Term Insurance has a cost as well. |
Let’s factor in the term premiums into the equation. |
Future Value of an Ideal Investment = FV(Total Rate of Return, Years of Accumulation, Annual Contribution, Initial Balance, Contributions at Beginning of Period) Amount Invested = Initial Balance + sum of contributions Term Premiums = sum of term premiums paid Opportunity Cost of Ordinary Taxes = Sum of Cumulative Annual Ordinary Taxes Paid * Investment Total Rate of Return Ordinary Income Tax = Sum of Annual Taxable Growth * Ordinary Tax Rate Total less expenses = Future Value of an Ideal Investment - Amount Invested - Ordinary Income Tax - OC of Ordinary Taxes - Term Premiums. A year-by-year illustration of this solution is displayed in worksheet form by clicking the Documentation button. |