BennyModerator@bennyJoin Date: 2002Post Count: 1,376
Have you come across situations where you hear a statement, read someone’s story, or even see a picture that just seems “Wrong” in some way? Our initial reaction is “That CAN’T be right!”
I’m sure we all have – they get stored away in our individual memories, and might become part of “Grand-dad’s crazy stories” in years to come. i.e. They remain important to us once we work out where the truth is.
Well, something I read on this website recently had me scratching my head – my knee-jerk reaction was to think “That CAN’T be right, surely?” And, just to prove how wrong it was, I opened a blank Excel page and set up the calculations so I could PROVE it wrong.
Result? It proved ME wrong – and proved the initial comment RIGHT !!
Let’s try it on you:-
Re: taxes, I heard a really interesting anecdote at a Tony Robbins event I attended in Dallas last year. If you take $1 and double it 20 times you get a little over $1MM. If you repeat that same process but this time take out 30% tax at each stage- instead of ending up with $1MM+ you end up with just over $30k. A staggering difference!
What was your immediate reaction? Was it like mine?
BTW, in my calcs, the figure came to $40k, not $30k – but hey, even now, having worked it out myself, I still find this astounding. In essence, doesn’t this show how important it is to “look after every cent?” Like, what if our expenses are 30% higher than they should/could be? Isn’t that cruelling our futures in much the same way as a 30% Tax would?
And my BIG question – was Steve McKnight aware of this way back in 2001 when he was getting “Ten cups of tea out of each teabag?” ;)
PS Try working out what effect a tiny 5% tax would have had on that same calculation. What would your brain tell you, even now that you know it could have an unexpectedly large impact?
Happy head-scratching – and mind-broadening !!
TerrywParticipant@terrywJoin Date: 2001Post Count: 16,190
- This topic was modified 2 years, 11 months ago by Benny.
Very interesting Benny.
This is the first time that I had heard of this so I just made a spreadsheet to test it out and I got similar results. Very interesting.
My results were
$1 double 20 times becomes $1,048,576.
$1 doubles 20 times with 30% tax on the income component becomes $40,642BennyModerator@bennyJoin Date: 2002Post Count: 1,376
I agree totally with your results Terry. It made me sit up and take notice !!
Did you try doing the 5% one? Even that tiny amount made a HUGE difference to the take-home amount. It took nearly 40% off that $1m figure !! When expenses compound, they have a massive effect too.