Wealth Building – Is Your Money Working For You?

Posted on October 27, 2008
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Do you want to learn one of the most powerful secrets of financial success? It can turn thousands into millions and millions into thousands. What is this powerful force that is probably working against you right now? It is the combination of compound interest and time. With compound interest on your side you can make millions. Working against you, compound interest will transfer millions in wealth from you to your creditors. The purpose of this book is to show you how to turn the tables on compound interest and make your enemy your friend.

You probably heard about compound interest in school but I doubt you really understood it. I am a qualified CPA with a Masters degree in Accounting and I did not fully comprehend the cost of compound interest working against you. But these examples can make it clearer than any college finance class. Let consider the following two families. For simplicity, I will call them A and B.

The A’s love credit. They always drive a new car and it is always financed. They revolve on their credit cards. Let’s assume they have $9,000 in credit card balances (like the typical American Family according to the Federal Reserve). Let’s also factor in a $20,000 car loan. The A’s spend over $2,950 in interest a year. Over a 40 year working career that adds up to $118,000.

The B’s have mastered the four block foundation of financial independence. They pay cash for their depreciating assets and hold them to achieve the maximum life. Rather than paying the credit card company interest they live within their means and save the interest in a long term savings vehicle. Because they save the interest paid ($2,950) each year they accumulate wealth. Over their 40 year working career that one change accumulates over $588,900 in wealth assuming a 7% return. Who would you rather be?

In a future article I will review the calculations and changes that can make this happen. But to get started you don’t need to know how to do the calculations. What you need to know are two important principles:

1. Compound interest working against you can undo all your financial plans.

2. Harnessing the power of compound interest can turn small amounts into large amounts.

Cliff Davis has over 30 years of experience in financial matters including mortgages, personal financial management and business management. He founded the Attain Advisor Network with the mission to bring financial independence to American families. Working through a network of CPA’s and Tax Preparers the Attain Advisor Network is helping families understand the Real Secrets of Money and make more on the money they have.

To find an Attain Advisor in your area please email Cliff at info@attainadvisornetwork.com

To become an Attain Advisor visit our website at http://www.attainadvisornetwork.com

To learn more about how money works and how to save more visit http://www.attainadvisornetwork.net

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