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Triple Compound Interest
Your Initial Investment or Principle earns interest, your interest earns interest, and the dollars you would have paid in taxes earns interest |
Triple Compound Interest (Simply put, your Initial Investment or Principle earns interest, your interest earns interest, and the dollars you would have paid in taxes earns interest. This basic fact about accumulating wealth suggests that you are better off paying taxes on your money when you are ready to use it, not while you are attempting to accumulate it.
How can you take advantage of this type of strategy ? Actually it is quite simple. Many investments offer Triple Compounding of Interest. An IRA is an excellent example that comes in several forms (Traditional and Roth) that allow you to place pre-taxed (Traditional) dollars into an account that will allow you to create significant growth without current taxation on the gains. The fact that there is no current taxation allows your principle to grow at a greater rate and allows the magic of compounding interest to significantly increase the value of the account. Other IRA's (Roth) allows you to place after tax dollars in the account of your choice, and still enjoy tax deferred growth and the advantage of Triple Compounding.
The ultimate idea is that with tax deferral and the Triple Compounding Effect you will have more dollars to spend when the time comes to enjoy your investment during retirement.
Other products that offer Triple Compounding are Annuities, 401(k) plans, TSA (403(b)) plans, and SEP IRA's., and Defined Benefit plans.) |
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