Want to know more about compound interest? Do you know that compound interest is one of your best financial allies especially when it comes to investing?
Compounding interest is the process of adding the interest in the primary capital. Anyone who wants to accumulate wealth should compound their profits. There are many people (especially rich people) who multiply their wealth easily because they know compound interest.
Whether you are investing in stocks, mutual funds, real estate or even setting your own business, compound interest has a big effect in your investment goal. Say for example, you are planning to invest in stocks with an investment capital amounting to $1,000,000. Your stocks portfolio is making 8% per year.
Beginners Guide to Compound Interest Introduction (Series of Topics)
I will provide more post about compound interest in InvestmentTotal.com. I believe compound interest is very interesting. So that, readers and visitors will know the importance of investing early and the effects of “procrastination”.
Example Compound Interest
The following year, your capital will become $1,080,000. It is because your $1,000,000 investment capital earned $80,000. The interested earned was added to the primary capital.
Starting Capital: $1,000,000
First Year: $1,080,000
Second Year: $1,166,400
See the difference? Instead of making $80,000 per year, you will be making $93,312.00 for your $1,000,000 that earns 8 percent per year.
Compound Interest (Reinvesting)
Imagine if you will keep on reinvesting your profits. Will make more money or not? Now, you know the effects of compound interest. Will you use it to generate wealth or will you let other people use it to you and let them become rich. I am talking about “credit card debts” and “loans”. So, be wise on how should you use compounding.
Series of Topics:
- How to Get Rich Off Compound Interest
- How Does Compound Interest Work with Stocks or 401k?
- Compound Interest in Stock Market
- Compound Interest Calculator with Inflation Adjustment
- Calculate Future Value of Investment with Compound Interest
- Compound Interest Formula Investment
- Monthly Compound Interest Calculator with Monthly Contributions
I hope you like this basic guide on how does compound interest works. Always visit this blog. From time to time, I will add more series of topics about “compound interest”.