March 23, 2019

Good Weather And Good Alternative Investment Advice

SMR 22 | Alternative Investment


Many people are stuck thinking Wall Street is the only way for your money. This thinking works to their interest because they like it when you make your money flow through them. However, there are actually more ways for your money to make money beyond the walls of Wall Street. Timothy gives good alternative investment advice as he covers oil and gas and more. He addresses taxes and what the government has been doing to its people. He also offers a glimpse of 401(k) and social security.

Listen to the podcast here:

Good Weather And Good Alternative Investment Advice

Sometimes I have to unplug because there are so much going on and so much moving with the economy. Some of the things I follow, some of the things I read, some of the people I follow can be depressing sometimes. You have to be confident in what you’re doing. You have to be confident in your strategies for your money. There are a lot of different things going on. We get bombarded with advertisements on TV for different mutual funds, different annuities and different financial service companies. This is what I’ve done. This is the reason I started this show a few years ago. I come on the show every week and I talk about the strategies that I do with my own money.

Oil And Gas

One of them I firmly believe in is oil and gas mainly because two of the three strategies that I deal with, that I have my own money and that I associate myself with, all goes back to taxes and the tax code. There are certain parts of the tax code that a lot of Americans could be benefiting from and they’re not. These parts of the tax code are not talked about in main street media, main street financing and main street economics because it’s not as profitable to Wall Street, but they’re still there. If you’re sick and tired of hearing about annuities, the phantom bonus money, the target date mutual funds, the low rate CDs, bonds, stocks and REITs, if you want to hear something else, if you want to see what else is out there that pertains specifically to certain parts of the tax code, call me.

I highly encourage you to go back and listen to the first podcast of 2019. The show with Rebecca Walser was phenomenal. Things change in life personally, demographics change over time and investing has changed. We are in a global economy where the money in the market could be affected by the price of tea in China. It could be affected by something that’s going on in another country that shouldn’t affect your money, but it does. I have chosen for the most part not play in that corrupt environment. I do have money in oil and gas so therefore I do pay very close attention to the price of oil per barrel, which was around $60 a barrel. That’s a winner for everybody involved, from the landowners, to the refineries and to us paying for gas at the pump. There are some major tax deductions for investing your money in oil and gas. I talked about them on the show. I’m talking about intangible drilling costs.

We are in a global economy where the money in the market could be affected by the price of tea in China. Click To Tweet

IRS Section 263(c) 59(e), there is a possibility that you can make an investment and possibly get up to 100% deduction on the amount you invested. It depends a little bit on when the wells were drilled, but it is possible. It has to be a cash investment. It cannot be IRS. It has to be cash. There’s the depletion allowance. IRS Section 611, 613 and 613(c)6. This is straight from the tax code. I probably sound a lot smarter than I am, I’m reading straight tax code to you. The passive activity loss rules, IRS Section 469(c)3. I encourage you to look all this up and if you’re looking for a great tax deduction to potentially get up to 100% but even if it wasn’t 100%, it’s somewhere around 80%. The law allows up to 85% deduction. The current presidential administration changed a couple of things in the tax code legislation, where you could accelerate the depletion allowance, which is the other 15%. Depending on when the wells are drilled, you can make an investment now in 2019.

When you file your 2019 taxes, you get a deduction for it at least up to 80% of the amount, maybe up to 100%, somewhere in between possibly. It depends on when the wells are drilled for each project. What does that get you? That gets you ownership in projects and it gets you cashflow. The cashflow is not as consistent as this other strategy with the company because the cashflow depends on number one, if we’re going to hit oil. Number two, what’s the price of oil per barrel. Number three, how many barrels are being pumped per day. All those are factors in your monthly check. The goal for this company is they want to be in a project for around three to five years and they want to get out of the project. They want to sell the project. Put your money in, receive a deduction, received monthly cashflow, three to five years, get out and that’s when they have a nice return of basis. We were in a project that I was a part of. It was two different projects.

One was a return of basis of 18% and one was 20%. If you invested $50,000, you get your $50,000 plus 20%. That doesn’t include all of the monthly cashflow. That does not even include the deduction. Once you factor in all of that, the tax reduction and the monthly cashflow, one of the projects was around a 52.68% return on your money. That’s close to a home run. That’s the highest one that I’ve ever been a part of and not everyone is like that. Not every project is like that but it was solid. I turned around and put the money back into another project, so I could get another tax deduction. I’m all about taxes. Uncle Sam was out to screw us over. Our government from a federal state local, unless you’re in a small municipality, we do a terrible job at managing money. Most of this comes down to career bureaucrats, career politicians and they get in there and they get a taste of that. Most politicians go in the office with a sense of urgency to change things. They get in there and they get a little taste of that power and the lobbying takes over.

SMR 22 | Alternative Investment

Alternative Investment: Why would we want to give more tax dollars to a government who is so irresponsible with the money they have?


The lobbyist and unions have ruined this country. We need term limits on these politicians, the fact that these politicians want to tax us more is absolute lunacy. Why in the heck would we want to give more tax dollars to a government who is so irresponsible with the money they have? My circle of friends is really small, but I don’t want around with people that think we’re not taxed enough. I’ve aligned myself with some great people. A friend of mine once told me, “You need a good pastor, a good friend and a good doctor.” I have a good pastor. I have a good doctor and I have several good friends. My circle of friends, we all think we’re overtaxed. If you think that we’re not paying enough in taxes, don’t call me because I’m going to tell you we’re not going to hit it off. If you do think we’re overtaxed, you want a deduction and you want tax-free income down the road, I can help you with that. This oil and gas company out of Texas have a great program where you can put cash in and get a deduction.

ConocoPhillips, EOG, And Marathon

That is probably nine or ten months away before your first check and when you put the money in. It depends on how close the project is to funding, but it’s probably going to have nine or ten months. Those monthly checks, again, there are variables. The price of oil per barrel, how many barrels being pumped per day, per month? Are we going to hit oil? There are some factors there, but if you’re looking for the consistent income, where you can earn interest without touching your basis. There are a lot of oil and gas activities going on in East and West Feliciana Parish. There’s a lot of leasing going on, a lot of swapping of land between oil and gas companies even in Pointe Coupee Parish, Northern East Baton Rouge Parish, Saint Helena Parish, Wilkinson and the mid-counties. The formation that is being targeted is the Austin Chalk Formation in this area. The three main players in those parishes are ConocoPhillips, EOG and Marathon. They have all leased large amounts of land, hundreds of thousands of acres.

How did those three companies get the money to pay families and landowners what we call bonus money? When you do the math on that, we’re talking millions of dollars they’re having to pay. Where did they get the money to do that? They’re a public-traded company. They raise capital every day. You could go invest money in ConocoPhillips. You could put money in EOG. You could put money in Marathon. I don’t have money in those stocks but I follow them because they’re up there around our property. Of those three, Marathon is the cheapest or the lowest prices around $16 or $17 per share. EOG is around $94. ConocoPhillips is around $66, but those are publicly traded companies. We’re a private company. We’re looking to go lease land to eventually drill for wells. We look for lenders/investors. You’re a lender lending this company your money. They are in turn going to pay you an interest rate.

Taxes are the greatest impediment to wealth accumulation. Click To Tweet

The interest rates are solid. They’re not a homerun. They’re not going to buy a second home in the Caribbean money but they’re solid rates of return on your money. This is a great place for IRA funds. It’s a great place if you have an old 401(k) sitting there. The minimum amount is $50,000. It’s for accredited investors only. You have one, two and three-year options. The one-year option, you have a simple interest and compounded with simple interest that are paid monthly. Do the math, you put $100,000 and you’re going to earn 8% a year on the simple interest over twelve months. If you commit your money to one year, 8%. If you commit to two years, you’re going to earn 8.5% per year paid over twelve months. If you commit your money to three years, you earn 9% per year for three years paid monthly. That’s not too shabby.

It could be a good fit for your portion of your money to have some diversification there. If you want to lock the money up and you don’t need them, you don’t need the monthly cashflow and maybe it is 401(k) money and you want the money to basically be compounded. Albert Einstein said, “The eighth wonder of the world is compound interest.” Here’s a great example. One-year compound interest at 8.3%. You put your money away for two years, it’s 9.23%. Three years is 10.28% per year, for three years. At the end of the 36 months, you would get your basis back plus 10.28%. Throwing some numbers out there, $150,000, three years compounded is $46,296. You would get your $150,000 back plus the $46,296 that it made over three years for $150,000. $100,000 for the three years is $30,864. A person should always know what their basis is. If you put in your basis of $100,000 in three years and it’s $30,864. Maybe you need some monthly cashflow and you don’t want to spend down the principal. This is a great place for that. You just have to get educated and know how the company makes money. There are ways for your money to make money other than what Wall Street wants you to know about. Wall Street likes people to flow their money through Wall Street so they are buying a little piece here and a little piece there.

Beyond Wall Street

I encourage you to look beyond the walls of Wall Street. Maybe a piece of oil and gas is what you need. It’s been very good to me. I love the tax deductions. We don’t drill oil wells for tax deductions. That is not the purpose for that, but Ronald Reagan did put these into laws to encourage American independence of foreign oil back in the ‘80s. Look where it’s gotten us? We are there. We’re pretty much independent of foreign oil. Crude prices remain elevated as the supply drops. The US oil inventories fail 9.6% as the OPEC Plus maintains supplies cuts. What does that mean? OPEC and its broad alliance are holding 1.2 million barrels of oil off the market every day, which has driven the price of oil up about 20% this 2019. The ugly situation in Venezuela hasn’t helped supply concerns as that nation’s output dwindles. All of this leaves US oil producers giddy as they pump more of the black gold out of West Texas, the Gulf of Mexico and Nebraska. If OPEC Plus wants to give up market share for higher prices, the US producers will gladly pick up the slack.

SMR 22 | Alternative Investment

Alternative Investment: It’s about education. It’s knowing what else is out there and it’s knowing what some of the ultra-wealthy do.


We pump more than 12 million barrels per day the most in US history. Oil and gas is a great place for some of your money. That’s my opinion and this radio show stays my opinion obviously but the tax deductions are phenomenal and it never fails. Usually, when I meet with someone, they’re like, “Why isn’t my CPA told me about this?” CPAs a lot of time or used to looking back in the rearview mirror. Most CPAs don’t look ahead but this is real. They want to run this by their lawyer. It always checks out. People have even gone to our office in Irving, Texas because I’m a salaried employee for them, whether you invest $50,000 or $500,000 I get paid the same thing. My job is to help this company raise money and I have a lot of my own cash in this company as well. I’m eating what I’m cooking. Very few financial people do that in this world. They’re going to sit there and tell you how great an annuity is and lock your money up for fourteen years and they wouldn’t dare put their own money in the annuity. They know that the phantom bonus is fake that they’re advertising.

They wouldn’t dare put their money in the target date mutual fund of 2035. Who wants to lock their money up for that long? I’m different on several fronts. If that interest you, do your own research. Once you get access to the website, you can explore the website and they have so much education of white papers. Go back and read the tax code and look up certain parts of the tax code that deal with tax deductions for oil and gas. Intangible drilling costs, IRS, Section 263(c) 59(e), depletion allowance, IRS Section 611, 613, 613(c)(6), passive activity loss rules, IRS Section 469(c)(3), look all that up. We all have access to that and you can see how your money can make money. You can see how to get a nice deduction to keep Uncle Sam out of your pockets. Uncle Sam bothers me sometimes and this is a way to keep them in check if you have cash. You can put IRA money in oil and gas, but you don’t get the tax deduction if you do it as far as the direct participation. The land where you get 8%, 9%, it’s great for IRA money.


It’s about education. It’s knowing what else is out there and it’s knowing what some of the ultra-wealthy do. I want to follow what they do because those guys are smart. Those guys have CPAs and tax lawyers. I’m not ultra-wealthy, I’m not even wealthy. When you look at my smoking hot wife and four kids, we have health and we’re happy. When it comes to finance, I’m not wealthy. I scale it down to my income on what the ultra-wealthy do. It’s no secret. Two of the three strategies that we talk about on the show deal with taxes and taxation. I believe that taxes are the greatest impediment to wealth accumulation. The government is out to get us as far as taxes. They absolutely screw us over on taxes. When you think about the taxes that we pay, we have income taxes, we have property taxes, we have sales taxes, we have debt taxes. It’s absolute lunacy of the taxes that we pay. I want to legally find ways to cut down my taxes and to not tax me in the future when I’m no longer working. I have found a couple of solutions. I have listened to some ultra-wealthy people and are doing what they’re doing on a much smaller scale.

Success cannot only be measured by simply calculating the rate of return over a period of time. Click To Tweet

When you look at the Internal Revenue Code and what it says about taxation, there’s a part of the US Tax Code is 7702. Look at that and learn about that. The Deficit Reduction Act of 1984 DEFRA and the Technical and Miscellaneous Revenue Act of 1988 TAMRA, together gave a new definition to what will be considered a contract and what would be considered an annuity. I believe that annuity is the worse place to put your money as far as accumulation and taxes, it’s the absolute worse. The tax laws give preferential tax treatment to certain contracts over annuities. The limits of DEFRA and TAMRA must be adhered to or what you thought would be tax exempt, it will be merely tax-deferred. Annuities are tax-deferred. I have a book called Confessions of a CPA from my friend Bryan Bloom. Bryan’s been a guest on the show numerous times. You can get this book on Bryan has two books, the green book, which talks about the 401(k) and how it’s a terrible place to put money.

In 2018 when he finished this, is this time for some new financial metrics. Bryan’s a CPA. For as long as I can remember and that has been 40 years as a CPA. Financial professionals have depended on the same few financial measurements. A mainstay of these financial metrics is a rate of return. In fact, many other financial measurements include rates of return as one of their measurement parameters or givens. Are these measurements enough to access all of the variables we were looking to measure now? I love relating things to sports, especially to my children trying to explain life. You can relate a lot of things to sports. Bryan does that as a conclusion in his book. In the baseball world, the measurement of success or progress is used to be measured by a few metrics. If the sports world has refined and improved their methods of measuring success over time, isn’t it time for the financial world to do the same? In the financial world, the rate of return is typically only measured the return over a long period of time.

SMR 22 | Alternative Investment

Confessions of a CPA: Why What I Was Taught To Be True Has Turned Out Not To Be

You now understand that financial accumulation, years does not necessarily define the best financial distribution during retirement years. Success cannot only be measured by simply calculating the rate of return over that entire period of time. We need new financial metrics for this task. Capital equivalent value, CEV and capital equivalent value rate of return, CEVROR are the new financial metrics that achieve this calculation goal. It has taken four years to write this book as it has grown from the inception of the idea in a small conference room in a hotel in Franklin, Tennessee to what I hope becomes a new hallmark of financial success. Along the way, these ideas and calculations have been reviewed and challenged by countless financial professionals until we determined we have true and accurate measurements. CEV and CEVROR are refining measurements of financial success just as a baseball pitcher’s walks in his per innings.

It further defines the effectiveness of a baseball pitcher beyond ERA. CEV and CEVROR give the ability to accurately determine the value that was previously unable to be measured in the financial world. My hope is that this new understanding will give you further tools to achieve greater personal and professional financial success. In the afterword of this books, Tom Love, has been a guest on the show numerous times. Tom says, “I’m so glad that Bryan has taken the time to clearly articulate where your money rest is far more important than its potential rate of return. 62% of Americans could stop filing income tax returns during retirement based on our 105-year-old tax code if they simply knew what we know. Thank you, Bryan, for the truth.” It goes back to the tax code. These ultra-wealthy people, they have some very smart people on their team, some very hybrid smart CPAs and some very sharp tax lawyers. I was in a meeting in Pittsburgh, a fifth of the room, there were about 40 of us and there were eight tax lawyers in there. They are very educated, very intelligent people and I am doing the same thing those guys are doing. All we’re doing is following the tax code.

If you want to see how to get some of your wealth off the radar screen of the IRS for income tax purposes, call me. We’re following current tax code. If you are contributing more than the match for your 401(k), then there’s an opportunity for you if you don’t need that money, redirect that money into something very similar to your Roth IRA. I am a big fan of the Roth IRA. The Roth IRA came from the strategy that I talk about. If you’re contributing over the match of your 401(k), you can stop doing that. You can call your HR department and tell them you want to put in the minimum amount to get the match and take the rest of what you will call over funding. Take the rest of that to put into something where it’s not going to lock your money up until you’re 59 and a half and you’ll be diversified. You’ll be a little bit more diversified than what you are, which I think that term is thrown around a lot. It all comes down to this question. When you’re looking at your financial future, everything comes down to it. It doesn’t matter if you’re a year away from retirement or twenty years away from retirement, it could probably help you. Do you think taxes will be higher or lower in the future?

If you think they’re going to be lower, then you should be contributing as I would be contributing as much money as I could into a 401(k), an IRA, a simple IRA or SEP, but I don’t believe taxes will be lower in the future. That’s why I’m not doing that. If you think and you believe taxes will be lower in the future, we all should be contributing to postpone the tax because basically you’re saying that we are in a higher bracket than what we will be in the future. Let’s postpone paying the taxes while we’re in the high bracket then pay them later when we take the money out while we’re in the low bracket. I believe the opposite. When you look at the history of the US Tax Code, basically it’s 1913 when the 16th Amendment was ratified, which I don’t even believe it was ratified. We are historically in low tax brackets now. I believe in paying taxes now on a dollar. When you take it out down the road, you don’t pay taxes on it again.

Taxes are a liability that you haven't paid yet. Click To Tweet

When you take it out down the road, the government doesn’t even know you’ve taken out because of the way that the IRS recognizes this income. They know this is not an annuity. You think taxes will be higher in the future, if you do, then we’re going to get along pretty good. Tom Love has a quote in the afterword of this book, “62% of Americans could stop filing income tax returns during retirement based on our 105-year-old tax code if they simply knew what we know. The reason that most people don’t know about it is that it’s not being pushed by your typical certified financial planners. They would make lower money on it than what they do managing your money. They make more money on fees. They do this and if you think about this, I heard something several years ago that was profound. It’s not a shot at traditional financial planners, even the certified ones because I have friends that are. We get into nice little cool debates over coffee or lunch about what they’re doing. For me, it all comes back down to taxes.

If you are getting tax advice from somebody, if you were receiving financial advice from someone who is telling you that you will be in a lower tax bracket when you retire, run. That is a myth. That may be true for some but it’s definitely 100% not true for all. It is true for very few people. If you are receiving financial advice from that person, whether it be a CPA or a financial advisor or a financial planner with all the acronyms behind his name, see if he will type that on his letterhead, “Mr. Smith, you will be in a lower tax bracket when you retire.” See if he would type that out and see if he’ll sign and date it. I bet he won’t do it because he’s predicting the future. He can’t predict what the morons in Congress are going to do. Our corrupt career piece of crap bureaucrats in Congress. No one can predict what they’re going to do and the way the country is in debt, I just don’t see how we can be in lower tax brackets in the future. We have politicians that I would love to drop kick in the mouth with steel toe boots on. They’re sitting there saying they want people to be on Social Security who have never paid into the system.

My mom and dad, Hollis and June Day where the textbook definition of blue collar workers. Looking back at 42 years old, knowing what I know, I believe the government gave my mom and dad the middle finger every paycheck, just like they’re giving to me and my wife. The fact that I have to pay in the Social Security and Medicare, they’re doing the same thing to us. My mom and dad both passed away before they ever got a penny of their Social Security dollars. I can’t make sense of that. The government loves people like my parents who paid into Social Security and Medicare their whole entire life and never got a penny. Talking about screwing over. Where’s that money at? Where did it go? At least if you put money into a house and property or at least a checking account, savings account when you die, your heir, your beneficiaries, your spouse or your kids get the leftovers. It doesn’t happen with Social Security. The government wants us to die before we get it. I’m convinced of that.

Why else do we not get anything back later on? Why else would they force us to put into the biggest Ponzi scheme ever in history? I get so mad talking about it because I’m better. I want the government in my life as a little as possible. I want government out of my life. The fact that they’re telling me, “We can manage your money better than you, so give it to us,” and they give me the middle finger. That’s what they do. When you look at taxes on Medicare, which most folks don’t even know about how you’re going to get ate up with that. What you’re going to pay in Medicare depends on your last two years of working. There are a lot of ways the government is out to screw us with our money. Those piece of craps in Washington, DC, they don’t know what it’s like to live on a budget because they have all this tax money coming in. They’re getting money under the table to waste money. They to do a ten-year study on how Alka-Seltzer affects seagulls and give away $3.6 million.

That’s ludicrous, but it’s not their money so they don’t care. That’s why they don’t care about Social Security and Medicare, they’re screwing us all the time. Going back to what I said, I chased that rabbit. When you look at the traditional financial ways of the way the stock market, the market and all that work, 99% of the folks were doing things because they don’t know any better. Like me, I didn’t know any better until about eight years ago. I want to tell everybody about it. I want to tell everybody about the tax code that I’m following, that you’re not hearing about from your CPA, that you’re not hearing about from your financial planner. If you worked 30, 40 years somewhere and you have $500,000 in your 401(k) that you have postponed the tax. Eventually, you got to pay the taxes on that, which you can almost say it’s a debt.

It’s a liability that you haven’t paid yet. Let’s just best case scenario this thing and you’re in a 25% tax bracket. If you have $500,000 in an account and you’re at 25% tax bracket, it means a fourth of that money is not yours. That means one-fourth of that money is Uncle Sam’s. You’re down to $375,000, but you’re paying a fee for your guy to manage all of that money. You’re paying a fee of 1%, 1.5%, 2%, I’ve even seen over 2% fees for people to manage money when a fourth of that money is not yours. You’re paying someone to manage money that you’ll never be going to get. That’s lunacy but that’s the way the system is set up. We’re talking about the government and what’s going on in society. This is an article I read, the Federal Reserve rejects a bank for being too safe. There’s a new bank and the United States called TNB USA. It is business model is simple, park 100% of their customer’s funds in their Federal Reserve. They won’t make loans. They won’t gamble away their customer savings on the latest investment fad.

When TNB applied for a master account at the Federal Reserve, they were rejected because the Fed thinks the business model is too risky. According to the Fed, not taking any chances with your customer’s savings is risky, it’s unreal. I can’t make sense of that. Most folks don’t even realize they’re going to pay taxes on their Social Security. I do realize that we have already paid taxes on Social Security, but the government again is out to screw us with our money because they want to double tax us on Social Security. They’re saying that “You have fallen for the trap, Billy. You know how we dangle that 401(k) carrot in your face for 30 years and you put money in your 401(k) for 30 years, when you take it out, when you take a distribution from that, we’re going to tax your Social Security.” I’m like, “Hold it Uncle Sam. My Social Security has been taxed already.” “We know that Billy, but we changed the rules. You’ve worked 35, 40 years. You’ve worked shift work. You’ve worked those 22 consecutive day turnarounds and you made that time and a half. You got $800,000 in your 401(k). That’s too much money in your 401(k). Every time you take a distribution out, we’re going to tax your Social Security.”

You’re like, “What is Social Security had to do with my 401(k)?” It has nothing to do with your 401(k). That’s how much the government loves to screw us over. I don’t see how that passed in Congress in the ‘80s to tax Social Security. Reading from Bryan’s book, Confessions of a CPA. If you look it up on Amazon, he’s got two books called Confessions of a CPA, but this is the black one. What are the unexpected benefits of tax-exempt withdrawals? In general, 50% of your Social Security is taxable at your highest income tax bracket rate, if your provisional income exceeds$ 25,000 or $32,000 if you’re married. As much as 85% of your Social Security payments could be subject to this additional income tax at a higher threshold of provisional income. Provisional income is your gross income plus 50% of your gross Social Security payments plus your tax-free interest. Your tax-free municipal bond interest may make your Social Security taxable so much for tax-free.

There is a new difference between tax-free and tax exempt. That’s what I’m going to show you, tax exempt. I can show what you’re going to be taxed when you start taking money out. There’s a way to avoid paying taxes on your Social Security. If you’re already receiving Social Security, I probably can’t help you or you have to make a drastic step to do that. You can do it, but for some folks, we’re talking about saving $200,000 to $250,000 over 25 to 30-year period that they don’t have to pay on taxes only because of where their money sits. We’re not talking about spending money where we invest. We’re talking about where it sits, the type of account it’s in.

Did you watch the State of the Union address? The two sides could not be further apart when it comes to market is taxation and the future of this country. We ask you these two questions. Do you have a wall built around your retirement plan? Are you prepared if taxes go the way of more socialist countries in the future? If you want to learn how to build a wall between taxes and your retirement, call me at 202-SAGE. That’s 202-7243. Go to the website You can send me an email from there. Let’s see if we’re going to get along and see if we believe the same thing about taxes. I hope you enjoyed the show.

Important Links:


Love the show? Subscribe, rate, review, and share!
Join the Sage Money Radio Community today:

You may also like...

Leave a Reply

Your email address will not be published. Required fields are marked *