Self-Directed IRA accounts are something special. Remember when your grandparents would tell you to take a coffee can and put all of your spare change into it? Before long, your money would grow. An IRA is very much the same; it grows year after year.

Albert Einstein once noted that the most powerful force in the universe was the principle of compounding. In investing, this manifests itself through something called compound interest. Put in its simplest terms, the phrase compound interest means that you begin to earn interest income on your interest income, resulting in your money growing at an ever-accelerating rate. It is the reason for the success of every person on the Forbes 400 list and anyone can take advantage of the benefits through a disciplined investing program.

Compound interest is interest added to the principal of a deposit or loan so that the added interest also earns interest from then on. This addition of interest to the principal is called compounding. A bank account, for example, may have its interest compounded every year: in this case, an account with $1000 initial principal and 20% interest per year would have a balance of $1200 at the end of the first year, $1440 at the end of the second year, $1728 at the end of the third year, and so on.

In the case of Lendvestments’s Passive Income Fund it pays a 8% preferred return and in year two investors receive the 8% preferred return pro-rated in advance on monthly payments. When interest income is paid monthly to investors and then instantly re-invest it, they would earn 8.3% a year. When an investor would reinvest earnings for a total investment period of 8 years he/she would have turned a $100,000 initial investment to almost double, $189,245.72.* Please note the Lendvestments Passive income fund also pays investors 20% of the funds earnings after its preferred 8% interest payment to investors and the 1% management fee. This extra payment can be substantial and increase these returns substantially if they too are reinvested and compounded.