Friday, December 22, 2006

Just 12 cents an hour...

Earning a mere 12 cents per hour, every hour, every day of the year totals more than $1,000 per year. Twelve cents! Of course, you can't work every hour of every day so it's not possible to do this purely by the sweat of your labor. The wealthy are well aware that they make money nearly every hour of every day through the ownership of assets.

Here are some examples which use simple, non compounding math:

$25,000 CD at a bank earning earning 4.5% annually earns (actually works or labors!) for the holder for almost $.13 per hour

Stock dividend on a $15,000 holding paying 5.1% earns the shareholder $.09 an hour, every hour, every day

Rental real estate valued at $245,000 appreciating at 3.5% annually delivers $.98 per hour in price appreciation

The simple trick to all of the above examples is that an individual MUST own capital in order to receive the benefit. This is why the rich get richer -- constantly! Middle class laborers who have few assets but have credit card balances go the other way. Their net worth declines as the dollars and cents becomes the property of the bank through interest payments.

Ownership and control of capital is the backbone of a capitalistic society and is essential for building wealth.

Capital -- it's a good thing!!