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Get Fundamentally Sound. Simplify to Multiply. The Theory of Decreasing Responsibility. How Life Works. At Retirement 1. Grown children 2. Lower debt 3. Mortgage paid Retirement income needed. Today 1. Young children 2. High debt 3. House mortgage Loss of income would be devastating.
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The Theory of Decreasing Responsibility How Life Works At Retirement 1. Grown children 2. Lower debt 3. Mortgage paid Retirement income needed Today 1. Young children 2. High debt 3. House mortgage Loss of income would be devastating
Income Replacement $1,000 per Month $120,000 $120,000 Liquid Assets $120,000 Invested at 6 - 8% will last for 20 – 25 years Withdrawal Schedule
The Rule of 72 This simple calculation gives you the approximate number of years it will take to double your investment. Number of Years 4% 6% 12% 0 $10,000 $10,000 $10,000 6 $20,000 12 $20,000 $40,000 18 $20,000 $80,000 24 $40,000 $160,000 30 $320,000 36 $40,000 $80,000 $640,000 ? The Power of Compound Interest Based on the Rule of 72, a one-time contribution of $10,000 doubles four more times at 12% than at 4%. The table serves as a demonstration of how the Rule of 72 works and is only an approximation of accumulations. It is not intended to represent any specific investment, in which rates of return will fluctuate. How many doubling periods do you have in your life?
3% $148,680 $286,370 6% 12% $1.3 Million $200 Monthly Savings for 35 YearsAge 30 - 65 “Compound interest is the most powerful force in the universe.” Albert Einstein, as quoted in Dow 40,000 by David Elias (1999) One of the biggest reasons people don’t save: too much debt Rates of return are nominal rates, compounded monthly. Contributions are assumed to be made at the beginning of the month. The chart above is not indicative of any particular investment or savings vehicle. It does not take into consideration taxes or other applicable deductions.
When does $35,000 exceed $170,000? Investor B Age Annual End of Year Payment Accumulation 22 0 0 23 0 0 24 0 0 25 0 0 26 0 0 27 0 0 28 0 0 29 5,000 5,520 30 5,000 11,630 31 5,000 18,370 32 5,000 25,810 33 5,000 34,040 34 5,000 43,130 35 5,000 53,170 36 5,000 64,260 37 5,000 76,510 38 5,000 90,050 39 5,000 105,000 40 5,000 121,520 41 5,000 139,760 42 5,000 159,920 43 5,000 182,190 44 5,000 206,790 45 5,000 233,970 46 5,000 264,000 47 5,000 297,160 48 5,000 333,800 49 5,000 374,280 50 5,000 419,000 51 5,000 468,390 52 5,000 522,960 53 5,000 583,250 54 5,000 649,850 55 5,000 723,420 56 5,000 804,690 57 5,000 894,480 58 5,000 993,660 59 5,000 1,103,240 60 5,000 1,224,280 61 5,000 1,358,010 62 5,000 1,505,730 Total Contributions: $170,000 Total Accumulation at Age 62: $1,505,730 Investor A Age Annual End of Year Payment Accumulation 22 5,000 5,520 23 5,000 11,630 24 5,000 18,370 25 5,000 25,810 26 5,000 34,040 27 5,000 43,130 28 5,000 53,170 29 0 58,730 30 0 64,880 31 0 71,680 32 0 79,180 33 0 87,480 34 0 96,640 35 0 106,760 36 0 117,930 37 0 130,280 38 0 143,930 39 0 159,000 40 0 175,650 41 0 194,040 42 0 214,360 43 0 236,800 44 0 261,600 45 0 288,990 46 0 319,250 47 0 352,680 48 0 389,610 49 0 430,410 50 0 475,480 51 0 525,270 52 0 580,270 53 0 641,040 54 0 708,160 55 0 782,310 56 0 864,230 57 0 954,730 58 0 1,054,700 59 0 1,165,140 60 0 1,287,150 61 0 1,421,930 62 0 1,570,820 Total Contributions: $35,000 Total Accumulation at Age 62: $1,570,820 It pays to start early! The hypothetical 10% rate of return and tax-deferred accumulation shown for both IRA accounts are not guaranteed or intended to demonstrate the performance of any actual investment. Unlike actual investments, the accounts show a constant rate of return without any fees or charges. Tax-deferred growth and any tax-deductible contributions are taxed upon withdrawal. Withdrawals prior to age 59 1/2 may be subject to a 10% penalty tax. Assumes payments are made at the beginning of compounding period with 10% rate of return compounded monthly.
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Compound Recruiting WEEK 1 Week 2 Week 3 3 3 3 3 3 3 3 3 3 Week 4 9 9 9 9 9 9 9 9 9 Week 5 27 27 27 27 27 27 27 27 27 Week 6 81 81 81 81 81 81 81 81 81