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Above is a theoretical calculation assuming all your earned interest is reinvested immediately, compounds monthly and no tax is paid. Obviously however, tax is payable at your usual rate whatever interest rate you receive. You can also invest in mortgages tax-free through an IRA. Not all IRA providers allow you to invest in mortgages. There are some that do allow you to do this however. These are known as self-directed IRAs. One such company is IRA Plus.
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