Wealth Formula Podcast

Market Updates: Economic data since last week's update: Core PCE Price Index rose 0.2% in April, in line with expectations Job openings decreased in April, indicating a cooling labor market Equity markets have been a bit volatile recently, down a couple of percentage points Ongoing volatility is expected as we move through the summer and elections However, the economic and inflation backdrop should provide good support for public equity and bond markets Potential for the Fed to start reducing rates in the second half of 2024, which could restart the real estate investment cycle The recommendation is for investors to be deployed and looking for opportunities, rather than sitting on the sidelines Investment Topic: Private Credit Funds Also known as private debt or direct lending Growth in non-bank lending due to regulatory changes making it harder for banks to expand their balance sheets Private credit funds raise capital from investors and deploy it as loans and other debt instruments Can target different types of credit and debt structures Potential benefits include regular interest payments, 7-12% annualized cash returns, and portfolio diversification Risks include being locked into a long-term investment and fund manager selection being key

This week's episode on Wealth Formula Podcast is a primer on asset protection. One of the things that I learned a few years back is that asset protection and estate planning are not one and the same. Asset protection is simply protection against creditors. An offshore trust in the Cook Islands, for example, is a rock solid way to protect your assets but it is not an estate planning vehicle. Since this week's podcast discusses asset protection, I want to just remind you of what you MUST know about estate planning. As of today, if you are single you can leave up to $13.61 million to your heirs without being subject to estate taxes—double that if you are a married couple. As long as you are below that, you need two things at a bare minimum to ensure that you don't make your loved ones even more miserable than they already will be. You need a will AND you need a trust. The key difference between a will and a living trust lies in how they manage and distribute your assets during your lifetime and after death. A will is a legal document that outlines how you want your assets distributed after you pass away. It only takes effect upon your death, at which point it goes through the probate process overseen by a court. On the other hand, a living trust is a legal arrangement where you transfer ownership of your assets into a trust during your lifetime. The trust is managed by a trustee (which can be you initially) for the benefit of your beneficiaries. Upon your death, the assets in the trust are then distributed according to your instructions, bypassing the probate process. You want to avoid probate at all costs if you want to make it easy on your loved ones. Probate is the legal process that takes place after someone dies to distribute their assets and property to the rightful heirs or beneficiaries. It involves going through the court system, which can be time-consuming, expensive, and open to the public. It can drag on for months or even years, especially if the estate is complex or there are disputes among heirs. A living trust allows assets to be distributed relatively quickly after death without court involvement. Furthermore, probate fees, court costs, attorney fees, executor fees, etc. can eat up a significant portion of the estate's value. With a living trust, you avoid most of these costly probate expenses. So if you have not done so, PLEASE make sure you get these documents done. It's not expensive and your family will thank you for it. Show Notes: 05:47 A Review on Estate Planning & Asset Protection 07:56 How to Determine What You Need 12:03 Protecting Your Real Estate 13:53 When Do You Need a Trust? 16:45 Asset Protection Strategies that Mitigates Tax 19:45 Upcoming Law Changes 23:50 Beneficial Owner Information Report

Buck shares the similar path that almost every successful entrepreneur he knows took.

The upcoming wealth transfer from Baby Boomers to younger generations is a significant and unprecedented event in history, often referred to as the "Great Wealth Transfer." Research indicates that about half of this $100 trillion transfer will go to Gen X, with the other half going to Millennials and Gen Z. This generational shift is interesting, as Gen X has been described as less altruistic, preferring to retain wealth for themselves, compared to the younger generations' greater focus on social equity and environmental sustainability. It will be intriguing to see how this "impact" orientation evolves as Millennials and Gen Z age. For those listeners who will be on the receiving end of this wealth transfer over the next decade or two, it's important to have the proper structures in place to ensure a smooth and tax-efficient transfer to your heirs. This is something that can and should be addressed now. Considering this upcoming wealth transfer also leads to some additional implications from an investment perspective. Baby Boomers' portfolios tended to be heavily weighted in stocks, bonds, and real estate. However, surveys show Millennials and Gen Z investors are much more open to alternative assets, such as real estate, private equity, venture capital, crypto, and other investments. This shift aligns with the younger generations' higher focus on sustainable investing, which accounted for 73% of their portfolios compared to only 26% for the general population. While there has been some recent backlash on sustainable investing, this trend could see a resurgence as the wealth transfer occurs. Interestingly, real estate seems to be a consistent favorite across all generations. Turning to the current market environment, equity markets remain near all-time highs, bond prices are generally steady, and safe-haven assets like gold and bitcoin are also elevated. The market expects the Federal Reserve's preferred inflation metric, Core PCE, to show further cooling when the latest data is released this Thursday.

The Baby Boomer generation (born 1946-1964) was historically the largest, peaking at around 78.8 million in 1999 when they were in their prime working years. However, the current Baby Boomer population in the U.S. as of 2019 is estimated to be 71.6 million, having declined due to mortality exceeding births as this generation ages. The Millennial generation (born 1981-1996) has now surpassed the Baby Boomers to become the largest living adult generation in the U.S. As of 2019, there were 72.1 million Millennials. The Millennial population is projected to continue growing, partly due to immigration, and peak around 2033 at 74.9 million before declining as mortality rises]. Following the Millennials is Generation X (born 1965-1980), with 65.2 million members in the U.S. as of 2019. Gen X is expected to outnumber the declining Baby Boomer population by 2028. The youngest major generation, Generation Z (born 1997-2012), is also a massive cohort. Gen Z makes up around 20% of the current U.S. population. The Gen Z population in the U.S. is expected to grow from immigration as well, similar to Millennials. The sheer size of the Millennial and Gen Z generations presents both opportunities and challenges for the U.S. economy. A larger working-age population can drive economic growth through increased productivity, consumption, and tax contributions. However, it also puts pressure on job markets, housing, infrastructure, and social services. A recognized major emerging problem is the challenge of supporting the aging Baby Boomer population as they continue retiring in large numbers. The burden of funding Social Security, Medicare, and other retirement programs will fall primarily on the Millennial and Gen Z generations. This will almost certainly strain public finances and some economists have even predicted a major national depression around 2030 because of this. All of these problems have been previously covered to some extent on Wealth Formula Podcast episodes in the past. This week, however, we cover another less appreciated problem…the transfer of massive amounts of wealth to a generation with different political views and values. My guest on this week's Wealth Formula Podcast believes this is a major underappreciated issue that needs to be addressed as soon as possible. Find out why. Show Notes: 00:00 Intro 05:54 The 100 Trillion Dollar Wealth Transfer 08:25 The Mindset Difference between Baby Boomers and Millennials 10:32 The Risk of the Wealth Transfer 14:59 Monetizing Influence 16:39 Where is Gen-X in All of This? 18:36 The Positive Outcomes 21:12 Where Does the Discourse Take Place? 23:10 The Worst Case Scenario

Buck Joffrey is joined by Rod Zabriskie and colleagues of Wealth Formula Banking to discuss this powerful financial tool that leverages your savings to invest the same money at two places at the same time.

Takeaways Tax policies can have a significant impact on businesses and individuals, and it's important to plan and adapt accordingly. The depletion of social security funds is a concern, and solutions need to be implemented to address this issue. The stock market has been performing well, with the Dow Jones hitting all-time highs and the S&P and NASDAQ showing significant gains. Diversification is key in managing investments and mitigating risks. Having a strong financial team, including tax specialists and estate planning experts, is crucial for navigating the complexities of the current market.