Saving Taxes Accelerates Wealth Growth

Posted on June 6, 2016 by

William Noll, Attorney & CPAIf you take $1.00 and double it tax-free for 20 days it’s worth $1,048,576 (over a million dollars). Take that that same $1.00, taxed at 30%, it will be worth only about $40,640 — A LOSS of a MILLION DOLLARS! Why is this so? Because with tax-free compounding, earnings accumulate not only on the principal amount of money but also accumulate on the tax-free earnings as well. (“Earnings on Earnings”). Thus compounding combines earning power on principal and earning power on interest. Compounding has been called the ”8th wonder of the world”, a “miracle”. Compounding money at high rates of tax-free return is a definite advantage of real estate, especially with a great tax plan.

The wealthy know that taxes are a primary factor in determining whether you get rich or stay poor. Let’s say, for example, you’re able to save just $2,000 annually on your tax bill. (With a good tax plan it will be much higher). You invest the $2,000 annually in an IRA which earns a tax-free annual return of 10%. After 20 years, you’ll have over $114,000! If you can save $10,000 annually on your tax bill and invest it in a Simple IRA for 20 years, you’ll end up with almost $573,000!

$5,000 in tax savings (which is found money) as a 10% down payment can allow you to buy an additional $50,000 in real estate! Assuming a 20% yearly return you would earn $10,000 which in 5 years would accumulate to $50,000!

You can use the tax savings to upgrade your rental properties for more monthly cash flow. One of my students (among many), Richard, used $2,000 of tax savings (like found money) to employ the Mr. Landlord technique of adding optional upgrades to his rental units and increased his cash flow by $200 a month or a yearly total of $2400 which divided by $2000 = 120% return! But because the $2,000 in tax savings is found money, the return is really infinite!!

So does Saving Taxes Makes You Wealthy? What would you say now?

Some Hardcore Facts About Money
Know Thy Money!

FACT 1: NO body, but NO body cares more about your money than YOU! And that is the way it should be as you are the owner. When I say “money” I do not just mean cash or bank accounts; there is also the equity in your home, real estate investments and other assets – IRA, 401(k), other retirement plans, stocks, bonds, mutual funds, insurance, annuities and your taxes; see next.

FACT 2: Taxes = Money! Saving taxes is like making money. The wealthy know that taxes are a primary factor in determining whether you get rich or stay poor. This was clearly demonstrated in Chapter 1.

FACT 3: If you leave your money matters up to most CPA’s, you will go broke. I can tell from having taught them for years. While they know numbers, most do not know “money” and “strategy”.

FACT 4: YOU need to control your money! Why is it that so many do not want to hear about handling their own money? When there are so many disasters where people lose all or most of their money and this continues to happen. Watch that TV show American Greed. Even with the most competent CPA’s and financial planners you still have to be in control. This does not mean you have to do the detail or do your own taxes (if you do not want to). It means you are the quarterback of your financial team and in control of your finances (money)!


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