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Compound Velocity & How Can You Take Advantage of It

October 31, 2022

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What is Compound Velocity and How Can You Take Advantage of It?

Compound velocity refers to a specific benefit that can be gained from investments that pay out more regularly than standard stock dividends.

This article will outline the benefits to be gained from compound velocity and explain how you can access them.

“Compound interest is the eighth wonder of the world. He who understands it earns it. He who doesn’t pays it.” – Albert Einstein

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Smart investors know and love compounding. Warren Buffet credits it, alongside good genes and a share of luck, with his $98.8 billion net worth.

Whilst traditional stock dividends tend to be paid out every quarter, some investments start producing a return and paying out to the investor from day one.

Investments that yield more frequent returns mean that reinvesting capital can begin earlier and can take place more often.

Capitalizing on the unique opportunities offered by daily returns can result in rapidly compounding investments and a huge difference in the health and size of a portfolio over time.

How Merchant Cash Advances Offer Compounding Velocity

Compound Velocity, A stack of twenty dollar bills in a black envelope.
Merchant cash advances provide daily ROI to investors and can rapidly accelerate compound interest gains. Photo by Karolina Grabowska.

Once an RIA or Accredited Investor invests in a merchant cash advance, the merchant immediately begins paying back the advance that they received.

In most cases, the merchants begin paying back their advances starting on day two. Then, every day following they continue making repayments until the total is cleared.

Those daily repayments flow back to the investor in real-time. The scheduling means that the investor can take those payments as the cash comes in, and reinvest it directly into additional deals.

There are very few other investments that offer ROI every single day.

Compounding velocity brings benefits that can be incredibly powerful in terms of the end return. Like regular compounding, the impact isn’t huge in the short term.

But over the course of several years the effect of compounding velocity, of money coming in and then instantly going back out into new deals within one day, can be impressive.

The unique chance that this mechanism provides for investors to instantly put those gains back to work, earning yet more ROI in additional deals, is seriously powerful.

Merchant cash advances are effectively a supercharged dividend reinvestment program because investors are getting capital returned to them every day that they can quickly put back out into new deals at a similar return.

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