All right, this one will be fun to jump into,
but something I've been thinking a lot about lately is Bitcoin.
It's all over the news and, like,
is typical. It's, the price has fluctuated quite a bit,
but over the last six months, the value of course has gone up.
It's gone up a lot. There's talks about the strategic Bitcoin reserve and other
cryptocurrency tax laws,
just with the United States changing them,
supposedly, we're hoping to make it easier to hold.
Lower the tax, the tax implications of selling it.
So there's a lot of, a lot of Bitcoin and crypto talk.
So I started to think about, like, the long-term hold implications,
using Bitcoin as reserve. So I started to run some scenarios,
honestly, for myself first, and then just something I wanted to share with everybody.
Uhm, but what would it look like if you held one Bitcoin
today? Say this was part of your retirement plan.
If you held one Bitcoin, what could you do to retire
on that? Like, we need, we, we don't retire on just an investment
that doesn't provide cash flow, right? Like, if.
We need to spend like retirement. A lot of times we're thinking of like
to be financially free in retirement. We're thinking that our income is
that exceeds our expenses. Like our,
our inflow needs exceed our outflow. Like whatever we want to spend money on,
if we want to travel, if we want to pay for housing and trips
and, and, and other things like we need cashflow.
So to get cashflow from.
Bitcoin, one of the opera, one of the options you'd have to not have
to sell it, you could borrow from it.
And I know in 2021, 2022,
there were some major issues. So just when you're,
if you're diving into this or first hearing about it,
there were some major issues with Bitcoin companies like the FTX and
Celsius and others, like where they were just over leveraged,
where they would use their own, their own cryptocurrency.
And they would leverage it and just so many of these companies got over
leveraged and it kind of just crumbled. So don't over leverage yourself and,
and then analyze and evaluate risks and don't,
yeah, don't. Yeah. Of course, don't. Don't invest money that you can't lose or
can't live without. Um,
but using this as part of your strategy,
part of your long-term wealth strategy,
retirement strategy, I would do it.
Like I'm doing this, this, this is.
It's part of my long-term wealth and long-term retirement strategy with Bitcoin.
So right now, I think there are other companies that are doing it,
but the one that's kind of come to mind,
the one that I've seen, um,
getting pretty active. into the space is Coinbase.
Of course, a lot of you, if you've heard of cryptocurrency, you've probably heard
of Coinbase, one of the biggest in the United States.
Uh, they are allowing loans on your Bitcoin.
So as an example, like, what this means. Is if you have,
say one Bitcoin, and in this episode we're just gonna say,
we're just gonna say that it's worth,
or the value is at 100,000 right now.
It's between 100 and 110 probably today.
If you have $100,000 of Bitcoin,
so you have one Bitcoin, you deposit that into Coinbase.
Coinbase is partnered with a company called Morpho,
and Morpho does these loans, and it's all inside your Coinbase account.
I've tested it out just to see how it works,
and it does work, but you put in a Bitcoin,
or in any portion of a Bitcoin, it doesn't need to be a full
one, you put in a portion of it. And you click a few buttons,
go through the process, click sign,
you can borrow back, so say it's $100,000 a Bitcoin,
you can borrow back, I believe they're letting you borrow up to 70% of
that. So, you put in a $100,000 value of Bitcoin,
you can borrow $70,000,
they give it to you in U.S. dollar coin,
but that can be converted to U.S. dollars,
immediately, that can be transferred to your bank,
so you could, put in one Bitcoin, you can pull $70,000 of cash right
back out. So, hypothetically,
well, not hypothetically, actually, you could own one Bitcoin for $30,000
of cash, because you put in a hundred, Like, you pull out $70,
you're net $30. But what it looks like now is that they are holding
one Bitcoin that you can't sell because they're using it as collateral.
Almost like real estate collateral. And this has always been around with,
Stocks. If you have a stock portfolio, you can do something similar.
You can borrow, It's not really easy.
Not everyone does it, but it's, It is possible.
You can borrow based on using your stock portfolio as,
collateral to just get actual cash right back out.
So, if you, So, the scenario I started to run,
or when you get that cash out, so the 70,000 that comes out,
um, you're not selling the Bitcoin.
It's never sold, you're not realizing. If you bought that one Bitcoin for a
dollar, you put it in there, you can get 70,000 to cash out,
and you're not paying any tax on it. It doesn't,
It's a a sale. So it's kind of like real estate when you do
a cash out refinances, which I've talked a lot about on this,
but I've not really talked about the Bitcoin. It really is like a cash
out refinance of sorts in Bitcoin. But,
If, say, if everyone started to do this,
if people were not holding Bitcoin, if it really is a store of value,
I feel it is. A lot of other people feel it is.
Like, I don't want to sell it, but it'd be nice to get some
of the cash out of it. If, You start to, start to accumulate a
lot. So that's a way you can do that.
So here's, I'm, I'm going to share the specific examples with you of how
you can retire, tax-free,
and by retirement, I'm talking about cash flow.
Like how you can get this tax-free cash flow that you can actually live
off of, uh, how you can get that tax-free.
Um, and the scenarios I've run,
so I ran three different scenarios.
One, if Bitcoin goes up, 10% in value a year,
like over the next 10 years, and we'll just kind of look at 10-year
scenarios, and if it goes up 20% in value over the next 10 years,
and if it goes up 30% in value in the next 10 years.
So, I've got, I've got
those three scenarios. And kind of the overarching strategy here,
and, or just kind of like process here,
is that the Bitcoin, the one Bitcoin that you own,
currently at 100,000, say in year one with the,
10% example, at the end of year one,
it goes up to 110,000.
That incremental growth now opens up more opportunity for you to borrow from that.
And that what you borrow is what you're living off of. And
that there's a, there is a net difference. So in the net difference of
what you're gaining. So if it goes up 10% value,
you took a loan out on this Bitcoin, right?
So the loan. When you took out, at least right now on Coinbase,
it's, it's like a 5%, like 5.1% interest rate. So if Bitcoin is only
going up 5% a year,
say it goes up 5% a year.
The loan costs, if the loan costs 5% a year,
you're not making that much. Like,
you're, you're not, there's not a lot, there's not going to be a lot
of cash flow that you can pull out of because the interest payments.
Are eating away at the equity that you have.
Um, and then in these examples,
so I ended up doing, I didn't do a 70% loan to value example.
I just, cause they do in these loans.
If you get to an. 86% loan to value,
they'll liquidate your, your crypto.
They'll, or they'll liquidate your Bitcoin.
They'll sell it so you can satisfy the loan.
Cause they, they don't, they want to limit their risk as well.
And they're holding your. Bitcoin collateral,
they'll sell it if it gets up to an 86%.
So if you, if, uh,
you have Bitcoin dropped, so you pull out 70,000 of cash.
So just a real quick explanation of how that works.
If you pull out 70,000 of cash.
You're at a 70% loan of value compared
to the $100,000, uh,
value initially. But if it goes down to $81,000 of value, your $70,000 loan
is, than an 86% loan of value,
and that's when they can liquidate it. So, so these scenarios I'm doing are
at a 50% loan of value. So,
over the time as it grows, and that,
I'm gonna do, uh, on one, of the wealth game weekly calls,
wealth game alliance calls. I'll go through these scenarios and I'll show you the
numbers. So, right now it might be a little,
yeah, hard to grasp since I'm not. I'm not showing you anything on the
screen, but, uhm,
so the 10%, 10% growth.
So, as you, it grows, Bitcoin grows 10% a year,
but you're accumulating as you're drawing, you're maxing out the 50% LTV every
year, your loan is also accumulating.
So, I've done the, the math on accumulating interest,
like the cost is increasing on how much you need to pay on the
interest, but the value increased the appreciate.
So, if, if it grows by 10% a year,
umm, year one, it's like year one,
uhh, you could, you pull out,
uhh, 50, like the $50,000 on day one to get to
the 50% loan to value, and then it grows by 10%,
right? So, grew to 110,000, so you can pull out $5,000 a cash in
year one. Like,
okay, you can't retire on that yet.
Um, and then year two starts going up,
like, year three, four, five.
It's like three to $5,000 a year.
Remember, this is just on the growth. You're happy.
You have to cover the interest cost and the math I've done,
we're staying under the 50% LTV.
You're eight. You're drawing six, five,
six thousand dollars a year. You're 10,
11, drawing, like six or seven thousand.
So it's like,
it's not life changing. Like you wouldn't be retiring on that.
It's like cool. You own some Bitcoin,
but you've taken out a bunch of loans. So those loans,
if you've taken five to six thousand a year over 10 years,
plus the original 50, like you have a hundred thousand dollar loan and two
to three hundred thousand dollars of Bitcoin over those 10 years.
But here's. Where the math starts to get really fun at the 20% rate.
So, of course, you still, you're still drawing out the initial amount,
like the 50,000. But if it's growing 20% a year,
now all of a sudden you can, you can pull out like.
Year 3, you're pulling out 12,000.
Year 5, you pull out 16,000.
These are the loans you're pulling out. Year 8,
close to 30,000. Year 10, it's $40,000.
Year 11, 50. Year 12. Year 12,
60. Year 13, 70. Like, at that point,
it really starts to compound. And then that's the 20% scenario.
So then the 30% scenario,
of course, it's the same upfront. You can pull out 50 grand to get
to the f 50% LTV. But by Year 3,
you're pulling out over 20,000.
Year 5, you're pulling out, uh, 40. Year 6 is 50.
Year 7 is 60. Year 8 is 80.
Year 9 is, like, just over a hundred.
By Year 10, you're pulling out about $140,000.
That's a year. That's every single year that you could pull out.
And this is, of course, assuming that we're still able to,
To borrow and collateralize your Bitcoin.
By Year 15, you can be pulling out $500,000 a year.
You have $5,000,000 a Bitcoin.
One Bitcoin. Umm.
By Year 20, $1.9 million of tax-free loan that
you're pulling out. That would be if Bitcoin is valued at $19 million.
But, Uhm, that's,
that, that really is the scenario I wanted to run past you.
And that's, that's what I want you to, that's what I want you to
see is you're, as we're planning for long-term wealth,
tax-free wealth. Cause if you, like,
if you just converted that to, Like, say you did that same thing with
stocks, or if you were selling it,
like if you're actually selling it in the tax rates,
federal and state all in, if you're to 30% tax rate,
it's like, drawing, pulling, or selling,
And paying tax on money that you need to pull out,
all of a sudden that tax hit is just completely eating away at your
returns. It's like the tax really is.
You've heard, like, taxes are your big, biggest expense.
That's why, because it, it stops the power of compounding.
Like, instead of having after 10 years of $5 million investment by
having one Bitcoin now, if it grows 30%,
which is, I think in a lot of the projections that a lot of
people are doing, that's kind of a conservative estimate.
Uhm,
which, yeah. But it's, it's,
it's amazing. So just, to think of,
or, Tax-free retirement,
tax-free wealth is amazing. That's, that's what I want you to think of.
And there's a lot of other opportunities, a lot of other options to do
that. But that is just one of them that I wanted to share with
you. So that's how you can retire tax-free.
On Bitcoin with, by owning one Bitcoin in 10 years
and hitting that 30% average annual return would be
the, would be the key to really help someone retire.
In 10 years by just owning one Bitcoin today.
Yeah, have a good rest of the day.
