How To Keep & Grow Your Money #9

In this letter we analyze the iShares Silver Trust ETF.

Ticker: SLV | Price: $27.20 | Market Cap: $13.7B | Average 10-Year Annual Return: 2.96%

What is it (short): The iShares Silver Trust ETF offers a way for investors to gain exposure to the price of silver by holding physical silver bullion.

What is it (long): This ETF is designed to track the daily price movements of silver, providing a cost-effective and convenient method for investing in silver without the need to physically buy or store the metal. The fund holds silver bullion, aiming to mirror the price of silver, less the trust’s expenses and liabilities.

Our thoughts: This ETF is a solid choice for those looking to diversify their portfolios with commodities, particularly silver. It serves as an effective hedge against inflation and economic uncertainty, offering investors a simple way to invest in physical silver through the stock market.

Do your own research and if you would like to take our free course to learn how to invest into ETFs and Index Funds at Index Institution™ go here.

Four Legal Ways to Avoid Paying Income Tax in the U.S.

There are several legal strategies to significantly reduce or even eliminate U.S. income tax, particularly if you're willing to live abroad or relocate to a U.S. territory. Here are some effective options:

1. Move Abroad: By living outside the U.S. for most of the year, you can take advantage of the Foreign Earned Income Exclusion (FEIE). In 2024, this allows you to exclude up to $126,500 of your income from U.S. taxes if you spend at least 330 days in foreign countries. This is ideal for expats who want to reduce their tax burden while maintaining flexibility.

2. Nomadic Lifestyle: Embracing a global nomad lifestyle can allow you to establish residency in tax-friendly countries. Many countries offer tax incentives to foreign residents, which can result in minimal or zero tax liability. By spending most of your time outside the U.S., you can maintain U.S. citizenship while benefiting from these international tax breaks.

3. Relocate to a U.S. Territory: Places like Puerto Rico offer significant tax savings under programs like Act 60 (formerly Acts 20 and 22). By becoming a bona fide resident and spending at least 183 days a year in Puerto Rico, you could benefit from a 4% income tax rate on business income and 0% tax on dividends, interest, and capital gains. The U.S. Virgin Islands also offers similar tax advantages.

4. Renounce U.S. Citizenship: For those seeking complete freedom from U.S. taxes, renouncing U.S. citizenship is an option. This is the most drastic step and involves an exit tax for those with significant assets, but it completely eliminates future U.S. tax obligations. However, it's important to carefully consider the implications for global mobility, banking, and investments.

These strategies each come with their own set of rules and considerations, so it's crucial to thoroughly understand the requirements and potential downsides before making any decisions. Consulting with a tax professional who specializes in expat tax law can help you navigate these options effectively

If you would like to explore legally paying less taxes and maximizing your freedom check out Global Optimizer™ or click here.

Financial concept to learn in this edition: Hurdle Rate

What Is a Hurdle Rate?

A hurdle rate is the minimum rate of return that an investment or project must achieve for it to be considered worthwhile by a business or investor. It's essentially a benchmark that helps in deciding whether to proceed with an investment.

Key Points:

1. Minimum Return: The hurdle rate represents the lowest acceptable return. If a project doesn’t meet or exceed this rate, it's usually rejected.

2. Risk-Based: Riskier projects generally have higher hurdle rates. This compensates for the increased uncertainty associated with these investments.

3. Decision-Making Tool: Companies and investors use the hurdle rate to evaluate potential projects or investments. If the projected return is above the hurdle rate, the project is likely to be pursued.

4. Private Equity and Hedge Funds: In these areas, the hurdle rate determines when fund managers can start earning performance fees, which are based on achieving returns above this threshold.

Factors Influencing the Hurdle Rate:

• Risk Premium: Reflects the additional return required to compensate for the risk associated with the investment.

• Inflation Rate: Accounts for the expected inflation over the investment period, ensuring that the returns are not eroded over time.

• Interest Rate: Includes the cost of borrowing money, ensuring the investment return exceeds the cost of capital.

Usage:

Investors and companies use the hurdle rate to assess whether an investment is likely to be profitable.

If the expected return is above the hurdle rate, the investment is considered sound; if it’s below, it’s likely to be rejected. The hurdle rate helps balance the potential profit against the associated risks and costs.

To learn more about Hurdle Rate read more on Investopedia here.