Albert Einstein once said that "compound interest is the greatest force in the universe." A 6% return doubles wealth every 12 years, and a 12% return every six years. If you can attain an 18% return, capital would double every four years. After just 20 years, $1,000,000 would grow to $32,000,000!
Deferring compensation is all about compounding wealth at a pre-tax, therefore higher, rate of return. Taxes can reduce investment return by 20-50%. For example, if the pre-tax rate were 12%, and the after-tax rate were 8%, saving compensation pre-tax would produce double the net wealth after 20 years!
Click on the link below to see how deferred compensation compares to alternatives:
Hedge Fund Managers
Deferred Compensation vs. Current Compensation
Trial Lawyers
CaR Program vs. Current Compensation
