Self-Made Millionaire Reveals the 3 Investments That Made Him Worth $10M in Six Years
Since ditching his $250,000-a-year software sales job to focus on real estate investing, Legacy Investing Show creator Preston Seo has taken control of his life and his money, and he now dispenses practical advice to those looking to achieve financial freedom.
Here are the three things that made Seo more than $10 million in six years. Stressing the structure, Seo said that if you “stack all three, automate the process and reinvest the savings,” you can make enough money to retire not only early, but as a millionaire.
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Invest in Real Estate
Real estate values have historically increased steadily over time due to factors such as inflation and demand. They are often chosen by savvy investors because you can control a high-value asset with a relatively small down payment (10% to 20%).
Seo is best known for building wealth through real estate — in particular, generating passive income through Airbnb ownership, which earns him $400,000 a year. In addition to earning cash flow on an appreciating asset, increasing equity as others pay down your loans and acting as a hedge against inflation, Seo uses real estate to minimize taxes.
“I use real estate to legally reduce my taxes to as close to zero as possible,” Seo said. “Things like short-term rental losses, cost segregation, 1031 exchanges [and] bonus depreciation offset my entire income.”
Owning rental properties can generate consistent passive cash flow if the rent collected exceeds mortgage, taxes, insurance and maintenance expenses. Revenue earned can be used to cover living expenses, improve your rental or Airbnb property, or expand your portfolio and compound growth by investing in additional properties.
Optimize Tax Advantages
Contributing to a 401(k) or Roth IRA, regardless of age or net worth, is more than just saving for retirement; it is also a financially prudent approach to make the most of your hard-earned money. In addition to lowering your taxable income, long-term investments will grow over time and help you reach financial independence.
“I max out my Roth IRA, HSA and solo 401(k) every single year,” Seo said. “That’s $85,550 going in tax-free or tax-deferred annually. Inside these accounts, I hold index funds and ETFs [exchange-traded funds] like VTI [Vanguard Total Stock Market Index Fund], VOO [Vanguard S&P 500 ETF], and QQQ [Invesco QQQ Trust Series 1 fund]."
Contributing the maximum amount to a retirement account is an excellent goal for high earners or those behind on savings. However, you need to evaluate your overall financial picture, including debt, emergency savings and other financial goals, before hitting the allowable contribution ceilings.
Take the Plunge With Crypto
Despite being around for 17 years now, many Americans remain suspicious of cryptocurrency because they don't fully understand it. According to a July Gallup poll, 55% of respondents regarded cryptocurrency as a "very risky" investment and 32% considered it "somewhat risky."
Seo sees Bitcoin as a “set it and forget it” type of investment — similar to “Amazon after the 2008 crash, Apple before the iPhone changed everything [and] index funds when returns felt boring” — one that people may miss out on because they “looked slow, risky or uncool at the time,” according to a Legacy Investing Show post earlier this year.
"Bitcoin is the only asset with a fixed supply of 21 million coins," Seo said. "I DCA [dollar-cost average] every single day regardless of price and keep everything in cold storage."
Crypto can be volatile and cyclical, and the average investor may have difficulty buying into a small number of expensive but established coins, such as bitcoin and ethereum. However, spot crypto ETFs and crypto futures ETFs allow investors access to digital assets in a way that may work as part of a long-term investment strategy.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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