Home Pediatric Dentistry Tax Reduction and its Game – Part 2

Tax Reduction and its Game – Part 2

by adminjay




As discussed in part 1 of this article relative to dentist retirement planning, the biggest opportunity for financial success is learning to be the orchestrator of your own financial future. You learned the Krebs cycle—you can learn the essentials of finance. There is no one who will care about your finances more than you. This represents a reinvestment in yourself after formal education.

Abdicate this responsibility at your own risk!

Beware! We are entering a new secular phase of social and economics that will challenge the old models.

The volatility of the markets, caused by higher costs of capital and the resurgence of inflation, has just begun. Forty years of declining interest rates, from a high of twenty percent in 1980 to zero percent in 2020, have fueled a period of economic and individual wealth creation that is an anomaly—this is not the norm!

Zero interest rates distort prices, leading to greater wealth disparity and increased government regulation, which is often associated with socialism. This equation is not conducive to future prosperity.

The COVID pandemic and subsequent lockdowns accompanied by trillions of dollars of “helicopter money” to stimulate an economy on its deathbed will distort the normal economic patterns for years. The U.S. debt liability has increased at an exponential pace since the 2008 financial debacle. A weakening dollar and foreign nations who want to replace the dollar as the global reserve currency is leaving the once mighty U.S. economic engine in danger.

Liquidity is being drained from the capital markets by the Fed which has caused bank insolvencies in the first half of 2023 that exceed all of the bank failures of the 2008 financial crisis. The massive amount of leverage in the system is about to unravel the house of cards that government officials have permitted.

We will see a return of the 70s stagflation.

The mid 60s to the early 80s was marked by high inflation and a stagnant stock market and economy. Removing the dollar from the gold standard in 1971 caused instability in the value of the dollar. The day of reckoning for decades of unmitigated debt spending will be a significant burden for at least another generation. The reconciliation will be painful.

There will be no return to the “normal” dentist retirement planning we’ve seen in the past.

This movie has played before, but most investors today are not old enough to have perspective… nor are their financial advisors who are just as lost. Learning how to navigate the future economy and financial markets may be the most important decision or non-decision that you will face after the selection of your career and life partner.

Financial assets (Wall Street products) are only claims on future earnings—there is no intrinsic value. Instead, tangible, or “hard assets” (businesses, real estate, precious metals), are the basis of the preservation of wealth and the key to your financial future.

These are words that will not be accepted by the majority. We’ve been indoctrinated to a financial construct that has had enormous tailwinds for the past seventy-five years.

After World War II, the world came together to begin rebuilding. The Bretton Woods Agreement of 1944 set the stage for one of the greatest expansions in the U.S. economy by establishing the dollar as the reserve currency and the U.S. as the superpower police nation.

Turning an economy from war production to one of productivity and the consumption of the Baby Boomer generation set the stage for a period of time that will not likely be duplicated. Globalization and free trade provided cheap products and labor for American consumption. Later, the move toward women joining the workforce increased the ability for families to upgrade their lifestyles substantially.

In spite of normal business cycles of six to eight years, the overall trend of the stock market indices has been positive until late 2021. Going forward, I predict that the elimination of the positive factors and the addition of the negative variables will result in a very stagnant economy which will put a damper on the earnings of corporations, and thus, stock market returns.

While investing in “alternatives,” or tangible assets, is more difficult for the average investor, the inefficiencies in such investments are what puts the individual investor in an advantageous position not available on Wall Street. The problem is, investing in hard assets takes time, study, work, and intentionality—a set of factors that dissuades the majority of high-income earners from making this venture even a consideration. Hundreds of my own doctor case studies prove that the outcome is worth the effort for those willing to go against industry groupthink.

The world of Wall Street says “No!” “No!” “No!”

Financial advisors, managers, and investing “gurus” convincingly tell you to just hand your money over to them and they’ll help you get “there.” Of course, they aren’t sure where “there” is because they have no idea how much your capital and investments will produce as far as cash flow goes. They don’t know what they don’t know, and many are too young to have ever experienced what is going on in the current economy.

The world of personal finance and investment has been purposely mystified for generations by the marketing machine of Wall Street, which includes its commissioned salespeople masquerading as financial advisors. (I’m not opposed to real financial advice. However, the traditional models are financial products disguised as planning.)

You’ve worked hard for your money, and no one will care about it more than you. This is why you need to break away from Wall Street’s volatile market and learn how to create cash flow with your money.

This is a game changer!

Fortunately, I started taking control over my money over 40 years ago. I was able to escape the chair some 20 years down the road. Even after a divorce, which splits everything in half, I was still able to do it. And you can do the same thing no matter where you are now.

Unfortunately, many alternative investments are intermixed with tax avoidance schemes which should be avoided. The allure of keeping more of your money can be overwhelming, especially if you are uncertain about how much will be enough. However, many tax avoidance schemes will increase your exposure and liability to audit in an era of increased scrutiny and vilification of success through the intentional disparity between the “haves” and the “have nots.”

Plus, 87,000 new IRS agents are entering the game with a mandate for blood!

The way to escape this risk is to have crystal clarity on exactly how much you need to be financially independent from your practice and a concrete plan to create that sustainable, predictable cash flow. Then, you can sleep better at night knowing that your nest egg is “free and clear,” and that the equity of your life’s work is secure and working for you.

After that, avoid the tax deferral games, pay your taxes, and get your investment capital to work for you instead of remaining stagnant in a “lockbox.”

I call this amassing “unfettered” capital.

What’s your plan for protecting and investing the proceeds of your life’s work? The stakes are high!

If you’re at that stage where you’re getting ready to sell, thinking about selling, or just made the sale, this is an extremely important move in which you will get one shot to do it right, or forever regret not understanding the ramifications of a poorly conceived decision.

Without the knowledge to move forward, you can’t make a smart decision or know what questions to ask. You may end up casually giving your money back to someone who says, “This is what we do for a living. Let us help you.” But they make their living off of you with absolutely no risk in the game!

You became a practice owner to control your own success.

Your hard work and sacrifices have brought you to where you are today with a significant return. Does it really make sense to abdicate control over this to an unproven party?

The next phase in your progression to freedom is to become your own financial advocate. You’ve come this far. Don’t hand over the reins to someone else now! No one cares about your hard-earned wealth as much as you do!

Invest in yourself like you did years ago. After all, if you don’t learn about creating cash flow and alternative investments to traditional dentist retirement planning processes, you’ll be at the whim of Wall Street. And the way it’s looking today, that’s a very scary proposition.


ABOUT THE AUTHOR

When his young daughter was hospitalized with leukemia, Dr. David Phelps, DDS, was able to turn to his alternative investments, step away from his dental practice and be by her side. From this experience, he created Freedom Founders in 2012. This community helps dentists and other professionals take control of their retirement investments to produce passive cash flow, security and live life on their terms.

To contact Dr. Phelps, visit www.freedomfounders.com.


FEATURED IMAGE CREDIT: Africa Studio/Shutterstock.com.



Source link

Related Articles