Please explain it to a not very financially literate person!
Much appreciated
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It would be more helpful to know what financial product you are referencing. But generally it means “forever”.
It basically means ongoing with no end.
Lots of things have fixed end dates. Like, you have to pay child support until the child is no longer a child, but you could set up a trust that pays out money to charity every year “in perpetuity”, which means as long as the trust has money and our financial system exist, it will donate money to charity.
A perpetuity is just some sort of regular payment that continues forever. An example would be a bond with no fixed maturity date. The issuer never has to pay back the principal and can just keep making interest payments forever.
When you hand your money to a business like a bank, they’re allowed to spend it as long as they also promise to pay you what you ask in a timely fashion.
They play the numbers game that you and a thousand other people aren’t going to cash out all at the same time.
In exchange to guarding your money, they may even pay you for the benefit of holding onto your money in small payments over time. More money means bigger payments.
In turn, they lend out your money to someone else, and have them make interest payments, like on cars and houses and credit cards and business loans.
Perpetuity means that you take out of the account less than or equal to what they put in.
Ideally it’s so much that you can keep affording at least the same things year after year, even if their price goes up.
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