Would you rather have $1 million… or less than $100,000? Mutual funds are a perfect example of “just because everyone is doing it, doesn’t make it right.” In fact, they’re one of the worst environments for your retirement nest egg. Why? Their tax treatment.
For the most part, mutual funds are often taxed-as-earned, which means that as you experience dividends or capital gains, you owe taxes on that growth each and every year….
To make this clear, let’s look at $1 doubling 20 times. In a tax-free environment, that dollar will become $1,048,576. If, on the other hand that same dollar doubles 20 times in a taxed-as-earned environment (25% tax rate), that dollar will only grow to $72,570. Which would you rather have 20 years later—more than $1 million or less than $100,000? The miracle of compound interest, one of three marvels of wealth accumulation, becomes almost completely negated when taxed after each earning period.
“Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.” – Albert Einstein
Having your money at risk in the market is as old and outdated as “buy and hold.” When the pressure of economic storms come and the market experiences downward trends, you don’t want to have your financial future built on that slippery slope.
Don’t wait another day. Take the time now to learn how to put your money in financial vehicles that grow in tax-advantaged environments, such as properly structured, maximum-funded Indexed Universal Life policies, or what we call IUL LASER Funds. These policies allow for tax-free income during retirement and upon your death, your money can transfer to your heirs income-tax-free.
We have helped many highly successful people accumulate their money safely, earning predictable, tax-free rates of return, with historical annual average rates of 5–10%. What that means is, when they retire, every $1 million dollars they have accumulated can generate $70,000 – $100,000 per year of tax-free income (aka tax free retirement), without depleting the principal on their nest egg!
