With the holiday season coming up, Dan thought for a long time about what he would ask for. Hours turned into days, and days into weeks. After a long time he finally had a plan. He would ask for a 10 year bond. The plan was to get a 10 year bond, every year, for 10 years. At the 10th anniversary, the first bond will mature and he can collect the cash. But wait, there’s more… behold, he would re-invest the original bond amount and purchase another 10 year bond. In this way, he would have a new 10 year bond every year. He would also have extra at the end of the year when he re-invested the bond that had matured and would draw the interest from redeeming the bond. So, he asked all of his friends and family enough for a 10 year bond and they all agreed. Here’s what it looks like:
Year 1 – 10 year bond, Year 2 – 10 year bond, etc.
Year 11 – redeem 10 year bond, draw the interest from the bond, than re-invest in another 10 year bond. Dan decided to do this every year for the rest of his life and he would draw the interest from the bond every year to spend on whatever he wanted.
So every year after that, Dan would get a 10 year bond for the holidays and would take the bond certificate, frame it, and put it on his wall. He would look at it and would smile, thankfully.