10 Facts about Compound Interest

Friday, February 19th 2016. | Economy

Knowing Facts about Compound Interest help you understand better about this term. Compound interest is the profit you may gain from your initial principal. It’s calculated by accumulating the interest of your total loan or deposit. Still, it’s more than just an interest of interest. You should know more about it.

Facts about Compound Interest 1: It’s Global

Any people can take advantage of compound interest. This means you don’t need to be an economist or professional investor. Any type of your investment will gain compound interest if you put money in your bank account.

Facts about Compound Interest 2: A Double-Sided Sword

It has both benefit and disadvantage. It will be good if you save money in a regular manner. On the other hand, you end up spending more if you take the loan. The compound interest makes your debt worse over time.

Facts about Compound Interest

Facts about Compound Interest

Facts about Compound Interest 3: The Rules

It’s true that you want compound your interest as often as you can. It’s wrong as you only need to compound quarterly when you put the money to the bank account. When it comes to borrowing, you need to take it annually.

Facts about Compound Interest 4: The Time

Time is the best friend when it is about compound interest. The growth of the compound is faster when the money compounds are longer. In average, money may grow up to 6% annually. It will double in the next 12 years.

Compound Interest Quote

Compound Interest Quote

Facts about Compound Interest 5: Credit Cards

It sounds good if you take the minimum payments on your credit cards. However, it will put you in an eternal debt as the interest compounds over time. Time isn’t on your side if you don’t repay the debts sooner.

Facts about Compound Interest 6: The Higher Return

You often overlook the low interest rate of savings. However, you can take advantage of it to add some amount to the payment. Both credit cards and home mortgage will do the jobs, after all. Mutual funds will be beneficial in the long terms as they give a higher return.

Compound Interest Image

Compound Interest Image

Facts about Compound Interest 7: It Compounds Faster

You will be amazed with how fast the interest may multiply. You will get more and more profits from your savings. This means your money grows bigger over time if you don’t take them out from the account. Check facts about Chinese money here.

Facts about Compound Interest 8: The Credit Cards

Compound interest is useful to take care of the debts of your credit cards. Suppose your rate of interest is 14% and you will put extra $5 to the payment. This means you can avoid paying $1,315 in 10 years of payments.

Compound Interest Facts

Compound Interest Facts

Facts about Compound Interest 9: The Flexibility

You don’t need to have much money or rich to take advantage of compound interest. The principal or concept works similarly regardless the amount of investment. Both rich and poor people can make use of compound interest. Get facts about coins here.

Facts about Compound Interest 10: The Sacrifice

Sacrifice is everything when it is about compound interest. It’s the way you get the benefits of the future. It’s worth the waiting actually.

Compound Interest Pic

Compound Interest Pic

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