Episode 7: The 3 Biggest Wealth Killers (And How to Beat Them)

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In this solo episode of Wealth Strategy Deep Dives, Dave unpacks the top three reasons most entrepreneurs and investors lose wealth: overpaying in taxes, lack of true diversification, and low financial IQ. Dave reveals how smart tax planning—using incentives designed for business owners and investors—can create exponential returns, and why traditional methods like 401(k)s might be holding you back.

He also shares why relying solely on your business or the stock market is risky, and how building your financial IQ can unlock opportunities others miss. From real estate and energy to creative deal structuring, Dave shows how education and strategic thinking can lead to powerful wealth creation—even without large amounts of capital.

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How is it going, everyone? And welcome to a special solo series of Wealth Strategy Secrets Of The Ultra Wealthy. I’m your host, Dave Wolcott. We get a lot of the same questions from our investors about infinite banking, tax efficiency, asset protection, strategy stacking, and how to actually build wealth outside of Wall Street. And we get it.

We know you’re busy. So in this series, I’m breaking down complex wealth strategy topics into short tactical episodes that you can actually use to build legacy wealth. Whether you’re just starting your journey or fine-tuning your portfolio, these episodes are designed to give you high-impact insights in just a few minutes. So let’s dive in. Hey, guys.

In today’s deep dive, we’re gonna talk about the top three reasons entrepreneurs and investors lose the most. So stay tuned for this one. Number one is coming in with paying too much in taxes. Now, whether you’re a business owner, a high-income earner, on your personal income statement, if you look at that line item that’s costing you the most, my guess is that 95 98% of you, it’s taxes are your number one biggest expense. So one of the misnomers that’s out there today is actually deferring your taxes into qualified plans.

While that might help you today in the short term, it can cause issues when you go to take out that income in later years, and you’re actually paying the top income rates for that. And my guess is rates are probably gonna go up in the future, so you’re probably doing yourself a disservice. Most people just really don’t understand that taxes are actually a roadmap of incentives for business owners and investors. So what you have to do is become smart on how you can actually leverage those incentives. So, for instance, one of the reasons that we really like real estate is that we get to partner with the government because there is a shortage of housing that’s available in this country.

Therefore, the government creates tax incentives. So we can invest as a partner with the government alongside the government where they’re looking for, and therefore, you get an incentive. That’s the reason business owners also get so many tax deductions because they’re providing jobs, they’re supporting our nation’s GDP, and the overall growth of the country. Right? So that’s one of the best reasons that you can reduce your taxes by being, becoming a business owner.

It’s also important to be looking at, again, tax-efficient assets in addition to real estate. We love oil and gas for one of those reasons. There are a lot of opportunities in the energy sector that provide tax efficiency, as well as some other asset classes that you might want to use. And lastly, around taxes, you know, one of the biggest things I wish I had learned when I was 20 was if someone had just simply told me that, look, if you are a W2 earner, you can actually get your taxes to 20% or maybe even less. If you’re a business owner, you can actually get your taxes to zero or less.

Right? So these are the targets. If you’re paying anything more than 20%, you have a big opportunity. And again, we’re always kind of chasing the yield on investments, right, thinking that we can actually take an investment and, you know, this one is 12%, that one’s 15%, that one is 20%, so that must be the best thing I could do. Well, let’s say that you were able to reduce your taxes by 15% in addition to getting a 20% return.

Well, now you’re making 30% on your capital. So really understand that this is actually one of your biggest opportunities you have is to reduce your tax bill. And don’t throw your arms up and say, hey, it’s just not possible given what I am. I’m W2 or my spouse and I are W2 earners. There are a lot of different strategies to help mitigate this.

Okay. Let’s go into number two. The second reason that entrepreneurs and investors are really losing is by not diversifying. They’re putting all of their eggs in one basket. And I’ve made this mistake, I can tell you, multiple times, whether it be not diversifying in my first business that, you know, we were growing exponentially, won the Inc five hundred two years in a row, and then all of a sudden had one quarter where we’re completely upside down after our best year ever.

As entrepreneurs, we love to invest in our businesses because it’s our baby, it’s our passion, it’s everything we do. But I can tell you, it is still really important to diversify outside of your business, start getting into other assets that are not directly impacted, because otherwise your business becomes your single point of failure. Right? So if you have issues on the business side, it’s actually going to impact you on the personal side as well. And then also think about diversification again from are all our assets in some type of stocks, bonds, mutual funds?

Right? They call that diversification, but I would actually call that diversification because it’s that you don’t really have a strong investment thesis, and you’re actually just spreading your risk across a hundred different, you know, assets, and you’re basically just riding out an index. So if you’re riding out that index, you might as well just put it in an ETF or an index fund and then do some kind of allocation like that. But don’t put a % of your assets into all that. Recently, we just went through all of the turmoil, watching markets go down significantly, even on a twenty-four-hour basis, with all of the tariffs here that were coming out in Q1.

And if your portfolio is a % subjected to the market and you took, you know, an eight to 10% drop, right, that’s really significant. But just think if all of those assets were only represented, say, 30% of your overall portfolio, you know, then you’d have a much less impact of a drop, right, when that really happened. And again, you know, thinking back to when we talked about how you can drive really a trifecta type of return in direct investments, syndications, private equity, real estate, other types, different asset classes outside of just investing in equities, which really just have a one-dimensional return to them. So let’s talk about number three now. Number three is all about actually having no education.

Most people the extent of their education is maybe watching Bloomberg and CNBC or reading the front page of the paper, kind of here and there, but not really understanding how the rest of the world actually works. Right? And you get that through listening to great podcasts, listening to YouTube. Right? Reading books.

I read countless books all the time, and I’m scouring for information. If you think about how much information is actually in a book, I mean, I can’t tell you that. It took me twenty years of experience, and I put all of that into one book that I could share with you all, and you could get that download and read that literally in, like, inside of a week or a weekend. Right? So I’m doing the same things.

I almost think of it as like software upgrade. Every time I actually read a book, I increase my knowledge. Right? I increase my capability, my skills, and my knowledge so I can become a better investor. I can become better educated on what I’m actually doing.

Right? So getting educated is absolutely key, and we love to talk about that as actual financial IQ. And in fact, it goes back to one of the earlier lessons we talked about as well, which is having intellectual capital. So, how can you create more intellectual capital in your life? This is also a great opportunity for you if you don’t have financial capital to invest.

There have been many times in my life when I was hungry and motivated, and eager to go invest. I had identified opportunities, but I didn’t have capital. So you know what I did? I worked on these other forms of capital. I started working on how I keep getting smarter.

How can I become a better investor? How can I increase my relationship capital? Capital, getting closer to even better deals, or maybe deals that I actually didn’t even need capital to put together? Right? Or identifying invisible deals where I actually created something out of nothing.

You know, this is the absolute power of this. And I’ll actually cite an example of one of our mastermind members that’s just super powerful of how this works. Well, he came to us about two years ago and was, you know, like most traditional investors. Most of his assets were in four zero-one k’s and IRAs. He was paying off his house diligently, a high-income earner, just doing really well, but still feeling like he wasn’t really making progress.

Well, you know, after six months inside the mastermind, learning new strategies, increasing his financial IQ all the time, creating accountability with different members, getting different insights, and really changing how he thought about the world, how he thought about things. He discovered that as a W-2, he knew he needed to reduce his taxes. So what he did was identify that short-term rentals provide a great, active income tax offset. So he was able to find a seller of a short-term rental. He was then further able to ensure that the seller offered seller-backed financing.

So he didn’t put down any money out of his own pocket, and he ended up buying a $1,200,000 home that gave him over a 6-figure tax reduction that year, created a passive income stream for him, and was nothing out of his pocket. So that is a fantastic example of how education, financial IQ can actually really exponentially increase your wealth. Thanks for listening. Thanks for tuning in to our special solo series. If this episode sparked something for you and you’re ready to learn more, head over to holisticwealthstrategy.com and download a free copy of my book.

You’ll also get access to our investor community where we share exclusive educational content, new opportunities, and resources designed to help you accelerate your path to freedom. And if you wanna take it even further, book a call with our team to learn about our virtual family office services or join our mastermind group where we go deep into building true generational wealth.

I’ll see you in the next episode.

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