And also rather risky but still:
Billionaire Peter Thiel, one of the founders of PayPal, has used a retirement account designed to help ordinary Americans save for their golden years to amass a $5bn tax-free nest egg, according to records obtained by ProPublica.
Thiel, a vocal opponent of higher taxes, is one of a number of ultra-rich Americans to use a Roth individual retirement account (IRA) to amass a tax-free fortune.
Roth IRAs were established in 1997 to encourage middle-class Americans to save, tax-free, for retirement. In 2018 the average Roth IRA held $39,108. The proceeds of a Roth IRA are tax-free as long as they are not withdrawn before the account holder reaches 59.5 years old.
Records obtained by ProPublica show that Thiel, 53, placed 1.7m shares of then-private PayPal into a Roth IRA in 1999. At the time annual contributions to the plans were capped at $2,000. The shares were valued at just $0.001 per share.
Within a year, the value of Thiel’s Roth increased from $1,664 to $3.8m. Thiel then used his Roth to make highly lucrative investments in Facebook and Palantir Technologies, according to tax records and other documents obtained by ProPublica. By 2019, Thiel’s Roth held $5bn “spread across 96 subaccounts”.
The whole investment gig has been run through his IRA. Entirely, wholly, legal and all that.
One implication of all this is that he’s long term investing. Putting it to use in the economy for decades, none of this short term profit making for him. But of course they’ll be screaming about that too.