{"id":5088,"date":"2017-06-27T04:00:38","date_gmt":"2017-06-27T04:00:38","guid":{"rendered":"https:\/\/amazingproperty.com.ng\/blog\/your-money-can-make-money-with-compound-interest\/"},"modified":"2024-01-19T10:01:30","modified_gmt":"2024-01-19T10:01:30","slug":"make-money-with-compound-interest","status":"publish","type":"post","link":"https:\/\/amazingproperty.com.ng\/blog\/make-money-with-compound-interest\/","title":{"rendered":"Make money with compound interest"},"content":{"rendered":"

Your money can make more money with compound interest in real estate investing .<\/h2>\n
\n

Realestate finance experts Ben Kingsley and Bryce Holdaway from the Property Couch are on hand to help you learn more about property investing.<\/p>\n

But before we get to the exciting world of compound interest<\/strong>, time for those boring yet important words of warning about your personal circumstances.<\/p>\n

This information is of a general nature and does not constitute professional advice. You should always seek professional advice in relation to your particular circumstances<\/em>.<\/span><\/p>\n

So what is compound interest?<\/h2>\n

Compound interest is all about delaying financial gratification in the short term so that you can earn more in the long term, says Holdaway.<\/p>\n

\u201cThink of it this way, if you\u2019ve got $10 and it earns 10%, at the end of the year you have $11,\u201d he says.<\/p>\n

\n

\"Compound<\/p>\n

In the first year, you earn 10% or $1 from your original $10.<\/p>\n<\/div>\n

But over time,\u00a0the interest that you earn grows as you are earning 10% on the increased funds<\/a>.<\/p>\n

\u201cBut next year, when you earn 10% on the $11, you actually get more than that initial dollar increase over time,\u201d he says.<\/p>\n

\n

\"Compound<\/p>\n

You can now earn over $1 in the second year when you earn the 10% interest as you are earning that interest on the increased amount of $11.<\/p>\n<\/div>\n

So the interest you earn is still 10%, but as the total amount of money that the interest is earned on has increased, so too does the amount you earn.<\/p>\n

This is what\u2019s called compound interest.<\/p>\n

How does it relate to money earning money?<\/h2>\n

Compound interest is magic stuff for investors as it can help earn more money over time,\u00a0says Kingsley.<\/p>\n

\u201cIt\u2019s actually all about over time and as it (the investment) grows in value, it gets bigger and bigger and bigger. So you\u2019re earning money on money,\u201d he says.<\/p>\n

\n

\"Compound<\/p>\n

Over time, here\u2019s how you can earn more and more from that initial $10.<\/p>\n<\/div>\n

What\u2019s all this got to do with property investing?<\/h2>\n

Compound interest can often mean a property investor\u2019s money is earning more money, he says.<\/p>\n

\u201cThat compound interest is a powerful thing because if we have a little bit left over and we put it into a property, over time it grows. And not only in isolation does that property grow (in value), but imagine if we tap into it so we can buy a second property and a third property. \u00a0So that power of compound interest is just exponential,\u201d he says.<\/p>\n

\n

\"Compound<\/p>\n

Compound interest can help you build a property portfolio.<\/p>\n<\/div>\n

Compound interest is great for investors in a rising a property market as the longer an investor can hold onto an asset or property, the more money they are likely to make. In this scenario leveraging the equity from one property and using it to buy another is a smart move.<\/p>\n

But when prices fall, things can get tough for investors as rental income<\/a> declines and some may struggle to service their debts.<\/p>\n

Regulatory concerns over investor loans<\/a> in Australia\u00a0has resulted in major lenders<\/a> significantly tightening their lending criteria for investor loans, also called interest-only loans.<\/p>\n

Some like the Australian Prudential Regulatory Authority worry about an investor\u2019s ability to service a loan, independently of the rental income they may earn on a property.<\/p>\n

Invest in high-yield dividend stocks<\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Your money can make more money with compound interest in real estate investing . Realestate finance … Make money with compound interest<\/span>Read 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