Not all investments grow the same. Not all debts grow the same. Do you know the difference between simple v. compounding interest? It is an important tool when you are an investor, since your principal will grow. You earn interest on your original investment and the interest that follows. With debts, the same policy applies, but this time, working against you. Minimum payments are for the birds.
Join me this week as we briefly discuss the basics of simple and compounding interest and how to better understand your investments and debts.
The Rule of 72: (72/Interest Rate)= Number of Years for the Investment to Double
True Compound Interest Calculator: https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator
Simple Interest: P x
r x
n Compounding Interest: P x (1+(r/n)) ^tn
P= Principal
r= Rate
n= The amount of times the investment is compounded per year
t= TimeSpecial shoutout to a very special listener this week, my father, Dale D.
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