How Wealthy Investors Reduce Taxes By Never Selling | Eshwar Prasad | Part 9

This episode isn't about closing out a series. It's about the philosophy underneath everything Eshwar shared across nine conversations - and it comes down to three words: give first, always.

In Part 9, Eshwar closes with the mechanics of how the wealthy create tax-free liquidity without selling, why he's watching the stablecoin bill as the unlock that financializes Bitcoin in the US, and how GameStop and MicroStrategy represent asymmetric Bitcoin-adjacent bets worth understanding.

He also gets personal: what he's actually building right now and who he wants to talk to, what he's willing to offer anyone who reaches out, and why his goal is to become the most boring investor possible - patient, unleveraged, and completely unbothered by short-term price movement.

The through-line across the whole episode is the same thing that runs through his approach to relationships: give the knowledge freely, don't expect anything back, and let what's real sort itself out.

In this episode: 

• Why W-2 Employees Are The Only Ones Who Actually Pay Taxes
• The Borrow-Don't-Sell Strategy And How It Creates Tax-Free Liquidity 
• Why The Stablecoin Bill Is The Most Important Pending Legislation For Bitcoin Investors 
• Gamestop And Microstrategy As Asymmetric Bitcoin Balance Sheet Plays 
• How To Build Relationships That Last - And Why Transactional Networking Produces Nothing
• What He's Building With Exemplar And Who He Wants To Demo It With 
• Why Being A Boring, Lazy Investor Is The End Goal, Not The Starting Point 
• How Meditation Creates More Time Than Any Productivity System

Chief Milestones is a series for operators, founders, and decision-makers navigating real constraints - in business, capital, and the life built around both.

Chief Milestones is a video podcast featuring honest conversations with founders, parents, and investors about building real businesses, staying healthy, and raising families.

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Transcript

Borrowing Instead Of Selling Assets

Eshwar 0:00

Invest in Bitcoin or even stock market. Uh, you don't pay any taxes until you sell it. But uh, what if uh you put in a thousand dollars and Bitcoin goes to a million, your hundred thousand becomes a million dollars? So you don't have to sell it, you can actually borrow against it. You're leveraging on top of it, you're paying three, four, four percent, lower interest rate, and then you're using that money to buy something else or whatever, like your lifestyle money, right, that you're spending on. So you never have to pay any taxes. And that's what the most of the rich people do. Elon Musk uh does the same thing, he never sells his stock. The moment he sells, Uncle Sam is gonna come after come after him for um for money to sell to right, and then obviously they don't sell, they'll collateralize that stock and then take money and then use that money, and they never have to pay taxes, right? It's only W-2 people that pay taxes. The rest of the people, yeah, I mean, they have a lot of money, but they don't sell. So every time I listen to podcasts and I read and I and I just want I want to be like a magnet that is trying to get all the information. Um, so I if I'm curious about everything, I just try to, you know, um try to ask more questions about it and try to get more information. So uh Chat GPT and me are my like the best friends, like uh, you know, like I always go to go to it. Um not only that, grok and all the other things. I just ask so many questions, think about it, and then connect it, and then I, you know, like and then you get so much information, you know so much about life and and business and investments or anything else, right? So my favorite pastime is browsing X and getting some alpha out of it. Um and then uh I'm wipe coding now, and then um and then just uh you know, just chatting with my friend and my mentor.

Learning Fast With AI And X

Reshma Vadlamudi 1:46

How important have relationships been to you throughout the career and how does someone build long-term relationships?

Eshwar 1:54

When you when you are able to give something to somebody, right, for no um you know, for no financial interest, for no financial gain or interest. And the and the and the relationships that you build that way are gonna live there forever. Um but most of the times the relationships are tend to be very transactional in nature. You know, you're expecting something from me, that's why I should be, you know, reaching out to you or stuff like that. So you know, I don't really believe in those type of relationships, right? So that's why I try to anybody that I meet, I try to the only thing that I have, my superpower, is my my wisdom and knowledge. And I'm free to, I'm I'm very, very liberal to share everything and anything that I know. Um, and then the process, if somebody values that and they consider my friend, I take that, and I'm I'm not expecting anybody to to be friends with me or uh, you know, whatever. I just do whatever I think is is uh is is right for me, and and uh in the process, if I'm able to make friends and relationships, then so be it. So I don't really specifically look for relationships or networking or whatnot, right? So so people that know me know me, people that don't know me, they don't know me.

Relationships Built Without Transactions

Reshma Vadlamudi 3:06

So

A Request For Clinical Research Feedback

Reshma Vadlamudi 3:08

okay. And uh do you have an ask right now?

Eshwar 3:12

Somebody is working in the in the in the in the uh drug discovery and uh you know clinical research side, and uh uh and if you want to demo a project that we're building on, if you're curious to see uh, you know, uh what we're doing with agents and clinical trials, you know, hit me up and I'll be more than happy to uh happy to showcase a product and uh you know help you know see if it's any beneficial for you, it's able to solve any any issues that you currently might have. That would immensely help us also get that you know direct feedback uh to to help build that product in that in that in that shape or form. I think uh it's important. So if anybody in the is in the clinical uh research industry, dub drug discovery, meta-analysis, uh uh, you know, creating SLR reports, um, pico analysis and got that kind of a thing, then uh definitely hit hit hit me up and then maybe we can we can work something together out.

Reshma Vadlamudi 4:08

Yeah. And then uh if someone is looking to get in touch with you, what do you have to offer? Are you willing to be someone's mentor? Are you willing to share your knowledge? Spend some time or uh

Mentorship Without Giving Direct Advice

Reshma Vadlamudi 4:25

Sure.

Eshwar 4:25

I mean, anybody can hit me up and I know what I know. I can only tell you what I know. Uh if that is useful for anybody, um definitely you know, hit me up. I don't I don't think uh you know, I'm I'm here to share my knowledge and my experience and my wisdom, or whatever I little I know. Uh I'm pretty sure I'm able to probably know more from people uh you know, than than what I'm able to offer at the same time. So, you know, uh knowledge is free, you know, just uh wisdom wisdom is is is is freely available for anybody to take it. So, you know, I'm happy to share what I know, how much ever little I know, I think I should I I think I'll be able to you know I think I don't I don't want to give advices or anything like that, but I can only tell anything based on what would I do if I were in the same situation. That's that's what I would say. Like I would never tell anybody to do, oh you should do this and do this, you know. I would only tell if I were in the situation, I would have done it. But I don't think I don't think that's the right thing to do, but that's what I would have done. It's not necessary that you do the same thing, but but if you think my thought process is something I explained the rationale and thought process process behind it, and this is why I do I do want to do what I want to do. If it's useful, take it, but don't do anything that I say you should do. Right? So think other side as well, right? Yeah. But I can only give a perspective of why I think I would do it that way, yeah, as opposed to and again, the certain circumstances the context changes. If it, you know, again, if I were to do the same thing 10 years ago, I would have totally different done something else. Now I would do something totally different. So it's not it's not the same. So when I have uh when I have the spectrum of those so many changes, right? I mean, why would it be foolish for me to uh advise anybody to do anything? Everybody has to do what's what what's in their best interest to do. I mean, I am the biggest proponent for Bitcoin and crypto there is, and I'm happy to uh help and share information how much ever I know. And uh, you know, I cannot give any advice of the invest in this, invest in that. Yeah uh but if you have any questions of how to store crypto, what's the best secure safest practices, and you know, how do how do I include all this in a trust versus you know things like that, you know, just uh you know um uh any tax.

Reshma Vadlamudi 6:48

We have to do a follow-up.

Eshwar 6:50

I mean it's a it's a it's a it's a greatest asset uh that is out there that has under overperformed everything that's out there for the last 200 years.

Reshma Vadlamudi 6:58

Yeah.

Eshwar 6:58

Uh and I'm only talking about um, you know, uh, you know, a six sigma event that is probably not gonna happen at all. Uh but I've you know my own my my um you know rationale again. I'm not asking you to invest in crypto or real estate or anything. I'm not against it, I'm not for it. So so I'm just only sharing my thought process, yes, thought thought process and how I look at those things.

Reshma Vadlamudi 7:25

Yes.

Eshwar 7:25

And because I have uh uh a bigger vision and I'm not going to sell something if something falls 80%, I have that patience. Not everybody has the same level of risk appetite uh like I do, right? So for most people that are probably watching this podcast, uh real estate is uh is a fabulous investment because they don't like to lose money, right?

Reshma Vadlamudi 7:44

You don't lose if you don't or it could also be like there are people uh who don't know much about like however you say like you don't have enough information about real estate. This is what I heard. Like I met all these people in real life and they genuinely didn't know anything about crypto or bitcoin, and it always is like okay, I don't even know if that's real.

Why Bitcoin Still Feels Early

Eshwar 8:06

So these people So once everybody knows everything about everything, then it's not an opportunity anymore. So the reason why it's still an opportunity is because most people don't know you're still so early. That that's what that means. And that becomes an opportunity in itself for anybody to understand it, study it. You know, if you look, I don't know if people uh looked at uh uh Bitcoin uh white paper, uh, as as um you know, technical as it might seem, it's pretty easy to understand. Anybody can read it and anybody can understand it. You know, it's so easy to understand, right? So so start with reading the Bitcoin uh white paper, or at least ask uh uh Chat GPT to explain what Bitcoin white paper is and summarize the contents and what it is and ask follow-up questions. Most people I think like when they're interacting with uh you know with these tools, they ask one question and they ask more questions. I think it's important for you to ask multiple questions like you would ask a person, like you're curious, like you want to know more. So then the amount of information you get, and then the the the retention of that information is gonna be so much, much better, right?

Reshma Vadlamudi 9:07

Yes.

Eshwar 9:08

So so look at the Bitcoin paper. And uh and it's so easy to understand uh what what why it is created and what it is trying to solve and and how it is different from regular money and how it is different from all the other assets, everything is in there. Okay, yeah, so if anybody wants to to know about crypto, just start with with the Bitcoin white paper. It's the easiest document that you can that you can read and understand, even people that do not have any knowledge, or you can use chat GPT to to rationalize it for you and and kind of really dump it down and and uh and um you know explain it in layman's terms.

Reshma Vadlamudi 9:42

Yes,

Capital Gains And Tax Deferral

Reshma Vadlamudi 9:43

yes, okay. So yes, I I I didn't know that there are any tax benefits to Bitcoin, actually. Are there any tax benefits? I yeah, of course.

Eshwar 9:55

Okay. I mean, it's like you know, tax benefits as such. I mean, what money other what are you doing that with that money, right? If you're investing in real estate, so you pay property taxes, you pay all these other taxes when you invest in Bitcoin or even stock market, uh, you don't pay any taxes until you sell it. Right? And more often, if you keep that investment for more than one year, it's uh you essentially you're paying anywhere between 15 to 20 percent short-term and long-term capital gains, right? Um But uh what if uh you put in a thousand dollars and Bitcoin goes to a million and you, you know, and you become, you know, you you know, you you um you get you your your hundred thousand becomes a million dollars. Um so you don't have to sell it, you can actually borrow against it, you know?

Reshma Vadlamudi 10:42

Okay. So you're leveraging.

Eshwar 10:43

You're leveraging on top of it, you're paying three, four, four percent, lower interest rate, and then you're using that money to buy something else or whatever, like your lifestyle money, right, that you're spending on. So you never have to pay any taxes. And that's what the most of the rich people do. So they have like huge stock uh stocks, right? I mean, Elon Musk uh does the same thing. He never sells his stock. The moment he sells, then Uncle Zamb is gonna come after come after him for um for money to sell to right, and then obviously they don't sell and they take uh interest on top in they'll take they'll collateralize that stock and then take money and then use that money and they never have to pay taxes, right? Yeah, it's only W-2 people that pay taxes.

Reshma Vadlamudi 11:21

Yeah.

Eshwar 11:22

Um, rest of the people, yeah. I mean, they have a lot of money, but they don't sell, right? So when you don't sell, you don't pay taxes, right?

Reshma Vadlamudi 11:28

So how do they like how what is the LTB?

Eshwar 11:32

Is

The Missing Piece: Bitcoin-Backed Loans

Eshwar 11:33

it on the No, uh for Bitcoin, it's not there. The market is still nascent. There are only a few banks that's outside of this country, it's not regulated yet. You're not allowed to get money. Um, you know, there's only a few companies that are doing this, that are based out of uh um what is it, country where there is like this called in like uh Bermuda, Bermuda. Okay, so it's a Bermuda-based company, it's only they are leveraging, and you don't really want to trust them, right? Um because you're basically essentially turning over your um uh your Bitcoin to them, and they can they have probably have like a cross you know third-party risk. Um but that will happen. That's my my my hope. So when and why, when my Bitcoin is gonna be become a million or ten million or thirty million or twenty million or hundred million for that matter, is when you have utility for it. So so you need to wait for some somebody to create a bank and have make it collateralized. If you can collateralize Bitcoin, that's when the value of Bitcoin is gonna go way higher. So it's not there yet in the US. But the reason there are reasons to be positive that that might happen very soon, the moment the stablecoin bill is enacted, I think that's a huge huge uh headwind uh for all these companies to uh to um you know collateralize Bitcoin and then be able to borrow money against it. Then you have you financialized Bitcoin, you have like financial products on top of Bitcoin. And all the Bitcoin maxi people that are really that live to the true um intention of Bitcoin probably might not like it. Um but somebody like me looking at this as not like uh um uh just an investor and trying to take uh you know uh an asymmetric bet on it uh to increase increase my portfolio, then I would want to see see it get financialized. You already have ETFs right now. Um so uh uh the only thing pending right now is is collateralized banks willing to collateralize Bitcoin. So

Leverage Basics And LTV Discipline

Eshwar 13:40

then that is when you can make you know uh phenomenal amount of uh you know money and then the value is gonna get increased. Um because you don't have to sell your Bitcoin and it's still growing at 20-30%. If you can if you can borrow money and then pay 4%, you know, you have the big best arbitrage trade that is out there. So you're paying 4%, you're making 20%, you're making 16% every year. Where else can you get that kind of return? So again, we are taking 20% as the lowest of the lowest of the floor. If you look at the last 10 years, Bitcoin has given more than 60, 70% returns, right? But I'm expecting the flowest of the lowest, right? I'm just conservatively accepting that okay, it's become such a big asset. It probably is not going to go up so much, okay, every year. So maybe let's just give it only 20%, right? So even then you make money. But if it takes 60%, it's no brainer, right? I I would probably do the same thing. So I leverage it and get money and then buy Bitcoin with it again. Right? Make sure that the the um LTV is is in a very comfortable position where it's not going to be too risky when the price price goes down. Uh, but you could probably leverage 20-30% and then buy Bitcoin with it again, right? And then if it increases, you do the same thing. That's how you create infinite leverage, right? Um that you don't you don't have uh, you know, and with very risk averse, and you know, the LTV should be very, very reasonable, take into account all these things. If you if your LTV is 30, 30 percent, uh that's the best thing in the world. Right. So um so that's why you make enormous amount of money faster. You can just you know multiply that money much faster. Somebody invested 100,000 in Tesla in 200 um you know, uh seven, uh three or four when it's like two bucks. Two bucks. Yeah, I mean it was. I I I bought that at a couple of bucks, yeah, two bucks. I mean, it's like pre, like now it has gone through uh multiple stock splits. Um uh so yeah, I mean, if somebody held it, right, and then uh leveraged it, bought more, leveraged it, bought more, leveraged it, bought more. You know, imagine the amount of returns that you would actually get that way. Uh but I'm just uh just telling what I'm observing and what I what I what I'm thinking, and uh, you know, I want to be able to spread that knowledge to people.

Reshma Vadlamudi 16:06

And if somebody is willing to see if you're seeing it as a big opportunity, you should let people know.

Eshwar 16:12

Like so again, you know what what might work for me might not work for somebody else. Again, their perspectives, their lifetime goals, their uh you know, risk appetite is completely different, right? If somebody is watching this that shares the same mindset that I am, yeah, maybe it works for you. But this strategy is not gonna work for anybody. So don't try this. Uh, you know, just because I'm doing this, don't try this because I have a big appetite for risk and I don't care. I've just sat through 80% uh down turn downturns, right? Yes. Uh and I bought more at the down, right? When Bitcoin went uh to 16,000, I bought it 16,000. So I bought them at 60,000, I bought them at 16,000, I bought them at 8,000. Like, so so and I've uh uh you know, I I you know have the high conviction to hold it.

Bitcoin Exposure Through Public Companies

Eshwar 17:00

Um, you know, like um, you know, I'm you know, I recently sold uh some full full full disclosure is to be able to put it in um you know um put it in Bitcoin-based uh companies that are putting in balance sheet. GameStop is is something that I'm really looking into. MicroStrategy is something that I'm looking into. So, so so um because it still gives me the the Bitcoin exposure, but it also gives me the um uh the volatility of doing certain things. You can do certain things with with options and everything else to uh to sell some coward calls and you make some passive income like that. There are opportunities like that that that presents themselves, you know, it makes it um and you don't have to worry about sharing you know, storing your keys or um you know hoping that somebody is is not going to find out about your keys because when you lose your keys, you lose your money. So it's just very important for you to be um very safe and secure. Uh so I'm starting to think uh like investing in this companies that are actually putting Bitcoin in their balance sheet. Uh obviously they have a core business and they also have like this Bitcoin exposure and they have this memness of it. Um, and you have people, a bunch of people short on this because everybody's expecting GameStop to uh to file bankruptcy eventually. So you have a lot of you know people that are sitting short. So there's a asymmetric opportunity, and then those have to get out. And if they announce that they're buying Bitcoin, that means that they're going to, you know, they're not going to get uh they're not gonna go bankrupt. So obviously the people that have already been shot for so long, they need to get out and the price increases, and then it has like roaring kitty and all these people that meme might memeze this stock because you know to 2021 when it went up 7,000 percent. So so it has that history, it has that that you know, so it has that that nature to it, it has a context to it, and it has a big business case right now. Uh, and I love the fact that they're uh that they are adapting Bitcoin as a as a as a treasury asset. And uh, you know, I'm uh you know, so maybe there's an asymmetric opportunity for me to in you know to take the money from Bitcoin and invest in some something like that. If Bitcoin goes, you know, you know, 100%, GameStop might go 300%. So you you always try to over-outperform the Bitcoin. Again, you know, Bitcoin people will say, like, you don't need to do that, you just hold it and don't do anything with it, it probably would have done much, much better. Uh, but my reasons were um uh were the complexity of storing keys and and being able to pass on to uh you know, and then you're expecting the company to do all that for you. Um you know, and you don't really you don't really have to worry about the security of it. And uh you have a market that you can actually, it's a liquid market, um, and you have options that you can play some some um you know um you know um covered calls and uh and because there's a lot of volatility you can you can do a bunch of things there. So so that's why I'm looking into is uh is uh you know again, whatever money that I have is obviously going to be related or tied to Bitcoin related stuff. That's that's pretty that's where I want to be, and that's where I feel like uh you know I will continue to continue to do so.

Reshma Vadlamudi 20:23

Okay.

Mindset, Kids, Meditation, And Time

Eshwar 20:24

A fine conversation. I I've just uh hopefully it's useful for people that's uh watching me and um and uh you know if I'm able to help anybody or help answer any question, um help clear any doubts or anything like that, then then you know I think we accomplished uh I'll link your uh LinkedIn and also the X uh Sure.

Reshma Vadlamudi 20:48

Yeah, so and then so people can either follow you or reach out.

Eshwar 20:52

Yes, and I like uh YouTube and I think uh you know if we look at my phone, if you look at my uh, you know, I probably spend uh seven, eight hours uh, you know, in in good days um watching YouTube. So people things will not working hard out of your comfort zone, not wanting to do things, but still want to do things, do that is not gonna make you successful. So find what is right for you, find what is what what excites you, what makes you happy to do 18 hours. Or you're very, very happy to work 24 hours straight, if it comes, right? Uh and that's what that's and that's that's what you want to want to be able to do. And then kids, um for uh uh you know they have to be um you know attended and everything else. And I think it's important to dial down the um the expectation of ourselves to do certain things certain way. Once you dial that down, I think uh you know it's not going to be forever, it's probably gonna be a couple of years uh until they need uh they need us. So so until that time, you know, it's it might feel hard, but again, that that is. You're feeling hard because you're internally intentionally conditioning yourself or telling yourself that it's hard. That's why it is hard. So if you remove that boundary or constraint from your brain to say, like, this is not hard, this is just life. And you accept the fact and then uh and then live happily, and then just be, you know, I think you know, definitely, I don't know. Um, meditation definitely helps um give you that time back. Um, you feel like you have more time than you need, you know, if you if you because because most of the times what you do is our brain continues to think, wander off, think so many things, and you create this emergency all the time in your brain. So if you just try to reduce that chatter and then just just kind of try to be with with um like that, where you are checking yourself every word you say, everything that you're observing yourself, like it's uh um, and then you be in that state of mind more often or not, right? I mean, that's why I feel like I don't want to just do diff difficult things. I know money is gonna come. All you have to do is just sit and observe, right? And then find opportunities. Um back in the day, it is difficult. You have to go out and probably talk to people. Now you don't have to have those restrictions anymore. Now you can do anything and everything from your home and laptop and probably not even a laptop, just a phone. So um, so um, so I don't want to work hard. I want to be a lazy investor, a boring investor, a boring guy, a boring thing. I just do a wake up, do whatever I want to do, wipe code in the process. If I'm not putting myself in a pressure to say, like, I have to uh I have to um do this or I have to deliver this, right? The more I put myself pressure, then you are you're putting yourself in a box. You know, um so so if it works, it works. If it doesn't work, it doesn't work, right? Um so so that's the kind of mindset that I'm I'm in right now. So again, everybody goes through different phases, and uh, you know, maybe somebody is in that hardworking phase. Yeah, um, you know, you will go you'll come through those things and uh eventually you will reach a place where you know you feel like um you know you're you're you're on a happy mental space and um and you just want to live life like that and not worry about anything, right? Not have any deadlines, nothing to do, anything like that. So so that's the goal. So um