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The Steps

Step 6

Build Long-Term Financial Independence

Stay Ahead of Inflation

There is no real secret to staying ahead of inflation—your assets simply have to earn more interest than inflation takes away. There are numerous options available to help your assets outpace inflation. Your LDM Associate will work with you to formulate a plan to help meet your individual needs and objectives.


Minimize Your Tax Burden

No one can escape death, and escaping taxes appears to be just as unlikely. Suggestions on ways to minimize the taxation of your assets are also available from your LDM Associate. You should also consult qualified legal and tax advisors.


“The Rule of 72” table will help you determine how long it will take to double your money based upon the interest rate your money earns. Just divide the number 72 by the interest rate. Illustrated in the chart below are several examples.

Taxes can take a big bite out of your ability to save and accumulate your money. It’s important to understand all the tax advantages available to you and apply them to minimize your tax liability. The chart below illustrates examples of how much money is needed on a monthly basis to reach the goal of a million dollars—in both a taxable and non-taxable scenario.

Compound Annual Return

The chart below is an example of how much one dollar could have grown after being invested in various markets beginning in 1926. The rate of inflation during the same period is included for reference (in red). As with any charted investment history, these figures do not guarantee future returns of any financial products.

Investment Risk Disclaimer

15 The “Rule of 72′′ is a common mathematical formula that approximates the time period required to double a principal amount at a fixed rate of return. Actual rates vary over time and the rule of 72 numbers shown are for illustration purposes and should not be construed to infer the rate of return associated with any particular financial product.

16 The “Retirement Goal” chart assumes a total tax liability of 35% and shows a rate of return not based on any actual investment, but is for illustrative purposes only.

17 Note: This chart does not reflect the past or future performance of any particular financial product (Data 1926-2007) and is for illustrative purposes only. The data assumes the reinvestment of all income and does not consider account expenses such as transaction costs or taxation. The average return represents a compound annual return. Government bonds and Treasury bills are guaranteed by the full faith and credit of the United States government as to the timely payment of principal and interest. Bonds are typically intended to provide income and/or diversification. U.S. government bonds may be exempt from state taxes and income is taxed as ordinary income in the year received. With government bonds, the investor is a creditor of the government. Stocks are not guaranteed and are more volatile than the other asset classes. Large company stocks provide ownership in corporations that intend to provide growth and/or current income. Small company stocks provide ownership in corporations that intend to seek high levels of growth. Small company stocks are more volatile than large company stocks and are subject to significant price fluctuation, business risks, and are thinly traded. Capital gains and dividends received may be taxed in the year received. Underlying data is from the Stocks, Bonds, Bills and Inflation® (SBBOII®) Yearbook, by Roger G. Ibbotson and Rex Sinquefield updated annually. An investment cannot be made directly in an index. Also, past performance is never a guarantee of future results.

SOURCE: Small Company Stocks—represented by the fifth capitalization of quintile stocks on the NYSE for 1926-2007 and the performance of the Dimensional Fund Advisors, Inc (DFA) U.S. Micro Cap Portfolio thereafter; Large Company Stocks— Standard and Poor’s (S&P) 500®, which is an unmanaged group of securities and considered to be representative of the stock market in general; Government Bonds—20 year U.S. Government Bond; Treasury Bill; Inflation—Consumer Price Index.


Office:  2652 Spring Arbor Rd. Jackson, MI 49203


(517) 795-1093


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