Uninterrupted compound interest (UCI) is a critical ingredient for building sustainable lifelong wealth.
With such a powerful wealth building force, why is this strategy not being used by everyone? As I ponder this question, it comes down to a lack of education and the necessary action steps that need to take place to implement. As I previously walked down the common place financial planning advice, I also missed out on UCI for far too long.
Money makes money. And the money that money makes, makes money
— Benjamin Franklin
There are many calculators on the internet that can be used to show the power of UCI and the long term growth it will bring. Let’s run through a quick example. The specific numbers are not what is important but focus on the long-term force of UCI.
Using this calculator, I have entered:
— Starting amount: $30,000
— Years to save: 10
— Rate of return: 4%
— Additional Contributions: $30,000 per year
The results are showing my ending balance in 10 years as $421,044 with an injection of $300,000. That is a gain of $121,044!
However, we need to consider other factors such as the 1099-div we get at the end of the year. What if we need to withdrawal the funds and stop its compounding? Just considering taxes alone, the ending balance is now $384,315 vs $421,044. Our gain was diminished $36,729 by taxes alone!
UCI within an environment where there is tax-free growth, no restrictions to access capital for emergencies or investment opportunities is POWERFUL!
Now that we understand the power of UCI, how does it get implemented with the tool the wealthy and big banks use? As Benjamin Franklin so eloquently said, “Money makes money, and the money that makes money makes money.”
The MOB team is here to help educate, inspire and guide you on YOUR journey to UCI!