This example of course has not taken into account initial purchasing costs involved to secure investment property, nor has it taken into account rental income that you would also be receiving....I have simply used it to demonstrate that more assets that you can get working for you, better off you will be.

Furthermore, if you already have equity built up in your own home, it is possible to purchase an income producing property, without even having to outlay any cash whatsoever.

I will discuss this in further detail shortly, but first I would like to explain to you miracle of compounding interest - because this is major factor that allows an average person to create a source of immense wealth. It is a little understood concept that can have a huge bearing on your future, once you understand how it can best be utilised.

Compounding is effect of letting something grow, and then rather than taking away newly created amount, you leave whole thing in tact, and allow further growth to take place on entire amount, and so on. Effectively making it grow exponentially.

For example. If you have $1,000.00 that is growing by 10% per year due to interest received. Then you have two options, you can withdraw income of $100.00 that has been generated, or you can leave it where it is, and allow it to compound (earn interest on interest),

If you allow it to compound, then in second year you will get an income of 10% of $1100.00, which is $110.00, instead of $100.00. This may not sound like much, but longer you leave money to compound, larger it will grow. As each year passes it will grow by a larger amount, in fact after 10 years it will be worth $2,593.75 and after 40 years it would be worth a massive $45,259.42. Remember that if you had withdrawn $100.00 interest each year for same period 40 years - then you would have received only $4,000.00 and would still have original $1000.00, being a total of only $5,000.00. This means that by letting it compound you would have earned more than an additional $40,000.00.

One of easiest ways to calculate how compounding interest works with different rates of return is to become familiar with Rule of 72.

This rule states that "The number of years that it will take for your money to double is 72 divided by interest (growth) rate".

Therefore if you have $1,000.00 invested at 10% interest, then number of years that it will take for your money to double to $2,000.00 is 7.2.

72 divided by 10 = 7.2

If your money is invested at 7% interest, then it will take approximately ten years to double in value. If it is invested at 5% it will double in just over fourteen years.

The two most important aspects of compounding are one: rate and two: time.

The higher rate and longer time something is left to compound, greater final result will be.

This is why sooner we start investing, better.

Visit authors website at http://members.optushome.com.au/dlohrere/

"We will continue our efforts to reduce burden on taxpayers and simplify tax code."

Can you believe it? This lady, and I mean no disrespect here toward Ms. Olson - I'm sure she's a hard-working government employee who does a great job, but this lady, in my humble opinion, has her head in sand, as do virtually all politicians and other government authorities who have created ungodly monster know as Internal Revenue Code.

The IRS changes one little rule that removes one form from only 15% of all returns filed - and this gives IRS right to think that they are reducing burden on taxpayers??? (Keep in mind that there are over 100 million tax returns filed every year. So, if this Schedule B rule change affects 15 million people, that's a measly 15% of all tax returns filed.)

C'mon - what is wrong with this picture? Do you get my point?

Taking away one lousy form from a small percentage of tax returns filed - how is that reducing burden on taxpayers? It's not! It's a drop in bucket. It's peanuts. It doesn't even come close to making an impact on incredible burden that taxpayers have each year on April 15.

Furthermore, how does this one little change "simplify tax code"? I am appalled that a government official would even use phrase "simplify tax code". We have never had tax simplification. Never. Never ever! Since 1913, when tax code was first implemented, there has been nothing but tax complications, never tax simplifications.

The rules only get more and more complicated. Tax laws only get more and more complex. The Tax Code just gets bigger and bigger. Don't let politicians' hype fool you. Never for a minute should you believe government when they say that they are trying to "simplify tax code."

So, what's average taxpayer to do? If tax rules just get more complicated, how are you supposed to make any sense out of all this mess?

You only have 2 options, as I see it. One I offer tongue-in- cheek, other is "words-to-live-by."

OPTION #1: Become a Tax Professional and prepare hundreds of tax returns every year. That's only way I know for you to become sufficiently knowledgeable in crazy world of U.S. taxation. Obviously, this is not a viable option for 99.9% of population. But you get point.

OPTION #2: Hook up with a Tax Professional. Find someone else who does tax returns for a living. Not your "family tax preparer", you know, Uncle Fred who likes doing returns and so offers to do yours for free. But an experienced tax person who does hundreds of returns every year and can help you make sense out of most nonsensical collection of rules on planet.