This guy thought his 9% return from hard money loans was good.

But he lives in California and his marginal tax rate is ~40%.

On an after‑tax basis, that 9% is really closer to 5-6%.

Not terrible. But the risk/reward starts to look a lot less attractive.

Generally, higher expected returns come from taking more risk.

If you then give a big slice of that return away to taxes without changing the risk, your return per unit of risk just went down.

That’s why I keep hammering the after‑tax lens.

If you can:

• Tax‑loss harvest effectively
• Realize depreciation (e.g., from real estate)
• Use structures that turn some income into more favorable tax character

…you can increase your after‑tax return per unit of risk without necessarily taking more risk.

Two portfolios with the same pre‑tax return can produce radically different long‑term outcomes depending on tax efficiency.

Especially in high‑tax states like California.

As long as I keep meeting people who still evaluate everything on a pre‑tax basis, I’ll keep making this content.