Asset Protection

The Only Chart You Need to Understand the Power of Compounding Returns

The concept of compounding returns is simple, yet incredibly powerful. If you start with $100,000 today and you make 1% after a year, you’re left with $101,000. You could take that $1,000 profit and put it to work elsewhere, leaving you with the original $100,000 investment. However, by re-investing that profit, you could make more money without lifting a finger; if your starting balance the following year is $101,000 instead of $100,000, you’re going to be left with $102,010 at the of that year. That’s a profit of $1,010 compared to your initial gain of $1,000.

In other words, you could be generating more and more profit each and every year as long as you re-invest your earnings. Now let’s consider the example below, which assumes various rates of return, compounded over the course of 30 years:

Asset protection is a type of planning intended to protect one’s assets from creditor claims. Individuals and business entities use asset protection techniques to limit creditors’ access to certain valuable assets, while operating within the bounds of debtor-creditor law. is all about taking chips off the table in good times, so that you still can walk away from the table a winner no matter what happens in bad times. Those who worry the most about asset protection are those who are the most likely to get sued; think obstetricians and, more recently, real estate investors here. But average folks often get caught up in difficult situations, and thus if you have something to protect then the topic of asset protection should at least cross your mind.

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