Wealth Mathematics

Anyone can solve the equation 6+6+6+6+6+6. But ask somebody to calculate
6x6x6x6x6x6 without a machine and they're going to look at you cross-eyed. The human
brain was designed for linear, not exponential processing.

Dow Jones reaching 2,000,000 by the year 2099, a one hundred fold gain from today's
prices. For that to occur, the Dow would need to compound at 5.7% for the next 83
years. Considering the Dow has grown 7.14% a year for the last 75 years, this seems
totally within the realm of possibility.

This example from The Art of Thinking Clearly illustrates why the Dow reaching 2
million was completely beyond comprehension: A piece of paper is folded in two, then
in half again, and again and again. How thick will it be after fifty folds? Take an
astronomical guess. What would be a ridiculous number! Well, if we assume that a
sheet of copy paper is approximately .004 inches thick, then its thickness after fifty folds
is a little over 60+ million miles. This equals the distance between the earth and the sun.
Linear growth we understand intuitively. However, we have no sense of exponential
growth.

The most powerful force in the universe, as Einstein referred to it, is something that
eludes many of us for two main reasons. One, most people just don't understand how it
works. For instance, 15% growth for 30 years is not 450%, it's 6500%! The second reason
why many fail to take advantage of compounding is because it takes time. Warren
Buffet has been rich forever, but 95% of his net worth was earned after his 60th
birthday.

It is best said: When it comes to growth rates, do not trust your intuition - because you
don't have any !
 Compounded Annual Growth Rate with Fees Payment - CAGR 27%
Fund Management
Begin Year Year Capital 30% Profit Tax @0% Capital at End of Year
Fees 3%

01 January, 2018 1 10,000,000 3,000,000 300,000 0 12,700,000

01 January, 2019 2 12,700,000 3,810,000 381,000 0 16,129,000
01 January, 2020 3 16,129,000 4,838,700 483,870 0 20,483,830
01 January, 2021 4 20,483,830 6,145,149 614,515 0 26,014,464
01 January, 2022 5 26,014,464 7,804,339 780,434 0 33,038,369
01 January, 2023 6 33,038,369 9,911,511 991,151 0 41,958,729
01 January, 2024 7 41,958,729 12,587,619 1,258,762 0 53,287,586
01 January, 2025 8 53,287,586 15,986,276 1,598,628 0 67,675,234
01 January, 2026 9 67,675,234 20,302,570 2,030,257 0 85,947,547
01 January, 2027 10 85,947,547 25,784,264 2,578,426 0 109,153,385
01 January, 2028 11 109,153,385 32,746,016 3,274,602 0 138,624,799
01 January, 2029 12 138,624,799 41,587,440 4,158,744 0 176,053,495
01 January, 2030 13 176,053,495 52,816,049 5,281,605 0 223,587,939
01 January, 2031 14 223,587,939 67,076,382 6,707,638 0 283,956,682
01 January, 2032 15 283,956,682 85,187,005 8,518,700 0 360,624,987
01 January, 2033 16 360,624,987 108,187,496 10,818,750 0 457,993,733
01 January, 2034 17 457,993,733 137,398,120 13,739,812 0 581,652,041
01 January, 2035 18 581,652,041 174,495,612 17,449,561 0 738,698,092
01 January, 2036 19 738,698,092 221,609,428 22,160,943 0 938,146,577
01 January, 2037 20 938,146,577 281,443,973 28,144,397 0 1,191,446,152
01 January, 2038 21 1,191,446,152 357,433,846 35,743,385 0 1,513,136,614
01 January, 2039 22 1,513,136,614 453,940,984 45,394,098 0 1,921,683,499
01 January, 2040 23 1,921,683,499 576,505,050 57,650,505 0 2,440,538,044
01 January, 2041 24 2,440,538,044 732,161,413 73,216,141 0 3,099,483,316
01 January, 2042 25 3,099,483,316 929,844,995 92,984,499 0 3,936,343,811
 Compounded Annual Growth Rate with Fees & Tax Payment - CAGR 17.79%
Fund Management
Begin Year Year Capital 30% Profit Tax @34.1% Capital at End of Year
Fees 3%

01 January, 2018 1 10,000,000 3,000,000 300,000 920,700 11,779,300

01 January, 2019 2 11,779,300 3,533,790 353,379 1,084,520 13,875,191
01 January, 2020 3 13,875,191 4,162,557 416,256 1,277,489 16,344,004
01 January, 2021 4 16,344,004 4,903,201 490,320 1,504,792 19,252,092
01 January, 2022 5 19,252,092 5,775,628 577,563 1,772,540 22,677,617
01 January, 2023 6 22,677,617 6,803,285 680,329 2,087,928 26,712,645
01 January, 2024 7 26,712,645 8,013,794 801,379 2,459,433 31,465,626
01 January, 2025 8 31,465,626 9,439,688 943,969 2,897,040 37,064,305
01 January, 2026 9 37,064,305 11,119,292 1,111,929 3,412,511 43,659,157
01 January, 2027 10 43,659,157 13,097,747 1,309,775 4,019,699 51,427,431
01 January, 2028 11 51,427,431 15,428,229 1,542,823 4,734,924 60,577,913
01 January, 2029 12 60,577,913 18,173,374 1,817,337 5,577,408 71,356,541
01 January, 2030 13 71,356,541 21,406,962 2,140,696 6,569,797 84,053,011
01 January, 2031 14 84,053,011 25,215,903 2,521,590 7,738,761 99,008,563
01 January, 2032 15 99,008,563 29,702,569 2,970,257 9,115,718 116,625,157
01 January, 2033 16 116,625,157 34,987,547 3,498,755 10,737,678 137,376,271
01 January, 2034 17 137,376,271 41,212,881 4,121,288 12,648,233 161,819,631
01 January, 2035 18 161,819,631 48,545,889 4,854,589 14,898,733 190,612,198
01 January, 2036 19 190,612,198 57,183,659 5,718,366 17,549,665 224,527,826
01 January, 2037 20 224,527,826 67,358,348 6,735,835 20,672,277 264,478,062
01 January, 2038 21 264,478,062 79,343,419 7,934,342 24,350,495 311,536,644
01 January, 2039 22 311,536,644 93,460,993 9,346,099 28,683,179 366,968,359
01 January, 2040 23 366,968,359 110,090,508 11,009,051 33,786,777 432,263,039
01 January, 2041 24 432,263,039 129,678,912 12,967,891 39,798,458 509,175,601
01 January, 2042 25 509,175,601 152,752,680 15,275,268 46,879,798 599,773,216