00:43:49 · Molly O'Shea
[00:43:49] S1: I can't handle the heat. No offense to Dubai. I'm sure it's lovely there and people are great, but I will not be moving there. It's too far. Today's episode is sponsored by VCX by Fundrise, the public ticker for private tech, allowing investors of all sizes to invest in venture capital. Learn more at getvcx.com. Some of you may not have heard this yet, but our sponsor Public just launched something called generated assets, and it brings AI into investing in a way I've honestly never seen before. Here's how it works: You type in an idea like AI powered supply chain companies with positive free cash flow or defense tech companies growing revenue over 25% year over year. Publix AI then dispatches a swarm of agents that scan every single US stock, evaluates them, and instantly builds a custom index around your thesis. What really stands out is how clearly it explains why each stock is included. And before you invest, you can even backtest your idea against the S and P 500, so you're making decisions with real context, not just guessing. And beyond generated assets, Public lets you invest in stocks, bonds, options, crypto, all in one place. They'll even give you an uncapped 1% match when you transfer your investments over from another platform. If you want to build a portfolio that actually reflects your thesis, visit public.com/sorcery, paid for by Public Investing. Full disclosure is in the description. Enterprise AI runs on Merge, the AI infra platform for integrations, agent tooling, and model orchestration, so your teams ship product, not plumbing. Mistral, Dropbox, and Drata already trust Merge in production. Start building at merge.dev. Founders scale faster on Deal. Set up payroll for any country in minutes, hire anyone anywhere, get visas handled fast, and get back to building. Visit deal.com/sorcery. Is there anything we're missing out on taxes?
00:45:46 · Michel Del Buono, Molly O'Shea
[00:45:46] S0: Yeah, I think there's one element which I think is really important to me. Super interesting thing happens when you bring two different disciplines and examine sort of the multidisciplinary aspect to it. So I kind of touched on this before, but it's like, again, you hire attorneys, they're gonna talk to you all about trusts. You hire sort of liquid asset managers, all they're gonna talk to you about is tax loss harvesting. No one is spending the time to look at the two and know enough about the two. Very few people know enough about the two to help you trade the two off. We've done some work on that, and it turns out that there are many situations where the trusts are not necessarily the right answer. They save you tax, but you can achieve the same or even better outcomes using these tax loss harvesting strategies. So I think that's where I would caution people to not just jump into one of the silos and look at all of them and be sure they're advised properly in all the different components, charity, liquid strategies and trusts, and trade them all off appropriately. [00:46:51] S1: Okay. So what do you do? How do you test a manager on that? [00:46:55] S0: You're gonna have to find an adviser that knows all these things enough to be able to trade them off. So that's the thing. It's rare quite rare to find people that have that multidisciplinary backing background. You look disappointed.
00:46:55 · Michel Del Buono, Molly O'Shea
[00:46:55] S0: You're gonna have to find an adviser that knows all these things enough to be able to trade them off. So that's the thing. It's rare quite rare to find people that have that multidisciplinary backing background. You look disappointed. [00:47:09] S1: I just, it's overwhelming, honestly. It's complicated. I can't imagine coming into this completely blind and trying to drum up like an entire life's wealth plan in, I don't know, a couple of months, if. [00:47:25] S0: That's why there's so many people who are unsatisfied with the outcomes that they have, but they only realize it years later. [00:47:31] S1: Yeah. It's tough. Because there's residential strategies, but there's also commercial strategies. And then there's also commercial strategies for where you put your money in. So if you wanna invest into a small business or own a small business and get dividends off of that, those kinds of things. But I guess to go into real estate more, how do you see this shape out, whether it's residential, commercial, those different components? [00:47:58] S0: Well, it's very different if you're taxable or not. If you're non taxable, you just look at sort of the raw returns. But if you're taxable, real estate and real assets more generally, which are assets that have cash flow like on oil wells, that's another type of real asset that's similar to real estate. [00:48:16] S1: You can buy an oil well?
00:48:16 · Molly O'Shea, Michel Del Buono
[00:48:16] S1: You can buy an oil well? [00:48:17] S0: Oh yeah. Yeah. There are many strategies. You can buy the output from oil, you can hedge it. There's all these very interesting strategies, but what all these real assets have in common, real estate, oil wells, patent portfolios, anything that has a cash flow generally has a depreciation tax credit against it. And so you can shield your tax to some degree from that, provided it's structured properly. And that's, I think, where, again, the difficulty is, is a lot of the standard funds out there don't do the structuring because most of their clients are not taxable. So if you structure things and here's the real problem. Let's say you personally invest in real estate but you're a podcaster, so real estate's not your principal occupation, so you can't necessarily leverage all those depreciation credits yourself because it's not your main occupation. The IRS limits how much you can do from passive activities. So you have to structure properly. You have to create a company effectively that inside the company uses all those tax credits and gives you something net of that. [00:49:19] S1: What is the most tax incentivized active thing to own?
00:49:19 · Molly O'Shea, Michel Del Buono
[00:49:19] S1: What is the most tax incentivized active thing to own? [00:49:24] S0: If structured properly, you can offset almost all of the income from the property, and then because of something called the step up in basis of death, when you sell that asset after you pass away, you don't owe tax on that either. So along the way, all the income you get from the asset doesn't pay tax because you got the depreciation credit. And then normally, if you sell it at the end, you pay a ton of tax. Right? But if you pass away and hand it to your heirs, they get a new basis, a new price for the asset that's gone up so they can sell it with no tax. So that that is but it's a very long term and illiquid strategy. You have to hold these things for a long time. In the liquid space, you know, it's all these tax loss harvesting strategies, levered tax loss, strategies, strategies that utilize swaps and other derivatives to generate ordinary income losses. There's so many strategies out there. Again, you got to understand the detail. You gotta understand the leverage, how you turn it up and down. So again, you gotta know what you're doing. You have to find the right advisor that can advise you on all these things. [00:50:25] S1: I know this is a totally personal question, but like what percentage for new wealth do you recommend on spending? I feel like people will want to just go Spending.
00:50:25 · Molly O'Shea, Michel Del Buono
[00:50:25] S1: I know this is a totally personal question, but like what percentage for new wealth do you recommend on spending? I feel like people will want to just go Spending. [00:50:36] S0: Yeah. Boy, that's an immensely personal one. Some people live very modest lifestyles and therefore any windfall they get can go into a very aggressive growth oriented portfolio, and they're thinking about long term wealth accumulation. Other people spend a lot, and so their portfolio has to be more liquid, less alternatives, and therefore most likely lower returns. And so these things feed on themselves. To the degree you can avoid spending, you're going to increase your end period value. I can't tell you. I mean, everyone's got their own preference, so I can't. [00:51:13] S1: Is there any way to manage someone who is just spending all their money away? [00:51:18] S0: They're manage. You mean manage their assets? [00:51:21] S1: Yeah. I mean, if they're spending like if they're dipping into everything and liquidating, if they can, like, is there any way to help them or do they you just you just have to like let them do it?