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Study Hall: How to Turn 8k to 325k For Your Child's Future · Earn Your Leisure

• 0:01
  Speaker 1: Earners.
• 0:01
  Speaker 2: What's up. You ever walk into a small business and
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  Speaker 2: This episode is brought to you by P and C Bank,
• 1:12
  Speaker 2: a lot of people think podcasts about work are boring,
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• 1:51
  Speaker 3: A couple of days ago, I'll put on Twitter and
• 1:53
  Speaker 3: Instagram about how to get your child a lot of
• 2:00
  Speaker 3: money in their retirement. So what I said was you
• 2:02
  Speaker 3: could turn eight How to turn eight thousand dollars into
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  Speaker 3: three hundred and twenty five thousand tax free for your child.
• 2:09
  Speaker 3: So here's the steps. So you open a RAWIRA for
• 2:12
  Speaker 3: your child. You put two thousand annually in between the
• 2:15
  Speaker 3: ages of fourteen and seventeen and let it sit until
• 2:20
  Speaker 3: they reach age sixty. Assuming an average of nine percent
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  Speaker 3: a year, that will equal three hundred and twenty five
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  Speaker 3: thousand dollars tax free at the end from your eight
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  Speaker 3: thousand dollars investment, and that will be a three thousand,
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  Speaker 3: nine hundred and sixty eight percent rate of return. So
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  Speaker 3: let me explain this in a little bit more detail. So, okay,
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  Speaker 3: and when a child starts to work, right of working age,
• 2:51
  Speaker 3: you can open up a retirement account for your child,
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  Speaker 3: an IRA or raw iray. I used raw ira because
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  Speaker 3: a raw fira is not tax when you take the
• 3:00
  Speaker 3: money out. Now, that's why I used age fourteen to
• 3:03
  Speaker 3: seventeen because in most states, fourteen is when you can
• 3:06
  Speaker 3: start working, and you know, seventeen is like kind of
• 3:09
  Speaker 3: when you kind of phase out out of high school
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  Speaker 3: and now you're kind of going into the eighteen. You're
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  Speaker 3: an adult at that point. So not technically my responsibility.
• 3:17
  Speaker 3: Just keep putting money into your account. So I did.
• 3:20
  Speaker 3: I did. If you put money in for four years, right,
• 3:25
  Speaker 3: two thousand dollars, which I think is a reasonable amount.
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  Speaker 3: I didn't want to do something that was crazy, like
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  Speaker 3: you know, and there's limits of how much money you
• 3:33
  Speaker 3: can put into an IRA anyway, right, And then so
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  Speaker 3: how I got the nine percent a year was that's
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  Speaker 3: the average for the S and P five hundred over
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  Speaker 3: the last twenty years. So I think that that's a
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  Speaker 3: very realistic expectation going forward. And that's like just SMP.
• 3:48
  Speaker 3: We're not even counting QQQ or you know, tech stocks,
• 3:51
  Speaker 3: which I've done obviously much much better than that, right,
• 3:56
  Speaker 3: and that would give the child three hundred and twenty
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  Speaker 3: five thousand dollars. So one of these, you know, is
• 4:03
  Speaker 3: there's always criticism for everything because it's America. So some
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  Speaker 3: people were like, well, damn, they got to wait until
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  Speaker 3: they's sixty years old. The whole point of it is
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  Speaker 3: that it's a retirement account, right, it's like trust almost
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  Speaker 3: in a sense. And how many people would be mad
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  Speaker 3: if they when the data they turned sixty, they had
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  Speaker 3: three hundred and twenty five thousand dollars tax free, Like,
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  Speaker 3: who would be mad about that?
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  Speaker 4: Yep?
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  Speaker 3: Right, and it only cost you eight thousand dollars, right,
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  Speaker 3: So why would you not want to set your child
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  Speaker 3: up not to say that this is the only money
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  Speaker 3: that they're going to have, but it's something that you
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  Speaker 3: can do for their future, right to help Then people
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  Speaker 3: was like, well, inflation, three hundred and twenty five thousand
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  Speaker 3: dollars is not even going to be worth anything. Okay,
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  Speaker 3: well better than nothing. It's better than nothing. And as
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  Speaker 3: I said, if you can do better than almost the
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  Speaker 3: fourth thousand percent rate of return over that timeframe tax free,
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  Speaker 3: which is actually a higher a higher rate of return
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  Speaker 3: because you have the factor in taxes, there's no taxes
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  Speaker 3: in it. I don't think that there's something that you
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  Speaker 3: should just throw away, right, And if you think that
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  Speaker 3: that's not enough money, then you could put in more money, right,
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  Speaker 3: you could put up to six thousand thinks sixty to
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  Speaker 3: an IRA. But this is just the IRA play. I mean,
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  Speaker 3: you can do this with a non qualified account. Also,
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  Speaker 3: you can do it with a money. You can put
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  Speaker 3: one hundred thousand dollars a year if you if you
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  Speaker 3: want to, if you are blessed to have that much money,
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  Speaker 3: and you feel like, you know, three hundred and twenty
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  Speaker 3: five thousand dollars tax free is not enough, well you
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  Speaker 3: do the calculation and equal whatever you want to equal
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  Speaker 3: a million. But the idea is that when you put
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  Speaker 3: money in early, there's a thing called compounding interest that
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  Speaker 3: works in your favor. And the longer that you can
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  Speaker 3: go without actually having to access that money, the more
• 6:00
  Speaker 3: beneficiary will be in the long.
• 6:01
  Speaker 1: Run for the child.
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  Speaker 3: So we talk about college savings a lot for children.
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  Speaker 3: That's important, but we haven't really spoken a lot about
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  Speaker 3: retirement savings for children. Like you could literally start and
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  Speaker 3: plan your child's retirement now, or like I said, just
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  Speaker 3: have an esteache for them so when they get to
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  Speaker 3: a point where they are at retirement, they have another
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  Speaker 3: source of money that can be added with. They they
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  Speaker 3: might have three million dollars on their own, okay, now
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  Speaker 3: is other three hundred thousand right now? They can use
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  Speaker 3: this to buy a home in Ghana, right or they
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  Speaker 3: can use this to give to their grandchildren. They could
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  Speaker 3: do a variety of other things. Like nobody's ever going
• 6:44
  Speaker 3: to turn down extra money. So that was something that
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  Speaker 3: you know, once again going back to my financial advising days,
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  Speaker 3: you know, I set iras up for people and then
• 6:53
  Speaker 3: I also set iras up for people's children sometimes. And
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  Speaker 3: another benefit for the entrepreneur is that you can actually
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  Speaker 3: start this type of program earlier than fourteen because as
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  Speaker 3: long as your child is working and actually doing a
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  Speaker 3: real job, so they could be nine years old, they
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  Speaker 3: could be ten years old, and the money so now
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  Speaker 3: you can put money aside and you can take it
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  Speaker 3: from the salary that you're paying them. You can pay
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  Speaker 3: your child up to like twelve thousand semi dollars a
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  Speaker 3: year as an entrepreneur and get a tax right off
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  Speaker 3: for that money that you're paying them. Right, So now
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  Speaker 3: you can do the same play where you can actually
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  Speaker 3: like let's say you're paying them two thousand dollars a year,
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  Speaker 3: right and then the money that you're paying goes into
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  Speaker 3: a retirement account, So now you're getting a tax deduction
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  Speaker 3: and you're also being able to save for your child's
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  Speaker 3: retirement as well. So that's a caveat in it for entrepreneurs.
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  Speaker 3: But even if you're not an entrepreneur and you just
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  Speaker 3: work a regular nine to five job, you're still able
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  Speaker 3: to put money away on a tax deferred basis that
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  Speaker 3: will grow and your child can access it later or
• 7:57
  Speaker 3: in life tax free.
• 8:00
  Speaker 1: For the long term. I think the biggest lesson in
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  Speaker 1: the last four years just the longer you can invest
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  Speaker 1: and plan in terms of succession for the family, the better.
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  Speaker 1: So I know people may have some pushback for it,
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  Speaker 1: but like you said, who want Who wouldn't want an
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  Speaker 1: extra three hundred thousand or four hundred thousand upon retirement,
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  Speaker 1: and with the rate of inflation, you're you're going to
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  Speaker 1: need it.
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  Speaker 2: Trust me, even with the regular face like what does
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  Speaker 2: that turn into? Like let's say it's two seventy five, right.
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  Speaker 1: Like you still it was worth it.
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  Speaker 2: It's still a great nest egg. And a lot of times,
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  Speaker 2: especially in our communities, when we approach retirement, right, yes,
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  Speaker 2: for your kids, but you're also taking care of the
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  Speaker 2: generation ahead of you a lot of times, right, and
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  Speaker 2: so you have an additional responsibility to not only take
• 8:44
  Speaker 2: care of your family, but you know your parents or
• 8:47
  Speaker 2: you know sometimes if you have aunts that took care
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  Speaker 2: of you, were responsible for you. Now you're taking care
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  Speaker 2: of them. So where are you getting that money from?
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  Speaker 2: So it's always it's always always recommended to always plan
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  Speaker 2: for the future. Please plant for the future, plant for
• 9:01
  Speaker 2: because you don't know.
• 9:02
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