Follow us on facebook and instagram @blackrypto and twitter @blackryptosoc

Reinvesting Your Masternode Rewards


As you earn rewards from our masternode pools, you have the option of having them sent to you or held and reinvested in more masternode shares or a combination with some being reinvested and some being sent to you.  If you aren't relying on the income or cashing out your rewards immediately, you should strongly consider reinvesting at least a portion of the rewards.  Two words explain why...

COMPOUND INTEREST

Compound interest (or compounding interest) is interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan. Thought to have originated in 17th-century Italy, compound interest can be thought of as “interest on interest,” and will make a sum grow at a faster rate than simple interest, which is calculated only on the principal amount.

If you're new to investing, this is probably one of the most important concepts you could learn.  If you invest $1000 and earn a monthly return of 10%, you get $100/month and would end up with $2,200 at the end of the year.  But let's say you reinvested that $100/month on top of the original $1000 investment, so in month 2 you'd earn 10% on the original $1,000 plus 10% on the additional $100 that was reinvested.  Instead of earning $100 in that second month, you'd earn $110, which would then be reinvested on top of the $1,100 and so on.  At the end of the year, you'd end up with $3,138.43 instead of that measly $2,200.  

Now you see the power of reinvesting your returns and compounding them. 

With masternode shares, this gets a little more complicated because the value of your original $1,000 is fluctuating with the exchange rate.  If you believe that the coin will rise in price over the long term, it makes more sense to reinvest your masternode rewards.  However, if you're unsure about the longer-term prospects of the coin, then you may want to cash out your rewards to invest in another coin or convert to US dollars and spend or save those.  It all depends on your personal financial goals and investing/portfolio strategy.