From $100 to Almost $340: 7 Ways Your Money Can Grow

Intro

From $100 to almost 340: here are seven ways your money can grow, and how each one pays. By our count, a quarter-percent yearly fee instead of 1% leaves about 29,000 more on a hundred thousand. By the last one, you'll know why money keeps growing even if you never add another dime.

7. In the rules we read

Number seven: in the rules we read, money in a money market fund is not protected the way bank deposits are. A regulator's guide says these funds invest in short-term debt, cash and cash equivalents. Many people use them to store cash, or instead of a bank savings account. They pay dividends that generally follow short-term interest rates.

In those rules, most of them aim to keep a steady price of $1 a share. If that price drifts by more than half a cent, the fund must reprice its shares. By our count, half a cent on a one-dollar share is a move of half of 1%. Before buying, the guide says to read the fund's prospectus and latest shareholder report.

Shares can generally be sold back to the fund on any business day. The guide adds that they carry relatively low risk compared with most investments, but have historically had lower returns. When short-term rates are very low, the fund's fees can be larger than what it earns. Fund rules and deposit protection differ by country.

Number six follows a whole market instead.

6. Not every index fund costs less than an actively managed one

Number six: not every index fund costs less than an actively managed one. An index fund seeks to track the returns of a market index, the regulator's guide says. An index measures a basket of stocks or bonds that stands for part of a market or an economy. Because index funds usually follow a passive strategy, they may be able to save costs.

The page says to understand a fund's actual cost before investing. In the regulator's example, $100,000 grows 4% a year for twenty years. With a yearly fee of a quarter percent, it ends near $208,000. With a fee of 1%, it ends near 179,000.

By our count, that is about $29,000 apart, the number from the opening. It shows how fees add up, not what any fund will earn. Like any investment, index funds involve risk. Fees and fund rules differ by country.

Number five adjusts with an inflation index. If lists like this help you, subscribe: every number here is official or marked as our own count.

5. On one government's inflation-linked savings bond

Number five: on one government's inflation-linked savings bond, the rate can go down as well as up. A central bank's bulletin says indexed bonds adjust both the principal and the interest in line with an inflation index. That savings bond changes its rate every six months, based on inflation. Its overall rate is built from a fixed rate and an inflation rate.

That savings bond is sold only electronically, in an online account with the issuer. It starts at $25, or any amount above that to the penny. You can cash it in after twelve months, but before five years you give up the last three months of interest. On the same government's inflation-protected notes, the principal goes up with inflation and down with deflation.

When those notes mature, you get the adjusted principal or the original, whichever is greater. Bond rules, limits and taxes differ by country. Number four is a share of the income from rented buildings.

4. In the two markets whose rules we read

Number four: in the two markets whose rules we read, a real estate investment trust must pay out most of its income. A stock exchange's guide says it invests in properties that earn income, like offices and shopping malls. Its income often comes from the regular rents on those properties. That exchange's guide says at least 90% of net income after tax is paid to investors as dividends.

It is a way to earn a share of the income from commercial real estate, without buying a building yourself. A regulator's bulletin lists one share as the minimum, and shares are bought through a broker. A listed trust's shares can be bought and sold with relative ease, like any listed stock. By our count, a trust with $1 million of income after tax pays out at least 900,000.

Its unit price may go down if its properties drop in value. And dividends may not be paid if it reports an operating loss. Trust rules and taxes differ by country. We are halfway, and one question makes every item easier: what is the limit before the payout?

Number three comes from a company's profit.

3. A company's board decides whether to pay a dividend at all

Number three: a company's board decides whether to pay a dividend at all, and how much. A dividend is a portion of a company's profit paid to shareholders. It is paid per share, so what you receive depends on how many shares you hold. In one exchange's example, 100 shares and a twenty-cent dividend pay you twenty.

That page lists three dates to check: declaration, last day of trade and payment. Only shareholders who own the share on the last day of trade receive that dividend. To compare shares, the dividend yield divides the yearly dividends per share by the price per share. By our count, a ten-dollar share that pays forty cents a year yields 4%.

Another exchange's page adds that an unusually high yield may signal a falling share price or a payout that cannot last. Dividend taxes and rules differ by country. How people build wealth over decades is in our millionaire video, linked on screen. Number two locks in its rate from the first day.

2. With a term deposit

Number two: with a term deposit, you may pay a penalty fee if you need your money before the term ends. A term deposit pays a fixed interest rate for the length of your term. One regulator's guide says your money is locked away for the term you choose, usually between one month and five years. When you cash it in, you receive the money you put in plus any interest.

That guide also says to shop around for the best rate and features before choosing. By our count, $1,000 at a fixed 3% earns $30 in a year. Leave early, and you may receive only part of the interest, or none at all. Its main risk is inflation growing faster than your money.

Deposit protection and its limits differ by country. In one breath: money market funds, index funds, inflation-linked bonds, real estate trusts, dividends and term deposits. How many years do you think it takes money to double at 2%? Number one has the answer.

1. Compound interest, which keeps growing even if you never add another dime

Number one: compound interest, which keeps growing even if you never add another dime. Compound interest is the interest you earn on interest. A deposit insurer's guide says earned interest is added to your principal, so the next interest is earned on a larger amount. The same guide says the longer your money stays in the account, the more it earns.

In the regulator's example, $100 at 5% a year is 105 after one year. After the second year, it is $110 and twenty-five cents. In ten years, it is more than $162. And in twenty-five years, it is almost 340, the number from the start.

The regulator's site also has a compound interest calculator for trying your own amount and rate. A central bank's blog gives a shortcut: divide seventy-two by the interest rate to see the years to double. At 2%, it takes thirty-six years to double your money. By our count, at 6% it takes about twelve years.

The rule is an approximation, not an exact answer. Interest rules and deposit protection differ by country. And that completes the seven. So, seven ways money can grow: money market funds, index funds and inflation-linked bonds.

Then real estate trusts, dividends, term deposits and compound interest. You can open one official guide, linked below, and check one number today. Which one would you look into first? Tell us its number in the comments.

Results vary, rules differ where you live, and this is information only, not financial advice. This is Wealth Filings. Subscribe to Wealth Filings so the next list finds you.