I’m Taylor Sohns, CEO of LifeGoal Wealth Advisors, a CIMA and a CFP. In recent conversations with clients and peers, I’ve laid out an idea I call the “triple threat investment.” It stands on three legs: outperformance versus the S&P 500 since inception, positive results during major equity sell-offs, and a sizable tax deduction against ordinary income. The goal here is simple. I want to explain what those claims mean, why I have allocated heavily to them this year, and what to consider before deciding whether they fit your plan.
What I Mean by “Triple Threat”
The phrase is a shorthand for three features that work together. First, historical returns have topped the S&P 500 since the strategy started. Second, it has increased in value during periods when broad stocks fell hard. Third, it creates a meaningful deduction against W-2 or business income each year it is held. Those traits help address the three problems investors face today: stretched equity valuations, volatility risk, and taxes that erode take-home results.
“The triple threat investment, one, has outperformed the S&P 500 since inception. Two, it’s gone up in value each time the S&P 500 has meaningfully sold off. And three, [it] creates a 30% tax deduction against your ordinary income every year you hold it.”
Think of it as a way to smooth the ride, not just chase headlines. Stocks do not need to rally for this to work. That is the core of the appeal. When markets zig, it can zag. When taxes rise with income, it can help offset them under current law. Those features make it a complement to, not a replacement for, a diversified portfolio.
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Key Points at a Glance
Before diving into the details, here are the essential takeaways about retirement planning with alternative investments:
- Since inception, reported returns average about 26% per year.
- It posted roughly +15% in 2022 while the S&P 500 fell about 19%.
- It generates an annual deduction equal to about 30% of invested capital.
- A $1,000,000 investment could reduce taxable ordinary income by around $300,000 per year while held.
- It is not real estate, and it is not oil and gas.
- Minimum investment requirements are scheduled to increase at year end.
Those headline numbers draw attention. Still, numbers alone do not make a plan. The way this type of strategy fits into a personal balance sheet matters as much as performance. Tax rules, liquidity terms, and risk drivers deserve a clear look.
Performance, Framed With Real Market Stress
Investors remember 2022. The S&P 500 fell about 19%. Bonds also struggled as yields jumped. Few places felt safe. A strategy that posted a gain in that year stands out. It suggests a return stream that is independent of equity momentum. That kind of diversification can be hard to find.
Since its inception, this approach has reportedly delivered about 26% per year. That is a high bar. When I see a number like that, I ask two questions. What is the driver of those returns? How repeatable are the conditions that produced them? High returns often come from bearing a different risk, not from magic. The value is in understanding that risk and sizing it wisely.
I pay close attention to how it behaved during the sharpest drawdowns. A strategy that rises during market stress can help stabilize a household plan. It can also reduce the need to sell beaten-down assets to raise cash. That is a practical advantage. It addresses a common failure point for investors: panic selling at the wrong time.
How It Can Rise When Stocks Fall
Returns that move differently from stocks often come from unique drivers. These can include legally defined cash flows, special tax credits, structural supply and demand, or contractual payouts. They may also involve hedging to profit from high-volatility periods.
I focus on three mechanics when evaluating that claim:
First, whether the return source is linked to market beta. If the correlation is low or negative, the odds of rising during equity sell-offs improve. Second, whether the payoff comes from a legal or contractual feature, these can add predictability. Third, whether the strategy avoids forced selling. Liquidity mismatches lead to significant losses during stress events.
Past results show that the triple threat investment gained when stocks struggled. Yet no strategy rises every single time. Correlations can shift. Under new policy or new capital flows, what once zigged can move in sync with risk assets. That is why I size it with care, and I document the “why” for each client before we allocate.
The Tax Angle: 30% Against Ordinary Income
Unlike traditional annuities, this strategy offers unique tax advantages that complement retirement income strategies.
The most striking feature is the annual deduction. A reduction of about 30% of invested capital, each year it is held, against ordinary income, is a powerful tool. Here is the idea with simple math. Invest $1,000,000, and you may deduct around $300,000 from W-2 or business income for that tax year. Hold it again in the next year, and the deduction repeats, subject to terms and current rules. High earners feel that they benefit the most because ordinary income is taxed at higher rates.
There are important conditions to remember. The tax code and IRS guidance govern deductions. Limits can apply based on income type, filing status, and passive activity rules. Some deductions are subject to phase-outs, carryforwards, or recapture—recordkeeping matters. Good tax advice is not optional here. Coordination with a CPA can prevent surprises.
Tax benefits can amplify returns. They can also be clawed back if the rules are not met. That is why I document eligibility, track K-1s or statements, and map out what happens under different income scenarios. A smart plan treats taxes as part of the asset, not an afterthought.
Why I Allocated Heavily This Year
My own allocation reflects the three features above. Stocks have run hard. Yields have jumped. The forward return outlook for a 60/40 blend sits in a modest range. I want exposure that does not rely on broad market gains to work.
As a CFP, I look first at the household balance sheet, not just the portfolio. A tax deduction that reduces ordinary income creates immediate cash flow relief. Positive results during equity drawdowns protect plan integrity. Higher minimums on the horizon add a timing factor for qualified investors who have done their homework. Those factors led me to commit most of my investable dollars to this approach this year, within a balanced plan.
“As a CFP, almost every investable dollar of mine this year has gone to this product because stocks don’t need to go up for it to work.”
What Could Go Wrong
No investment is risk-free. The most common blind spots fall into a few categories. One is tax risk. Laws change. Guidance evolves. Deductions tied to specific programs can be revised. Another is liquidity. Many strategies with special features limit redemptions or have multi-year holds. Cash flow planning should reflect that.
There is also execution risk. The structure needs to be run by skilled managers with tight controls. Suppose the return driver depends on third parties or a supply chain, which creates extra variables. Due diligence should cover counterparty quality, the auditor’s background, and the structure’s historical audits. Fees matter too. High returns can mask heavy costs in good years. Over time, fees compound just like gains and losses.
Finally, there is sizing risk. Even a strong strategy can hurt a plan if sized too large. Trimming position size to fit risk tolerance is wise. Diversification still matters. The goal is to add a unique return source, not to bet the plan on one idea.
How to Evaluate This for Your Plan
As you consider whether to allocate capital to this strategy, remember that successful investing starts with disciplined saving and financial planning.
I use a simple checklist when sizing this type of investment:
- Fit: Does it solve a problem your plan has today? Volatility? Taxes? Cash flow?
- Horizon: Can you hold it through the stated period without needing liquidity?
- Tax Profile: Do you have enough ordinary income for the deduction to help now?
- Documentation: Are the offering documents, audits, and risk factors clear and current?
- Team: Do managers and service providers have strong records and clean controls?
- Sizing: What is the drawdown you can tolerate if results vary or rules change?
- Exit: How do redemptions work, and what are the gates or penalties?
Walk through those points line by line. Tie each answer to a practical step in your plan. For example, if the hold period is three years, make sure your emergency fund and near-term goals are covered elsewhere. If tax carryforwards will soak up the deduction, model the timing and confirm how many years are needed to use them.
About Minimums and Timing
Minimum investment sizes matter for access and sizing. The current schedule points to a doubling of the minimum at year’s end, for qualified investors, that may create a window. But timing should never trump diligence. If the fit is correct and the documentation checks out, moving before a higher minimum can be useful. If not, pass. No single deadline should drive a multi-year decision.
“Reason to act now, the minimum investment will double at year end.”
Why It Is Not Real Estate or Oil and Gas
Many tax-forward strategies come from real estate depreciation or oil and gas drilling costs. This is different. The drivers, documentation, and risk profile are distinct. That separation helps explain the low correlation to stocks and bonds in stress periods. It also explains why the deduction targets ordinary income rather than capital gains or passive buckets in many cases. Still, the only way to know exactly how it applies to you is to read the documents and coordinate with a tax professional.
Putting It All Together
The triple threat investment stands on three legs: return potential, downside diversification, and tax relief against ordinary income. That is a rare mix. It is why I have committed substantial personal capital this year. But I make that choice with eyes open to the risks, the hold period, and the need for strict documentation.
If you’re an investor who wants to add a return stream that does not rely on the S&P 500, and you also face high ordinary income tax, this approach may be worth a look. Read everything. Model outcomes. Align the size with your tolerance and goals. Used thoughtfully, it can strengthen a plan by smoothing returns and improving after-tax results. Used carelessly, it can create headaches. Decide with care, and make taxes work for you rather than against you.
Frequently Asked Questions
Q: How can an investment post gains when the S&P 500 is falling?
Some strategies earn returns from drivers that are not tied to stock prices. They may rely on contractual cash flows, structural features, or volatility-sensitive hedges. When equities drop, those drivers can still pay off, producing gains even as the index declines.
Q: What does a 30% deduction against ordinary income actually mean for taxes?
It means the investor may be able to reduce W-2 or business income by about 30% of the invested amount for that tax year, subject to rules and limits. The impact depends on your tax bracket, filing status, and eligibility. Always confirm treatment with a qualified tax professional and review offering documents for details.
Q: Is this suitable for investors who need easy access to cash?
Probably not. Many strategies that provide unique return drivers and tax benefits require multi-year holds or limit redemptions. If near-term liquidity is important, consider a smaller allocation or different tools that better match your cash needs.
