Accrued Dividend

Well, you know how pervasively the catch phrase “Hmmm, that’s interesting” is used? Why? Because something of interest is something of value. Yeah, that’s where the notion of interest came from. So financially speaking, the thing of value you have is your capital…your money...the dough you saved from mowing lawns all summer. And you can use that capital to make more capital for yourself without having to, uh...mow more lawns.

How do you pull off this magic? You invest your money. And one interesting way to invest it is in bonds. Which, conveniently for this video, pay interest.

Interest is just rent on your money. And when you buy a bond, you are the landlord. That is, people will pay you, say, 60 bucks a year to rent a thousand dollars from you. The rate they are paying then is 6 percent a year to rent that lawn-mowing grand. And if you were buying a formal, publicly traded bond, like the ones offered by AT&T and Comcast and Time Warner and others, you’d be paid your interest twice a year. That is, you’d get 30 bucks on Jun 30 and another 30 bucks just before New Year’s Eve. Just in time to buy a bunch of those obnoxious noisemakers. And you’d collect that interest until the bond says it’ll pay you back your original amount, called principal. So if this were a 10-year bond paying 6 percent interest, note how much interest you'd make from the grand you invested in that 6% bond. You did nothing for 10 years, just sitting on your fat butt watching the Cleveland Browns lose football games, and you collected thirty dollars 20 times for a total of 600 bucks in total interest…and then you got your grand back.

600 bucks for doing pretty much nothing. A concept with which the Cleveland Browns are very familiar.