Lecture Notes: 12 Assets That Make You Rich

Introduction

• Presenter: Toby Mathis, tax attorney and partner at Anderson Business Advisor.
• Focus on trends in investments by wealthy individuals.
• Data gathered from IRS publications and think tanks.

Key Assets for Wealth

1. Cash

• Importance: Enables taking advantage of opportunities.
• Example: Companies like Microsoft and Apple maintain large cash reserves.
• Strategy: Keep cash in high yield savings or money market accounts to offset inflation.

2. Real Estate

• Benefits:
  • Rental Income: Provides perpetual income.
  • Appreciation: Real estate value increases over time.
  • Depreciation: Tax deductions can offset other income.
  • Leverage opportunities: Use down payments to gain full property benefits.
• Strategy: Own rental properties, leverage real estate investments.

3. Bonds

• Types:
  • Government Bonds
  • Corporate Bonds
  • Tax-Free Municipal Bonds
• Benefits: Stable, long-term investment, good for high-income individuals.
• Strategy: Include in investment portfolios for tax advantages and stability.

4. Stocks and REITs

• Method: Purchase shares in publicly traded companies and real estate investment trusts.
• Advantages: No transaction costs, potential for significant gains.
• Strategy: Start with small investments and increase as knowledge grows.

5. Mutual Funds and ETFs

• Concept: "Bucket" of various stocks, easy diversification.
• Types:
  • Mutual Funds: May have hidden fees.
  • ETFs: More transparent, often a better choice.
• Strategy: Use for diversified investment without picking individual stocks.

6. Commodities

• Examples: Gold, oil, art, whiskey, possibly Bitcoin.
• Role: Part of a diversified portfolio, not necessarily cash flow producing.
• Strategy: Include as part of a balanced investment strategy like 30-30-30-10.

7. Intellectual Property

• Forms: Books, music, patents, trademarks.
• Benefits: Generate income through royalties and licensing fees.
• Examples: Michael Buffer’s trademark phrase, musicians’ catalogs.

8. Crypto

• Potential: Varied opportunities like mining and staking.
• Caution: High risk, include in smaller percentage of a portfolio.

9. Collectibles

• Items: Art, wine, cars, watches, handbags.
• Value: Appreciation potential, though not consistent for everyone.

10. Building a Business

• Benefits: Can generate multiple asset types (IP, goodwill, real estate).
• Example: McDonald's real estate strategy.
• Strategy: Develop and grow a business to build wealth.

11. Tax-Advantaged Accounts

• Types: IRAs, 401ks, HSAs, Roth accounts.
• Benefit: Tax-free growth increases asset value.
• Example: Teachers benefiting from long-term consistent contributions.

12. Education and Skill

• Concept: Constant learning and skill improvement.
• Quote: "Learn until you earn."
• Examples: Steve Jobs’ use of calligraphy in computers.
• Strategy: Continuously develop skills and knowledge for future gains.

Conclusion

• Emphasize continuous learning and strategy in building wealth.
• Encourage engagement and discussion on additional potential wealth-building assets.