Working Hard for Your Money vs. Making Your Money Work Hard for You

How to Make Money vs. How to Make Your Money Work for You?   

Knowing how to make money is undeniably Great but ultimately, it’s not about how much you make; it’s about how much you get to keep and spend. When relying solely upon ‘sweat equity’ it’s not always readily apparent just how much the negative impacts of taxation and inflation detract from ‘with simple interest’ savings models.  

First let’s better understand the impact of taxes: If you double $1 every day for 20 days, you will end up with $1,048,576. Take that same $1 doubled over the same period and apply 40% tax and your growth outcome is $12,089.26. Why such disparate outcomes? Because the tax rate is applied to the entire amount of money, not just the increase from the previous doubling. 

How will inflation over time affect a dollar that you save today? The annual rate of inflation (www.usinflationcalculator.com) for the period ending in April 2023 was 4.9%. Using the Rule of 72 formula, a dollar saved today with the inflationary rate of 4.9% will lose half its current purchase power in approximately 14.5 years.   

So if hard work and disciplined adherence to a budget aren’t enough to accomplish big financial goals in an efficient and meaningful way, what’s the solution for getting your money to work for you?  

Ideally this environment should feature the ability to save absent the adverse effects of exposure to tax and a rate of return that historically outpaces high rates of inflation coupled with the benefits of compound interest and tax-free distributions.  

Are you interested in seeing a scenario customized to your needs? Click here or call: 310.388.8212 

www.higherpriorities.taxfreetools.com