If rate of return is important, what is the return on tax free?
Most advisors, financial gurus & TV talking heads have us convinced that rate of return is the most important factor for growing your investments and building your retirement account.
Most advisors, financial gurus & TV talking heads have us convinced that rate of return is the most important factor for growing your investments and building your retirement account.
Their primary focus is on the products and “where you have your money." At Tier 1 Capital we disagree with this philosophy. By following Privatized Banking through the use of Nelson Nash’s Becoming Your Own Banker and eliminating the staggering costs of traditional financing you can dramatically increase your wealth building potential.
To illustrate this point let’s assume that we are the greatest financial planners in the world and we can get you a 100% return on your investment every single year for the next 20 years (See chart below). Comparing the growth in a tax free account and a taxable account is staggering. We’ve used tax rates of 0%, 17% and 27% respectively for 3 fictional clients. Many people are in higher tax brackets!
Now, I have performed equally well for each of these 3 clients. What’s the difference? Will getting a higher rate of return solve the problem? Absolutely not! The bigger issue is the tax paid on those gains. So, which one client would you prefer to be? Of course you'd want the tax free plan. Contact us to find out what the effective rate of return on your investments is!
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