My brother 'gets it' now!

[pj86]

Hi all,

I am very pleased to say that my little brother (age 17) has inherited the FI-ambition after seeing an Excel sheet with calculations on what investing 36K a year can do after 40 years.

This is a worry less as my brother will be starting his software firm from the day he turns 18 (he is a high school dropout). He is already delivering to a couple of clients, so the day he turns 18 he will get a nice lump sum. Fortunately, he will put it in Vangaurd or buy some real estate! (The real estate might be fiscally more attractive as a corporation. Anyway, it's better than buying a Volvo break as he planned to.)

I feel great today! If we will all be FI later the chances of having a family breakup will be lower...

PJ

 

[Arif]

I am very pleased to say that my little brother (age 17) has inherited the FI-ambition after seeing an Excel sheet with calculations on what investing 36K a year can do after 40 years.

That's the same[-]tactic[/-] strategy I used with my wife. Thank God for excel spreadsheets. I had no trouble convincing her to live in the duplex for a few more years instead of buying the big house when we were LTs.
Congrats and good luck to your brother with his business. Sounds like he's heading in the right direction.

 

[MooreBonds]

Hi all,

I am very pleased to say that my little brother (age 17) has inherited the FI-ambition after seeing an Excel sheet with calculations on what investing 36K a year can do after 40 years.

This is a worry less as my brother will be starting his software firm from the day he turns 18 (he is a high school dropout). He is already delivering to a couple of clients, so the day he turns 18 he will get a nice lump sum. Fortunately, he will put it in Vangaurd or buy some real estate! (The real estate might be fiscally more attractive as a corporation. Anyway, it's better than buying a Volvo break as he planned to.)

I feel great today! If we will all be FI later the chances of having a family breakup will be lower...

PJ

Congrats on your success!

Why not try one additional step and helping him analyze which best retirement options he has both this year (assuming he turns 18 this year) and next year?

For instance...if his total income will be in the 20ks-30ks, he could qualify for the savers credit by putting it in a traditional IRA, and getting a tax credit. Or, he could do 50% in a ROTH, and 50% in a traditional IRA. Or, he could try a solo 401(k), a SEP IRA, etc., etc. (and in the spirit of UncleMic, I wouldn't be able to sleep at night if I didn't mention...psst...Health Savings Account) . Just don't forget to tell him about the ugly truth of self-employment taxes, and estimated taxes.

Or, just write the ER forum website written in sticker letters that kidnappers use and leave it under his pillow. We'll take good care of him when he shows up.

 

[pj86]

Thanks for tips Moorebonds!

We're living in Belgium though, so not all are applicable

In Belgium, once you pay yourself about 34K yearly, the fiscus will allow all the other fun things (such as renting your own home at market conditions). We do not have Roth IRA and such.

The greatest thing is that my brother is in software, and for intellectual property I found a nice getaway via an Hong Kong 'developing company' (Belgium and HK have a peculiar tax agreement here). Combine this with the fact that capital gains are untaxed in Belgium and it is not hard to imagine a way to get the company money in private hands without taxes! (However, we'll take fiscal advice on each step.)

So tax deductions are great, byt maybe he will hardly pay taxes to begin with

EDIT: You are speaking of advicing him on his best retirement options... well he knows about index> real estate in the past, but he is dreaming about living on landlord revenue while using 100% of his other income to increase the capital (/amount of rental units). Maybe not optimal, but if that's what he wants, I guess it will work out just fine.