Any time you encounter an investment concept that you have never heard of before, you can be pretty sure that it exists for at least one of the three reasons: (1) tax minimization; (2) marketability; or (3) liability. The use of the holding company structure is no different. A holding company is an investment tool of the wealthy that is useful if you want to lower taxes, transfer assets easier, or avoid liability.
For instance, let us that over the course of your life, you become one of those secret millionaires in Quincy, Florida that makes a lifelong fortune by investing in Coca-Cola stock. By the time you are middle-aged, you find yourself … Read the rest of this article!
In the investment arena of oil and natural gas partnerships, you see a lot of general partnerships crop up in areas that are being drilled (particularly Texas). You might wonder: Why don’t these people form limited partnerships so that they can shield their personal assets from liability in the event that an oil well has a massive tort or contract fallout?
The answer is that there is an extremely lucrative tax deduction called the “income of intangible drilling costs (IDCs) that enables general partnership investors with working interests in oil and natural gas ventures to deduct all of the income that comes from intangible drilling costs. You can also become eligible for this … Read the rest of this article!
Paychex, Inc. is a payroll processor for 605,000 businesses in the United States and Germany that have between 10 and 200 employees. It is on the short list of stocks with excellent investment characteristics that I have yet to cover on the site. Since 1990, PAYX stock has created enormous wealth for its shareholders by compounding at a rate of 21.2% annualized—on par with the compounding rates of Warren Buffett at his best. If you invested $10,000 into PAYX back then, you would have $1.6 million today.
The investment thesis for Paychex relies on two factors:
Paychex has a remarkably stable customer base.
Paychex has extreme profit margins that have stood the generational
… Read the rest of this article!