Advanced Tax Magic.

In my last post I talked a bit about how to factor Tax into your Magical Wealth building strategy. I also hinted at advanced work that could be done using geo-arbitrage and international diversification, but did not go deeper into it. I’m still not going to cover it because it is something increasingly difficult for Americans to do, and something that you will need to be hyper-vigilant about monitoring both in terms of foreign accounts and the ever shifting laws.

One thing I should have covered but didn’t was a about Taxes and Savings. If you are in the Strategic Sorcery course you know that financial security is about more than having enough to pay your bills. It is about having money for emergencies, money to help those in need, and money for when you cannot or simply don’t want to work anymore. One of the biggest benefits that Sorcerers should be taking advantage of are Roth IRA’s and Roth 401k’s.

Senator William Roth’s lasting legacy to America is a way to pay the taxes on savings today rather than when they are withdrawn. Basically when you put money into an IRA or a 401k you get a tax break and pay no taxes when you put into it, instead you pay taxes on the money you withdraw in the future.

Now many of you might be thinking “Why would I want to pay taxes now instead of later?”

A few reasons:

1. You are hopefully making less now than you will be in the future, and are thus in a lower tax bracket. So you pay less taxes.

2. Taxes are at an all time low and are not likely to drop further, but will go up.

3. The whole point of having an IRA or 401k is to take advantage of compound interest. With a Roth you do not pay taxes when you withdraw the pricipal or the earnings. If you start a Roth IRA when you are young this can be a HUGE savings.

4. Roths are more flexible if there is an emergency and you need to withdraw some of the money.

Unfortunately  there are limits on how much you can sock into a Roth IRA (about 5k) and you can only do that if your income is less than $123k a year. There is no limit on the Roth 401k though, and there is a way to “backdoor contribute” by starting a traditional IRA and converting it into a Roth IRA – but there again it gets complicated and you need vigilance.

Now Strategic Sorcery is all about the combining the three pillars of Sorcery, Mind Training, and Skillful Action to create a better life – which is why I cover things like this on the blog. So how would magic factor into this? Assuming that you have already used magic to kill your debt*, make enough money to live on and save with, here are some ways that magic can be applied to your savings:

• Fiscal Discipline: Glyphs and Sasafrass spells sometimes help to keep us on-track and not spend that money now. This is especially true for people in their 20’s who often feel like they don’t have enough money to begin with and that retirement age is VERY distant. It’s not that distant, and if you want to take advantage of compounding now is the time.
• Standard Accumulation Magic: You should have magic aimed at consistent and steady success of whatever funds your IRA and 401k are invested in. I like Dzambhala for this, but some people like to use Mercury (cuz that money is moving all the time) or even a fertility Goddess like Abundantia (because you are in a real sense growing something from the seed money you put in.)
• Information Magic: Magic designed to help you find the best accounts with the lowest possible fees. Or if you are an active trader information on where to have your money when. Here is a nice little breakdown from nerdwallet.

The point is this: Stop chasing down the trendy wealth spirit of the month in hopes that THIS is the guy that will bring the riches. Start using the spirits that you already have a relationship with and pointhing them at stuff like this, rather than just feeding them and doing “ummmm, I wanna be rich….”

*because other than a house or Student loans, interest on debt almost always outpaces interest on savings,