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About Compound Interest and Money Investment

By Edited May 5, 2015 0 0

The chasm between the rich and the not-so-rich seems to be ever widening though the former seem to be putting in no greater efforts. The secret to their "quick easy money" success lies in compound interest, and the fact that they wisely invest the money they already have, thus multiplying it. People with money earn even through interest on the invested money. A cyclic effect, but it sure leads one to conclude that money does grow on trees.

There is nothing to stop you from putting the money at your disposal into the bank account and earn compound interest. Simply stated, compound interest rates work in your favor in the way explained below:

The bank generally pays an interest on the primary amount deposited by you and not on the cumulative amount. This considerably restricts the basic amount from growing as it would have, had it been made to earn a compound interest. Such a deposit earns dividend on the interest of the key amount along with the basic interest paid for it.

"Compounding" is the term generally applied to the additional interest paid on the sum total value of the principal money as it earns basic interest month after month. This results in faster growth of your money, thus making you richer.

This is a smart way to watch your money double as the interest you earn each time is calculated on the interest already compounded. Of course, making money quick this way is not always guaranteed, but a bank balance offering compound interest is the ideal way to escalate the principal sum safely.

You can use simple mathematical calculation (or use a simple interest calculator) to deduce how much your principal amount will grow within a fixed time period. This can be done depending upon how the institution your money is invested in pays the interest – whether annually, bi-annually, quarterly, monthly or perhaps even daily.

Earning a compound interest through a bank account is one of the best ways to multiply your wealth and potentially earn quick money (if managed properly). You cannot afford to ignore this sure technique of gaining monetary power without having to lift a finger!

Learn more about investing by tracking your money the right way.



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