RETIRE EARLY WITH STRATEGY'S STRD AND STRC

Summary

In this video, Bitcoin expert Adam Livingston introduces a strategy to achieve early retirement using high-yield Bitcoin-backed preferred stock instruments—Stride and Stretch. These assets allow investors to reduce the traditional 4% withdrawal rule, compressing years of work into a shorter timeframe. Adam explains how Stride offers high returns with some risk, while Stretch provides more stability with steady monthly dividends. He also highlights the importance of tax efficiency and asset coverage, while promoting Bitcoin as the key to financial independence. Sponsored by Horizon, the video also covers how homeowners can use their home equity to buy Bitcoin without taking on debt.

Takeaways

• 😀 Stride and Stretch are Bitcoin-backed preferred stock instruments that enable early retirement by generating high yields with less capital required compared to traditional investments.
• 😀 Stride offers a high yield of 12.64% due to a significant market discount, making it a high-risk, high-reward option for investors seeking faster retirement.
• 😀 Stretch, with a slightly lower yield of 10.25%, provides more stability, acting like a Bitcoin-backed money market or savings account for those seeking steady monthly cash flow.
• 😀 The 4% withdrawal rule (based on the Trinity study) is used by many to calculate how much capital is needed for retirement, but Stride and Stretch significantly reduce the amount required for early retirement.
• 😀 With Stride, investors need roughly 1/3 of the capital required by the 4% rule, while Stretch reduces the requirement by about 2.6 times, making early retirement more achievable.
• 😀 Strategy, the company behind Stride and Stretch, is considered financially strong, with a Bitcoin-rich balance sheet, ensuring long-term dividend payments even in worst-case scenarios.
• 😀 The mix between Stride and Stretch allows investors to dial in their risk tolerance, balancing high returns with stability and lower volatility.
• 😀 Stride has a non-cumulative dividend, meaning if a payout is skipped, it will not be made up later, introducing some risk for investors.
• 😀 Investors can use tax-advantaged accounts like Roth IRAs to shelter their preferred stock dividends from taxes, increasing long-term returns.
• 😀 Horizon, a sponsor of the video, provides a unique service where homeowners can unlock home equity to buy Bitcoin without taking on debt or new monthly payments, retaining 100% of the Bitcoin upside.
• 😀 Firefish offers Bitcoin-backed loans, allowing investors to collateralize Bitcoin for liquidity without selling it, further enhancing wealth-building potential in a Bitcoin bull market.

Q & A

What is the main concept of the strategy presented in the video?

The main concept is to use Bitcoin-backed preferred stock instruments, specifically Stride and Stretch, to achieve early retirement by generating high cash flows and reducing the capital required to retire. These instruments offer a way to compress traditional retirement timelines.

How does Horizon help people invest in Bitcoin using home equity?

Horizon allows homeowners to unlock a portion of their home equity to buy Bitcoin without taking on debt. There are no monthly payments, and the Bitcoin is fully theirs to custody. When the homeowner sells or refinances their home, Horizon takes an agreed share of the home's future value.

What is the difference between Stride and Stretch preferred stocks?

Stride offers a higher yield, paying a flat 10% coupon with an effective return of 12.64%. However, it is more volatile and can skip dividend payments. Stretch, on the other hand, offers lower yield (around 10.25%) but provides more stability, like a money market with Bitcoin-backed cash flow.

What is the Trinity Study and how does it relate to early retirement?

The Trinity Study is a study that determined a safe withdrawal rate for retirement, recommending a 4% annual withdrawal from your nest egg. The strategy in the video suggests that by using high-yield instruments like Stride and Stretch, you can retire with a much smaller capital base, reducing the need for decades of work.

Why is Stride considered riskier compared to Stretch?

Stride is riskier because it is the junior preferred stock in the capital stack, meaning its dividend can be skipped without being paid back. While the potential rewards are higher due to its greater yield, there's more risk involved, especially if the board skips a dividend payment.

What are the potential risks of investing in Stride and Stretch?

The risks include the possibility of a skipped dividend on Stride (which would not be paid back), the lower yield on Stretch compared to Stride, and liquidity risks for both instruments. Additionally, Stretch’s coupon can be adjusted by management, potentially reducing yield.

How does the asset coverage of Strategy impact the stability of these preferred stocks?

Strategy’s strong Bitcoin-backed balance sheet provides significant coverage for both Stride and Stretch, ensuring that the companies are financially stable. This coverage mitigates some of the risks associated with these instruments, as Bitcoin is expected to appreciate over time.

What is the 4% withdrawal rule, and how do Stride and Stretch challenge it?

The 4% withdrawal rule suggests that you need to save 25 times your annual spending to retire. Stride and Stretch challenge this by offering much higher yields, allowing you to retire with significantly less capital. For example, $50,000 in annual expenses would require only $396,000 using Stride instead of a $1 million using the 4% rule.

How should investors decide between Stride and Stretch when allocating their portfolio?

Investors should choose based on their risk tolerance and desired cash flow. If stability is more important, Stretch is a better choice. If higher yields and faster retirement are the goals, Stride should be the preferred option. A mix of both allows for a balance of risk and reward.

How can taxes impact the strategy outlined in the video, and what is the recommendation?

Taxes can affect the dividends from these preferred stocks, especially since Stride’s dividends are qualified and taxed at lower rates, while Stretch’s dividends are taxed as ordinary income. The recommendation is to park these preferreds inside a Roth IRA or other tax-advantaged account to minimize tax liability.