Today, we’re going to talk about the millionaires and the millionaire strategy they apply. The millionaires pay themselves close to nothing, only $1. If you’re looking to learn about real estate, chances are you expect to be a millionaire one day. In order to get there, you need to start thinking like one.
One of the key factors why millionaires will pay themselves only $1 is taxes.
In case you didn’t know or maybe you knew but you need a bit of a refresher, you pay taxes according to how much money you make. The richer you are, the more money you have to pay.
That’s why you always hear on the news that the richest don’t pay any taxes because they have this type of information to outsmart the system in a legal way.
If you make $50,000, you have to pay 10%. If you make $100,000, you have to pay 15%. If you make $200,000, you have to pay 17%. That’s how they assign you the tax bracket depending on how you make yearly.
That’s only at the federal level. In addition to that, you also have to pay taxes on the state level. In addition to that, you also have to pay FICA taxes.
- FICA: FICA refers to taxes towards social security, and Medicare.
- Net worth: If you don’t know what your net worth is, it’s just basically what you as a person are worth based on your asset, based on your liabilities, based on everything you have.
The simple formula to determine your net worth, it’s literally just taking your assets and then subtracting your liabilities, and that will give you the number.
In fact, the net worth is one of the very first things that a bank wants to know about you when it comes to a mortgage application. They make you fill up a sheet that contains all of the assets that you have, all of the savings, and whatever type of debt or liability that you have, and that’s how they determine your net worth, and they determine whether you can afford to have a mortgage with them or not.
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The more money you make, the more taxes you’re going to have to pay. The tax rate starts at 10% when you make under $10,000 if you’re single, under $20,000 if you are married. Then as you progress down the chain or if you start making money down the line, obviously, your tax bracket starts increasing.
What tax bracket do you think millionaires are going to end up with if they’re getting paid only $1? They will be at the lowest tax bracket possible.
They’re not avoiding taxes, they’re just simply doing it illegally. They’re gaming the system, they’re learning about the advantages that one financial structure has over another, and this is one of them.
- Capital gains: A capital gain tax is a tax on the growth in value of your investment.
You can actually enjoy the tax breaks, the tax benefits and still manage to keep the majority of your wealth as possible. This is how Mark Zuckerberg, the CEO of Facebook, did it. Also, that’s how Larry Page, the co-founder of Google, did it.
Some of the key points as to why you should care so much about something like this if your plan is to become the next millionaire. There’s an article that tells us a little bit about a millionaire’s experience managing taxes.
How much does the Facebook CEO earn?
“As revealed by Facebook annual proxy statements submitted to the SEC, Zuckerberg currently earns a base salary of just $1, making him Facebook’s lowest-paid employee.” Lowest paid. “This has been the case since 2013 when Zuckerberg first requested for his $500,000 base salary to be dropped.” This is how he compares himself with other tech leaders.
Then we have Jack Dorsey from Twitter making $1.4. Then everyone below managed to make a little bit more. “The practice has been ongoing since the early 1900s but has become increasingly common in recent years with the likes of Michael Bloomberg, founder of a financial data company by the same name, and Donald Trump having rejected anything more than $1.”
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“Google co-founder Larry Page and Sergey Brin have been paid $1 since the company went public in 2004, while Zuckerberg’s social media rival Jack Dorsey refuses to earn above $1.4 despite his fortune being considerably smaller than the Facebook founder.”
What makes them a millionaire?
Every asset that you own makes up your net worth. As an individual, you have savings, but potentially or if you don’t have them already, you could have real estate or you currently have real estate. Some people invest in the stock market.
“While Zuckerberg may be paid pocket change for his continual role with the social media company, he continues to add billions of dollars to his wealth each year.” Why? Because the value of Facebook goes up every single year. His net worth is composed of the stocks that he owns.
“Over the past decade, the Facebook founder’s worth has grown by 58.3 billion. That equates to approximately earnings of $5.83 billion annually. The Facebook company still owns about 28% of the company’s publicly traded Class A shares”. As the price of the shares increases, so too does Zuckerberg’s wealth.
Google’s Co-founder – Millionaires
On the other hand, despite his virtually non-existent salary, Page has profited immensely from his company. His net worth is estimated to be around $60 billion as of April 2019. His wealth increases only if the stock’s value increases, his interests are more aligned with the company’s success.
Each stock of Gooche is worth $2,083.81. They don’t have to worry about paying any of the high tax brackets. They don’t have to worry about any FICA taxes whatsoever.
All they have to do is to maximize their gain so that way they pay capital gains and that’s how they retain their wealth, and they continue to maximize each of the net worth that will remove their worries about having to constantly work on something else, constantly working to preserve the wealth. All they have to do is just to give it all they got to their company to make sure it continues to grow and that way their wealth will also continue to grow.
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