3 ms·

> Thiel turned $2000 into this amount Is there a history of what trades he made and over what period? A $2k investment to $5B is insane.

jeremysalwen 5y ago
You can actually put ~50k per year into a Roth ira using the mega backdoor technique. Still impressive.
spamizbad 5y ago
The "trick" is you put your near-worthless startup stock into the fund before any major valuations. So when your company shares are worth $0.01 or whatever, you put in a few thousand dollars worth of them each year before you valuation skyrockets. Assuming the company goes public, the shares stay in the Roth. IANAL but I assume you lose Roth benefits and probably pay some penalties if the company gets sold for cash.
- nrmitchi 5y ago
  As discussed previously, this "trick" is actually explicitly not permitted, because you could do something like say "My stock is only work $0.001 each ;)" while simultaneously selling to investors are orders-of-magnitude higher valuations. I mean, let's be real: the argument in defense of this is that Thiel bought his founders shares at "a fair value". There were 3 original founders, so the argument is that the company had a fair value of.... ~$5k? > you put in a few thousand dollars worth of them each year before you valuation skyrockets You can't transfer assets into an IRA like this either.
  - spamizbad 5y ago
    So how'd he do it?
    - nrmitchi 5y ago
      What do you mean? Just because something is a prohibited transaction doesn't mean there is a magical fairly that ensures you don't. I'm sure you are aware that the audit-rate for wealthy individuals is (and was) significantly lower than other income brackets. There is no magical automated system that is going to catch and flag a not-arms-length transaction, and I'm sure he (well, his legal team) is sitting around saying "well it's a shame this wasn't caught at the time, you know, statute of limitations and such".
blfr 5y ago
I've read another story about his IRA that I cannot find now and he started with his PayPal shares, then used proceeds from that for Facebook and other investments for which he's famous. This was not a public/stock investment strategy. It's less impressive that it could have been(!) because he took out some money (and paid taxes on it).
colinmhayes 5y ago
He bought 1.7 million paypal shares for $1,700. They were worth 50 million a couple years later. After that it's just a bun ch of venture capital stuff, including facebook.

jeremysalwen 5y ago

You can actually put ~50k per year into a Roth ira using the mega backdoor technique. Still impressive.

spamizbad 5y ago

The "trick" is you put your near-worthless startup stock into the fund before any major valuations. So when your company shares are worth $0.01 or whatever, you put in a few thousand dollars worth of them each year before you valuation skyrockets. Assuming the company goes public, the shares stay in the Roth. IANAL but I assume you lose Roth benefits and probably pay some penalties if the company gets sold for cash.

nrmitchi 5y ago
As discussed previously, this "trick" is actually explicitly not permitted, because you could do something like say "My stock is only work $0.001 each ;)" while simultaneously selling to investors are orders-of-magnitude higher valuations. I mean, let's be real: the argument in defense of this is that Thiel bought his founders shares at "a fair value". There were 3 original founders, so the argument is that the company had a fair value of.... ~$5k? > you put in a few thousand dollars worth of them each year before you valuation skyrockets You can't transfer assets into an IRA like this either.
- spamizbad 5y ago
  So how'd he do it?
  - nrmitchi 5y ago
    What do you mean? Just because something is a prohibited transaction doesn't mean there is a magical fairly that ensures you don't. I'm sure you are aware that the audit-rate for wealthy individuals is (and was) significantly lower than other income brackets. There is no magical automated system that is going to catch and flag a not-arms-length transaction, and I'm sure he (well, his legal team) is sitting around saying "well it's a shame this wasn't caught at the time, you know, statute of limitations and such".

blfr 5y ago

I've read another story about his IRA that I cannot find now and he started with his PayPal shares, then used proceeds from that for Facebook and other investments for which he's famous. This was not a public/stock investment strategy. It's less impressive that it could have been(!) because he took out some money (and paid taxes on it).

colinmhayes 5y ago

He bought 1.7 million paypal shares for $1,700. They were worth 50 million a couple years later. After that it's just a bun ch of venture capital stuff, including facebook.