THE TRUTH ABOUT TAXES AND HOW WEALTH IS CREATED MATT THERIAULT
• If you’re an investor?
Investor, in this sense, does not mean taking your savings and putting them in retirement plans or trading on
the stock market. An investor, as it qualifies here, is someone who has other people send them money to
invest. When using other people’s money you’re able to receive tax deductions on the purchases you’ve made
with it. For example, you can utilize someone else’s money to acquire real estate and you’re still allowed to
claim the depreciation, a well-known tax benefit. Given that real estate is how wealth is created by 74% of the
wealthiest people in the country, it’s the primary area I focus on in creating my own wealth, and I help others
do the same.
In addition to the four cashflow quadrants, which are determined by how money comes to you, there are three
types of income. Each is taxed differently so it’s important to understand what they are.
Three Income Classes:
• Earned Income or Ordinary Income
The highest taxed income. It’s not uncommon for people to pay half of their earned income in taxes. Most
people work for earned income, and then turn around and have their savings work for more earned income
through interest or retirement plans.
• Portfolio Income or Capital Gains
The second highest taxed income. Capital gains occur when you buy low and sell high. It’s essentially trading
and that’s why it’s taxed differently.