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It has been said two things are guaranteed in life, death and taxes. Many folks spend a lot of energy attempting to eliminate the tax issue but not enough time focusing on the other guarantee. By doing so, they throw away millions of dollars which they could have used to make their life easier.
Your life has value! And for you not to plan around that value is short sighted. Timeworn wisdom says that a sensible person leaves an inheritance to their children's children. And you can accomplish this without working any harder than you're currently working...if you so desire.
First, realize that you finance everything you purchase. You either pay interest to somebody else or you give up interest when you spend your own money. The question is, "Who do you want to pay interest to, yourself or somebody else?"
In 1933 George Clason established this commonly known fact in his classic book The Richest Man in Babylon. Pay yourself first. That doesn't mean paying your bills, buying groceries, or compensating the utility company for the use of your utilities first...it means pay yourself first! This is the very first step towards building capital. And without capital you'll never be able to pay yourself the interest you lose by financing everything you purchase.
Secondly, when you capitalize you must do so in a manner that doesn't increase your taxation. Taxes are insidious and avoidance of taxation is a form of good citizenship. Notice I didn't say tax evasion? Tax evasion is illegal, but tax avoidance is a public service, as Supreme Court Justice Louis Brandeis so boldly wrote about over a half century ago.
You'll also need to address liquidity. Having capital does you absolutely no good if you don't exercise control over it. Allowing your capital to be controlled by other people, places, or plans will always cost you plenty because the entity that controls your money will profit more than you do by using your money.
Finally, you need to understand that the flow of capital is what creates more capital. This is something that should be understood by everybody but is often discounted by those who believe that your capital can expand only when somebody else's capital contracts. This is a false paradigm which encourages central planning and bigger government which becomes necessary in order to confiscate more and more capital from those who produce it and supposedly give it to those who haven't produced enough. We call this taxation and appropriation today but in reality it is nothing more than pilfering and larceny.
That capital can be produced and not simply stolen is an obvious fact, otherwise we would all still be living in the dark ages where wealth consisted of storehouses full of jewels, silver and gold which nobody really benefited from. (If you don't believe this think about living in a cold damp palace with no running water, no central heat or air, eating dirty unrefrigerated foods, having to bury your bodily wastes, and bathing maybe once or twice a year if you were lucky, while being king or queen of an entire nation(s).)
Once capitalization is established, borrow from your own capital without penalty (no taxes or rate of return lost on your capital) and pay yourself the interest that you are currently paying to others (or losing as mentioned above) and you've properly planned for the other known guarantee of life.
Congratulations! You've just purchased a participating whole life insurance policy and made your life easier while leaving an inheritance for your grandchildren.
by Tomas McFie