1. His Roth IRA went from $1,700 to $5 Billion
In 1999, Peter Thiel bought 1.7million shares of PayPal at $.001 each with his Roth IRA, for a total of $1,700. That same account sits around $5 billion today, from that initial investment of $1,700. Peter is currently 54 years old and once he turns 59 ½, he will be able to withdraw the entire $5 billion without paying any taxes on it.
Peter Thiel is an ultra successful entrepreneur and venture capitalist best know for founding and serving as CEO of PayPal, providing the first outside investment in Facebook, co-founding Palantir Technologies, and providing early stage capital for companies like LinkedIn, Yelp, and many others. Safe to say he is a legend in the start-up and venture capital world, and all of these wins have made him billions.
But what he did with Paypal shares could be one of his smartest moves yet. By putting his early PayPal shares into a Roth IRA, he will pay $0 in taxes from the money heâs made on those shares.
What is is Roth IRA? This is a special retirement account where you can put in after-tax dollars, and withdraw the entire account tax free after the age of 59 ½. You can contribute up to $6,000/year to a Roth IRA or $7,000/year if you are over 50 years old.
A common question when it comes to a Roth IRA is, what is the difference between a Roth IRA and my 401K? The major difference is that you contribute to a 401k with money you have not paid taxes on, while you contribute to a Roth IRA with money you have already paid taxes on. The biggest advantage to a Roth IRA is seen at the time you withdraw the money. When youâre 59 ½ years old and you withdraw money from your 401K, you will have to pay taxes on that money, but you will not pay taxes on money withdrawn from a Roth IRA.
Either way you are paying taxes on the money, but with a Roth IRA you pay before putting the money in, and a 401k you pay when you take the money out. In theory, you will be in a higher tax bracket when youâre 59 ½, so Iâd rather pay the taxes now. Roth IRA for the win.
I have been asked, which one should I open? (401k vs Roth IRA) The short answer is: Both. Especially if your employer offers a 401k match. That is free money and you should be taking full advantage of the match. On the other hand, if you have neither accounts opened, and your employer offers no 401k match, I would opt for the Roth IRA first. BtwâŚ. this is not financial advice. :)
In my opinion, a Roth IRA may be one of the only sure ways to guarantee you are a millionaire by the time you retire.
For example, if you start contributing $6,000/ year starting at 25 years old, and assume the stock market returns an average of 8%/year. You will have $1.1 million by 60 years old, or $1.6 million by 65 years oldâŚ. completely tax free.
Moral of the story⌠If you havenât started contributing to a Roth IRA, start now.
2. Youâre way Younger than You ThinkâŚ
In this world of social media, it seems like every 21 year old on Instagram is some how already a millionaire or running a successful company. If youâre anything like me, it can be hard to not compare yourself to these figures, and feel bad about not reaching your idea of âsuccessâ at your age. The feeling of âI always thought I would be a millionaire by nowâ or âwhy am I so behind everyone elseâ. The truth is, most of what you see on social media is a lie, and everyones timing is different.
Hereâs a few people that found their massive success in their later years:
Donald Fisher: Founder of Gap Inc. Estimated Net Worth: $3.3 billion Donald didn't open up the first Gap store until he was 40 years old
Sam Walton: Founder of Walmart Estimate New Worth: $8.6 billion Sam didn't open up the first Walmart until he was 44 years old
Momofuku Ando: Inventor of Instant Ramen Estimated New Worth: $100 million Momofuku didn't invent instant ramen until he was 48 years old
Gary Vaynerchuk didnât get his first paid speaking gig until he was 35 and was only paid $5,000 for it. Now at 46 years old, Garyâs speaking fee is around $200,000 per event.
The lesson here: Youâre never too old to get started.
3. Business Idea of the Week: Bro Trips
Last weekend was my birthday weekend, and I was very fortunate to have 4 of my best buds travel in from out of town to celebrate with me. While they were here, this idea came to me.
The problem: Guys love going on âboys tripsâ, but we suck at planning.
There is a big opportunity to do all of the planning for a group of guys looking to go on an epic boys weekend, and they would pay good money to take the details off of their plate. This is a niche opportunity and this niche has a lot of money to spend.
For example, if 8 guys want to plan a trip to Vegas, there are 8 flights that need to be booked to arrive around the same time on the same day. There are 4 rooms that need to be booked at the same hotel, or 1 airbnb that will house all 8 guys. Then there are the activities to plan for once they are there. Make sure there is a limo ready to pick them up from the hotel on the first night, make sure they have a table at a club that night, make sure they have a tee time the next morning, and make sure they have a cabana at the pool for that afternoon. There are a ton a different details to plan, and the details add up as the price goes up.
How I would structure this: I would make this a niche travel service that is highly catered to what the client is looking for. The main factors to focus on will be the destination, the activities at the destination, and the clients price point. Once you have these 3 factors, you can put together the cost of the trip + your service fee and write a proposal something like this:
$3,000/person = 5 start hotel, 6 activities, and 24/7 trip manager on call
$2,400/person = 5 room Airbnb, 4 activities, and 12hour/day trip manager on call
etcâŚ.
How I would get started: The best was to get this started is by offering your services for free to get experience and a used case. To do this you can start with groups of guy friends you know and ask if you can plan their next trip 100% free. If you donât know a group of friends you could do this for, I would recommend going on LinkedIn, message guys in the range of 25-30 years old, and pitch them on your service (and mention it is 100% free as you are trying to build customer used cases). Youâre bound to find a group of guys that will gladly let you take care of all of the details of their next trip.
Once you get 1 or 2 trips under your belt, you can start to scale this. Start with a website, begin scaled outreach to you target customers on LinkedIn, and youâve got yourself a business.
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