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Is Your Retirement Plan Working? Can You Remove The Guesswork?

February 23, 2012 | Comments: 0 | Views: 136

Answer: Yes-- Receive Tax-Free or Tax Deferred Monthly Income.

How to maximize your retirement nest egg:Investing your nest egg foolishly will cost you dearly. To avoid this mistake, there is one investing principle of wealth accumulation that you must understand-compound interest. When you understand how compound interest works you will realize that receiving monthly income, tax-free, or tax deferred is the foundation of successful investing.

Understand the Rule of 72: The rule of 72 is a mathematical formula that calculates approximately how long it takes your money to double if it is earning various rates of income. By dividing the interest rate you're earning into the number 72, the answer you get is the number of years it takes for your money to double.

Examples: 72/6% = 12 years to double; 72/8% = 9 years to double; 72/10%

= 7.2 years to double.

Example: If you were able to earn an average 6 percent average annual rate of return on an investment, divide 72 by 6 and you would get 12. This is the number of years it would take for your money to double. That means that in 36 years, your money would double three times. First, $1,000 doubles to $2,000, then $2,000 doubles to $4,000 and finally $4,000 doubles to $8,000.

What type of investment will pay 6% to 10%? Typically, strong common stocks will not pay 6% to 10%; some bonds will; but, most promissory notes can be tailored to yield 6% to 10%. Promissory notes, if properly used and understood are an excellent investment for the conservative, long-term investor. They are not intended to be a "get rich quick", or "fast money", or "sure thing" type of investment. They are intended to be used by reasonably careful investors to build wealth over a reasonable length of time.

What is a Promissory Note? A promissory note is a form of debt, or a promise to pay, that an individual or a company use to raise money; it is a loan instrument. The borrower promises to return the investor's funds (principal), and to make fixed interest payments to the investor in exchange for borrowing the money. Promissory notes have set terms, or repayment periods, ranging from a few months to several years; they also have a specified annual interest rate and specified monthly payments; they also specify, if any and/or what type, of collateral security is given to back-up the promise to repay.

How and where can we earn income tax free or tax deferred? For the average individual the US Government has created tax deferred and tax free retirement investment accounts. They are called Individual Retirement Accounts "IRA Accounts".

By using a self-directed IRA Account as your vehicles to invest in promissory notes, you can benefit from the principle of tax-free or tax-deferred compounding interest-- The Rule of 72 will tell you how long it will take your money to double.

If you are using a self-directed IRA Account for your retirement investing in promissory notes, no taxable income is reported each year, unless you choose to take withdrawals from your IRA account. Tax-deferred means that, you don't have to pay tax on any of the capital gains and/or interest income you earn during the years your investment is growing. The taxes are paid when you begin withdrawing the money. An IRA Account is a very tax efficient way to maximize your retirement nest egg.

Summary: Start now to plan for a profitable retirement. Enjoy the comfort of monthly income from promissory notes.

Lawrence Tepper specializes in: Promissory Note Appraisal & Valuation--and LLC Valuation and Appraisal Expert Consulting Services EDUCATION AND TRAINING Law Degree /Accounting Minor University of Denver Colorado Real Estate Broker-- Promissory Notes Specialization Certified Commercial Investment Member From National Assoc. Realtors (CCIM)

PRACTICAL EXPERIENCE 35 + years of appraisal and valuation for Attorneys, CPA's, Estates, Trusts, Administrators, and Financial-Investment Advisors.

http://promissorynoteappraisers.com/

Source: EzineArticles
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