Compound Interest

925 Words 4 Pages
Passive Income and Compound Interest A passive income may not always be enough to live off of. Chances are, in spite of having a regular income of unearned money, you will need to continue working at your job. However, what a passive income can do is promise you a brighter future.
Maybe you want to retire early with enough money to live a life of relaxation and enjoyment. A regular job may not help, but such income can be your path to a brighter future. It can assist you with your dreams if only invested thoughtfully.
This is because passive income in the form of rental property, paper invest- ments or even online network marketing have one advantage - they are all con- stantly on the rise. This means that the money you can get from
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While real estate investments cannot be easily liquidated, its value is steadily increasing. Due to this, it becomes an ideal in- vestment; all you need to do is keep the papers that prove that the property is under your name.
When renting this property out, as the rate of rent increases, you can also charge the tenant more for continuing to stay there. In this manner, you will now be earning more money by doing absolutely nothing.
Similarly, each of the sources of passive income has this crucial advantage. It is called compound interest. Here, compound interest refers to this gradual increase in money. In financial investments such as dividend funds, however, it works a lit- tle differently.
Through compound interest, you will be able to see an exponential increase in your principal amount. It is the art of using your existing money to make more money. While a bank may provide you simple interest, the interest earned is often negligible due to the low rates.
Compound Interest, on the other hand, works by combining the interest earned with the principal amount present. Therefore, you will receive higher interests with each return. This ensures that so long as the principal keeps increasing, the
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So you need to begin your planning well in advance.
Due to the more prosperous returns provided, people often turn to the stock market as a great source of passive income. Investing in the stock market index al- lows your money to increase with time. This too uses compound interest to pro- vide returns.
Unlike banks, however, their rate of interests are a little higher. Unfortunately, stock market investments are also riskier compared to banks.
However, in order to maintain a passive income, you don 't have to be limited to only one source. You can, for example, choose to invest the returns earned from rental property into the stock market index in order to gain more money.
But while maintaining a source of such unearned income seems to be a simple process, it is not so. You need to keep the right investments. For doing this, a lot of planning is required.
Should you invest the interest earned from your dividend fund into the stock market, or leave it in the fund itself? Which decision will allow you to make more money in the future?
You will constantly have to make such difficult choices. But once you know how you wish to proceed, everything becomes easier.
It 's time to make your money work for you, so invest

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