This week's Wealth Formula Podcast features an interview with a tax attorney. While I'm not a tax professional myself, I want to drill down on something we touched on briefly that is incredibly relevant to many of you: the so-called short-term rental loophole.

If I were a high-earning W-2 wage earner, this would be at the top of my list to implement—and I know many of you are already doing it. The short-term rental loophole is one of those quirks in the tax code that most people don't even know exists, but once you do, it can be a total game-changer.

Here's why. Normally, when you buy a rental property, depreciation losses can't offset your W-2 income. They're considered passive, and they stay stuck in that bucket.

But short-term rentals—Airbnb, VRBO, whatever—work differently. If the average stay is seven days or less and you materially participate, the IRS doesn't classify it as passive. It becomes an active business.

That means the paper losses you generate can offset your ordinary income, even from your day job. Normally, you'd need a real estate professional status to get that benefit. This is the one situation where you don't.

So let's walk through how it works. When you buy a residential property, the IRS requires you to depreciate the structure—the walls, roof, foundation—over 27½ years. On a million-dollar property, that's about $36,000 a year. It's a slow drip.

A cost segregation study changes that. Instead of treating the property as one block of concrete and wood, it carves out the parts that don't last 27 years. Furniture, carpet, appliances, cabinets, and even ceiling fans—those are considered 5-year property. In other words, you can depreciate them much faster.

Now add bonus depreciation. Instead of spreading those 5-year assets out over five years, the current rules let you write off most of them all at once in year one.

Here's the example. You buy a $1,000,000 short-term rental and finance it at 70 percent loan-to-value. That means you put in $300,000 cash and borrow $700,000. A cost seg often shows about 30 percent of the property—roughly $300,000—is 5-year personal property. Thanks to bonus depreciation, you deduct that entire $300,000 immediately.

So you put in $300,000 cash, and you got a $300,000 paper loss in the same year. In practical terms, you just deducted your entire down payment against your taxable income. This is what real estate professionals do all the time and why they often end up with no tax liability at all.

In this case, it works for you as a W2 wage earner. And for that reason, I think its one of the most powerful tools out there for high paid professionals that is grossly underutilized.

Remember, the biggest expense for most people is the amount of tax they pay—especially W2 wage earners. This strategy lets you use money you would otherwise pay the IRS to build a cash-flowing asset for yourself.

Listen to this week's Wealth Formula Podcast to learn other ways to legally pay less tax!

Bitcoin is definitely volatile. If you told me it was going to go down by 50 percent next year, I would hesitantly believe you.

However, there is no way you can convince me that Bitcoin will not hit $500,000 at some point within the next five years.

Think about what's happening: ETFs are everywhere, treasury companies are holding Bitcoin, there are rumors of central banks buying it, and even an American Bitcoin reserve. It is an asset that will go up. But it may go down before that, and that is unnerving.

You should not put money into Bitcoin unless you commit to not touching it for 5–10 years.

But then you face another problem—Bitcoin is like gold. Unlike apartment buildings, there is no rent, no cashflow. Other coins like Ethereum and Solana have mechanisms called staking that allow for yield. Bitcoin does not. Its beauty is that there are not a lot of moving parts. It's a vault of security, and that's pretty much it. Again, just like gold.

There have been companies like BlockFi and Celsius—which are, indeed, traditional finance companies—that lost people's Bitcoin when they went insolvent.

But now there may be a way to get yield from Bitcoin while keeping it in your custody.

That's what we talk about on this week's Wealth Formula Podcast, in addition to covering recent news and making predictions about Bitcoin's price.

It's been a while since I've talked about Wealth Formula Banking in detail, and I know we have a lot of new listeners who may not have heard about it yet. So today, I want to share a webinar that explains why I think this strategy is such a no-brainer.

First off—what is Wealth Formula Banking? You may have heard of something called "infinite banking." It's a similar concept, but instead of focusing on paying your bills, Wealth Formula Banking is specifically designed to amplify your investments.

My introduction to this idea came the same way you're hearing it now—through a podcast. I kept hearing the phrase "be your own bank." Honestly, I didn't know what that meant, and I tuned it out until a friend finally broke it down for me. That's when I had my aha moment.

Here's why. Normally, when you want to invest in a cash-flowing asset, you park money in a checking or savings account first. The problem? Those accounts pay you almost nothing—well under 1 percent. Meanwhile, inflation is running at 2–3 percent, so you're guaranteed to lose money. That's why my friend Robert Kiyosaki always says, "savers are losers."

Wealth Formula Banking flips that script. You're essentially creating a special kind of cash value life insurance policy, where the money you put in grows at a virtually bulletproof 5–6 percent compounding rate per year. Not that sexy on its own, BUT…here's the kicker: you don't have to pull that money out to invest in your deal. Instead, you borrow against it from the insurance company's general ledger at a simple interest rate.

That means your original money keeps compounding inside the policy at 5–6 percent—even while you've borrowed against it to invest in cash-flowing assets like real estate. That's the key. With a HELOC, when you borrow, your money stops working for you. With Wealth Formula Banking, your money never stops growing.

So now you've got the same dollars doing two jobs at once: earning safe, compounding growth inside your policy and generating income from your investments outside of it. By simply routing your money through Wealth Formula Banking, you're supercharging your returns.

And here's what makes it even more powerful: tax-free growth within the insurance account, real asset protection to shield your wealth from lawsuits and creditors. Plus, it includes a permanent death benefit, which means that in addition to building wealth today, you're also creating a lasting legacy for your family tomorrow.

It's not magic—it's math. And it's the kind of smart arbitrage that can turn ordinary investments into extraordinary ones.

Schedule a FREE consultation:

https://wealthformulabanking.com/

Most people picture investing as a game of chess. Everything is visible on the board, the rules are clear, and if you're sharp enough, you can see ten moves ahead. But markets don't work like that. They shift in real time—rates change, policies flip, black swan events crash the party. That's why I think investing looks a lot more like poker.

In poker, you never know all the cards. You play with incomplete information, and even the best players lose hands. What separates them isn't luck—it's process. Over time, making slightly better decisions than everyone else compounds into big wins. That's the same discipline great investors use. They don't wait for certainty—it never comes. They weigh probabilities, manage risk, and swing hard when the odds line up.

Risk isn't the enemy. Fold every hand and you'll bleed out. To win, you've got to put chips in the pot—wisely. Wealthy investors do the same. They protect the downside, but when they see an asymmetric bet—small risk, huge upside—they lean in. That's what early Bitcoin adopters did. That's what smart money did in real estate after 2008.

And just like poker, investing is about knowing when to quit. Ego and sunk costs can trap you in bad hands, but the pros know when to fold and move their chips to a better table.

In the end, both games reward patience, discipline, and emotional control. You don't need to win every hand. You just need to stay in the game long enough for compounding to do its work. The amateurs play for excitement. The pros play for longevity.

That's the mindset you need as an investor and the reason I interviewed a former professional poker player on this week's Wealth Formula Podcast!

Learn more about Annie Duke: https://linktr.ee/annieduke

If you look at the wealthiest people in the world, they almost always get there through business ownership or real estate. The only real exceptions are athletes and entertainers—and let's be honest, that's not a realistic path for most of us.

We talk about real estate a lot here and through deal flow in our investor club. But today I want to focus more on business ownership.

One way in is to start a business from scratch. I've done that a few times—sometimes it worked out really well, other times it was a total disaster. That's the reality of startups. They require a certain wiring, an appetite for risk, and the ability to move forward without much of a safety net. It's harder to do when you're 52, have three kids heading to college and alimony to pay.

Another option is to buy an existing business. The advantage here is that you're stepping into something that has already worked, which gives you confidence in the viability of the business. But it's not without risks. Some businesses depend heavily on key people or relationships that don't transfer, and the ones that truly run themselves tend to be very expensive and often out of reach.

The third option is franchising. It's not risk-free either, but it does give you a roadmap. If you're the type who can follow a proven system, your chances of success go way up. You're not starting from scratch—you're plugging into a model that's already been tested and supported. For people who don't necessarily have the renegade startup personality but want more than just a paycheck and index funds, franchising can be a great fit.

We've talked about franchises before, but this week's episode brings a fresh perspective from someone focusing on non-food franchises. I think you'll find it really interesting.

If there's one thing that separates the truly wealthy from everyone else, it's their relationship with risk.

Not blind risk. I'm talking about conviction — the ability to see an opportunity before everyone else does, to lean into it while others are frozen, and to hold through the storm until the payoff is undeniable.

The extreme example is Bitcoin. In 2012, when it was trading for less than the price of a cup of coffee, most people laughed it off as internet monopoly money. But a handful of people had conviction.

They understood the asymmetric nature of the bet — the downside was capped at the small amount they put in, while the upside was exponential. Those early adopters didn't just make returns; many became billionaires.

Of course, most people hadn't even heard of Bitcoin in 2012, so that might not have even been an option for you. So let's take another example that you almost certainly did live through.

Real estate after the Great Recession in 2008 was radioactive. Nobody wanted to touch it. Yet those who bought when fear was at its peak ended up riding one of the longest real estate bull markets in U.S. history.

Data from the National Association of Realtors shows that home prices more than doubled from 2012 to 2022 in many markets. Imagine the rewards of being on the buy side in 2012.

I've said it before and I'll say it again: I believe we are in a similar scenario with real estate right now as we head into a descending rate environment following a real estate bloodbath.

Properties are severely discounted, and values are almost certain to go up as rates fall. But you have to see the big picture and not be scared. That's not easy to do when everyone else is.

Real estate moguls and business owners are the ones most likely to take their wealth to the next level. Real estate is accessible to you — and so is business ownership.

Look at the Forbes billionaire list and you'll see a pattern: nearly 70% of the world's wealthiest people are business founders or owners. They didn't get rich clipping coupons from the S&P 500.

They got there by creating or buying businesses that became valuable, saleable assets. The risk was obvious: most startups fail. But the payoff for the ones that succeed dwarfs anything you'll ever get in your brokerage account.

Now, the reality is that most high-paid professionals never play in this arena. They're comfortable and don't want to rock the boat. Some call it the "golden handcuffs" — you make enough money to feel comfortable, but that same comfort prevents you from ever taking risk. And you know what? That's totally fine.

Just know that doing your 9-to-5 and investing into your 401(k) is not going to create life-changing money. If all you're looking for is life-sustaining money, keep doing what you're doing.

But ask yourself this question: What's the life you dream about? If it's the life you already have, then congratulations. If not, are you on a trajectory that even makes it possible to get there? If not, you've got to change course.

My guest this week on Wealth Formula Podcast has done a great deal of research on the wealthy and has written a book based on what he has learned.

Something big is happening in Washington right now, and it has the potential to reshape everything you and I do as investors.

A few weeks ago, the Trump administration attempted to remove Fed Governor Lisa Cook, only to have an appeals court block the move on legal grounds.

At almost the same time, Stephen Miran—one of Trump's economic advisers—was confirmed by the Senate to the Fed's Board of Governors by a razor-thin margin.

On one side, an attempted subtraction. On the other, a confirmed addition. All of this is happening right before a major policy meeting, and it's not hard to see the writing on the wall.

Trump's takeover of the Fed is not a question of if—it's a question of when. Whether it unfolds in a matter of weeks or drags out over the next few months, the direction is set and the outcome is inevitable.

The endgame is to bring interest rates down and, if necessary, use quantitative easing to drive bond yields even lower. That kind of policy would flood the system with liquidity, and the immediate effect would be a booming economy. Asset prices would rip higher—stocks, real estate, gold, Bitcoin—you name it. If you own assets, you'd feel wealthier almost overnight.

But of course, there's another side to this coin. A dollar that weakens under the weight of easy money. A gap between the asset-rich and the asset-poor that grows even wider. Rising inequality, rising tensions, and perhaps a long-term cost to the credibility of the U.S. financial system.

So is this takeover of the Fed a good thing? That depends entirely on where you sit. If you're a wage earner with no meaningful assets, it's bad news. If you're an investor, it's a reminder that ignoring policy shifts like this is done at your own peril.

The time to prepare is now, not later. Don't wait for rates to drop before acting. History shows that buying assets in a descending rate environment has been one of the most powerful wealth-creation maneuvers in the United States.

Think back to 2008. The Fed responded to the financial crisis with unprecedented rate cuts and waves of quantitative easing. What followed was more than a decade of explosive gains in stocks, real estate, and other assets.

Those who bought while rates were falling built extraordinary wealth. Those who stood on the sidelines missed out.

But don't take my word. Listen to noted economist Richard Duncan explain the dynamics of this situation in this week's episode of Wealth Forula Podcast.

Learn more about Richard Duncan:

https://richardduncaneconomics.com/