5 Investing Tricks to Double Your Money
We all want to get the most out of our money, whether our end goal is a home down payment, retirement, or increased freedom and security. Your investments are, undoubtedly, critical building blocks for increasing your net worth and reducing any financial stress. This article will provide five under-utilized steps you can take today to help ensure your money will grow to its highest potential.
Every brokerage house will allow you to set dividend payments to either "cash" or "reinvest." If you have this setting in "cash" mode, every time your investment pays a dividend, you'll receive it as ready, spendable cash in your settlement account. This is a sensible choice if you rely on your investment account for passive income and see long-term gains as a secondary priority.
However, if you're investing in a retirement account for the purpose of covering retirement costs in 30 or 40 years, you'll be far better off setting dividend payments to "reinvest." When each of your investments pays a dividend, the payment will be automatically reinvested back into the same stock, bond, or fund from which it came. If the market value of the investment has fallen, your dividend will purchase more shares upon reinvestment. This causes a powerful compounding effect that requires no ongoing intervention on the part of the account owner.
Source Fool.com