September 29, 2020



Let’s take a moment to determine the before-tax wealth accumulation potential of three types of investments.
Savings:  If you invest $40,000 in a certificate of deposit (CD) at 5%,compounded daily, our investment will grow to  $84,675 in fifteen years.

Stocks & Bonds:   If you invest $40,000 in a mutual fund growing at 10% annually, your investment will grow to $176,090 in fifteen years.

Real Estate:     If you invest $40,000 (20% down) in a $200,000 real estate investment, appreciating at annually, in fifteen years the value of the property will grow from $200,000 to $415,785.   Assuming a 15-year fully amortized loan was used to purchase the property, let’s take a look at the future net equity potential of this investment.

 Future value of property in 15 years        $415,785
– 7% overall cost of sale                              $29,105
– Loan balance                                                        $0
 = Net proceeds from sale before tax       $386,680

REVIEW:   In the above examples we determined that if you invested $40,000 for 15 years, you would be able to accumulate wealth (before tax) in the following amounts:
1) Certificate of deposit    $84,675
2) Mutual fund                   $176,090
3) Real estate                      $386,680


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