The dream that you can believe through hypnosis.

I never learned how to invest to become wealthy in school. Teacher's--they don't know what they don't know!  However, I always wanted to know why some people are so well off, and others are not? I finally found my answer.  "knowing how to save, manage, calculate, use the Tax Laws in your favor, and to take action to plan ahead to build passive income." Look at your purchases in terms of total lifetime effect on your wealth. The rule is lifetime asset accumulation. An asset is something that increases your wealth, consumption is not an investment.The purpose of savings is to enable you to live on a cash basis. Because of inflation, saving is not a retirement plan. Inflation means someone in the middle class cannot save enough for retirement.

We have all heard that grandma's beneficiary got a 10,000 dollar check from her whole life policy after paying for 60 years. When she bought the policy gold cost 35 dollars an ounce. Today, Gold cost 1370 dollars per ounce. If the 10,000 was multiplied by 40 times it would have had the purchasing power of $400,000 in today's money.

A major reducer of asset accumulation is taxes! taxation on interest "tax now", "tax later" or "tax never".

In the "tax now" category

In California, they take 9.55% (7.45% MD) when you get it, and another 9.75% when you use it. The IRS takes another 25%. Remember the 15% for SS. So if you use the money you get today, 44.3 percent goes the Government. If you are getting 1.20 percent interest, let us say, from B of A's High Yield CD  (sic) --you are actually getting 1.20 * (1- 0.346)= 0.79 percent.

The rule of 72,

In the Gold example above, 40 times corresponds to 5 doubling periods over 60 years or every 12 years. 72/12 = 6% a real inflation rate. Take any item study its increase; it's the same 6%. This means a before tax interest rate must be 9%. Check this out, with B of A, it will take 91 years for your money to double, but its value will be POINT .8% of what it was 91 years ago. At 7% it will take 10 years to double.

Do you like the idea of 7% "taxed later" or "never", which is promised by some of the strongest, longest lived companies in the world?

Assets like precious metals or Real Estate are not taxed until they are sold and keep up with inflation, but they don't exceed it.

IRAs, annuities (tax now and tax later), and 401(k)s (tax later) are a useful tools for saving because they are "tax later on accrued interest" contracts, and should be an important strategy for emergency or strategic funds. Delayed annuities are like IRAs, but don't have the 10% withdrawal tax penalties.

The equities market (stock) is controlled by the Devil -- he is not your friend. The current DOW is maintained by the Fed.

What is Tax Never? means people will never get taxed from all the gains when they take money out from this vehicle. Because beneficiaries don't pay taxes on insurance payouts, In fact the owner of an insurance policy can take advantage of without dying. The "term" policies are designed to expire before you do, and inflation destroys much of the appeal. But some contracts have an interesting strategic financial application.

 

An example, a family paid off their debts in 6 years including their mortgage, and now has $2,795 a month to do something with. If they haven't done so already, the first thing is to protect their family with health, disability, LTC, and life insurance. I come from a family of 10 children. 4 siblings have already died. Of the remaining, 3 have had their spouses pass away. Two have been subject to long term care. Two have had breast cancer, diabetes took my father at 44, and all have had close encounters with potentially deadly diseases and kinetics--car accidents, weather like hurricanes, tornadoes, criminals or other hazards. Starting about the age of 45, diabetes becomes a real possibility, and after that you will live too short.

One can create an immediate estate if they act in time. A healthy 30 year old man can secure a half million dollar estate with insurance.

Let us say: The family we got out of debt is putting 2000 a month into savings. What about the next 6 years? With untaxed 7% interest, in 6 years they will have $172,819 whereas if they used B of A, it would essentially be 144,000. They have the benefit of $29,000 more than B of A: 20% more.

If tax never: Some people are well off because they know how to save, manage, calculate, use the Tax Laws in their favor, and to take action to plan ahead to build passive income. Look at your purchases in terms of total lifetime effect on your wealth to maximize lifetime asset accumulation.

The purpose of savings is to enable you to live on a cash basis which avoids the finance expense and poor negotiating position resulting in increased cost, and to give one the freedom of wise financial maneuvers to maximize asset accumulation and passive income.

One doesn't plan to fail, but one does fail to plan. See "Well Formed Goals."