The Story of Box A and Box B

Box B
The “Lending” Box

You may be thinking “but, my money in the government (or other) plan is compounding for me, so that justifies my financing and other costs”. Consider this. What you pay in interest, excess taxes, and fees offsets your growth; but, that is only part of the equation. Those costs compound too – into a “lost” fortune that offsets your “realized” fortune.  

You can track the growth of your dollars in an investment. You can also track the lost growth of the dollars you spent on interest, excess taxes, and fees. But, you don’t. If you did track them, you would see they compound into your "lost fortune". Your “lost fortune” can equal or exceed your “realized fortune”.

It boils down to this: If you were positioned differently and did not have to pay interest, excess taxes, and fees to “them” you could take that money and invest it; couldn’t you? If you did invest that money it would compound and increase your wealth; wouldn’t it? But, because you DO pay those costs to “them”, that is money you cannot invest, so you have LOST wealth: you lose the costs you pay PLUS all the growth that money could have earned for you. Your lost growth offsets your realized growth; over time your “lost fortune” offsets your “realized fortune”.

Back

Next