Here’s the incredible story:
This would be a meeting that would change Thiel’s life.
With a Roth Individual Retirement Account (IRA) you invest a limited amount of money each year ($6,000).
When the money is in your account it’s never taxed again.
As long as you don’t withdraw it before you’re 59 1/2.
He raised $1 million from friends and family to launch Thiel Capital Management.
Pensco was a small firm that allowed its customers to put almost any investment in a tax-beneficial retirement account.
Anderson introduced Thiel to the Roth IRA, a new account that wouldn’t make you pay tax when you took the money out.
Thiel seized the opportunity with two hands.
He was about to become Pensco’s whale.
The average American typically uses their retirement account to purchase stocks or bonds.
The value of which is set by a public stock exchange.
Thiel used his Roth IRA to purchase shares in his new startup, PayPal.
Thiel paid $0.001 per share for 1.7 million shares.
This cost him only $1,700.
Then in August, another $4.5 million from Nokia’s venture fund.
The dot-com boom was happening, and happening quick…
The reported value of Thiel’s Roth at the end of 1999? $1,664.
In 2000, the value of his Roth jumped to $3.8 million.
A cool 227,490% increase.
In 2002, eBay purchased PayPal.
Thiel sold the shares and bagged $28.5 million inside his tax-free wrapper.
What happened next?
Rinse and repeat…
A data analytics company backed by a CIA venture fund.
Thiel used the $28.5 million sloshing around in his Roth to buy shares of Palantir.
There was another opportunity sitting on the table.
In 2004, Thiel met Mark Zuckerberg.
By the end of 2008, his Roth was worth $870 million.
What if you also started a Roth in 1999 and maximised your contribution each year?
You’d have $258,000.
1. Open a Roth with $2,000
2. Buy founders shares for fractions of a penny
3. Shield yourself from tax until you’re 59 and a half
4. Use the proceeds to make other investments
5. Find yourself on the beach sipping a cold one
(6. Meteoric startup growth)
To give you some perspective:
1 in 4 working-age Americans have nothing saved for retirement.
The average Roth IRA was worth $115,400 at the start of 2020.
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