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  1. #61
    Senior Member ptgatsby's Avatar
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    Quote Originally Posted by Zarathustra View Post
    Some people, myself included, read the pre-2008 tea leaves (and profited from it) pretty damn well.
    Well, any edge can earn you infinite money, though small edges require many iterations. Any idea what yours is?

    Quote Originally Posted by FDG View Post
    Ok, yeah, if you want to become wealthy in a step-by-step fashion then surely it's much better if you start young (and you're also more likely to hit and ride a boom).
    FWIW, you are also more likely to hit bad times, which can be equally devastating (or worse). There is a presumption of political security in the states. It is the surest way to become wealthy though.

    In general, I'd save less and spend more investing in oneself when young. It's the safest investment and can be as simple as getting a computer, taking a course, getting certified... or just consuming the savings to volunteer in different areas. The states includes lots of options, I believe, aside from the Peace Corps. Lots of strategies, but better than working and stocking money, for the most part.

    Quote Originally Posted by FDG View Post
    Well technically this is fraud, lol (especially if you write off your own income as a "business expense" - which I don't think can be done either, tbh).
    It is fraud but not terribly uncommon. People get caught all the time.

    All you need to do is find a way to get your income going to a company, then pay yourself an income from the company. You lose on fixed overhead, but expenses inside the company are pre-tax. It's been cracked down on a lot as far as I know... it's something you read more in books because it's very dangerous in practice. This doesn't apply as much for professionals who need to limit liability - most of those professions have somewhat different tax handling situations.

    In short, to really make it work you need to do it with large numbers... and the larger the numbers, the more likely you are to get caught. No one cares about a few meals being mis-charged but that's because a few meals are barely profitable.

    Structuring around taxes is only really worthwhile once you are already wealthy.

  2. #62
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    Quote Originally Posted by FDG View Post
    Setting up a business just as a way to deduct taxes from your primary income can indeed be a fraud, especially if you're making your business run at loss while you're pillaging its cash flow to finance your own living expense and the business ends up being bankrupt. Of course you can be good at if you're careful, if everything looks legal you may get away with it (until bankruptcy). I would still not recommend this strategy unless you have a real reason to start a business.



    If you have a real business then I think it's cool to set everything up so that you can pay the lowest possible amount of taxes. Starting a business as a way to pay lower income taxes is a bit different and riskier.
    Any business has to be created with the intention of making a profit not with the express purpose of being a tax shelter.

    But, as long as the business exists to be a real business, you can deduct most things involved with furthering that business.

    Operating in good faith as a business is kind of assumed.

  3. #63
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    Quote Originally Posted by ptgatsby View Post
    FWIW, you are also more likely to hit bad times, which can be equally devastating (or worse). There is a presumption of political security in the states. It is the surest way to become wealthy though.
    The longer your money stays invested the more likely you are to participate in long term growth trends. This one of the differences between smart money and dumb money. Let's say I invest in the S&P 500 in 2006.

    The financial crisis hits and I lose 30% of my portfolio value (ON PAPER). Instead of lighting my hair on fire and pulling my money out I stay invested, and maybe put some more money in once we hit the bottom of the trough.

    I then get to participate in the recovery (which has been very robust in the markets) and come out way ahead over the next couple of years.

    The dumb money gets frightened by losses and pulls out. Turning their losses on paper to losses in their wallet. They then wait to reinvest until the market turns around.

    The problem being that they likely reinvest with the rest of the dumb money at a peak and get to participate in another downturn that freaks them out. They pull their money out turning that paper loss into a real one and the cycle continues.

    This is one of the reasons why day traders frequently lose their shirts. A well managed buy and hold strategy with some dollar cost averaging makes much more sense for most investors (depending on their financial goals).

    Structuring around taxes is only really worthwhile once you are already wealthy.
    While it is true that as assets grow the tax implications of ones financial standing also grow (in both complexity and impact), most investors above the poverty line can benefit from taking into consideration the tax implications of their financial decisions.

    You don't have to qualify for the Alternative Minimum Tax to benefit from minimizing your tax liability.

  4. #64
    pathwise dependent FDG's Avatar
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    Quote Originally Posted by ptgatsby View Post
    FWIW, you are also more likely to hit bad times, which can be equally devastating (or worse).
    Of course. I'm operating under the presumption that someone whose aim is "becoming wealthy" will be as careful and as knowledgeable as possible with his (her) money, so as to ride the booms and avoid the busts, or at the very least, avoid selling depreciating assets during a bust.

    Quote Originally Posted by DiscoBiscuit
    Operating in good faith as a business is kind of assumed.
    Yeah well OrangeAppled's suggestion was not fully in good faith, thus my objection.
    ENTj 7-3-8 sx/sp

  5. #65
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    Quote Originally Posted by FDG View Post
    Yeah well OrangeAppled's suggestion was not fully in good faith, thus my objection.
    Ahh. That clarifies it.

  6. #66
    LadyLazarus
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    Whatever Opium is going for nowadays.

  7. #67
    Post Human Post Qlip's Avatar
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    Just to get by, only considering my expenses, here in the Bay area, I could definitely do it with about 30k. I've done the math in the past. It doesn't account for retirement savings, and I'm very comfortable with less than ideal conditions. I prefer them against McMansions, or even mansions, unless it's an Edwardian mansion with dark woodwork, tapestries, a study and a library and a parlor.

    Edit: A pet raven in a cage, a secret bookcase entrance to a cellar, silveware, brass, wavy glass panes, gas lights, and a fireplace in each room.

  8. #68
    philosopher wood nymph greenfairy's Avatar
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    A living wage plus a little extra to save and spend on the occasional luxury.

  9. #69
    Emperor/Dictator kyuuei's Avatar
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    Quote Originally Posted by Qlip View Post
    Just to get by, only considering my expenses, here in the Bay area, I could definitely do it with about 30k. I've done the math in the past. It doesn't account for retirement savings, and I'm very comfortable with less than ideal conditions. I prefer them against McMansions, or even mansions, unless it's an Edwardian mansion with dark woodwork, tapestries, a study and a library and a parlor.

    Edit: A pet raven in a cage, a secret bookcase entrance to a cellar, silveware, brass, wavy glass panes, gas lights, and a fireplace in each room.
    I don't see why you couldn't make a smaller house look like an Edwardian mansion.. It'd be far cheaper to do legitimate decor and architecture that way..
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  10. #70
    Post Human Post Qlip's Avatar
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    Quote Originally Posted by kyuuei View Post
    I don't see why you couldn't make a smaller house look like an Edwardian mansion.. It'd be far cheaper to do legitimate decor and architecture that way..
    I can, and there are perfectly handsome smaller Edwardian houses that feel like mansions. It may happen some day, but right now I'm working on my opium den, which may be in need of an animatronic raven.

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