Compound interest is interest added to the principal of a deposit or loan so that the added interest also earns interest from then on. This addition of interest to the principal is called compounding.
Compound interest can significantly boost investment returns over the long term. While the magic of compounding has led to the apocryphal story of Albert Einstein supposedly calling it the eighth wonder of the world and/or man’s greatest invention, compounding can also work against consumers who have loans that carry very high interest rates, such as credit-card debt. So better stay away from credit card debts and start investing on high yield interest investments such as the stock market.
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