Business owners and 1099 contractors tend to have higher risk tolerances than your regular 9-5 salary employee. They are used to fluctuations in cash flow and having to "eat what they kill". Many enjoy dealing with these problems because it allows them to bring in much more money and pay significantly less taxes than their 9-5 counterparts.
A salaried employee makes money, pays taxes, then can spend what is left over. A business owner or 1099 contractor is often able to make money, spend it, and then pay taxes on what is left over. Big difference!
One area that many business owners and contractors tend to stay away from is the stock market. I believe this is because many of them are more familiar with the physical world and enjoy investing in tangible assets, like real estate, that they can control and know more about. Also, business owners are often well-educated on the tax benefits of depreciation that tangible assets offer.
The fact is that in addition to receiving deductions for investing in tangible assets, many tax benefits are available for investing in businesses traded in public markets.
Here is the big idea put very simply: The same way business owners can pay themselves wages from their business, they are allowed to make investments for themselves (and all other employees, if desired) to help prepare for retirement. The tax savings come in two ways. The individual can write off their personal contributions and also the business can write off its contribution on behalf of the employees. These investments can be put in whatever stock and historically since 1802 have doubled every 6-7 years.
The biggest objection from those super into real estate and other asset classes is they wonder why they would put money into an account they can't touch till they are almost 60 years old when they could just make more investments in what they like and know. To them, I would say that the goal isn't to take away from money set aside for the current investment strategy, it is to redirect money that is already going to the government and place it on your balance sheets so it can work for you. This money is already spent on funding the government, so why not take some of it and put it back into your estate and watch it double every 7 years until you are 60? You're basically making the government invest for you since the money was supposed to go to them.
Also, I think it is important to diversify a little bit. If you live in a world of "eat what you kill" and fluctuating cash flows, a steady flow of cash into the stock of large businesses that are taking over the world will only help to stabilize your wealth over time.
Anyway, this is my two cents on the subject as someone who was a commission-only 1099 contractor for 3 years. I wish I had known this sooner.
Text, dm, or call if you want to chat about it or if you disagree.
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