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Rekenthaler Report

Reinvesting Matters! (A Great Deal)

As does being careful when interpreting charts.

Income versus Growth
Interest receipts provide the initial investment lesson. If you are fortunate enough to possess capital, others will pay to borrow it. Money for nothing! But of course, those receipts are not free, because you have paid an opportunity cost. Others now have your funds. They may put them to work, while you may not.

Then comes capital appreciation. That understanding arrives later, because most possessions lose value over time, not gain it. Among the exceptions are real estate and stock shares. When savers accumulate enough money to buy those items, they become investors (or, less happily, speculators). Now, they possess something tangible, rather than the mere promise of future payments. They own an asset.