Dear Reader,

The ultimate wealth destroyer is not a stock market crash.

It is not even inflation.

It is a force that is much more powerful because, once you get on the wrong side of it…

Time itself starts working against you.

Benjamin Franklin understood just how powerful this force could be.

When Franklin died in 1790, he left £2,000 (~$4,444 at the time) to Boston and Philadelphia with some pretty unusual instructions.

The money was supposed to be lent to young tradesmen who were trying to get started in business.

As the loans were repaid with interest, the money could be lent out again.

Unfortunately, Franklin’s trusts were plagued by severe mismanagement.

And by 1991 – about 200 years later – his initial £2,000 endowment was “only” worth $6.5 million.

Why do I say only?

Because had these trusts not been mismanaged, that sum would have been worth far more.

Had that endowment been able to generate a conservative 5% a year, it would have turned into $76.8 million instead after 200 years.

At 7% a year? It would have grown into a staggering $3.3 billion.

No, that’s not a typo.

And it goes to show just how powerful this force is.

You already know what I’m talking about – the power of compounding.

It is the ultimate wealth creator.

As Franklin himself said:

“Money can beget Money, and its offspring can beget more, and so on.”

And compounding is not limited to money.

Skills compound. Relationships compound. Your reputation compounds.

You get a little bit better at something, that opens another opportunity, which allows you to get better again, and eventually you can wind up somewhere that would have looked impossible when you started.

But there is another side of compounding that I don't think gets nearly enough attention.

Because compounding can also be the ultimate wealth destroyer.

The Dark Side of Compounding

If you own an asset producing compound returns, time can become your best friend.

But if somebody else owns a compounding claim on your future income...

Time can become your enemy.

Payday loans are probably the ugliest example.

A typical payday loan might charge you $15 for every $100 you borrow.

On a two-week loan, that works out to an annual percentage rate of almost 400%.

The greatest investor on earth will never be able to generate that kind of return consistently (the famous Medallion fund’s best track record was 66% annually over 30 years).

No financial vehicle will allow you to positively compound your wealth at 400% a year.

And yet…

Negatively compounding your wealth at 400% a year is as easy as heading down to your nearest payday lender.

The Consumer Financial Protection Bureau found that more than four out of five payday loans were rolled over or followed by another loan within two weeks.

That’s negative compounding in action.

In many ways, it is far easier to fall down the slippery slope of negative compounding than to set yourself up for positive compounding.

Payday loans are an extreme example, but the same basic thing can happen in much more ordinary ways.

You carry a credit-card balance month after month.

You constantly finance cars that you can't really afford.

You stack up a bunch of small buy-now-pay-later payments because individually none of them feels like a big deal.

None of these decisions destroy you by itself.

The Problem is That Each Bad Decision Limits Your Future Options

Economists call this path dependence.

This is really just a fancy way of saying that the path you're already on affects which options you have available tomorrow.

Let's say two people both get hit with a $2,000 car repair.

One has $10,000 in savings.

He pays the bill, gets annoyed about it, then moves on with his life.

The other person has nothing saved, so the repair goes on a credit card.

Now part of every future paycheck has to go backward to pay for something that already happened.

That makes it harder to build savings.

Which makes the next emergency more likely to go on the card too.

Same $2,000 repair – completely different financial path afterward.

This is one reason debt can cost you far more than whatever interest rate is printed on the statement.

It can slowly cut off the number of choices you have.

My wife and I were extremely conscious of this when we were starting out.

When we first got married, we spent roughly the first nine months getting ourselves completely out of debt.

Then when our son was born and my wife stopped working, all three of us were living on somewhere around $2,000 a month.

That meant saying no to plenty of things we technically could have afforded.

We could have spent more. We chose not to.

We knew what our longer-term goals were.

We wanted my wife to be able to stay home. We wanted financial breathing room. And eventually I wanted enough freedom that I could leave my own job and build something myself.

So for years we were very careful about avoiding the kinds of decisions that would make those things harder later.

Eventually, those decisions started compounding too.

My wife never had to go back to work.

Later I was able to leave my stockbroking job and build Heresy Financial.

There wasn't one magical stock pick that made that happen.

A lot of it was just getting ourselves onto the right financial path early enough and then staying there.

And this is a big reason I'm so passionate about teaching people how the financial system actually works.

Because there are traps everywhere.

Some of them are designed to look harmless at first.

And if you don't understand what you're signing up for…

You can spend years digging yourself out of a decision that took five minutes to make.

This is How the Gap Gets so Wide

This is also one reason the rich tend to keep getting richer.

People who own assets, build skills, and keep investing more capital get positive compounding working in their favor.

Meanwhile, someone buried in debt can have the exact opposite happening.

One person is having compounding working for them. The other has compounding working against them.

Over the years, those two paths can move very far apart – even if they started from the same place.

And I’m not pretending everyone starts from the same place.

Housing is harder to afford than it was for previous generations.

Inflation has eaten away at purchasing power.

Plenty of young Americans are staying home longer because moving out has simply become too expensive.

None of that is your fault.

But it is still your responsibility.

Nobody is going to rewind home prices for you.

Nobody is going to restore the purchasing power you've already lost.

You can complain about the hand you were dealt – even justifiably – but you still have to play it.

And Washington can make that hand harder to play.

Because when the government piles up debt, more and more tax dollars have to go toward interest instead of productive uses…

While the pressure for higher taxes, more borrowing, and further monetary debasement keeps building.

And right now, that debt is closing in on $40 trillion.

Washington has had decades to reverse course. It hasn’t.

And as Washington continues down this path, the last thing I want is all of my wealth sitting in dollars that will be steadily diluted over time.

I want productive assets.

I want ownership in businesses that can generate profits, produce cash flow, and increase their value over time.

Now, I don’t need to chase every hot investment theme to get that.

I’m not going to join the mania that seems to take over investors every few months.

We’ve seen it with AI chips… power… memory.

There is always some new theme everyone suddenly decides they have to own.

And investors convince themselves they need to buy into whatever is going vertical or risk missing the next 10X stock.

I don’t think you need to play that game.

In fact, we can actually use all that excitement to our advantage instead.

Because crazy markets can create opportunities to generate cash flow while still going after big returns.

And that’s exactly what I’m going to show you in my upcoming LIVE Tactical Cashflow Masterclass…

Which is happening next Thursday, August 20 at 7:00 P.M. ET.

I’ll show you:

• Why traditional income strategies may struggle to keep pace with today’s rising cost of living
• The secret to turning today’s crazy market swings into an additional stream of portfolio income (In historical tests, this approach could have generated cumulative cashflow-only yields like 144% in 2 years…130% in 16 months…and even 226% in 2 years.)
• And a unique strategy designed to pursue both higher total returns and recurring cashflow from a single stock (With historical total returns as high as 664% over 2 years – and in one 18-month test, over 10X the return of traditional buy-and-hold.)

And that brings us right back to where we started.