IRA accounts (Ultra-rich vs Rich vs Poor)

Ever wondered how the Ultra-rich use IRA accounts? And how people with moderate means can also use the IRA accounts? Read on…

In recent past, my Roth IRA account’s worth reached $100,000 so I am personally very excited. I can be considered rich by many standards. Today, we will talk about Roth IRA accounts and how the ultra-rich and rich use it. We will then continue to talk about the middle class and the poor – and explore what can they do to be able to save a little more.

(You can also skip directly to rich or middle class/ poor section if the ultra-rich jugglery does not interest you).

Ultra-rich

Ultra-rich use several different techniques to make the most of Roth IRA possibilities. The most widely used and easiest to understand is “Buying pre-IPO stock that records a 2,000% gain as soon as IPO’.

IPO stands for Initial Public Offering. Any company usually starts because a few like minded people come together and start to create a new product or service. They put some of their money and start the company.

If the idea starts to do well, they will find investors to invest some serious money. Once the company becomes successful, then they go to the ‘stock market’ and sell part of their (owners + investors) ownership to common public through an IPO.

The company has a lot of flexibility in deciding how much to ‘charge’ for the initial distribution of shares.

The name of Max R. Levchin (Yelp) comes up often in these discussions, let us examine what he did:

He acquired Yelp stock mostly for free. At one point, he held about 29 million shares of Yelp.

Yelp went public in 2012 at stock price of $15. This means Max’s 29 Million shares would have been worth $435 Million.
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