Comparison Illustration
of Triple Compounding
SPDA vs CD
$100,000 Deposit; 25% Tax Bracket |
| Year |
SPDA @ 6.0% |
CD @ 6.0%
Less 25% tax bracket |
Difference |
| 1 |
$106,000
|
$104,500 |
$1,500 |
| 5 |
$133,823 |
$124,618 |
$9,205 |
| 10 |
$179,083 |
$155,297 |
$23,786 |
| 15 |
$239,656 |
$193,528 |
$46,128 |
| 20 |
$320,714 |
$241,171 |
$79,543 |
| 30 |
$574,349 |
$374,532 |
$199,871 |
| 40 |
$1,028,572 |
$581,636 |
$446,936 |
| 50 |
$1,842,015 |
$903,264 |
$938,751 |
One final step would be to consider
the tax on the SPDA if surrendered for
its full cash value. In year 30, the
gain in the SPDA is $474,349. At a 25%
tax rate, the tax would be $118,587.
Subtracting the tax from the total cash
value leaves the SPDA with a net value
of $455,762; which is still $81,230
more than the CD. The magic of "Triple
Compounding"!
Click
here to view taxable yields
Illustrative purposes
only. Chart is to assist understanding
the effect of compound interest without
withdrawal to pay current income taxes.
Taxes on the SPDA would have to be paid
at some point. Illustrated rates are
hypothetical and not guaranteed. This chart
is for comparison only. |
