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The Tree of Happiness There is no nexus between a tree and your happiness. At least, that's what I believed until I learned about the tree of happiness -- Albizia. Chinese call it a tree of happiness. It bends in the winds but doesn't break. Interesting. I call it perseverance. How... Read more

The Simple Path to Wealth One of the cornerstones of this blog is the fact that you need to achieve financial peace so that financial worries can't rob your happiness. Everything we do is for one and only one reason -- to be free and to be happy. A street smart person knows how to... Read more

Why Trump Will Be the Next President After winning primary in the Hoosier State, Donald Trump has been declared the presumptive nominee of the Republican party. Pundits declared that he can't win against the Clinton political Juggernaut. May be. But I don't agree. While most polls show Clinton... Read more

The White Coat Investor: A Book Review I admire physicians. I am not a physician but I have been fortunate to work with several smart physicians. Physicians are naturally bright professionals as I have seen them learning technology and even programming even though that is not their core focus. On... Read more

Why Apple is still a good investment   You don't have to be a pro to understand why Apple is still a good investment; in fact, you are better off being a motley fool even if you watch CNBC. On Jan 28, 2015 Jim Cramer called it an investment of lifetime; a stock that will rise again this... Read more

Diversify...Really?   It's OK to have your eggs in one basket as long as you control what happens to that basket. -- Elon Musk It sounds oxymoronic but the fad in the personal finance industry is to promote diversification. Ironically, most of us are really bad at diversification... Read more

Wela: An Interview with Wes Moss With the advent of the Internet, our lives have changed forever. Amazon is redefining how we buy anything including pencils to power tools. Whether you like it or not, wealth management has also begun its inroads on the Internet. The brilliant idea that you... Read more

How to Invest in Stocks like a Pro   Let's face it -- most of us, mere mortals, consider investing ourselves in a stock market akin to playing Roulette in Las Vegas! If you have similar thoughts then you are not alone! According to Henry Blodget, one time super star Internet stock expert,... Read more

Why I still Invest in Apple   Let's face it -- most of us are Apple investors. If you deny, look at top ten holdings of any mutual fund that you own. Unlike old superstar stocks of the past -- Intel, Microsoft or Dell to name a few -- there is something unique about Apple. It has... Read more

lnvestment Lessons from Warren Buffett Games are won by players who focus on the playing field – not by those whose eyes are glued to the scoreboard. If you can enjoy Saturdays and Sundays without looking at stock prices, give it a try on weekdays. -- Warren Buffett While Warren Buffett... Read more

Is Tesla Still a Worthy Investment?   "Is Tesla still a worthy investment?," asked a friend of mine who read my article which I wrote back in June of last year. A lot has happened since then. Tesla stock has doubled in price and Elon's presence in the media is omnipresent. This guy is... Read more

Year 2013: My Favorite Personal Finance Articles It is hard to believe but, indeed, year 2013 is in the box. For stock investors, it was a banner year. Nasdaq finally climbed back to its old highs and other indices performed brilliantly as well. While pundits on the Street may have tried their best to... Read more

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Creative Ideas to Make Money Work for You

We all think about making more money – to pay bills and to save for the retirement. But making an extra income without investing it wisely for the future growth may not be the best strategy. Not only think about making more money, but also about creative ways to make money work for you tax free – sounds oxymoranic – but it’s easy to do.

It’s fact that when it comes to wealth, rich people invest more into tax sheltered investments that grow over the time. They learn how to use compounding rate of return to grow their nest egg tax free. The secret lies in the fact that rich people know how to reduce their realized income by finding ways to grow their unrealized income.

All of our ideas to make money revolve around the central fact that we all want to have more disposable income – to invest and to grow our nest egg. But taxes take a huge amount of money away before we even realize it. So, let’s explore some of these ideas to make money work for you once you earn it.

Invest in Roth IRA to own commercial real estate.

Roth IRA is the best tax free investment vehicle. By paying taxes upfront, IRS allows up to $5000 per person to save in Roth IRA. Married couple can save $10000 per year in Roth IRA. Assume that you are in 25% tax bracket, $2500 goes to uncle Sam and $7500 goes to Roth IRA. One of the best usages of Roth IRA can be made to purchase investment properties. All you need is a custodian company that can handle real estate investment through your Roth IRA. It’s very easy to find these companies on Google. With the current real estate market plunge, you can find distressed or foreclosed investment property at a deep discount. Your Roth IRA can purchase this investment property and also fund the needed repairs. You can sell the property and make money without paying any capital gains. Now, you can invest in another property and repeat that process over and over. You will never pay taxes ever. All the accumulated capital gains can be used for any purpose – even for your child’s education in the future.

Invest Roth IRA or Simple IRA into tax free income fund.

Another great way to grow your asset tax free is to invest part of your Roth IRA or simple IRA into tax free income fund. If you have $100,000 in your taxable investment yielding 5% annually then you would have earned $5000. But, if you are in 28% tax bracket then your realized gain would be $3750. Instead,  if you invest same $100,000 into a tax free income account yielding 4.5% annually, it would have returned $4500. Now, you have $750 more to invest next year.

Albert Einstein once said that the best force in the world is the power of compounding return. Once you become a good custodian of your money and find ways to let it grow tax free, you’ll be amazed that these simple ideas can make money work for you.

 

 

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Comments (4)

[…] There is no income tax on asset that appreciates yet has no earned income. Wealthy people invest in income producing real estate and mutual funds. Unrealized income is one of the greatest investment tools to become […]

Interesting recommendations. And timely for me. We should have some funds avail soon and we were wondering how to invest it. What you suggest seems like an interesting options to explore – thanks for that.

[…] good idea to invest your retirement funds into a growth or an index mutual fund. But, the market has not returned much in last 10 years. Both DOW and NASDAQ are well below their […]

[…] good idea to invest your retirement funds into a growth or an index mutual fund. But, the market has not returned much in last 10 years. Both DOW and NASDAQ are well below their […]