Learn from the Wealthy

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Episode Transcript

Speaker 1 (00:00):
Welcome the Money and Wealth with John O'Bryant, a production
of the Black Effect Podcast Network and iHeartRadio. Yo Yo.
This is John Hobryant, and this is another exciting episode
at least I think it's exciting of Money and Wealth.

(00:24):
Money and Wealth is one of the top one hundred
business podcasts in the country, Top forty Entrepreneurship. Tell all
your friends about it. This is John O'Briant, and I'm
about to break some eggs. I'm going to tell you
how the wealthy do it. And I'm not some guys
selling books and tapes whatever. I don't mind people doing that.
There are a lot of great teachers doing that. This

(00:44):
is this. I'm a practitioner. I'm somebody who've done it,
who's done it, I'm doing it. I have four hundred
employees right now. My payroll is a mell and they
have dollars every couple of weeks. You know, we have
one hundred million dollars of annual activity and our various
enterprises best at four hund and a half billion dollars
four point eight billion dollars. Through the various enterprises in

(01:05):
the communities and individuals and homes and small businesses, et cetera.
About three hundred million in private enterprises. So I'm talking
from experience, right, had some successes, had some failures. I
was homeless. My credit score was at one time three
to four hundred when I was homeless in Compton. Grew
up in Comptent in south central LA from the bottom quartile,

(01:27):
the bottom, the worst zip code, not the worst, the
one of the poor zip codes in America, certainly in
the West Coast, Confident, south central to you know, the
point zero one percenter above the one percent group on
income and wealth, and one generation did it legally. Right.
So the first thing is you hear people saying I

(01:50):
hate rich people. No, you don't. You hate rich people
until you become rich. What you hate is a gamed system.
You hate a system that no matter how hard you work,
that you feel you just can't get ahead. You feel
like you just can't succeed, like you've got too much
month at the end of your money, and you feel

(02:13):
this system is rigged against you. And in many ways
it might be, and in some ways it is. And
then there's bad capitalism, right, there's bad capitalisms where I
benefit and you pay a price for it, and good
capitalism is where I benefit and you benefit more. I
try to practice good capitalism, and capitalism and democracy are

(02:34):
horrible systems except for every other system. I've been to
one hundred countries around the world, so about a little
under half of all countries in the world, and I've
seen a lot, and I can't think of a better
system with regard to being able to go from the
bottom to the top than ours. It can be better,
it can be improved. There's a reason why everybody in

(02:55):
the dang on world wants to get to the United
States of America, even with are current challenges and problems,
even with the politics of division, even well, by the way,
it's been worse. You had slavery in this country. You
had Jim Crow in this country. You had legal racism
in this country. You had assassinations in this country. Like

(03:16):
be hopeful the sun will come up tomorrow. Everything's going
to be okay. Now let's get into this episode. By
the way, thanks to everybody who participated in Green Socks
Day April thirtieth, the last day of Financial Literacy Month. Walmart,
thank you very much for making the socks at no
cost to Operation Hope and the Financial Literacy for All initiative.

(03:39):
He was co sponsored by Financial Literacy for All Initiative,
which I CoA chair with the CEO of Walmart, douglat Millan,
and Operation Hope. I'm the founder of Operation Hope and
involved all the sports fanchises. So thank you Roger Goodell NFL,
Thank you Adam Silver of the NBA. Thank you for
the commissioners of the Major League Baseball, Major League Soccer,

(04:01):
NASCAR Hockey. I missed anybody out of going from memory,
so all the sports franchises did it. Organizations, thank you
so much. You didn't have to do it. First time
I think they've ever collaborated on something like this in
a public effort. Was the first time I ever had
they were on one stage together in a public way
when they came to our form December twenty twenty four.

(04:24):
If you've never seen that, go back and watch it.
It's online. You see it on YouTube. Pretty amazing. And
then we had a bunch of corporations and companies and
housewives and folks from the streets to the suites from
urban America rural America. Is really quite beautiful. The color
for a moment was not black or white as in
race arguing over that, or red or blue as in politics,

(04:46):
but green, the color green, which is at the root
of everything. I keep saying, your day's not by God
or Love. Your days about money. So let's learn about money.
And this segment is about teaching you how the wealthy
use their money, right, And I don't just want you

(05:06):
to get rich. I want you to build wealth. And
how did I build wealth? How do I continue to
build wealth? By night? Because this is an ongoing process.
I'm in the I'm in the arena of capitalism every day, right,
and I think the best is yet to come. My
biggest endeavors, I think in the often you'll hear a
few of them that gets announced here soon. I mean,

(05:29):
I've done some big stuff, but I think the biggest
is coming. So I'm still learning. But I'm to quote
my friend Quincy Jones, I'm just nosy as hell. I've
got two years in one mouth, so I listen twice
as much as I talk. Right, I'm just nosy as hell.
I want to know everything about everything, and I want
you nosy, and I don't want you resentful of people
who are successful. I want you to learn how to

(05:50):
go get some yourself. This is the James Brown version
of affirmative action. Open the door. I get it my
dang self, So get into this. So this episode is
learn from the wealthy, how they spend, how they borrow,
how they pay and don't pay taxes, and know this
is not some tax avoiding scheme. I'm going to break

(06:12):
it all down for you. As I keep saying, I
like math because it doesn't have an opinion. That is
a quote from my friend Melody Hobson that I you
try to give her credit for all the time, even
though I own I've taken ownership this dang on thing
because it's so much of what I believe. Okay, get
your pen and pencil out, or your iPad or your
iPhone or your notes app or whatever. If you're running,

(06:35):
you may need to stop and take some notes, or
you may want to come back with your girlfriends or
your guy friends and get in a huddle. And really,
this is an episode you may want to replay back
and have a conversation about, because I'm going to really
unpack a number of topics I'm trying to throw top
I'm gonna try to tackle three big areas at the
same time or in one episode that I think a

(06:59):
major area is a major in misunderstanding about the wealthy,
not just a rich the wealthy. You make rich as
a contract, so you make so rich. You can make
money on a contract, as I keep saying, thirty thousand,
three hundred dollars, three three thousand dollars, thirty thousand, three
million dollars, you can still lose it, okay, because it's
a contract. It's income, right, and if your outflow exceince

(07:22):
your inflow, then your overhead will be your downfall. If
a contract stops, then in your and your and your
expenses continue, and you've not built wealth that will allow
the income to sustain your way of life. You can
still go broke, which is why you hear about you know,
professional uh, professional sports players with a one hundred million

(07:43):
dollars contract, you know in the working at Starbucks or
something in eight years because they thought it was going
to last forever and just spend, spend, spend, since spent. Okay,
So you make money during the day, you build wealth
in your sleep. And my brother Tony Wrestler told me
this one day and it just really blew my mind.
And this was six years ago. I really thought I

(08:04):
knew something until I didn't realize that I didn't. And
Tony's one of the most successful business owners in the
business leaders in the country and a good friend of
mine has been a partner and a couple of my
initiatives and adventures. I also want to give some credit
to Michael Righetti, who's also an early partner in my
Promise Homes company. Okay, let's start this. We're going to

(08:25):
pull back the curtains on how the wealthy really live.
Let's talk about how they finance their lifestyles, how we
finance our lifestyles. I guess I'm now part of this group.
Then I'm going to talk about how they can lose
it all. Okay, the wealthy and I'm also talked about
how to navigate taxes. And I'm also going to talk

(08:46):
about a unique financing tools that the wealthy use. Okay,
concept number one. Wealthy people borrow against assets. They don't
just spend cash. This is I mean, this is so important.
The power of margin accounts and security base lines of

(09:07):
credit is something going to I'm going to break down
for you. I'm gonna come back to that after I
give you sort of this framework. Borring at low interest
rates against stock portfolios or real estate, using leverage to
keep assets growing while still accessing cash. All this is
part of the same conversation. Rich people don't sal stock,

(09:29):
they borrow against it. This is really important. So while
this delays or avoids capital gains is a mystery to
most people, or how this avoids capital gains and just
taxation is a mystery, most people are going to unpack
that for you. I'm going to relate this to Elona Musk.
I'm not picking only a lot of Musk. I think

(09:50):
he's a genius. Actually I use the starlink, you know, technology.
But I'm going to explain why and how he did
the stuff he did, not just him, but I think
he's the most notable example because he doesn't earn an
income best based I can best I can tell. Okay,

(10:11):
wealthy homeowners take out helocks instead of refinancing or selling
home equity lines of credit. Uh philosophical point that it's
important to note here the poor sale time, the middle
class sell labor, the wealthy sell or borrow against assets.

(10:34):
And by the way, just going back to the Elon
Musk thing, for many this is a trait that I
want you to pick up in your life, which is
I want you to not be emotional about decision making.
Emotions have an incredible value. In fact, I think that
if you're if you don't have EQ emotional intelligence and
you just have IQ intellectual intelligence then you have, then

(10:58):
you're at a loss. I mean you you you're a human,
you're a human doing You're not a human being. We're
not human beings having in spiritual experience. We're spiritual beings
having a human experience. So energy matters. And so you
can have a lot of brilliant people who have a
blind spot called people. Some financial brilliant people have this issue,

(11:18):
and some tech brilliant people have this issue where they
just have a blind spot called people and they're just
not complete leaders or even though they think they're smart
in one area, it can make them smart in others.
A great leader who's well rounded, Okay, And that's what
I want you to be. You have a multi multiplicity
of skills. You have IQ and EQ intellectual intelligence, and

(11:40):
you have emotional intelligence right, which includes empathy and caring
for people. In my opinion, treat others as you want
to be treated when something happens. Is capitalism is a
gladiator sport right. I don't want you getting locked up
and all getting your emotions all wrapped up because somebody
in business took a jab at you, or somebody in

(12:02):
business event took an advantage over you. That's in the
broader context. It's just business. And when I've explained that
that often, capitalism is a negotiating table. Right on one
side of the table is the seller, and on the
side of the table is a buyer of a product.
And the seller's job is to extract as much from

(12:23):
you in price as they and deliver I guess as
little as you and resources in that product so they
can make the maximum profit. Your job, on the excited
that table is to give the least in price and
to extract as much in value. And every negotiating table
is a good negotiation. Everybody leaves slightly annoyed. I said
that in a previous podcast. It can't you can't say

(12:45):
that enough. So you're going to have disagreements in business.
You're going to have people who are gladiators at the
highest level, who are going to take takes, you know,
swipes at each other from time to time. I try
it to make that my business. My business is business.
I try to stay focused. And you know, I'm just
not one ounce to my self. Steem depends on somebody
else's acceptance of me or not or not. So uh,

(13:09):
but I do recognize that other people see a win
lose situation, not a win win situation. I want you
to be win win oriented and you treat people lovingly
and with respect because that's how you're built, not because
how anybody else rolls. Right, So don't be emotional in business.
So so the wealthy again. Thing differently, this is a

(13:34):
very powerful point. The poor cell time, the middle class
cell labor, the wealthy seller barrow against assets. Okay, so
let's dig into this a little bit. This is so powerful. Okay,
let's talk about in order to understand what I'm talking about,

(13:55):
we got to unpack a couple of the vehicles. The
biggest one I want to talk about are marginal ounce
and securities based lines of credit. So these are major
vehicles for the wealthy. They use them smartly to build wealth,
to reduce taxation, taxes, and maintain liquidity availability or access

(14:18):
to cash without selling their investments. Right. I use these vehicles,
by the way, So the definition is let's start there.
Because people for all these terms around, and nobody actually
ever tells you what this stuff means. A marginal account
lets you borrow money from your brokerage from using your

(14:38):
existing investment investment or investments as collateral. I want you
to think about a stock account, ETF's, bonds, et cetera. Okay,
it's often used by more securities investable publicly traded investment
grade products and is used prime a ready to leverage

(15:00):
your portfolio to grow it. And that's different from a
securities based line of credit. Slightly. I'll explain that. So
how does this work? So let's say you deposit I'm
going to say a million dollars, but you can, by
the way, you can put one hundred thousand dollars in it.
You can do fifty thousand dollars in it. I guess
there may be some minimums, but theoretically you could have

(15:22):
a twenty five thousand dollars margin account. So but let
me make this, make this easy. It's a million dollar
in stock that you have in this hypothetic hypothetical example.
Because in this example you're wealthy, your brokerage firm might
let you borrow let's say fifty percent of that. Okay,
It depends on the kinds of stock. If these are

(15:43):
perceived to be riskier stocks, maybe there are technology stocks,
then the brokerage might say, we only want to give
you fifty percent on the value. If these are stocks
that are considered blueship, as they say, you know the
best of the best, what they call the flight to quality.

(16:06):
I don't sorry naming names, but like you know the
companies that you it would be obvious to you. Then
they might let you borrow beyond fifty percent, sometimes as
much as seventy percent. Okay, I don't think you should
be borrowing seventy percent of the value the stocks. Explain
in a minute, I explain why in a minute. Uh

(16:26):
that borrow money now can be used to buy more
stock or for other purposes. This is America. You can
use you don't even tell you what. Well, if they
are restrictions, they can tell you what to use it for.
But in this example, the margin accounts and I'm aware
of they would not attempt to restrict your movements as
long as it's legal. So now you have a million

(16:47):
dollars with a stock you now borrow. You have a
margin account of five hundred thousand dollars in an example,
do not use all five hundred thousand dollars please, but
you could theoretically borrow up to five hundred thousand dollars
in this example, well to buy more stock. Now you're
going to pay interest on the money you borrow this. Now,
let's say your name is Joeanne. Here you've become the

(17:08):
bank of Joanne John the bank of John. So you're
not borrowing from a bank or an institution or whatever.
You're borrowing from yourself. These are your assets, right, But
you must pay for the person the institution extending the
credit to you. Okay, Against your assets, you must pay
an interest rate and margin. Interest rates vary, you know,

(17:30):
seven to twelve percent on average. I pay a little
less than that. The more of a preferred customer you are,
the less you pay. But seven to twelve percent, and
it might actually be lower for this next product, I'm
gonna tell you. But just one step at a time. Okay.

(17:54):
Why is this a smart use? The wealthy us is
to leverage for growth. Is used in increase returns the
profit when you're confident about a stocks performance. So this
is where it gets a little complicated. Good debt juices profits.

(18:17):
So our friends of mine who are in the hip
hop industry who have bought properties for all cash, real
estate properties. I've encouraged them that that is very admirable,
and I just know they want to be free, okay,
But I've explained to them that there is no billionaire
or sent a millionaire that got there without good debt.
There's no city or county in America or the world.

(18:39):
Actually that's a leading GDP gross domestic products, leading economy
that didn't do it with good without good debt. So
bonds that are issued. But I mean these are prime products,
not the homeboy shopping that work financing. So I want
you to use good debt for conservative leverage. You shouldn't
be leveraged up to your eyeballs. You shouldn't be nice

(19:00):
and eberson loan of value. But I've encouraged my friends
who own these properties free and clear that they should
put a modest mortgage on it because that juices your returns.
The less money you have in it in the higher
the guarantee the return I guarantee. But if you are
highly confident this asset is going to yield your return,
the less of your money's in it, and the more

(19:22):
of OPM, other people's money that's in it OPM, the
higher your return on your investment, if that made me sense.
If not, you can play this back. But I have
a lot of ground to cover in a short period
of time, and I'm already twenty minutes in as I
need to go a little faster. And by the way,
the comments when you see out clips of this in
social media, you can ask me my opinion on go

(19:44):
deeper on something and I will try my best to
respond between meetings and all that kind of stuff. Okay,
So with regard to stock, so if you think that
the stock you're invested in are these things you're investing
in are really really really special, and you just want
to invest more in it, and you're confident about this
performance hard to be by the way, but if you're
a highly of a performance the then leverage is a

(20:06):
good thing. Okay, reasonable leverage. There's another benefit that's much
more palatable to me than talking about leverage, because I
think you'd be very careful about leverage. Liquidity without selling
you can access your cash without triggering capital gains taxes
from selling stock. Yes, that's what I said, and I

(20:26):
want you to play that back. Slowly in your head.
This is or repeat it for those in the back
of the room. You can access your cash without triggering
a tax bill because you haven't sold anything. Yes, that's
what I said that. You do not pay taxes on debt. Okay,
even if it's your debt, even if it's debt that

(20:50):
you've incurred to get access to your own money. This
is very important. You do not pay a tax on
debt proceeds loan proceeds. Now, don't go crazy going to
get loans. I'm just telling you this is what the
wealthy do, and you get all this stuff is anything
that's done moderately, Like you know, anything in moderation. Most

(21:12):
things and moderations are healthy for you, good for you.
You know, drugs and moderation are prescribed. Alcohol and moderation
will lower your blood pressure. Right, most things in moderation.
You know, sleep and moderation is wonderful. Too much sleep
puts you to sleep. Right. So debt and moderation strategic timing, borrow,
doing downturns to buy the dip or hold onto appreciating assets.

(21:38):
So this is a more sophisticated thing. I don't want you.
I've wanted to cover that. But I don't want you
really holding onto that, buying in the dip. That requires
a lot of confidence and sophistication. And I don't want
you calling me blaming me because you thought as soon
as it was a dip, it was really a carbon
a canvenist valley that opened up because of an economic earthquake,

(21:59):
never to cover again. So you don't do that unless
you're a sophisticated investor. Now let's talk about risk. If
the value of your securities fall, the brokera made issue
what's called a margin call, and a margin call requires
you to deposit more money or sell assets quickly. Okay,

(22:20):
put simply, you have one hundred thousand dollars account. You
had a margin margin account for fifty thousand dollars. You
use all fifty thousand dollars. Let's be aggressive. You had
a margin account for you had a margin account for
seventy percent. Loan of value. You borrowed seventy thousand dollars.
The top end value the stock was one hundred thousand dollars.
There was a shaking of the market, the market which

(22:42):
just happened, by the way, and the value that account
went down to Theoretically, down to eighty thousand dollars from
one hundred thousand. Okay, and you were able to borrow
seventy percent of that stock value. Now you can only
borrow let's just say sixty thousand dollars or fifty five dollars,
and you've now leveraged yourself to seventy thousand dollars. There's

(23:04):
a margin call that calls you up to say you
either pay that down to the maximum or lower of
your available limit, or we must sell they must sell
some stocks. Okay, So this can amplify the losses, are
can amplify gains. Okay, Now let's get I want to
get into the lesson here. Let's get to securities based
lines of credit. A security based line of credit is

(23:26):
a line of credit secured by your investment portfolio. Right.
It's similar to a home equity line of credit, but
backed by stocks instead of real estate. And the easy
example between this and just a margin account is just
it's more sophisticated. It is issued typically by a bank,
not by your brokerage company, and they just give you

(23:48):
a loan securitized by your not by your house, but
by your securities portfolio. The interest rate is typically much less.
Sometimes it's lowes three to five percent better terms. That
are conditions, generally speaking, the same tax treatment. You're not
basically taxed on it because it's debt. Yeah, and there

(24:11):
are other parts of this, you know it. You can
get slightly higher leverage with this vehicle, but they're basically
the same, just the ones more sophisticated. So what's my
drop the mic on this? Before I get to sort
of the risk The rich don't sell, They borrow. Uh,
they let their money keep working and growing while they

(24:32):
access credit like it's cash. Poor folks sell to soon.
Rich folks borrow smart and build empires. Can I get
an amen? Okay, So now let's go back to the
lessons because now I want to get to how folks

(24:55):
can lose their money. So let's take and I don't Again,
I'm just I'm not picking on this guy. I'm just
saying that this is just a wonderful example because his
stuff is so public. And again, I mean, I'm not
saying this is better or worse. I'm just saying here
it is so Elon Musk, the theoretically the richest man

(25:19):
in the world today does not earn best. I can
tell an income. He tried to get an income from
his company and the courts blocked it, so his pay
package was blocked. He does not get an income. There
are other people who don't want an income. I'll get
to that in a minute. And most of other people
don't want an income. So how did he buy what
was called Twitter, which we now call X what he

(25:41):
calls X. He used I believe stock from a company
he owns called Tesla, which is a publicly traded company,
his Rocket company, other companies he owns, other assets the
owner not publicly traded, privately finance and all that kind
of stuff, the publicly traded end of the The biggest
he one he has is Tesla, which trades at a

(26:05):
higher price to earnings ratio price of the stock than
any other car company, so kudos to him. He uses
the stock from the car company his stock, takes a
loan against it. I'm calling it a margin account. Might
be more sophisticated. He might have it in a trust

(26:25):
or whatever, and hopefully I'll get to that before this
podcast is over. And he used that to borrow money
along with bank money and other investors to buy assets.
In this good example, he bought he uses to buy
X what we call Twitter, what I used to call
what I call Twitter, And that works as long as
the asset goes up or his stock value doesn't go down.

(26:48):
And then he used some money to go pay for
this and to pay for that and lifestyle. All that
works unless you drop below the ratio of value of
your stock to your debt that you've floated. Now I
don't know his business model, and that's a lot of money.

(27:08):
It's really, really, really really hard to go broke when
you even if you're losing one hundred billion or one
hundred and fifty billion on a basis of I mean
a billion dollars would by itself would be hard to
go broke on in one lifetime. So let's leave that
aside for a moment. Let me give you a practical example.
You're a tech entrepreneur and you have taken a company

(27:32):
public in Silicon Valley, and everybody told you this company
was not Everybody Wall Street told you the valuation of
this company was a billion dollars. In this example, you
own seventy percent of the stock. You owned seven hundred
thousands worth of stock. You then when got you're not
earning any income because the company is not earning any income.
It's a startup and it has not made a profit yet.

(27:53):
It may not make a profit for a while, but
Wall Street believes in it. The stock has gone public,
the stock is worth a billion dollars. Investors have bought.
You owned seventy percent of the stock in this example.
I'm just making this easy, and your stock is worth hello,
seven hundred million dollars. Now you wouldn't get a margin
loan or or securities loan against that. You now want
to go buy a yacht and houses and planes and

(28:15):
whatever it is. You bought right, and you got your
lifestyle expenses every year, and you ran up a tab
in this example of five hundred million dollars, and you think, well,
this is easy, that it probably is worth a billion.
I owed five hundred million, but my valuation is seven
hundred million. I still have two hundred million dollars. Then
there's something that rocks the stock market, that rocks the economy,

(28:36):
and tech stocks are more volatile than normal stocks, by
the way, traditional stocks. In this example, the value that
you wake up one day in the value of this
company now not a billion, is six hundred million. Okay,
you had a lot of credit for seven hundred million.
You've used five hundred million. You have a seventy percent
loan of value ratio, okay and maximum. The bank calls

(28:59):
you very nicely in this example, because you're worth so
much and you owe so much. If you owe the
bank four million, the bank owns you. If you owe
the bank four hundred million, you own the bank, or
at least you have leverage to negotiate. Right, So the
bank calls you and said, hello, you need to No
big deal for you, right, you just need to pay

(29:21):
this down because now your line of credit is not
seven hundred million. Your line of credit is actually sort
of the holding is worth six hundred million. A line
of credit is more like, you know, three fifty three,
seventy five something like that. You owe five hundred million
in this example. No, yeah, you owe five huty million
this example. So you got to come up with one
hundred million plus in cap. I'm doing this off the
top of my head. It's a bad day, right, you

(29:45):
don't have that money. You may have to go sell assets.
That's called a fire sale. So you used to got
to start selling assets quickly or the bank and the
bank or execurity firm can ceize take your ownership. You
just go broke. There's many people have gone broke just
like I just told you. So here's another example of

(30:08):
what really happened in most recently twenty twenty one twenty two,
you had this mean stock fiasco where people thought a
company was worth x and for no good reason, they
drove the price up. And then people who are wealthy,
people who were you know, mischievous, they sold at the
height while all poor people got stuck in the middle

(30:29):
and couldn't and then the price was dropping. And there
it is like a falling knife, right, and they're stuck
at four hundred dollars of stock and the stock is
really was words was worth a hundred bucks, right, and
you could figure out the rest and hopefully you didn't
take out a loan. In the midst of all that stuff.
There's a company called Archicos. Archicos, I'm sure seeing this

(30:50):
improperly capital management that collapsed, losing twenty billion dollars because
they were overleveraged. In this particular crisis, you have new
wealth like cryptocurrency, in tech exits and IPOs and these things.
If you're overconfident, if you're over leveraged. If you're ignoring

(31:13):
taxes and liquidity needs, well you can it can be
a very very bad day. So you got to remember
the wealth is not what you earn, is what you keep.
Leverage without discipline is a shortcut to poverty. Do the

(31:37):
wealthy pay taxes? I guess I'll mix these two. Okay,
do the worth it because I want to do with
a Warren Buffett quote. And I know Warren. I mean,
we're not like buddies, but I do know I'm gonna
see them at least once a year. And I got images.
I remember one day I was going to a conference
in speaking and I didn't know what the conference was.

(31:57):
I just went there as a favor to a friend
and I just gotten married. And that's when you know
when you marry the right person, when they on their
honeymoon goes to a business conference with you and it's like,
just cool with it. So we go to this conference
in the middle of you know, no place, and I
can't name the conference, sorry, and I walk into double

(32:19):
beds and I called the front desk. It was a
little end like. Look, I don't mean be like rude
or whatever, but we just got married. Can we at
least get a queen bed, like, you know, I'm so sorry.
You know, we're sold out, but we can get you
someplace two or three miles down the road. I like, well,
let me go register and think about it. I don't
be a good, you know, a burden here. Let me

(32:41):
talk to my bride and I'll get back to you.
So I went to the to the sink to wash
my hands, and there was no hot water. But okay,
one thing leading to the other. I walk out the door,
turn right, which means the sink was facing the next bedroom.
The next door, the next door neighbor would have shared

(33:03):
the same sink as mind, because that's how they built properties.
So my hot water's not working. They're hot water's not working.
So I turn out. I turned, I go out the door,
and I turn right. Coming out that door, Warren Buffett.
I look at him. I look at Shakespeare. I turn around,
not saying a word. I go back into the room.

(33:24):
I call the front desk. I said, you know what,
I'll stay right here, no problem whatsoever. Got to hang
out with Warren Buffett and and pick his brain and
get to know him. He's a really nice guy in
his family. But Warren Buffett is a number of great quotes, right.
One of them is, well, this is not great quote.

(33:45):
This is something he talks about that he thought it
was a shame that he had his secretary paid more
in taxes than he did. Well, he meant, I believe
tax rate. Okay, so that is correct. But let me
get into this because it's more complicated. So the wealthy

(34:07):
often pay taxes differently, not necessarily less, but maybe later
and in a different form. And this is a really
important section for you to pay attention to. So this
is called the buy, borrow and die strategy. Right. So
I've just told you you buy assets like real estate

(34:28):
or are marketable securities like really good quality stocks and
things like that, you modestly borrow against them because that
allows you to live and do stuff you want to
do and reinvest. But you do that modestly, okay, and
then you die and you plan for your death, and
guess what you're not doing in that example, paying taxes.

(34:51):
Now you're gonna end up paying taxes, or your errors
will end up paying taxes. I'll getting that a minute.
But look, fair change, no robbery. What I just told
you is not illegal. That is the tax As long
as you're respecting the tax code, you have a proper accountant,
not playing games with the federal taxi agencies, then what
I just told you is completely legal. This is the buy,

(35:12):
borrow and die strategy. That's what a trust is for,
is a state planning. So you want to buy appreciating assets,
borrow against some tax free die, and pass on stepped
up basis to your heirs. A steped up basis means
basically what happens after you remove the debt and all
that stuff. It's less. So if you have a dollar

(35:34):
that you're going to sell an asset for, you're going
to pay taxes on the dollar. But if there's the
only thingess left is twenty cents, the unions taking pay
taxes on the twenty cents. Okay, I'm confusing myself here
or not being clear to you, but trust that you're
really smart, so you'll catch this on replay. You're going

(35:55):
to so capital gains versus earned income tax rates. This
is really important. While the rich prefer capital gains. Now
we're talking about me rich and wealthy fifteen to twenty
percent over a salary which is thirty seven percent. Okay,
I'm talking about the use of trusts, foundations, liability corporations.

(36:18):
Philanthropy is a tax strategy dynasty dynastic dynastic wealth via
a GRATS, g R, a t S grats and estate
planning tools. So the wealthy paid lesson in percentage terms,
not necessarily in total dollars. This is the game that

(36:40):
politicians play often, by the way, So it's a myth.
This bus bursts some myths here. Rich people don't pay taxes. No,
not true. In fact, the wealthy pay most of the taxes,
but they may they pay much lower tax rate. Okay, John,

(37:00):
what did you just say? That made no sense? Right? Okay,
So if you are you own some real estate, let
me give it practical. IM gonna give you my own example.
So I bought a piece of real estate in LA
for you know, two hundred thousand dollars. Then it went
down to one hundreds some of my thousand dollars in

(37:22):
the economic crisis two thousand and eight. I let I
held on to it. Poor people just seale sales sale.
But everybody was telling me that was broke, so I listened.
I didn't pay attention to them because they hang around
nine and broke people you'll be the tenth. I kept
a hold of it. Uh. Several years later, six years later,
I wanted to buy a piece of real estate called
seven nd and fifty thousand dollars. Where do I get
seven fifty thousand dollars from? Let me got okay, let

(37:43):
me figure out what to get it from. I want
to buy this property. So I call a friend of
mine in Los Angeles, a real estate broker, a brother
actually named low who's just absolutely great. And I asked him,
I knowe. Daniel Lowe is his name if you want
to use an ice real estate agent in LA. And
his wife is Jennifer Lowe, and I knew her, and

(38:05):
so I got to know the sun. So anyways, this
real estate agent named Daniel Loan, and I said, look,
this is my property and I'll tell you the address
at seven one two two Latira in Los Angeles, and
it's a townhouse and I want to sell it. What
can you they go get it for? Keepn know how
I bought it for two hundred thousand change. He said, oh,

(38:26):
probably seven to fifty. I said, excuse me, what'd you say?
He said, yeah, I can probably give you seven to
fifty thousand dollars and I pay SoSE yes, how soon
can you sell this? I can probably sell this in
a week. Really, we listed it. It was sold within
a week. He had an offer women a week to
a minute to close. And then when I got the
seven to fifty transferred to me thousand dollars. I'm not

(38:50):
a genius here, I'm not a rocket size. This is
a power of real estate. I keep telling you the
number one way you build wealth, this home ownership. I
did nothing but buy it and hold. And somebody rented
this place out to me when I wasn't there and
moved to Atlanta, and it was a police officer, black
police officer in the LAPD laid on paying rent. By
the way, it's fine, and all I have to do
is just pay the property taxes once a year, which
I was, you know, fine, but you know it's my asset,

(39:12):
and I had sort of put it on set and release.
I forgot about it, really and other than chasing's got
for rent anyway, So we years later I bought it again,
sold it for what three times what I paid for it.
That Okay, here's the magic. Through a ten thirty one
tax free exchange, I was able to take that seven fifty,
transfer it to another state. Within a year, buy another

(39:36):
asset tax free. Hello John Bryant to your head, Hello
did that? Oh? Did that ring? True? Zero taxes? That's
a ten thirty one tax free exchange that's available to
everybody if you do it within a year. Real estate
to real estate, you pay no taxes. In fact, if

(39:58):
you have a single family home and you sell that home,
this is this is this is just mainStreet capitalism. Here,
you sell that home and you're a single person, I
believe you have profits of capital gains. Profits means a
gain on capital game versus a gain on income income
tax thirty seven percent, capital gains tax twenty percent, fifteen

(40:20):
twenty percent. I'll get to a difference in a minute.
You want to be in the capital gain side. Right
of a very wealthy friend of mine who got upset
when I try to bring him a business deal, he said,
I don't want to make any more money. I've already
made as much money. I'm trying to manage what I've
got because if I make if I make some money,
I got to pay thirty seven percent plus the city.
In the city, the state and city taxes might be
as much as fifty percent in the state of California

(40:42):
of every dollar you make. I'm not trying to do that.
But if I just manage the asses I've got and
I sell buy and sell assets of a capital gains bass,
I'm paying twenty percent. It's just smart right. You should
try to legally, legally, properly decrease your tax bird as
much as you can and pay what you pay what

(41:04):
you legally or obligate you. And I paid my first
seven figure tax bill. I was very honored to do it.
Paying taxes means you're making money, you're building wealth. It's
a compliment to the capitalist system and the compliment to
you use. Don't get angry gous you got to pay taxes,
just prepare for it when you do. What you do
not want to do is being in a fight with
the irs. Back to the story or the franchise tax board,

(41:24):
which I've been in the fight with before. It's not fun.
They would just come and take your stuff. That's true,
gangster they don't play. So if you're a single person,
you can get up to two hundred and fifty thousand dollars
with a tax free money when you sell a house,
marry up to five or one thousand dollars. Now check
with your tax pro I'm giving you general advice, okay,
or go to my one of my whole financial coaches
and operation. Nope. Now, if you make less than forty

(41:44):
seven thousand dollars a year as an individual or ninety
four thousand dollars a year as a couple, your capital
gains tax is zero. See this works, It works for people, right.
And if you've been made between forty seven thousand and
five hundred and eighteen thousand single or ninety four thousand

(42:05):
to five hundred and eighty three thousand as a married
couple joint filing jointly, uh, then you your capital gains
tax is about fifteen percent to uh what about fifteen percent?
Which is a bargain. If you're me and all of
my friends, you're gonna pay twenty percent to capital gains tax.

(42:25):
And you might pay a little mode of something on
a state level. I no idea in Georgia, but fifteen
twenty percent is even still a great deal. Now here
are the places where they're so Okay. So if you're
if you're making a living that's what they call it,
making a living, then you're earning a W A paycheck
with a W two or a ten ninety nine. Ten

(42:46):
ninety nine is a contract income. Okay, they pay, They
don't take any taxes out, but you've got to remember
to take your own taxes out otherwise the federalies will
become to get you. Okay. If if you're earning an
income is a W two, right, so you're cashing the check,
you're not writing it. This is another example. I guess
if you're if you're a capital gains person, you're writing

(43:07):
the check, Jerry speaking. If you're W two, you're cashing
the check. W two is a lower tax amount, but
a higher tax percentage. Okay, capital gains is a lower
tax amount us a percentage and a higher tax amount.
Here are some states in how they treat taxes. California

(43:30):
charged you thirteen on your capital gains. Uh. They treated
like ordinary income. California, where I was born, is gangster right,
no special deals, no special rates. New York same thing
they tax it. You're in capital gains is ordinary income
up to ten point nine plus a New York city tax. Uh. Texas, California,

(43:55):
so Texas, Florida, Tennessee. No state income tax. That's why
people love living there. So you only pay federal capital
gains tax Arizona, Georgia, North Carolina. Uh, you do not.
H They do not tax capital gains. But they have
a flat or a modern income tax, which is why
I told you I paid a modern tax in Georgia
over by the way. Once you pay that tax, you

(44:16):
start looking at your potholes and all kinds of stuff.
You're like, hey man, start writing letters, get fix this stuff.
Your council piers and your congress person the hey man,
that's me, Like, I just paid taxes, pay fix this stuff, right.
You start becoming real concern So yeah, now let's get
into some some some of the I'm just gonna run
through this stuff really quickly. The fifteen percent capital gains

(44:38):
uh tax applies at the federal level for most Americans
who earn you know, less than a half million dollars a year.
Your your total tax bill is going to just go
to your tax go to your tax pro Okay, So
here's what the what the federal the federal govern tells
about who pays what. So wh when you're your friends
say you these politicians and say rich people don't pay taxes,

(45:01):
it's a lie. Now, they may not pay their fair
share of taxes, and there are a lot of tax loopholes,
and there's some things that need to be addressed. In
my opinion, took me on Wall Street where people are
getting away with things. But the reality is this. The
top one percent of earners, which includes me, pay about

(45:22):
forty percent of all federal income tax. The top ten
percent of earners pay roughly seventy percent of all federal
income tax. The bottom fifty percent of earners pay about
two to three percent of all federal income tax. And
doesn't that feel fair? I mean, that's that's not bad

(45:45):
because it how this is the case because the US
federal income tax system is progressive. Higher earners or tax
at a higher marginal rate up to thirty seven percent.
So if you're earning money, then they're getting it from
your earnings. They're they but they want to reward investment.
It's a whole other conversation for another time, holding investments

(46:07):
and all that kind of stuff. And I mean, so again,
making money or building wealth. The effective tax rate is
what someone actually pays after deductions, credits, loopholes, not just
the top line rate. Right, So many ulture wealthy individuals
pay lower individual effect lower effective tax rates than the

(46:28):
middle class workers. Why they earn capital gains not salaries
again twenty to fifteen to twenty percent versus thirty seve percent.
They usu legal tax shelters like foundations, real estate depreciation
carried interest, which is for private equity and hedge fund managers.
And I think that is an issue that someone could
argue needs some more attention paid to borrowing against assets assets.

(46:52):
I talked about margin accounts and security insecurities backed lines
of credit. So when Warren Buffett says that he pays
a lower tax rates in his secretary, is because most
of his income is from capital gains and dividends. Okay,
is the light on in your head now? Like, oh, okay,
now I get it. Some ultrawealthy pay almost nothing legally,
all right. You know Jeff Bezos, Elon Musk, other billionaires

(47:16):
paid little to no taxes in some years. This wasn't illegal.
They simply didn't realize taxable income. Instead, they borrowed against
their stock. They used appreciation and claim investment losses. As
long as it's legal, it's all good. Now. I could
go deeper into that topic, but I really want to

(47:36):
make sure I'm covering everything for you in this particular episode,
and so let me go deal with structures. So the

(47:59):
wealthy used t us foundations, limited liability corporations, right, and
then you have a two like this g R A T.
I mentioned the grat. Okay, they'd used to minimize taxes,
preserve wealth, and shape their legacy. I'm going to just
go through this real quickly. So a trust is a
legal entity that holds assets on behalf of beneficiaries. You.

(48:19):
Wealthy individuals use various types of trusts. This is used
to avoid probate, which is an argument basically after you
die through the court system, and it's very expensive with
a lot of lawyers. The public court process basically settles
your estates. If you have a trust, it's sorted because
you've sorted it out in advance, You've told everybody what
you want, You've dealt with the tax issues. It's just

(48:41):
it's like you're alive. The trust is like you're alive
even though you passed on, and it minimizes your estate taxes.
I have a trust by the way, you control how
and when your heirs receive their money. Common types of
common types used by the way irrevocable trust. I had

(49:02):
a friend of mine who had an irrevocable trust, and
after he passed, someone he loved very dearly basically had
to go and negotiate with other members of their family.
Of the family, and I don't want to get too specifics.
I don' want aybody to guess who this is, but
they had negotiate with other members of their family on
assets because the trust has been put in place twenty

(49:25):
years before, and one group was targeted and there was
an assumption that somebody else was going to be okay,
and so the primary person in this person's life was
not okay. Actually, so irrevocable trust, you really need to
know what you're doing before you use one of those.
You move assets out of the individual estate, out of

(49:47):
an individual estate, lowering the state tax liability, but it's irrevocable.
There was a revocable trust. Also, by the way, grand
toward trust. Grand Or paid taxes on trust income, allowing
the assets to grow untouched inside the trust. And that
sounds that's exactly what that sounds like like. So if

(50:08):
I put something in the trust, I'd pay the taxes
on the trust income. Dynasty trust a designed to lasts
for multiple generations without incurring a state taxes at each
generational level, especially powerful in states that allow trust to
last for hundreds of years or more. In this d

(50:30):
this is the dynasty trust. That's again, it's just gangster.
I wish I had time to go into detail on
these things. You can tell me whether you want me
to do another podcast, because we're coming on the one
o'clock the one hour market. If you want to go
deeper in one of these areas or some of these areas,
I will, but I don't want to bore you. If
you like John, get on with it. Private foundations these

(50:50):
are these are not like Operation Hope. It's not an
Operation Open a five oh one c three nonprofit, public nonprofit.
I don't own the nonprofit I founded it, But the
four point five billion dollars I've run through Operation Hope,
I don't own that, And they can technically can fire
me tomorrow the board of directors that I put in place. Right,

(51:10):
many founders have been founded by that fired from their
own situation. So another discussion on the other day. So
a private foundation, these are non profit entities that wealthy
individuals or families fund themselves. I want you to think
about now, the Gates Foundation, why do you want to
use them? The donor gets a tax deduction from contributing

(51:30):
to the foundation up to say, thirty percent of adjusted
gross income. The foundation has only only has a distribute
five percent of its assets each year to charitable causes
to keep it legal. The rest can be invested and
managed often by family members and advisors. Now don't feel
a certain kind of way. They can't put the money
in their pockets, but they can keep this perpetually going

(51:55):
and just take If it's one hundred million dollars private foundation,
they can just you know, give out five million dollars
and it's legal for them to just reinvest the rest.
But the public got the benefit of five million dollars
of charitable activity. And this money is not available to
this individual or person or family to use to go
buy Bentley's and all kind of lifestyle stuff. So I

(52:17):
don't want you to understand that the one of the
benefits of this is legacy and brand control. The family's
name lives on while funding causes that they care about.
It's giving with intention and tax efficiency. I love this
next vehicle, LLC's I have a bunch of them, like
a boatload of LC's limited liability corporations. Wealthy individuals and

(52:39):
families can often place real estate, investment portfolios or even
businesses inside it limited liability corporation, then transfer interest in
the LC to airs or trusts. I cannot recommend this enough.
They're simple, they're easy, often one page to design. I
had seven hundred home homes when I used to own

(53:00):
the Promise Homes Company, just under set under homes, and
my ultimate goal was to get each one of those
homes and an individual LLC I didn't get. I didn't
get to that point because I was buying homes a
bunch of a time. But I would certainly have a
group of homes in a separate LLC. So something happens
that that that LLC gets sued or there's some issue
with that, or there's a legal fight, then then you

(53:22):
can only punch through to that limit liability corporation. You
can't punch through that to get to my other assets,
other properties that had nothing to do with that, And
you can't get to me. I ain't got nothing to
do with it. It was you know, you trip and fail
on in that home, and you can sue for recompense
with regard to that property. Although you'd hope that you
can work something out and not get into lawsuit. I've
been in a lawsuit in all the years I've been

(53:44):
in business. I try to work it out. So here's
the benefits of a LLC asset protection again, lawsuits, divorce,
et cetera. Now, you can't sign something personally. You can't
do a mortgage. You know, and sign it personally, then
retroactively put it into a limited life ability corporation and
then tell the bank that you can't come at me. No,
you signed that personally, you personally guarantee it. You just

(54:06):
put it inside of an LC. So somebody suing the
as suing later. I guess the asset may be have
some protections. I think about this. Yeah, I have a Yes,
I have a property in an LLC that I personally
guaranteed the mortgage. The company would come after me. The

(54:27):
bank would come after me if I default it. Yes,
but somebody suing because they it was some tied to
that property. You can only get Yeah, you couldn't punch
through to me if you were suing me externally, but
certainly the debt would be mine In that example, you
see I'm doing this in real time like so this
is like as honest and direct as it gets. So.
Asset protection valuation discounts. Interest in LLCs are often minority,

(54:50):
are non controlling, meaning their value for state gift tax
purposes can be reduced by twenty to forty percent. Talk
to your tax bro theyn't know what I'm talking about.
Get having ten percent to your daughter, ten percent to
your son, or that's what I'm talking about. Right, There's
there's some real benefits there from tax planning purposes. Helps.
It helps with succession planning and managing family business assets

(55:12):
under a unified structure. It keeps everything really clean. Inelegant.
Philanthropy is a tax strategy. This is my social impact playbook.
Wealthy families use philanthropy not only to do good, but
to offset income taxes through charitable deductions. I've done that.
It's a good thing. America is the most philanthropic country

(55:34):
in the world. Is it because Americans are better people? No, Okay,
it's because the tax structure incentivizes philanthropic contributions, and so
the tax structure incentivises home ownership. As an example, that's
why seventy five percent of whites in the country own homes.
And as soon as you're financially literate, you listening to this,

(55:54):
I'm convinced you're going to own a home and you're
going to do the things I'm talking about because your
incentive to do it. And it's very simple. You want
something to grow, you incentivize it. You want something to die,
and you want to stop it, you penalize it. I
used to ride I still ride bicycles, but I loved
add this carbon fib or bicycle, and I loved it
so much I wanted to travel with it. So I

(56:15):
would take that bike to Maui with me, and I'd
go to the Delta counter and I'd say, my bike
is in a bike bag. I want to ship this
to Maui, Hawaii. And they look at me crazy because
it's big and bulky. Okay, mister Brian, and we're gonna
do it for free because we like you. But then
I did it, you know, several times a year. They're like,
he and a bunch of other people are doing it.

(56:36):
Let's let's charge him one hundred bucks each way. And
I grow griped and grumbled a little bit, but I said, fine,
hundred bucks each way. Then they increased it to two
hundred dollars each way, and then I think that three
hundred dollars each way. Well, when he got to two
or three hundred dollars each way, I said, now the
bike staying at home, and I rented a bike in Maui.
And by the way, I'm more than happy rinting a

(56:57):
bikes in Maui today. But that changed my beha. They
taxed me enough to change it. Wasn't they were being
mean to meet. They didn't want big bulky bikes that
worth ten dollars in the whole of their plane gets broken, scratched,
whatever they get charged for it, sued for it, and
it mess less room for them to take luggage. They
weren't a by delivery program right, so that something they

(57:19):
tried to do as a convenience to their passengers became
some of the people like me took advantage of. And
they stopped it by creating a disincentive. That made sense
because it applies to a lot of different things. So
charitable deductions or offset income avoid capital gains taxes by
noting by donating appreciated assets like stock. So you can

(57:42):
donate stock to avoid capital gains tax, reduce the state
taxes by moving wealth out of the estate into a
charitable vehicle. Again, you want to go deeper in some
of this, I will. I'm just trying to do this
very quickly. Okay. Let's deal with a grand tour Retained
Auity trust a GRAT g R. A T A GRAT

(58:03):
allows a wealthy individual to freeze the value of their
estate and pass on the appreciation of an asset. That
air is tax free if done right. Yes, I said
that right in this gangster wich about it. We can
be talking about millions and millions of minions of dollars,
tens of millions of dollars for a wealthy estate, maybe
even hundreds of millions, depending on how wealthy somebody is.

(58:25):
So the person puts appreciating asset stocks in a private
company or real estate into a GRAT. They receive annuity
payments back over a set term, to say over five years,
based on a fixed IRS interest rate. If the asset
grows faster than the I R S interest rate, which
is typically low, then the excess growth passes the AIRS

(58:49):
with no additional gift or state taxes. You can play
this back later. This is one of the most powerful
state planning to used by the by ultra wealthy families. Thing,
the Waltons, thing, Zuckerberg, Matta, who's a friend of mine?
I think Jeff Bezos, et cetera. It's crazy. I know
all these people, not well a lot, but I'd at
least know them. Most of the Marxite pretty nice in person.

(59:12):
A dynasty trust is used by wealthy families to preserve
wealth across multiple generations while minimizing or eliminating the estate
of gift taxes over time. It's one of the most
powerful tools. We're creating multi generational wealth. Again, we don't
have time to get them at an hour now if
I bored you, A couple of benefits. Normally, with wealth
has passed down, it's taxed at each generation, okay, forty percent.

(59:37):
Federal state taxes ouch forty percent. Okay, So I'll say
that again. When wealth has passed down, it's taxed at
each generation. Okay. A dynasty trust locks in wealth now
and future generations benefit tax free because the asset never
legally enters their states. Did you get that? It protects

(59:59):
assets from credit, divorce and lawsuits because the trust owns
the asset. Not the beneficiaries. Those assets are shielded from
creditors or bankruptcy, divorce settlements, poor decision makers. By making
by heirs, this creates a financial firewall for the family.
You can set you know, you can set your own
detailed rules. Money only released by for educ You can

(01:00:20):
say your money's only released for educational purposes, or health
and housing, or starting a business. It prevents trust fund
baby syndrome, where heirs don't blow the fortune because they
never learned how to work and they figure that they
can just jail forever. By the ways the joke, first
generation makes it, second generation spends it, third generation loses it.
Often so this you can encourage people to work and

(01:00:41):
do stuff because you can limit how much money it
goes to them. It often guided by a trustee or
a family member. By the way Shack I think with
Shack said when his kid said, man, Daddy, why are
we working? We rich? We rich? He says, no, no,
I'm rich. You got to go to work, right. It
often's guided by a trustee or family member. Family offer.
It's not a family member maintaining oversight, family office. You

(01:01:03):
mean you when we deal with that in the next podcast,
has so much to go over. It takes advantage of
current gift and the state tax exemptions. In twenty twenty five,
the estate tax exemption may be reduced significantly by the way,
from thirteen point six million to seven million. Most people
are listening to this, going, what do I care. I
don't have seven million, but for somebody like me, what
I just told you is relevant. Families are using dynasty

(01:01:25):
tax trusts now to lock in the larger exemption before
its sunset. So basically they're doing they're creating these trusts
like right now in a hurry before the end of
twenty twenty five, so they get the benefit of basically
fourteen million dollars worth a coverage versus seven million dollars
with the coverage one. Once in the trust, that wealth
can grow indefinitely outside the taxable estate benefits from growth

(01:01:46):
over time. Assets placed in a dynasty. In a dynasty
trust can be invested growing for generations, no estate tax drag,
so the compounding of power is much stronger than an
a taxable to state, what I tell you make money
during the day, you build wealth in your sleep, all right.
I can go on and on and on, But basically
a dynasty trust is how the wealthy play chess, not checkers.

(01:02:08):
It's not just about giving your children money. It's about
giving your family a foundation for one hundred years. Hello,
I'm not gonna get this right. But Warren Buffett one
said that he wanted to give his children enough money
so they never wanted for anything, but not so much
that they didn't want to do did not want to
do anything. He wanted to give them purpose and dignity

(01:02:30):
and all that stuff, but not a free ride. He
wanted them, you know, he wanted them to not suffer,
but he didn't want them to be spoiled brats. And
I think he succeeded. That kids are pretty cool people,
the ones I've met. I think I met all of them. Okay,
I hope that I've covered. I thought I'll both done
this this some justice. I really want to cover these
margin accounts and the lines of credit and how wealthy

(01:02:53):
people can go broke. That was a really important, important
thing for me to cover. I think I covered decently.
The trust foundations in l sees that in taxation that
most most taxes in this country are paid like seventy
percent are paid by the wealthy. So you can tell
politicians when they say this, you're lying. You're lying, You're lying.
John Brian told me that actually the wealthy pay most taxes,

(01:03:13):
but percentage wise they don't, and because of loopholes, they
probably we probably should be paying more. I mean, once
you get into a tax conversation, I mean, you got
to you. When you're wealthy, you have a whole team
of people who do nothing but sit down and try
to figure out how to avoid unnecessary taxation legally. And

(01:03:35):
some people push it too far. They're taking money off
shore and all that stuff. You go to jail for
that kind of stuff. Some people just say, I don't
you know, say some of these celebrities you've seen that
I don't owe any taxes, that taxing is a legal system.
They didn't literally in prison like they thought because they
were a celebrities are gonna say no, They literally ended
up in prison Wesley's Knipes and a bunch of other people.
So don't do that, all right. This is John O'Brien

(01:03:58):
this Money and Wealth on the Black Effect Network. Thanks
for making this a top one hundred podcasts and business
in the country, Top forty for entrepreneurship. Thanks for giving
me some love. I want you to give my book
Financial Literacy for all. Thanks for your support. If you've
been involved in Green Sock State. It'll be back next year.
By the way, if you missed it this year, get
my book, which now in paper book, paper book, paperback right.

(01:04:20):
Tell your friends to follow this podcast and also go
to Operation Hope and sign up download the Hope and
End app Hope in hand app, and sign up for
financial coaching if you tell them I sent you to
give you a thousand dollars scholarship for coaching and counseling
on me. That'll get your credit score up, your dead down,
your savings up so you can start building wealth again.

(01:04:41):
I want you to I don't want you saying you
hate rich people. I want you to be one, and
then I want you to focus on then once you
want you can become rich. I want you to start
being focused on becoming wealthy. My mother wanted a smith
got wrestler, so worked an hourly job for thirty two years.
The mother of one is the mother of Maara Hoskins
and Donnie Dave JN. L. Harris, my brother and my

(01:05:02):
sister and my brother and myself. My dad was Johnny
will Smith Arlene Hayes was my half sister. She's gone
to glory. My mother worked for thirty two years at
Bowing Aircraft and Downdouge's Aircraft, which became Bowing Aircraft a
merger and making eighteen dollars an hour, had a great
credit score, did not have generational wealth, so she had

(01:05:22):
to hustle, so she made money during the day. She
had a part time income from making handicrafts and things.
She used a part time income to save a down
payment to buy a house. She bought her first house,
then sold that one for a profit, bought a second one.
She did that seven times, and she gave a down
payment to my brother, and my sister gave me an
emergency loan when I needed it. I paid her back.

(01:05:43):
And she died with a min dollar net worth and
a credit score over seven hundred. It was only was
it dropped from eight to fifty because she wasn't using
credit anymore in the later parts of her life. But
she had lived a life of self determination. She built
a generational wealth at a whale. Her will was gangster
by the way. It basically said, anybody argue with his
will is cut out of it, so She had created
her own form of a trust in a very tight wheel,

(01:06:06):
and in the way she structured there was not no
taxing issues. But anybody can create a trust. You can
create a trust that you need to be wealthy to
do it. You should, at the very least have a wheel,
and you should have life insurance. Whether you can't get
a whole life, get term. All right, Love and light,
John O'Brien, let's go do this thing. Financial literacy is
the civil rights issue of this generation. You know better,
you do better. Piece and Light, No days off. That's

(01:06:29):
my t shirt today. Money and Wealth with John O'Brien
is a production of the Black Effect Podcast Network. For

(01:06:49):
more podcasts from the Black Effect Podcast Network, visit the
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