How Investments Make Money: A Simple Guide for Realtors

When most people think about investing, they think in one simple equation: I invest my money so it makes more money. While that’s true, gaining a clearer understanding of how investments work can make a meaningful difference in how confident you feel.

This clarity is especially important for realtors and self-employed business owners, whose income can be variable and whose investment decisions often carry more weight, as there may not be an employer-sponsored retirement plan in the background.

At a high level, investments typically make money in three ways: dividends, interest, and appreciation. 

1. Dividends: sharing in a company’s success

Dividends come from owning part of a company.

When you invest in stocks—whether directly or through a fund—you’re buying equity, meaning ownership. Even if that ownership is very small, you’re still entitled to share in the company’s success. When a company earns profits beyond its expenses, it may choose to distribute a portion of those profits to its owners in the form of dividends.

Think of dividends as a small “thank you” for being an owner. That money is typically deposited directly into your investment account. From there, you can choose to take it as income or, more commonly, reinvest it to purchase additional shares. Over time, reinvesting dividends can quietly compound and play a meaningful role in long-term growth.

2. Interest: getting paid to lend your money

Interest works differently. Instead of owning part of a company, you’re lending your money.

Debt-based investments include things like bonds, CDs, and high-yield savings accounts. In these cases, you’re loaning money to an entity—often the U.S. government or a financial institution—and they agree to pay you interest in exchange for using your money for a set period of time.

With a high-yield savings account, your money stays accessible while earning interest. With bonds or CDs, you’re agreeing to lend your money for a defined timeframe in exchange for a known return. These types of investments often bring stability and predictability to a portfolio—something many self-employed professionals value when income fluctuates month to month.

3. Appreciation: growth over time

Appreciation is the increase in an investment’s value over time.

If you purchase an investment for one price and it’s worth more later, that difference is appreciation. This growth is driven by factors like business performance, innovation, economic conditions, and long-term market trends.

Appreciation-focused investments can fluctuate in the short term, but over longer periods, they’ve historically played a key role in building wealth—especially for realtors who may rely on strong earning years to fund long-term goals.

Why all three matter

No single investment does everything well—which is why diversification matters.

Dividends can provide income and consistency.

Interest can offer stability and balance.

Appreciation fuels long-term growth.

When these elements work together, your investment strategy can support both where you are now and where you’re headed next. For realtors and self-employed individuals, this balance helps create financial security outside of commissions or business revenue.

At PeaceLink Financial Planning, investment management isn’t about chasing trends or reacting to headlines. It’s about building understanding, alignment, and confidence—so your money can quietly do its job in the background while you focus on your business, your family, and the life you’re building.

If you’re curious how your investments fit into your bigger financial picture, our Financial Health Assessment Quiz is a great next step. It’s a quick, thoughtful way to check in on where things stand and identify opportunities to bring more clarity and peace of mind to your financial life.