Understanding how Compound Interest works will help you make a better investment of your investment fund in the long or short term. Many people are not successful in their investments due to lack of research, but here you will be very well informed about this and other topics.
Have you thought about investing? You should also think about knowledge, not just money, as the old saying goes: “knowledge is power”. So you argue: But where should I start?
Using another old jargon: “from the beginning”. Whatever investment you intend to make, know that the knowledge you have about the business you are planning will be essential.
Check out below, precious tips from financial experts on how Compound Interest works and how you can apply it to your personal finances.
In general terms, we can define it as follows: Compound interest is the application of interest on interest.
How many people do you know who make a debt, can't pay it, it snowballs out of control. Well, this debt that doesn't stop growing is called compound interest. Therefore, you need to be financially educated so as not to fall into traps.
After all, what is this interest really for?
They are used to mark out loans, financing and even some investments.
However, it is known that in this modality, the interest that is charged on a debt or to remunerate an investment will also affect the value of the accrued interest and not only on the initial capital, it is necessary to be careful!
Don't be ignorant about fees, this is a bad idea, in addition to paying interest on borrowed capital, you will still have to pay interest on interest.
However, in the case of investments, using compound interest to your advantage is one of the best ways to make your money pay more.
Final Thoughts – How can I calculate compound interest?
It's not that complicated. Check it out:
Compound Interest Formula
To calculate compound interest, you will use the following formula:
M = C (1+i)t
On what:
M = Final amount
C = Capital invested
i = Fixed rate
t = Time period.
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Source: economic value
