What is meant by the term compound interest

Posted on 29.05.2019 by Admin
For me, the financial coach, it's a term I'm familiar with. But for those of you who are wondering, WTF is compound interest. Youd love to pay the loan back after one year, BUT life happens and you have to defer with hopes to pay next year.

Equally, we all hate having to pay interest on loans and debts.

To put it in simple terms, the interest you earn on any savings and investments is accrued in exactly the same way as it is on money you borrow. What is meant by the term compound interest. In this way, compound interest sucks because you continue to owe more and more as time goes on. If you carry abalance from month to month you are charged interest on the totalamount owed including the interest from previous months. Compound interest can significantly boost investment returns over the long term.
Do you really understand what compound interest means and how it works. An example is a credit card debt. What is the meaning of the terms risk-return tradeoff and time value of money.