Tax-Free Billions: Step by Step How Peter Thiel Has $5B in His Roth IRA (2024)

The Peter Thiel IRA Strategy: How $1,700 Became $5B

Utilizing the proceeds from his substantial PayPal windfall and investment inFacebook startup shares, Thiel channeled millions into investments inother startups within Silicon Valley.

Heeven directed funds into his own hedge fund, asdetailed inamemo from his financial assistant into his RothIRA.

The process begins byopening aRoth IRA account. Even arelatively small amount isokay.

The next step istoseek out anopportunity toacquire anasset, orastake inastartup company, that isexpected toexperience significant value growth inthe future.

This step iscrucial because the goal istoinvest inacompany whose shares are valued atavery low cost atthe time ofacquisition.

Aswith most startups, PayPal provided its key executives with modest initial salaries and substantial stockgrants. Per Thiel’s IRS records, his earnings for that particular year amounted to$73,263.

Investors can use the money intheir Roth IRA tobuy low-value shares inaprivate company before itgets big ($0.00001). Some founders have used this strategy tobuy shares intheir own companies— with dirt-cheap prices set bythe companies themselves.

Why dothis?

Purchasing shares inastartup ataprice per share that isextremely low, often just afraction ofacent, allows them toacquire many shares with arelatively small investment for the greatest possible return oninvestment.

Sell your shares and keep all the profits tax-free inaRoth IRA account. The Peter Thiel IRA strategy acquired the ultimate edge any investor could have used but was astrategy that eluded almost all other investors:

Turning his personal investment bank into aRoth IRA, 100% shielded from taxation.

This newfound advantage allowed him toutilize the funds within his Roth IRA account tobuy and sell nearly any investment hedesired.

Investors can use the profits and gains toinvest innew assets orsecurities within the Roth IRA.

Example: Ifyou have stocks that have appreciated invalue, you can sell them within the Roth IRA and use the proceeds topurchase new stocks orother eligible assets.

Asthe startup grows invalue over time, any profits generated from the appreciated stock within the Roth IRA remain shielded from taxes indefinitely.

Warren Buffet isuniversally recognized asone ofthe best investorsever. But, not even Buffet can’t hold acandle tothe Peter Thiel IRA strategy.

Averaged a20% annual return over 55 years.

Total Return: 5,828%

Averaged anannual return of97% over 24years.

Total Return: 294,117,600%

The Peter Thiel IRA strategy seized the opportunity toacquire shares instartups atremarkably economicalprices. Thiel’s pivotal contribution of$500,000 marked the initial significant external cash infusion into Facebook.

Interestingly, these very Facebook shares found their way—predictably—into Thiel’s Roth IRA, afact later unveiled byaFacebook attorney through aletter submitted inafederal court.

This strategic move ensured the Peter Thiel IRA strategy wouldn’t beliable for taxes onhis early investment inthe social media giant.

Atthe time, Senator Roth assured that his novel IRA concept would,stating:

“Offer assistance todiligent, middle-class American workers.”

How would Senator Roth feel about Peter Thiel’s IRA portfolio today?

Transforming the Traditional IRA: The Roth Conversion

About adecade after the creation ofthe Roth, changes introduced abackdoor method for investors toconvert atraditional retirement account into aRoth IRA bypaying aone-time tax.

The newfound flexibility significantly impacted retirement planning byallowing individuals toshift their retirement savings from atax-deferred environment toatax-freeone.

Itallowed any American totake money inless favorable traditional retirement accounts and, after paying aone-time tax, toshift them toaRoth where their money could grow untaxed, similar tohaving your own Bermuda-style tax haven right here inthe U.S.

This process was asignificant departure from previous restrictions that limited Roth conversions toindividuals with lower incomelevels.

Before the change:

Now, regardless ofincome, anyone could convert their traditional IRAs into aRoth.

The decision toconvert toaRoth IRA depends onseveral factors:

So, what does this mean for you?

Inhis book “Zero toOne,” Thiel argues that fortunes are built not byluck orunfair advantage but bydiscerning investors and founders who are more courageous than their peers, leaders who zig when the crowd zags.

Thiel devotes anentire chapter tothe importance ofkeeping secrets, writing that “every great business isbuilt around asecret that’s hidden from the outside.”

By2019, Thiel’s holdings were sovast and diverse that his +$5 billion was spread across 96 sub-accounts inside hisRoth. These retirement account strategies all relied onpublicly traded investments and strategy available toall taxpayers…

You won’t make $5B dollars like Thiel, but could you make $5M? Absolutely!

Compound Interest: Humanity’s Greatest Shortcoming

Investing for retirement isajourney that requires careful planning, patience, and agood understanding ofthe dynamics ofcompound interest.

One question often arises ininvestors' minds: How often does money typically double inanIRA?

Simple Example: Would you rather have $5M all atonce orapenny that doubles daily for amonth?

Unlike simple interest, which iscalculated solely onthe principal amount, compound interest also takes into account the accumulated interest.

When shaping arobust retirement portfolio, including Bitcoin might initially raiseeyebrows. Often linked toits fair share ofvolatility and perceived risk, Bitcoin presents anarray ofreasons why itshould beconsidered aprudent long-term investment for yourIRA.

Diversifying your IRA with assets that promise substantial returns, like Bitcoin, can beashrewdmove. The inherent advantage lies inthe potential for tax-deferred oreven tax-free growth, depending onyour IRA type— whether Traditional orRoth.

While you likely won’t beable toturn your Roth IRA account into a$5B;a$5M Roth Bitcoin IRA account, perhaps. Bitcoin can provide you financial security using the Peter Thiel IRA strategy.

This ispart ofanew initiative called Swan Research.

The conventional retirement portfolio often follows a60/40 allocation between stocks and bonds, astrategy designed tobalance risk andreward. Bitcoin, however, takes diversification tothe next level.

Unlike traditional assets, Bitcoin exhibits alower correlation, making itavaluable addition toyourportfolio. This can ultimately enhance your overall risk-adjusted returns, offering anedge inunpredictable marketconditions.

The insidious effects ofinflation onthe purchasing power ofyour hard-earned money over time are undeniable.

Bitcoin isapotential safeguard against the erosion ofvalue caused byunrestrained monetary expansion from newly issued banking credit and government deficit spending into the total supply.

With afixed maximum supply of21 million coins, Bitcoin’s scarcity sets itapart from fiat currencies susceptible todevaluation and even physical gold.

InJune 2022, authorities inUganda revealed asignificant find ofaround 31 million metric tonnes ofgold ore within thenation. This discovery could yield upto320,158 metric tonnes ofpurified gold, with anapproximate valuation of$12trillion.

This single new discovery represents more than the entire amount ofgold above ground and accounted for intotalsupply. Asthis gold isrecovered, itwill begin tosignificantly dilute the scarcity properties ofthe metal.

However, noone will ever find asingle additional satoshi ofnewBitcoin. New massive gold deposits like that recently discovered inUganda will continue, though.Predictive models indicate that the final Bitcoin will bemined by2140, over acentury away.

Incontrast, NASA, the U.S. government’s space research agency, has devised astrategy tocapture anasteroid valued at$10 quintillion, primarily due toits abundant precious metals like gold.

NASA’s timeline suggests that the asteroid retrieval mission could occur inlate 2029 orearly 2030, assuming the mission issuccessful.

Contrast the conventional 7% expected annual returns ofastandard 60/40 portfolio with the impressive track record ofBitcoin.

Above, wementioned that the Peter Thiel IRA strategy has netted anaverage return of97%. Since its inception in2009, Bitcoin’s average annual price increase has exceeded 100%, showcasing its potential for monumental growth.

While it’s prudent not toput all your eggs inone basket, even asmall allocation into aBitcoin IRA can significantly bolster your retirementprospects.

Arollover isamovement from a401k, 403b, orsimilar retirement account toaRoth IRA usually coordinated primarily bythe customer and their existing retirementcustodian.

Typically funds are sent bywire transfer, which isthe recommendedmethod. Funds can also besent viacheque. However, this issignificantly slower than sending funds via wiretransfer.

Can Iroll over part ofmy401k, 403b, orsimilar retirement account into Swan BitcoinIRA?

What isthe pricing ofthe Swan BitcoinIRA?

A0.99% transaction fee taken out when the funds are moved over.

Interested inspeaking toanIRA expert?

Ifyou are interested inatax-free Coinbase alternative orhave any other questions, please email IRA@swanbitcoin.com. Book acall with arep today and get apersonalized guide onhow tomaximize your retirement portfolio with Bitcoin.