What are your thoughts on Juliet's dad? What he had to say to me? Cause he had a different approach than say you or I.

It's interesting.

Look, There's two things around real estate debt, because I know we're talking about now mortgage debt, right? The reality is when you look at the appreciation, generally speaking, if you're looking at real estate, even as an investment vehicle, right? Historically speaking, equity markets have outperformed the real estate markets, right? But the reason why people can make a lot of money on real estate is because of leverage, right? You put that 50% on a vehicle that goes up by let's say five to 10% a year, you're almost doubling that minus the interest rate that you're paying, right? Because there's interest on that amount.

So the arbitrage and how much money you can make on leverage, that's one thing.

And the second thing is, yeah, like these long-term, if you're not even looking at the appreciation of the real estate itself, but playing the game or, you know, you can call it a game, but yeah, like long-term, if you have a healthy allocation of equities and you have a good rate on your mortgage, you should be able to long-term outperform those mortgages, right? But also being aware, we have clients when they retire, we want peace of mind is you have the money, let's pay that mortgage off.

Or we let that, if we know we have, let's say a seven or eight years before that rate adjusts and we started it now we might be diversified but after that seven or eight year period before that rate adjusts and they're ready to retire we'll just say let's pay that bad boy off because it's also about certainty and knowing and comfort level it's not one size fits all your appetite for risk rob might be different than you know somebody else's appetite for risk

Is that anal to go to a credit review thing like a credit karma and monitor your credit or take a look at your accounts like annualcreditreport.com? And do you do that or is that something you pass on? Yeah.

One thousand percent, Rob.

Mm-hmm.

But usually, you could solve for some of it by just figuring out what you're spending.

There's many tools that are out there.

There's aggregators which actually can track your spending.

There are different websites you can use.

Even sometimes you can use your, just simply even look, looking at your credit card statement organized with any.

I like to not necessarily know, wait, how much were you spending at Starbucks every month? But generally speaking, how much were you spending to going out to eat? How much were you spending on groceries? How much are you spending on your mortgage? Just understanding those things high level, because y- if you want to solve for problems, you need to know what the problems are first, right? So what levers, if you get in an emergency situation, what levers can we pull, right? To, to help if there is, if there ever is a financial issue, right? So if you could say, "Hey, discretionary." Somebody says, "Okay, we're spending $3,000 a month or $3,000 a year on our wine budget," or if we're spending $4,000 a year on our season tickets to sporting events or whatever the number is, right?

Yeah.

What's the disconnect here and why are investors not properly valuing the actual value of the business over how the price action is going?

You know, that's such a good question and I'll, I've got the answer for you and for the audience.

You know, markets are really just an experimentation in human psychology.

You know, I get asked the question a lot.

People will say, you know, "If, if all information is public, shouldn't the markets be priced efficiency- efficiently?" And the answer to that is no, because it's not about the information.

It's not about the quantity of the information being provided.

It's about every market participant's interpretation of that information.

So if we're looking at this comparison, where are we in that journey? Is Blockbuster still open? Are we starting to see some of them shutter? How far do you view us in this timeline?

What do we need to know?

Thanks for having me, Rob.

I really appreciate what you said because it's not just what you own.

It's more, it's also more important in my opinion, where you own it, right? So, Often the clients that we work with, they've been working at their company employers for many times.

They might have $2 million.

We have a client as an example who has $2 billion in their money that they've saved outside of their 401k taxable money.

They might have $2 million in their 401k and $500,000 in a Roth, right? This is a typical client that we might work with.

And I'm like, you don't need to do that because the municipal bond is not paying taxes on it.

Right.

That's what's called a wash sale violation, right? So we start with that as the basics, right? So t- let's talk about how we utilize this in a diversified portfolio, right? And then we'll talk a little bit more about some other strategies.

I'm gonna start with a, a strategy what we call an indirect indexing.

Indire- tax loss harvesting using indirect indexing, okay? So most of us who are like me, I believe that most people and most of our clients that have made wealth have made it through buying stocks or owning concentrated securities, and they come to us for diversification.

We like to buy them index funds or low-cost ETFs.

Index funds are funds that represent major broad-based indexes, right? So what a indirect index tax loss harvesting solution could be is you own a diversified basket of these ETFs.

Let's say seven or eight different funds that represent international, emerging markets, large cap, small cap, right? And you're adding money to the portfolio, and the portfolio's growing just like the index long term.

Where should we pick back up?

What do we need to know about tax loss harvesting strategies, Rahul?

Thanks for having me, Rob.

So what I'll say is, let's just start with some of the basics, right? For those of you who don't know, that might have securities that you buy, there's a thing called the wash sale violation, right? Wash sale violation is sometimes you have a portfolio, you have a position that you have a loss in and you want to take that loss for IRS purposes that you can use against other securities or other future gains, right? So you're able to do that, right? But what the wash sale violation is, you're not allowed to buy a security that the IRS would deem the same or very similar to the security you just sold, right? You can't do it 30 days before and you can't do it 30 days after.

Right.

That's what's called a watch sale violation.

Right.

So we start with that as the basics.

Where should we pick back up?

I thought it might have been something the IRS would close years ago, but it's a loophole that's pretty efficient for financial planning.

Yeah, thanks for having me, Rob.

We hear the word backdoor, Rob, and often we think we're doing something, let's say, illegal or something that's like a tax startup.

It is a complete IRS approved strategy, right? And I'll give some basics around it, right? Often what we have is we have clients in the Bay Area, or sorry, we have clients that often do maximize their 401k portfolios, right? So they maximize by putting their pre-tax money into a 401k.

Now, what that often means is they are not able to get any more deductions for contributing to an IRA, right? But you still are allowed to contribute to an IRA, right? But you don't get a deduction for it.

So what a client might do is they might say, okay, I'm going to put $7,500 into a traditional IRA, right? Now they don't get a deduction for it because they already have that pre-tax 401k that they're getting a deduction for from their employer plan, $7,500 or $8,600 if you're above the age of 50.

called the catch-up provision, okay? Now, what we do is we basically, there's a rule, there's a rule that says anybody that has an IRA at any given year can convert their IRA from an IRA to a Roth IRA.

Should we move to the mega backdoor Roth or should we linger? Okay.

I thought it might have been something the IRS would close years ago, but it's a loophole that's pretty efficient for financial planning.

Yeah.

Thanks for having me, Rob.

We hear the word backdoor Roth, and often we think we're doing something, let's say, illegal or something that's, like, a tax fraud.

It is a complete IRS-approved strategy, right? And I'll give some basics around it, right? Often what we have is we have clients in the Bay Area...

Or sorry, we have cl- we have clients that often do maximize their 401[k] portfolios, right? So they maximize by putting their pre-tax money into a 401[k].

Now, what that often means is they are not able to get any more deductions for contributing to an IRA, right? I- but you still are allowed to contribute to an IRA, right? But you, like, you don't get a deduction for it.

Mm-hmm.

Sure.

Sure.

Yeah.

Like you said, my name is Rahul Shah, principal architect in Tite House.

I'm a solopreneur.

I started Tite House about two and a half years ago.

I... really that it was it's a long walk to how i really got to being interested in passive housing thinking it's something that i can really take on because it is a dense subject and to be honest i was scared of taking on even more architects level of competencies to even get to be a licensed architect is a very high bar and a passive house is yet another one.

Yeah, so have you, what attempts have you made at doing that, getting that across?

You're not going to have enough time to do that.

There is something else, you know, we talked about the annual gift exclusion, but in addition, there's this thing called the lifetime gift credit, right? Which is the estate tax exemption.

It happens to be the same amount.

And what that is, is that's approximately $15 million a person.

So what that means, Rob, is that in addition to that $19,000 per year gift that you're making to the client, you're allowed to give an additional amount up to a total of $15 million to out of your personal account to any beneficiary.

Now, when you do give that amount, that amount does eventually get grossed back up into your state for state tax purposes.

So what's the benefit of doing that, right? The benefit of doing that would be, let's say I'm a client and I have $30 million of Oracle stock, right? And I don't need any more of that money.

What is a grat? What do I need to know?

What is a GRAT?

I appreciate you saying that.

We hear the word annuity and I immediately run for the hills because I view the inverted annuity generally as a bad word and it doesn't quite work as an annuity.

But what it really is, I'll give the very simple scenario and I think it was easier to explain in the scenario, right? I have a client, right? He has $20 million of Oracle stock, $10 million diversified portfolio, right? He feels like that $20 million is enough for him, right? And he wants the $20 million for him to be able to spend and draw down plus the $10 million diversified, right? What we do is though, he's saying, if their stock appreciates, I do not want any more of that appreciation for myself.

I'm happy to have that go to the children.

So what we do is we set up this thing called the grad, right? We put some securities.

Let's say in this scenario, we put a million dollars of securities into the grad, okay? We set the term of the grad, usually fixed, commonly two to 10 years, right? And over that two to 10 years, we have to pull that $1 million of Oracle stock back into ourselves, into our own name, plus an interest rate that the IRS publishes called the section 7520 rate, right? So let's assume in the scenario, what happens in the scenarios, right? Scenario one, the stock does nothing or underperforms that interest rate, right? Your stock goes down 10%, whatever ends up happening, you pull out Whatever is left in the GRAT, the GRAT expires worthless, right? Nothing.

Do we need to get back to that?