This factor alone is a major reason for selecting offshore opportunities over domestic investments. The Value Of Tax-free Compound Interest Much of the discussion of the growing value of an investment depends upon the tax free compounding of the earnings. It is such a cliche that almost everyone ignores the powerful, fundamental truth underlying the concept. And few people understand how to make compound interest work for them. Compounding is a two-way street.
Debts compound, too.
Back in the 1970s and 1980s, the fashion of the time was to buy American real estate leveraged with debt, and roll over the debt, counting on an increase in the value of the property to pay off the debt and make a profit. And in much of the United States, real estate values did increase at a rate that enabled a lot of people to make a lot of money purely on debt financing. They would buy a property. Instead of paying off the loan, they would allow the principal and interest to build. The trouble is, real estate values don't go in one direction only.