How To Compound Your Income in 2023


With the price of seemingly everything going up over the past year, you’ve probably noticed your spending power waning. When your dollar won’t go as far, the obvious need is to bring in more income.


But not everyone has the option of working more, and you also may not have the time or energy a side hustle requires. But there’s another option: You can compound the income you already receive and grow what you have in 2023 without getting a raise or putting in a single extra hour of work. Here’s how.

Compound Growth: When Interest Collects Interest

If you want to grow your income without toiling for more hours, then you have to put your money to work — and positioning your money to make more money is the whole concept behind compound growth.

“What’s compound growth? It’s the idea that when your money grows, the new money that you’ve made will also grow if you keep it invested,” said Kaitlyn Maloney, senior content strategist of Plynk Invest. “For example, if you started with $20 and then invested $20 per month — assuming a hypothetical annual 7% return — in 10 years you would have $3,422, and in 20 years you would have $10,338. 

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“Of course, 7% annual growth is a hypothetical example, as every year in the market is different. In some years it’s higher, and in other years it’s lower. But, if you can keep your money invested for the long haul, it could pay off with the help of compound growth.”

Invest In a CD for Low-Risk Gains

The surest way to grow your income is to dedicate part of it to the pursuit of compound interest — and while no investment is guaranteed, certificates of deposit, which are insured by the FDIC, are about as safe a bet as you’ll find.

“Invest in a high-interest certificate of deposit (CD) that receives daily compound interest,” said Adrienne Taylor-Wells, AFC and founder of Tailored WealthSaver. “Presently, Navy Federal is offering a 4.4% 12-month CD, which you can earn up to $90 for the year for simply putting $3,000 for 12 months to the side.”

All but the most conservative investors, however, will be shooting for better than low single-digit gains on a yearlong investment of three grand.

But the potential for greater reward always comes with greater risk.

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Invest In Big Companies That Issue Dividends

If you’re a novice who doesn’t know much about investing except that $90 isn’t going to cut it, you’ll be pleased to know that the stock market is history’s greatest wealth-generation machine. But stock investing comes with risks that you don’t have to worry about when you park your money in a CD. You might be able to soften that risk by investing only in the companies that can deliver gains when the market is up and play defense when the market is down.

“One of the easiest ways to do this is by buying low-volatility stocks and earning dividends on them,” said Ahren Tiller, founder and supervising attorney at The Bankruptcy Law Center.

Large, well-established, U.S.-based companies that issue dividends — particularly those that consistently raise their dividends — tend to outperform the larger market, according to Kiplinger.

Spread Out Your Eggs by Investing In Funds

Tiller mentioned Berkshire Hathaway, which is run by Warren Buffett, history’s most successful investor. But Buffett himself would likely advise against investing in Berkshire Hathaway — or any individual stock, for that matter — because it’s always risky to place all your money on one bet. Instead, Buffett has long advocated for index funds, which are cheap, easy to buy and sell, and provide instantly diversified portfolios that consistently outperform professionally managed funds.

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“Invest in index funds with low maintenance fees either in a brokerage account, your employer-sponsored retirement account or an IRA,” Taylor-Wells said. “Index funds that match the performance of significant indexes like the SPY, which practically matches and mirrors the S&P 500, offer lower costs when investing.”

Invest In Real Estate (You Don’t Have To Buy)

Some of the greatest fortunes the world has ever known came from wise investments in real estate, but buying that first investment property is beyond the reach of most people. The good news: You don’t have to.

“As much as I love rental properties as sources of passive income, you can earn passive streams of income from real estate in many other ways as well,” said G. Brian Davis, a real estate investor and founder of “From real estate crowdfunding platforms to peer-to-peer loans, vacation rental arbitrage and a dozen other strategies, you can build many diverse passive income streams. Many don’t require much cash either, unlike buying rental properties. For example, some real estate crowdfunding platforms let you invest with as little as $10.”

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The Best Time To Get Started Is Now

No matter the path you choose, remember that the most powerful tool you have is not money. It’s time — and a little patience never hurts, either.”When it comes to compounding your earnings, the best thing to do is start as soon as possible,” said Melanie Hanson, editor-in-chief of EDI Refinance. “If you start saving money and earning interest sooner, it will have more time to compound and thus will provide you with an eventual greater sum. However, once you start, leave it alone. It can be tough to watch your money going up a tiny bit at a time, but it’s imperative to remember that as your money earns more, it’ll then earn more. You’re not going to get rich overnight — these things take time. Have patience and see it through.”

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