple other things from your perspective. You make an investment, and then you use the deduction from the other side of it, there’s a couple of more steps that need to be done from the investment company side. But basically, they locate a suitable investment project or you want to you determine what the tax benefits going to be. And then they find a suitable “donee”. So, in this case, we’ve been talking about an example about donating it to a government, and then you, the company will accept the investment into the property, then you’ll get a couple of appraisals, you’ll get your first one. And same at the same time, you’ll prepare the deed for recording into the property, which designates the conservation easement, as a green property, or for public use for perpetuity, and then you’ll finalize the last details. You’ll get the last appraisals done, you’ll record the deed, and then you can begin using those deductions immediately. This whole process probably takes a few weeks, and then you’re off and running. If it’s already ready to go, then you can maybe shortcut that a bit more.  

All right, so who wins in this? The investor is going to win, right, you’re going to get a tax deduction, you’re going to create an above average return by taking that deduction. So, you’re going to win as the investor, the nonprofit entity wins. So, the government basically furthers their mission by fostering a property that will benefit the public for perpetuity. Now, the public also wins, because they get to enjoy public use space that’s maintained at no cost. And not just this year, not next year, but forever. So that’s always going to be conservation forever. Think about Central Park, it’s never going to become a development, right? It’s always Central Park that the public could can use.  

Let me summarize by saying, you know, first of all, in my next video, I’m going to talk about the pros and cons of conservation easements, because there are some cons that you need to be aware of. And if you’re not aware of the IRS you can kind of frown upon them. So, you have to know what you’re doing when it comes to that. But conservation easements can essentially be a lucrative tax deduction and an investment opportunity that helps to create desirable green spaces that the public can enjoy for years to come. And basically, it’s a win-win-win for everyone. I hope I was able to shed some light on the conservation easement opportunity. If you want to learn more about it. First of all, the wealth architect podcast is making a series on conservation easement investments. So, you’ll be able to click on the wealth architect podcast.com Or go to Mark Yegge team on YouTube. And you’ll be able to just search on conservation easements. I’ll have a playlist there that will have the different ways that you can learn about conservation easements. So, the bottom line is you can see why I really believe in the benefits of a conservation easement, you get a deduction. It’s also a pretty good return on investment rather than if you didn’t do it. And, you know, I just think there’s so many benefits for wealthier investors to be able to take advantage of our tax code that gives you incentives to take these deductions and also create public projects that work out for perpetuity for public use. So, I think you’ll see that it’s a pretty cool project and I want to thank you for being here on this edition of the wealth architect podcast.  

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