Why Income Matters

Don't need dividend payments? Investing for the long term? Choosing income paying assets and accumulating that yield can mean you double your money in half the time

Emma Wall 7 April, 2014 | 2:38PM
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Looking for growth? You’d be a fool to ignore income. Albert Einstein called compound interest the eighth wonder of the world – famed to have said: “He who understands it, earns it ... he who doesn't ... pays it”.

Einstein is not the only high profile fan of compound interest. Warren Buffett, the sage of Omaha himself described investing to Forbes magazine as “forgoing consumption now in order to have the ability to consume more at a later date”.

Compounding interest is when you pay dividends back into the capital sum, allowing that capital sum to grow and in turn the dividends will grow too. These larger dividend payments are invested back in to the pot, and the process repeats itself.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Emma Wall  is former Senior International Editor for Morningstar