April 10, 2021
GameStop Profits | What to Do With My GameStop Profits? | Stock Market Tips
Are you one of the winners in the GameStop trading? Atty. Chris Berry discusses what you can do with your earnings and how to protect them.
Estate Attorney and Advisor Chris Berry of Castle Wealth Group answers questions on retirement and estate planning every Wednesday at 1pm. Register via this link or give our office a call at 844-885-4200.
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Episode Transcript
What to Do With Your Gains
Hey, this is Chris Berry, certified estate law attorney and advisor talking about what to do with all your GameStop winnings. If you like this information, please make sure to subscribe to our YouTube channel.
Christopher Berry is a leading estate attorney and advisor in the area of retirement and legacy planning. He has been featured in publications such as Forbes, Kiplinger’s, Crain’s Detroit, and more. He’s the host of the weekly radio show and podcast, The Chris Berry Show. He’s a national thought leader as it relates to retirement and legacy planning and is author of the Amazon best-selling book, The Caregiver’s Legal Guide.
So with that, GameStop and AMC and Blackberry, they’ve been on this amazing run the last couple of days, going up and down, and depending on where you’re at with that, maybe you participated in the rollercoaster that all started… A lot of it started in a Reddit group as they were trying to stick it to the hedge fund managers.
But with that, you might’ve made quite a bit of money on the gains, and hopefully you sold at the right time. If you were someone that sold. I know a lot of people are holding on and I think they call that the diamond hands, if I’m not mistaken. But if you did sell and you have a lot of profit from your GameStop stock or any of the other stocks, then first understand that you might have some taxes that are due, but what should you do with the gains, your winnings? What should you do with a profit? And this conversation has came up actually in our practice. And so I look at it from two respects.
Outside of an IRA
First, we have to look at where were you doing this investing and if it was non-qualified, meaning outside of an IRA, you’re going to have a little bit more flexibility. It’s going to be better from a tax perspective, with regards to where you’re doing your investing in GameStop or AMC or Blackberry. If it is non-qualified, then one of the things that you may want to do is look at putting those profits into an asset protection trust.
So there’s going to be two aspects to this. One is where do we decide to keep our profits? Do we keep it in our name? Do we keep it in a legal entity? And then second, what do we invest in it? And so there’s two steps to this process. So if you’re concerned about lawsuits, and creditors, and bankruptcies, or longterm care costs in the future and you have these profits that are sitting in a non-qualified account, like a checking account, savings account, brokerage account, we might want to consider an asset protection trust. To shield those from creditors in the future, lawsuits protect from long-term care costs in the future.
You can still get access to it. You can still manage it. You can still invest it. It doesn’t change it from a tax perspective. We have a specific type of trust geared towards this situation, it’s called a Castle Trust. You’re in control. You serve as trustee, you pay income tax the way you normally do. You receive all the income, but the principal would be protected. So if you were to get sued, for whatever reason, whatever’s in the trust would be protected.
And then second, what do we invest it in? And that’s a longer conversation that talks about… And we have to figure out what are your goals? Is this going to be something short term? Longterm? And I always view it in terms of time horizons. So if this is money that you think you’re going to use over the next year to buy a house or something like that, then let’s keep it safe and liquid, keep it in the bank. If this is something that’s going to be more longterm, then we could look at reinvesting back into the market into a portfolio. Because I view individual stocks, it’s a little bit of a roller coaster. You can certainly win sometimes, but you can certainly lose. And if you’re looking at, you know what, I was on the rollercoaster long enough, now I want to take some on my winnings, then maybe we want to put it into a full portfolio based on how much risk you’re willing to take on in your portfolio.
Safety and Growth
Or we could look at the safety and growth side. Now we have to sacrifice some liquidity here, but we have some interesting alternatives. One of the things that could be a possibility would be index universal life insurance that grows tax-free, that could provide you a tax-free income in retirement, offers a death benefit as well as a long-term care benefit. And also we can look at certain investments that offer no downside, meaning whatever you put in would be protected and then you’d participate just in the upside of the market.
So different things to think about. And the important thing is figure out what is your goal in terms of the investing, then figure out the best strategy and then and only then pick the right tools. So if you made out in the GameStop rollercoaster or the Blackberry or AMC, and you’re looking at what to do with your profits, first thing is, think about, do you want to keep it invested in your name, or do you want to shelter it inside of an asset protection trust, maybe a Castle Trust.
And then the second is decide what you want to invest it in moving forward. If it’s something short term, I suggest maybe just leave it there until you buy that new house or whatever it may be. If you’re looking at investing, we can look to the market which offers liquidity and the potential for growth, but no guarantees of safety. Or we can look at certain investments that offer you guarantees of safety based on the company, gives you the potential growth, but you have to sacrifice a little bit of liquidity.
You want some more information on this? Give our office a call (844) 885-4200. Or reach out to us at contact@castlewealthgroup.com. And this has been Chris Berry with Castle Wealth Group, congratulations on your GameStop profits if you’re walking away a winner with that. Thank you so much.
Castle Wealth Group has clients across the nation and helps families plan, protect and preserve what is important by creating a retirement and legacy blueprint.