Interest works two ways; we can pay or collect it. Paying interest isn't always a bad thing. Credit card interest rates are usually high. Most financial advisors consider them a drain on family finances. Loans for homes that can appreciate over time are a better reason to take out a loan. These loans normally have a much lower interest rate. We just need to be aware of what types of Interest we are paying and manage our debt properly. Collecting interest works the other direction; somebody pays us for using our money. Bank deposits (CD's) and money market funds are a good place to start. Government and corporate bonds should be considered also. Bonds usually pay interest two or four times a year. My dad called this “Making money while you sleep." Interest earned can be spent any way we like or saved to compound over time. There are risks to be aware of when we loan money. Interest rates can increase in the future and reduce the price of our bonds. Like people, corporations can default on bond payments or the entire loan if business gets bad enough. We should always consider these and other risks when investing in anything. Finwiz.
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