Respuesta :
They can receive compounding returns By investing their earnings back into their original investment.
By investing their earnings back, the amount of investment that became the base for percentage calculation will became larger. So, even though the rate of interest stay the same, the investor will accumulate larger revenue over time if they decided to re-invest their profit.
By investing their earnings back, the amount of investment that became the base for percentage calculation will became larger. So, even though the rate of interest stay the same, the investor will accumulate larger revenue over time if they decided to re-invest their profit.
Answering the question, investors can receive compounding returns by reinvesting their earnings back into their original investment.
When an investor re-invests his earnings back into his original investment, such investors will make money.
Further Explanation
Compound returns makes investors more money because they reinvest the profit they make back into the business.
For example, if an investor invested $20,000 with a guaranteed interest rate of 20% per annum, it means such investor will receive a payout of $4000. The investor can decide to put the profits back into the same company or just opt-out.
For proper clarification, let assume the investor decides to put the profit back into the company.
This implies that the investor in the first year invested $20,000 into the company and earned $4,000 profit, but since the investor is putting the money he earned back into the same company, therefore, the investor is now reinvesting $24,000 which will guarantee a payout of $28,800 at the end of the second year.
In the circumstance that such investor decide to keep the profit he earned in first the year, it means that the continuation of his $20,000 investment at the end of the second year would give him $24,000
Therefore, investors can receive compounding returns by investing their earnings back into their original investment
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KEYWORDS:
- compounding returns
- investor
- company
- profit
- earned
- interest
