How can an Individual Retirement Account build up to 9 Figures, when the IRS allows allows an individual to contribute 4-5 Figures Per Year? Mitt Romney “ballooned” his IRA Account to over $100 Million in his IRA Tax Free and did so legally!
That is the question. How did he do it? All of the details are unknown. However, we do have deas on what was done.
Learn from Mitt Romney
Romney was in the industry for buying businesses. He bought companies for a low price and then would ultimately sell them for a high price and run them through his partnership using his Self-Directed IRA. He was connected to Bain Capital that is in the business of adding value to companies and then selling them for tremendous value while having the assets split up.
Bain Capital and its partners look for companies that are e not worth as much as other companies.
It’s important to note that running this through a partnership is key because of an obscure little tax rule. According to John Hyre, Tax Attorney, Accountant, and Investor; The tax rule states that an interest in future partnership profits (which in the tax world would include most LLCs) is worth zero (or close to zero) on day one.
Let’s Do The Math!
If you do the math and say the partnership had 100,000 share worth a $1 per share. Therefore, A Self-Directed IRA with a mere $10,000 in it could buy 10% of the future profits in the partnership. Given how good Romney and his people were at finding/making deals, the value of 10% of the partnership’s profits could be worth millions after a few years. That could be how he did it. The IRA bought an interest in future profits for very little – and the future profits were worth quite a lot.
Let’s face it- we will not all be so fortunate as Mitt Romney has been with his financial decisions. However, Mitt Romney did not automatically follow the “herd mentality” with his money and indirectly subscribe to that mentality. I’ll be very frank- It is extremely easy to get lazy and just follow what everybody else is doing with their money
Romney used his greatest asset- Sound Financial Education; along with doing his due diligence, homework,and putting in many hours by learning this appropriate skill and trade. He did not sell himself short and let passivity consume his financial choices.
Wealth Building Should Not Be Easy and Should Take Preparation
So, it wasn’t simple. There are and will be lots of moving parts. However, if one does his diligence, takes his time, and looks at all options- there can be a different result than mediocrity. Wealth can be used as a tool to help your family and also help other families too. Therefore, when you are on your quest to build wealth for your family; certainly look out for your interests, but lookout for the interests of others as well too!
Many wealth building philosophies exist. However, use your biggest asset- get financially educated and gain more control through sound wisdom and homework.
As mentioned, Romney did not get results by sitting on his hands.