How to Leave Behind $11,440,238 Tax-Free Money to Your Children
Today, I will show you guys how to leave behind $11,440,238 tax-free money to your children.
I know you might be saying that’s impossible. But I will show you its possible, in fact I will prove it to you.
Nothing is free in this world, but this over 11 million dollar is almost free. It will cost you only $100 per month for 30 years.
THAT’S IT guys, with just $1200 per year and 30 years investment, your children can have so much money.
Make sure to read entire post to learn a trick to avoid paying tax on your 11 million dollars.
When should you start this?
If you are reading this, regardless of your age you should apply this method I am about to show you.
In the United States, majority of people get married and have children in their 30s and 40s, mainly in their 30s.
For our example purpose, let’s pick a 30 years old. Average age of my blog readers is around 30-40 years old.
This is also age where lot of people are finally starting to setting down. Age 30 is a common benchmark for lot of us. Me personally, at 30 I was fresh out of college with decent salary job.
What is the trick?
Let’s say at age 30, you open an investment account with reliable brokers.
Let’s say at this time you did not have money saved up, so you opened account with only $1000. You decided to put another $100 each month you get paid.
With $100 per month , you are investing around $1200 each year. If you do that for next 30 years, you will have invested $37,000. That’s $1200 times 30 years, plus your initial $1000 investment.
If you walk to me and say give me $37,000 now and I will give you back over 11 million dollars in future, I would laugh it off. But guys this is possible.
Based on last 100 years, market average is around 10%. It is easily attainable if you invest for long term.
So, watch this now? I took our investment plan numbers and run it through the calculator.
You can see I put $1000 for initial investment. I put $100 for monthly contribution for 30 years window. For interest rate, I used 10%. I got this number based on last 100 years investment return history.
So, Let’s see how much your money grew over 30 years.
Holy….. that is crazy return. In 30 years, your $37,000 grew into giant $230, 829. That is 769% return on your investment.
I attached tables with breakdown showing how much your money grew each year.
Let’s assume you had children within first 5 years of marriage. At this point, you will turn 60 and your children will be around 25 years old.
What to do with $230,829.42?
Congrats, you officially made almost $200,000 investing just $100 each month. You invested this money for your children, so let’s explore different things you can do with this money.
First, you can withdraw money needed to pay down your college tuition. I know loans erode your future earnings and savings. So, not having student loan will give your children head start they deserve.
You can take this money and help your children buy house. This will be sufficient to buy a nice house in a decent neighborhood.
This money can go towards your children’s wedding. You will have lot of excess money to do other things, even after paying for the entire weeding.
My advice would be to let it grow as long as you can. But I understand, sometime you need money to pay for things. Best thing to do would be to take only money you really need.
Best thing you can do with this money is let it grow. Your sons and daughters can achieve financial freedom if you make right decisions.
Let’s see what happens if you let it grow.
Stage Two tax free money
So, watch this now? I took our 230k and invest it back in the market for 10% return rate. This time you are not making any contribution.
Your children are 25 right now. Let’s say, age 55 is their retirement benchmark. So they have another 30 years to let this money grow.
Let’s check how much your money grew in 30 years.
Holy Crap, that is insane. Your money grew into $4,311,705.65, that is crazy. Investing $100 per month for 30 years is all you need to take your family out of poverty for tax-free money.
Let’s say your children don’t want to retire early and want to retire at the recommended age of 65. I ran the numbers again, and you can see the results for yourself.
This number makes my body shake. It’s unbelievable how so little money can grow into such a big amount.
You just made $11,440,238.70 for your children and family. This money is enough to feed multiple families for years and years.
Don’t wait to start investing, this will change not only your future but future of multiple generations. Your children will thank you for being wise and making right decision.
How to avoid paying tax on your investment return?
When you first decide to start investing, you have so many options to pick from. However, all these options requires you to pay tax when you withdraw your money.
Tax can chew up a big portion of your return. There is one way to avoid it, and it’s called Roth IRA. You can learn more about Roth IRA here.
In Roth IRA account, you invest post-tax income. So when you withdraw your money, you don’t have to pay tax.
Last Few Words
I hope you saw the power of investing early. You don’t need to invest a lot to provide for your family, few hundreds per year is enough.
Worst mistake you can make is not starting early. It’s so clear, time is an important component in our calculation.
Anyways, I hope you learned something from this post. Make sure to check my blog often, I post great finance related content regularly.
If you want to learn 10 ways to retire in less than years, than make sure to read this amazing article.