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Mandy Money

Mandy Money

make your money grow

Making money with your money – it’s a pretty sweet concept. Here’s how it works…

Apart from saving your earnings, there are generally two ways that money can grow over time.

1. Interest returns

2. Investment returns

Let’s dig in…

1. Interest returns

Each time money is deposited into a bank account, it is technically being borrowed by the bank. Interest returns are the fixed payments that you receive as compensation for lending your money to a bank.

The bank then takes this money and lends some of it out to other borrowers (e.g. mortgage holders who have purchased a house); the banks are really just a middle-man in the process.

To compensate you for lending, they will provide interest rates on your money. An interest rate is a % of your money that is repaid on top of the initial amount.

The good thing about interest rates is that you get the return with very low risk, the not-so-good part is that this little cash bonus is usually quite small relative to the amount you have sitting in the bank.

High-interest saver accounts are likely to offer the highest interest rate returns on your money.

2. Investment returns

Investment returns represent the additional money you are likely to receive by investing in a company or asset. Some examples of possible investments include shares, property or commodities (gold for example). Investment returns vary over time, depending on how the assets value changes.

Investing is much riskier than leaving your money in a bank, to compensate for that extra risk, the returns are usually a bit higher than interest.

 

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