compound interest – USA Prime Loans http://usaprimeloans.com/ Thu, 17 Mar 2022 04:57:13 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://usaprimeloans.com/wp-content/uploads/2021/10/icon-10-120x120.png compound interest – USA Prime Loans http://usaprimeloans.com/ 32 32 Compound Interest Is Overrated, And You Better Believe It | by Maria Nedeva | March 2022 https://usaprimeloans.com/compound-interest-is-overrated-and-you-better-believe-it-by-maria-nedeva-march-2022/ Thu, 17 Mar 2022 04:57:13 +0000 https://usaprimeloans.com/compound-interest-is-overrated-and-you-better-believe-it-by-maria-nedeva-march-2022/ Photo by Andy Hermawan on Unsplash Compound interest is the answer, said personal finance enthusiasts. Compound interest is the eighth wonder of the world, said Albert Einstein. I’m not convinced, and on that one, I’m going to lock the horns with personal finance wisdom and a genius. Call me contrary, but the glitz and glorification […]]]>
Photo by Andy Hermawan on Unsplash

Compound interest is the answer, said personal finance enthusiasts.

Compound interest is the eighth wonder of the world, said Albert Einstein.

I’m not convinced, and on that one, I’m going to lock the horns with personal finance wisdom and a genius.

Call me contrary, but the glitz and glorification of compound interest leaves me called. Not because compound interest isn’t meaningful, but because it’s overstated.

Here’s the thing – your money can make money from compound interest, but for it to make a real difference, you need large sums of money or a surprisingly long time frame. And I mean multiple lifespans, which is why Twilight’s vampires are so incredibly rich.

You and I are human and have limited time and resources. You better believe me that compound interest is overrated and adjust your investment strategy accordingly.

(Oh, and before I go any further, I’m sure Einstein’s quote is misunderstood. In the eyes of a physicist, compound interest is a wonder because the money just seems to appear; it doesn’t happen. not produced in a universe where nothing is lost and gained.)

Simply put, compound interest is interest on interest and makes money grow faster.

It can work in your favor or against you. Compound interest accelerates the growth of your investments (depending on the frequency of compounding). It also causes your debt to grow rapidly.

We experienced capitalization when we were in debt and when we built up investments. It had a much bigger effect on us when we were in debt.

Compound interest is overrated
Photo by Daisy Anderson from Pexels

Have you heard of Ben Franklin’s experiment?

Alright, here it is.

In his will, Benjamin Franklin, who died in 1790, left $4,400 each to Boston and Philadelphia. His will stipulated that the cities would have access to certain funds after 100 years and would receive the rest after 200 years.

Now, the part that compound interest geeks are excited about: when the cities received their balances after 200 years, the combined bequest had grown to $6.5 million!

Can you see anything wrong with that?

Let me help you. Silver took 200 years to reach this staggering amount. You and I are not 200 years old.

One way to accelerate capitalization is to invest at a (higher) interest rate.

For example, assuming your investments are compounded at an annual rate of 10%, your money will double in 7 years.

It has been some time since investors have seen such annual rates of return. Most of us shed tears of joy and gratitude if we reach 5-6% per year. Often, the mass investor would settle for an annual return of 2%.

At a 2% annual return, your money will double in 35 years.

Compound interest requires a lot of money

Another way to optimize capitalization is to start with a lot of money.

For example, if you have £20,000 compounded at an annual interest rate of 2%, in 10 years you will have the princely sum of £24,424. In other words, you’ve made £4,424 in ten years, which is probably less than the amount inflated by your money.

On the other hand, if you start with 2 million pounds at the same annual interest rate, in ten years you will have 2,441,588 pounds. That’s a compound interest of £441,558, which is more respectable.

Do you have £2 million to invest?

Expecting your investments to accumulate at 10% per year and to double every seven years sounds dreamy, doesn’t it?

When you check your account seven years from now, you might find that was what it was – a pipe dream.

Because you forgot to factor in inflation and taxes.

Capitalization takes a long time, and life, and black swans, can get in the way.

Banks can fail, the economy can collapse, there are pandemics, wars and other cataclysmic events.

What would have happened to Ben Franklin’s endowment if it had been made in Russia in 1790. Do you remember the Bolshevik Revolution of 1917?

Yeah. It would have seriously ruined the composition.

And the fact is that cataclysmic events are probable, possible and unpredictable.

Compound interest is speculative and stems from “interest on interest”, adding no value to the economy and people’s lives.

Call me old fashioned, but “money for nothing” is a red flag for me. There may be problems down the line.

Have you wondered why banks offer you interest on your savings and investments?

Because banks de facto borrow money from you to lend to others and speculate. Yes, your money makes the banks a lot of money; they offer you a tiny part of it as interest.

Investing in yourself is the best way
Photo by Tim Mossholder on Unsplash

I hope you now believe that compound interest, while important, is overstated. Ask people who tell you to start investing early because you lose compound interest. Challenge people who tell you not to spend on the daily indulgences that define your humanity (to me, that’s good coffee) because the money you spend today will be [insert some eye-watering amount here] in a hundred years.

More importantly, remember that investing in yourself is likely to accumulate better than investing in something else.

Building wealth takes imagination and brilliance, not dogma. And as beneficial as compound interest can be, it’s overrated.

***

Maria Nedeva, PhD, is a business school professor and creator of The Money Principle: a personal finance website where she teaches people in financial difficulty how to build lasting wealth. Maria Nedeva is the author of “Never Bet on Red: How to Pay Off Debt Fast and Live Debt Free Forever”

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Compound interest and the rule of 72 https://usaprimeloans.com/compound-interest-and-the-rule-of-72/ Mon, 07 Mar 2022 12:05:13 +0000 https://usaprimeloans.com/compound-interest-and-the-rule-of-72/ With that in mind, would you rather have R1,000 a day for 30 days or R1 whose value has doubled every day for 30 days? Connoisseurs would choose the doubling of R1. Why? Because after 30 days they would have accumulated over R500 million – compared to the R30,000 they would have had they opted […]]]>

With that in mind, would you rather have R1,000 a day for 30 days or R1 whose value has doubled every day for 30 days? Connoisseurs would choose the doubling of R1. Why? Because after 30 days they would have accumulated over R500 million – compared to the R30,000 they would have had they opted for R1,000 a day.

What is the difference between compound interest and simple interest?

In short, with simple interest you only earn interest on the original amount you invested, whereas compound interest is “interest earned on interest” and it is calculated on the principal amount as well as the interest from the previous period.

Auto loans and consumer loans use simple interest while estimating interest payments. Even cash deposits use simple interest to calculate investment return. Borrowers benefit more from simple interest because there is no compounding power. In other words, there is no interest on interest.

Compound interest has the potential to generate more returns than simple interest. An investment grows exponentially with compound interest because it is based on the principal power of compounding. Compound interest is most often used in investments where there is reinvestment of profits.

How does compound interest work?

The principle is simple: one rand invested at an annual return of 10% will be worth 1.10 rand in one year. Invest that R1.10 and get 10% again, and you’ll end up with R1.21 two years from the day of your initial investment. The first year only brought you R0.10, but the second year generated R0.11. And this is the basic principle of compound interest – earnings on earnings. Increase the time and amount invested and the gains become more and more pronounced.

In the words of Albert Einstein: “Compound interest is the eighth wonder of the world. Whoever understands it, wins it. Whoever doesn’t, pays.

The Rule of 72

A great tool to have in your toolbox when looking at your investments earning compound interest is the “Rule of 72”. The Rule of 72 is a mathematical principle that estimates how long it will take for an investment to double in value and is a basic formula anyone can use.

Simply take the number 72 and divide it by the interest earned on your investments each year to get the number of years it will take for your investments to grow by 100% or double.

Below is a graphical illustration of the ruler. For example, if an investment earns 10% per year, its value will double in about seven years. Conversely, for an investment to double in seven years, it must generate an annual rate of return of 10%.

Let’s say you invested R10,000 at an annual rate of return of 9.1%, which is the annualized return of the Morningstar Balanced Portfolio over the past seven years. To calculate the doubling time using the rule of 72, you need to enter the numbers into the formula as follows:

72 ÷ 9.1 = 7.9 years

This means that your initial investment of R10,000 will be worth R20,000 in about 7.9 years, assuming your earnings accumulate. All of this also assumes that you don’t make additional contributions to your investment over time, which makes it even more impressive that your money has doubled in less than a decade.

The earlier you start, the more likely you are to reach your goal

Let’s take a simple example of two investors who both aspire to become millionaires.

Investor A

Investor A is sensible and manages to save his rands and, from 24 to 30 years old, manages to invest 2,000 rands per year in a portfolio recommended by his financial adviser.

His investment increases each year by 12% (net), and although he stopped saving after he turned 30, he left the money invested where he continued to earn 12% each year until his retirement at age 65.

Investor B

Investor B, on the other hand, continued to spend his money for another six years before starting to save R2,000 per year at age 30, also earning 12% (net) per year through the same advisor. However, Investor B was able to continue investing R2000 per year until he retired at the same time as Investor A, i.e. at the age of 65.

So, did any of them achieve their goal of making a million? In the end, the two were pretty much successful.

The difference is that because sensible Investor A started early, he only had to invest R12,000 (i.e. R2,000 for six years), while Investor B needed to invest R72,000 (R2,000 for 36 years) (or six times the amount that Investor A invested) to arrive at the same point. Therefore, this six-year delay effectively cost Investor B R60,000.

A lesson to remember

Whether our financial goal is to become a millionaire, retire comfortably, or become financially independent, the benefit of compound interest is that it helps us achieve those goals.

Investing as early as possible can be as important as the actual amount invested over a lifetime. Therefore, to truly reap the magic of compounding, it’s important to start investing – or paying down debt as the same principle applies in reverse – as early as possible. Always remember that due to the effect of compound interest or compound returns, gains lead to gains, which lead to even greater gains. This is the real power of compound interest.

Roné Swanepoel, Head of Business Development at Morningstar Investment Management SA

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Compound interest is your golden ticket to wealth creation https://usaprimeloans.com/compound-interest-is-your-golden-ticket-to-wealth-creation/ Fri, 04 Mar 2022 00:25:09 +0000 https://usaprimeloans.com/compound-interest-is-your-golden-ticket-to-wealth-creation/ Compound interest is a concept that comes with many labels. Some call it the secret to doubling your money. Some call it the ultimate set-and-forget investment strategy. Albert Einstein himself called it the 8th wonder of the world. But let’s call it what it really is: a regularly underused way to build your wealth. “It […]]]>

Compound interest is a concept that comes with many labels. Some call it the secret to doubling your money. Some call it the ultimate set-and-forget investment strategy. Albert Einstein himself called it the 8th wonder of the world. But let’s call it what it really is: a regularly underused way to build your wealth.

“It sounds so simple, it almost feels like it’s not true,” says Brendan Doggett, Country Manager (Australia) at investment firm Sharesies.

“But when you plug in numbers, you’re like, ‘Really? $10…$10…$10…where do you get that?’ And it adds up.”

Here’s a quick and easy breakdown of everything you need to know about compound interest from the man himself:



COP A $10 SIGNUP BONUS SHARED WITH CODE ‘BOSS’

What is compound interest?

The other quote from Einstein (allegedly) that helps explain it: “He who understands it, wins it. Whoever doesn’t, pays. Compound interest and the idea behind it are very easy to know when you pay it, like with a credit card (it’s interest on interest).

Benjamin Franklin also explains it quite easily: “Compound interest is when money makes money. And that money then makes money. And then money from that money makes money. So that’s the correct version of the interest on your credit card.

By way of example – and without going into the calculations of all this – we all baked bread during confinement. Compound interest is like your sourdough starter. You do it and it continues to grow and expand and you don’t have to do anything else. That’s the non-financial way to describe it.

Another example that people use when talking about compound interest is the snowball. At first it starts very slowly, because the quantities are small, but over time it becomes huge.

Compound interest formula

  • A = Final amount
  • P = initial principal
  • r = interest rate
  • n – Number of times interest is applied per period
  • t = number of time periods elapsed

The Rule of 72

The calculation of compound interest is the rule of 72. This is the time it would take for your money to double if you did nothing. If you divide 72 by the interest rate you get, that’s how long it takes to double your money without adding anything more.

Compound interest is one thing, but if you invest in the stock market, you have access to compound returns, i.e. the increase in the price of company shares and the dividends they may pay . According to the “S&P/ASX 200 Fact Sheet,” dated June 30, 2021. The ASX 200 total return was 9.26% over 10 years through the end of June 2022. This means that approximately all 7.7 years, your money doubles if you had, say, an ETF linked to the ASX 200.

Compound interest in action

ASIC has a very good website: Money Smart. There is a compound interest calculator so those of you playing the game can follow the next example using the 9.26% return from the example above with annual compounding.



If you invested $10 a week from birth to age 18, you would have invested $9,360, but you would also have earned $12,714 in interest.

And if you go to 30, you would have invested $15,600 and earned $58,942 in interest.

Go to 50 and you would have invested $26,000…your investment becomes $460,670. Nearly half a million for $26,000 is pretty impressive.

When Einstein talked about the 8th wonder of the world, he was right. Because it’s money for jam, money for doing nothing. This cumulative effect is like magic.

Where to put your money

Conventional wisdom holds that you have access to the magic of compound interest by putting your money in a bank account.

The interest rate you get is important. If you look at some savings accounts right now, for the privilege of keeping your money, you can get 0.25%. This is usually an introductory rate that reverts to a lower base rate after a period of time. With these rates, compound interest won’t give you the magic you want.

Whereas if you step into the equity market, the average net ten-year ASX 200 total return was 9.26% including dividends. Of course, there are peaks and troughs over time. But that’s the average. And if you invest money regularly and keep reinvesting those returns, it can turn into a big return.

Of course, there is a risk in the market. Using ETFs is a way to diversify that risk across companies, sectors, themes, and countries without thinking too much about it.



How to Make the Most of Compound Returns for the Newbie Investor

It all comes down to investing regularly and setting long-term investment goals for yourself. And the sooner you put in the money, the better. When is the best time to invest? 20 years ago. When is the second best time to invest? Now. It’s never too late. When it comes to compounding benefits, it’s all about time in market, not market timing.

But what does this look like in practice? With the ASX, companies sometimes pay dividends, and some may even pay dividends twice a year. The more dividends you receive and reinvest, the more you invest in your future. Reinvesting your dividends helps you compound your returns.

There are also features like auto investing, something that just launched on the Sharesies platform. You choose a pre-made or DIY investment package, an amount you want to invest, and a frequency you want that investment to be made. The Sharesies platform basically does everything for you. And if you leave your returns in your Sharesies portfolio, you can continue to reinvest and accumulate them.

The other beauty of something like auto investing is that it could average the stock price you pay over time, but also trick you into investing habitually, for the long haul. If you can put in a lump sum to start, that’s great too, because it gets money into the market sooner.

What else should you consider before embarking on your investing journey in relation to compound returns?

  • Check your financial health and pay off your debts if you can
  • Calculate how much money you need to pay your bills, live your life and sort out the money you have left to invest
  • But also start saving as much as you can, as regularly as possible – set goals and a strategy that works for you and your situation.
  • Don’t panic…sometimes markets go up, sometimes markets go down. If you’re worried, revise your strategy and confirm that it still fits your personal situation.
  • If you invest regularly, it does what is called dollar cost averaging which can even out peaks and troughs in stock prices.

“You don’t have to be a professional stock picker, you just need to invest regularly and hold. This is the secret to wealth creation, some would say.

Brendan Dogget

START INVESTING NOW WITH STOCKS

All investing involves risk. T&Cs and fees apply for use of the platform provided by Sharesies Limited. $10 applies to new accounts only. Promotion T&Cs apply and for use of the platform provided by Sharesies Limited. This article is sponsored by Sharesies AU Pty Limited, as an authorised representative of Sanlam Private Wealth Pty Limited (AFSL No. 337927). This is not financial advice and the information provided in this article  has been prepared without taking into account your objectives, financial situation or needs. Speak to a licensed financial advisor for advice specific to your circumstances. Image shown does not represent a real portfolio.

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Calculating Compound Interest for Small Businesses https://usaprimeloans.com/calculating-compound-interest-for-small-businesses/ Mon, 28 Feb 2022 08:00:00 +0000 https://usaprimeloans.com/calculating-compound-interest-for-small-businesses/ Compound interest can help or hinder your goal. The three factors that influence the final cost are interest rate, balance and time. To know the effects of compound interest, you need to use the correct mathematical formula or online calculator. This article is for small business owners who want to maximize their savings and minimize […]]]>
  • Compound interest can help or hinder your goal.
  • The three factors that influence the final cost are interest rate, balance and time.
  • To know the effects of compound interest, you need to use the correct mathematical formula or online calculator.
  • This article is for small business owners who want to maximize their savings and minimize their financial obligations.

The power of compound interest can work for or against you as a consumer. If you have a deposit account at a bank, you will earn interest on the amount you deposited as well as the interest your money has already earned. Conversely, if you have credit card debt and have a month-to-month balance, interest will be added to the amount you owe, which has already accrued interest.

Here are the factors that determine how much compound interest will increase the value of your assets or liabilities:

Whether you’re saving or borrowing money, it’s always wise to track the effect finance charges will have on the balance. Unless you’re a math whiz, you won’t be able to work out the numbers in your head. You can calculate compound interest yourself with a mathematical formula or plug the numbers into an online calculator. Whichever way you do it, knowing how much compound interest can help you reach your financial goals or can hinder your progress is a worthy undertaking.

What is compound interest?

Interest is the fee a lender will charge you to use their money. Instead of simply repaying the amount you borrowed, a fee is added to the balance. Lenders charge interest on installment loans, credit cards and other financial obligations. Banks also pay interest to people who deposit money in their institution because you allow them to use the money to make loans.

There are many ways to calculate interest, but the compound interest method is most commonly used for credit cards and bank deposit accounts. With it, interest accrues on the initial capital as well as accrued interest from a deposit or debt.

By compounding interest, a principal amount can grow at a faster rate than if the simple interest method were applied. This is because simple interest is based entirely on the percentage of the principal amount and not on the interest applied. This method is often used for auto loans, term loans, and some student loans.

Is this starting to seem complicated? Essentially, compound interest works like this: Imagine depositing money in a savings account and leaving it there. The bank will first add interest to the amount you have deposited. The next time the bank assesses interest, it will be on the amount you originally deposited more additional interest. This means you make money on the principal plus what the bank has already given you.

For this reason, compound interest on a savings account can help you build up a nice nest egg with relatively little effort on your part.

The downside of compound interest occurs when you owe money. For example, imagine that you have accumulated a large bill on your business credit card. Instead of paying in full, you pay in part and transfer the rest to the next month. The bank will add interest to this debt. If you continue to push this balance, the next time interest is calculated, it will be on the balance that has already increased with the interest that was added the previous month.

Therefore, compound interest on a debt can add up quickly. The bank charges you for the convenience of rolling over the balance.

Simple Interest vs Compound Interest

To see how compound interest is calculated differently than simple interest, simply do a side-by-side comparison with the same terms. Here’s what it would be like for each method, on $4,000, with an annual interest rate of 8% over a four-year period.

Example of simple interest

Simple interest is calculated by multiplying principal (P) by rate (R) by time (T). This would be the calculation for the example above:

$4,000 x 0.08 x 4 = $1,280

So in four years, the total interest would be $1,280 and the balance would increase to $5,280.

Example of Compound Interest

Compound interest is calculated by applying interest to the principal plus accrued interest after each year. Break down :

  • After the first year, P x R x T (which in this case is 1) = $320, the new principal would be $4,320.
  • At the end of the second year, P x R x T = $345.60, which adds to the old principal, creating a new principal of $4,665.60.
  • At the end of the third year, P x R x T = $373.25, which added to the old capital is $5,038.85.
  • Applying this formula again for the fourth year yields a new principal of $5,441.96, or a total interest earned of $1,441.96.

Compared to simple interest, compound interest is $161.96 more.

Compound interest formula

The example above illustrates the concept of compound interest, but you can use another formula that is much simpler than calculating for each year and adding. This is the formula:

P x (1+r)you = Future Value (FV)

In this formula, “P” represents the present value, “r” represents the interest rate as a decimal, and “t” is the time period expressed as an exponent. This formula can also be used to roll back, which is useful when you want to set a savings goal of a specific amount of money over a set period of time. In other words, if you know your target FV and want to determine the present value you need, you can work the formula backwards:

P = VF ÷ (1+r)you

Point: While you can have fun doing the math yourself using these formulas and a financial calculator, you can save time and ensure accuracy by using an online calculator. One of the best is the compound interest calculator offered by the United States Securities and Exchange Commission.

Components of Compound Interest

When you want compound interest to work in your favor because you’re building funds for the future, keep the components of compound interest in mind. To grow your money, you will need the following components.

  • High interest rate: This should be the highest interest available that you can qualify for. Deposit account rates are tied to rates set by the Federal Reserve, though they fluctuate depending on the bank, so it’s best to shop around.
  • High Balance: You’ll also want to add to your balance so it grows, not just with interest, but with regular deposits.
  • Long period: The longer you let the funds grow, the more compound interest will be added to the principal. With regular investments, a savings account can grow to quite a large amount. The younger you are when you start saving and contributing, the more time capitalization can be to your advantage. Although results may seem slow at first, persistence can really pay off. For example, contributing $5,000 annually to an IRA for 45 years, with an average return of 8%, can generate retirement savings of more than $1.93 million, or eight times the amount contributed.

The flip side of growing money, of course, is losing it. This is easy to do when compound interest is calculated on a debt. Again, keep the components of compound interest in mind. This time you will need the following components.

  • Low interest rate: Look for the credit product that has the lowest possible interest rate. While it’s best to keep debt at zero, if you need or want to pay it off over time, a low interest rate is key.
  • Low balance: Using a credit product that calculates interest using the compound interest method can become an extremely expensive undertaking when the balance is high. Do your best to only charge the amount you can afford to pay in full by the due date.
  • Short period of time: If you need to pay off a large balance in installments, make your payments as large as possible so you don’t extend the date unnecessarily. Credit card debt of $5,000 with an interest rate of 25% that you pay over five years will cost you $3,805 in compound interest. If you reduced the term to 12 months, the capitalization would be $702.

Compound Interest: A Powerful Friend or Foe

Ultimately, compound interest is a powerful way to increase or decrease the value of your savings or debt. You have considerable control over this process. By calculating what you could earn with regular deposits, you can plan your dreams, from starting your own business to retiring in luxury. And by calculating what you could lose by allowing a balance to earn excessive interest, you can make better decisions when shopping and managing your accounts. The choice is yours.

Elaine J. Hom contributed writing and research to this article.

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MONEY CLINIC | I want to start saving early. How does compound interest work? https://usaprimeloans.com/money-clinic-i-want-to-start-saving-early-how-does-compound-interest-work/ Wed, 23 Feb 2022 02:23:21 +0000 https://usaprimeloans.com/money-clinic-i-want-to-start-saving-early-how-does-compound-interest-work/ ]]> ]]> Best Crypto Savings Account for UK Residents https://usaprimeloans.com/best-crypto-savings-account-for-uk-residents/ Tue, 15 Feb 2022 00:04:11 +0000 https://usaprimeloans.com/best-crypto-savings-account-for-uk-residents/ Looking to grow your crypto investments? Then a crypto savings account is all you need. A crypto savings account helps you earn interest on your holdings. And all you have to do is keep your assets on a crypto lending platform for a while. There are many crypto savings accounts available. So the question is, […]]]>

Looking to grow your crypto investments? Then a crypto savings account is all you need. A crypto savings account helps you earn interest on your holdings. And all you have to do is keep your assets on a crypto lending platform for a while.

There are many crypto savings accounts available. So the question is, which are the best crypto savings accounts for UK residents?

Well, to help you with this question, I will talk about some of the well-known crypto lending platforms. So let’s go :

Best UK Crypto Savings Account

1.BlockFi

BlockFi is one of the best crypto savings accounts you can try. It is a cryptocurrency exchange that offers you paid accounts and low interest loans all over the world.

The platform does not charge any transaction fees on your trades. Plus, there are no hidden fees or minimum balances.

With a BlockFi Interest account, you will be able to earn between 3% and 8.6% compound interest on your cryptocurrency holdings. The interest rate varies from cryptocurrency to cryptocurrency and fluctuates with market values.

Many crypto platforms including The Money Mongers, ranks BlockFi as the best crypto savings account on the market because interest with BlockFi accrues daily and is added to your account each month. Thus, you will earn interest on a monthly basis.

In addition, BlockFi also offers you a Bitcoin rewards credit card, and it is the first company to do so. With the credit card, you can get 1.5% back in Bitcoin on your purchases. Additionally, the rewards will be added to your BlockFi Interest Account. Thus, it will also start earning interest.

2. Celsius Network

Celsius Network is another popular platform that offers a crypto savings account. It is primarily a decentralized finance or DeFi platform that focuses on crypto lending, borrowing, and earning. The platform is an ideal solution for anyone looking to earn passive income in the crypto space.

With Celsius Network, you will be able to earn the best rates on any amount of crypto and get paid every Monday to keep HODLing your assets. Plus, you can earn up to 25% more rewards when you choose to earn in the CEL (native Celsius token) token.

The good part is that there is a calculator on site where you can calculate how much you could earn over a certain period of time.

Using Celsius Network is also extremely simple and has some unique features. One of these features is the CelPay which allows you to send and receive payments directly from the application.

3. Gemini

Gemini is one of the most popular crypto exchanges available in the market which also offers you a crypto savings account.

His savings account is known as Gemini Earn, and with this, you can receive up to 8.05% APY on your cryptocurrencies and stablecoins.

Getting started with Gemini Earn is extremely easy, all you have to do is open an account on the platform and trade any amount of crypto, and transfer it to Gemini Earn. That’s it, and now you will start earning interest on your crypto assets.

The good part is that unlike other platforms, you are allowed to redeem and move your crypto assets to your trading account with interest at any time. Plus, there are no minimums, transfer or redemption fees.

It allows you to earn interest on a daily basis. Additionally, you can deposit and receive over 110 times the national average interest rate, with high-yield crypto returns. Also, you can check the interest rate this way.

4. You Hodler

YouHodler is another popular DeFi platform that allows you to earn interest on your crypto holdings. With this platform, you can turn your cold assets into big profits.

YouHodler lets you earn up to 12% APR with compound interest. For this, you just need to deposit your crypto assets in savings accounts.

It lets you earn interest on coins like Bitcoin (BTC), Pax Gold (PAXG), and a bunch of other stablecoins. Additionally, YouHodler deposits crypto interest earnings directly into your wallet every week.

It also comes with a tool named Multi HODL. This tool helps you capitalize on market volatility. This way you can boost your savings and keep your daily interest. Moreover, you can boost your crypto and find the right balance.

5. Hodlnaut

Hodlnaut is another popular platform that offers you a crypto savings account. By using Hodlnaut, you will be able to earn up to 12.73% APY. The good part is that there are no lock-up periods or minimum deposits like most other platforms.

You can deposit and withdraw cryptocurrency at any time. Moreover, at present, it only supports six cryptocurrencies, including BTC, ETH, DAI, USDC, USDT, and WBTC. You can also use its on-site calculator to find out how much you could earn.

Additionally, Hodlnaut’s Preferred Interest Payout feature allows you to earn interest on your favorite crypto asset. As a result, you will enjoy the flexibility and freedom to earn interest in the cryptocurrency of your choice and maximize your profits.

Along with these, it also comes with a token exchange feature. You can use it to easily swap tokens and rebalance your portfolio without moving your funds from the platform.

6. Point-of-sale financing

Outlet Finance is also one of the best savings accounts for UK residents. It is a savings app that allows you to earn more than 50 times the interest compared to a traditional savings account.

It is basically an automation system built on top of a P2P lending platform based on blockchain technology. The money you invest is converted into stablecoins. It will therefore not fluctuate like most other cryptocurrencies do. And then the platform lent your funds to borrowers.

The platform makes it very easy to save money at the highest possible rate. So you can earn passive income while keeping your coins.

7. Nexo

Nexo is another great platform that allows you to earn passive interest on your crypto holdings. With this, you can start earning up to 20%, which is paid out daily.

The platform supports over 31 digital assets including USDT, USDC, USDP, USDX, GPX, BTC, ETH, NEXO, etc.

Also, depending on your token selection, the interest rate will vary. For example, with USDT you can earn up to 12% APR, but with BTC or ETH you can earn up to 8% APR. You can use their on-site calculator to calculate how much you could earn with Nexo.

The platform also offers you a Nexo Card. The card is accepted by over 40 million merchants worldwide, and you can earn up to 2% instant cashback on all your purchases, and you can make payments in local currencies. Additionally, there are no minimum monthly repayments.

Last words:

So these were some of the best crypto savings accounts for UK residents. Now go ahead and check out these platforms, play around with their on-site calculator to find out how much you could earn with your crypto assets. Also make sure you are aware of the risks and benefits of a crypto savings account. So you can invest your money safely.

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Compound interest https://usaprimeloans.com/compound-interest/ Wed, 09 Feb 2022 03:55:00 +0000 https://usaprimeloans.com/compound-interest/ “By Roné Swanepoel, Business Development Manager of Morningstar Investment Management SA” Did you know that if you start saving just a small amount early in life, it can lead to a bigger pot of savings than if you were to save a lot later in life? Sounds too good to be true? This is exactly […]]]>

“By Roné Swanepoel, Business Development Manager of Morningstar Investment Management SA”

Did you know that if you start saving just a small amount early in life, it can lead to a bigger pot of savings than if you were to save a lot later in life? Sounds too good to be true? This is exactly why compound interest is known as the eighth wonder of the world.

With that in mind, would you rather have R1,000 a day for 30 days or R1 that has doubled in value every day for 30 days? Connoisseurs would choose the doubling of R1. Why? Because after 30 days, they would have accumulated over R500 million – compared to the R30,000 they would have if they had opted for R1,000 a day.

What is the difference between compound interest and simple interest?

In short, with simple interest you only earn interest on the original amount you invested, whereas compound interest is “interest earned on interest” and it is calculated on the principal amount as well as the interest from the previous period.

Auto loans and consumer loans use simple interest while estimating interest payments. Even cash deposits use simple interest to calculate investment return. Borrowers benefit more from simple interest because there is no compounding power. In other words, there is no interest on interest.

Compound interest has the potential to generate more returns than simple interest. An investment grows exponentially with compound interest because it is based on the principal power of compounding. Compound interest is most often used in investments where there is reinvestment of profits.

How does compound interest work?

The principle is simple: one rand invested at an annual return of 10% will be worth 1.10 rand in one year. Invest that R1.10 and get 10% again, and you’ll end up with R1.21 two years from the day of your initial investment. The first year only brought you R0.10, but the second year generated R0.11. And this is the basic principle of compound interest – earnings on earnings. Increase the time and amount invested and the gains become more and more pronounced.

In the words of Albert Einstein: “Compound interest is the eighth wonder of the world. Whoever understands it, wins it. Whoever doesn’t, pays.

The Rule of 72

A great tool to have in your toolbox when looking at your investments earning compound interest is the “Rule of 72”. The Rule of 72 is a mathematical principle that estimates how long it will take for an investment to double in value and is a basic formula anyone can use.

Simply take the number 72 and divide it by the interest earned on your investments each year to get the number of years it will take for your investments to grow by 100% or double.

Below is a graphical illustration of the ruler. For example, if an investment earns 10% per year, its value will double in about seven years. Conversely, for an investment to double in seven years, it must generate an annual rate of return of 10%.

Source: Clearnomics, data as of November 2021. For illustrative purposes only.

Let’s say you invested R10,000 at an annual rate of return of 9.1%, which is the annualized return of the Morningstar Balanced Portfolio over the past seven years. To calculate the doubling time using the rule of 72, you need to enter the numbers into the formula as follows:

72 ÷ 9.1 = 7.9 years

This means that your initial investment of R10,000 will be worth R20,000 in about 7.9 years, assuming your earnings accumulate. All of this also assumes that you don’t make additional contributions to your investment over time, which makes it even more impressive that your money has doubled in less than a decade.

The earlier you start, the more likely you are to reach your goal

Let’s take a simple example of two investors who both aspire to become millionaires.

Investor A

Investor A is sensible and manages to save his rands and, from 24 to 30 years old, manages to invest 2,000 rands per year in a portfolio recommended by his financial adviser.

His investment increases each year by 12% (net), and although he stopped saving after he turned 30, he left the money invested where he continued to earn 12% each year until his retirement at age 65.

Investor B

Investor B, on the other hand, continued to spend his money for another six years before starting to save R2,000 per year at age 30, also earning 12% (net) per year through the same advisor. However, Investor B was able to continue investing R2000 per year until he retired at the same time as Investor A, i.e. at the age of 65.

So, did any of them achieve their goal of making a million? In the end, the two were pretty much successful.

The difference is that because sensible Investor A started early, he only had to invest R12,000 (i.e. R2,000 for six years), while Investor B had to invest R72,000 (R2,000 for 36 years) (or six times the amount that Investor A invested) to arrive at the same point. Therefore, this six-year delay effectively cost Investor B R60,000.

A lesson to remember

Whether our financial goal is to become a millionaire, retire comfortably, or become financially independent, the benefit of compound interest is that it helps us achieve those goals.

Investing as early as possible can be as important as the actual amount invested over a lifetime. Therefore, to truly reap the magic of compounding, it’s important to start investing – or paying down debt as the same principle applies in reverse – as early as possible. Always remember that due to the effect of compound interest or compound returns, gains lead to gains, which lead to even greater gains. This is the real power of compound interest.

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How the interest rate affects your savings account https://usaprimeloans.com/how-the-interest-rate-affects-your-savings-account/ Mon, 24 Jan 2022 12:06:22 +0000 https://usaprimeloans.com/how-the-interest-rate-affects-your-savings-account/ Bank / Savings Account /Getty Images/iStockphoto If you have a savings account, you’re likely getting a barely noticeable return of 0.06% interest, which is the national average, according to the FDIC. That’s a far cry from 1980, at the height of the so-called Great Inflation, when three-month CD yields approached 20%. In fact, savings accounts […]]]>

/Getty Images/iStockphoto

If you have a savings account, you’re likely getting a barely noticeable return of 0.06% interest, which is the national average, according to the FDIC. That’s a far cry from 1980, at the height of the so-called Great Inflation, when three-month CD yields approached 20%. In fact, savings accounts have provided such paltry returns for so long that they were losing money to rising prices long before inflation took off in 2021.

Why? For the same reason that mortgages have been at or near record highs for months — the almighty interest rate.

See: Bank accounts that will help you supplement and develop your social security
Check Out: Learn About GOBankingRates’ Best Checking Accounts of 2022

Interest rates determine what the bank charges you and what you charge the bank

Interest is the fee you pay to borrow money or the payment you get when you lend it. It is calculated as a percentage of the principal, called the rate. You may notice that you have many interest rates in your financial life, such as:

The other side of the coin is the interest you earn for lending money to the bank, which is what you do when you deposit money in a savings account. That’s almost certain to be the lowest interest rate of your entire financial life – unless you have an interest check, which pays even less than six hundredths of a percent.

In short, banks have all the money because they charge high interest rates for the money they lend and pay low interest rates on the money they borrow.

GOBankingRates’ Top Picks: The Best Regional Banks of 2022

Who sets interest rates?

All of these different rates associated with all of these different types of loans are based on a single rate set by a group of 12 bankers and monetary policymakers who make up the Federal Open Market Committee (FOMC).

The FOMC meets several times a year to determine what the federal funds rate should be. When the FOMC wants to reduce the money supply, it raises the interest rate to discourage borrowing and attract deposits. When he wants to increase the money supply, he lowers the rates. The federal funds rate determines the prime rate, which is the lowest rate that banks charge other banks for overnight loans.

When the FOMC increases the federal funds rate, the prime rate increases. When the prime rate rises, interest rates on loans – and, in theory, deposits in savings accounts – rise with it. When the FOMC lowers the rate, it becomes cheaper to borrow money, but the return you collect in your savings account decreases.

Learn more about interest rates: how interest rates affect your portfolio and the economy as a whole

Higher interest rates mean more money in your savings account

Your savings account is based on the money-growing power of compound interest, allowing you to earn interest on the interest your original money has already earned. One month’s interest is added to your balance, and that sum earns even more interest the next month, and so on.

You can use an investment calculator from Investor.gov to see how your savings account will grow more than the sum of your contributions over time.

Let’s say you started with an initial investment of $1,000 and contributed $100 per month for 10 years at 1% interest. After a decade you would have contributed $13,000, but you would have $13,725.25 in your savings account – the difference comes from the interest you earned from the bank for lending it the money as a deposit .

As Discover points out, 0.01% interest — what you’ll get with the worst savings accounts — would earn you 50 cents on a $5,000 deposit over the course of a year. The same deposit in the same year with an interest rate of 1%, on the other hand, would earn you $50.53.

Important: 25 things you should never do with your money

So when the FOMC raises rates, savings accounts pay higher returns?

The trade-off with interest is that when rates go up, you pay more to borrow money, but earn more from savings vehicles like CDs, money market accounts, and savings accounts — in theory. . In reality, the FOMC is not the only force pushing interest rates up or down. Individual lenders have wide discretion and routinely charge different borrowers different rates based on their credit history and all sorts of other factors.

They also determine what they’re willing to pay for deposits — and while your savings account’s APY should go up when the FOMC raises its own rate, that doesn’t always happen. You might notice, for example, that last year’s record mortgage rates rose slightly when interest rates rose, but your savings account held firm no matter how sad it was. pays you.

Indeed, the financial sector is not immune to the laws of supply and demand.

According to Credit Karma, banks currently have so much cash that they simply don’t need your deposits enough to pay more. Therefore, unlike in 1980, it is a banking market that allows lenders to charge more for loans when the prime rate rises without increasing the APY they pay into their savings accounts.

So for now, plan for your emergency fund to keep losing money to inflation while you “save” money in an account that earns you six hundredths more than what you he would win if you stuff him under your mattress.

More from GOBankingRates

About the Author

Andrew Lisa has been writing professionally since 2001. An award-winning writer, Andrew was previously one of the youngest nationally distributed columnists for the nation’s largest newspaper syndicate, the Gannett News Service. He worked as a business editor for amNewYork, the most widely distributed newspaper in Manhattan, and worked as an editor for TheStreet.com, a financial publication at the heart of New York’s Wall Street investment community. .

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Compound interest calculator • Benzinga https://usaprimeloans.com/compound-interest-calculator-benzinga/ Fri, 21 Jan 2022 20:35:44 +0000 https://usaprimeloans.com/compound-interest-calculator-benzinga/ When managing your money, compound interest can help you increase your net worth safely. In its simplest terms, compound interest helps money multiply at an accelerated rate. Review this information and determine which is best for your situation. What is compound interest? Simply put, compound interest multiplies the total amount saved by the annual interest […]]]>

When managing your money, compound interest can help you increase your net worth safely. In its simplest terms, compound interest helps money multiply at an accelerated rate. Review this information and determine which is best for your situation.

What is compound interest?

Simply put, compound interest multiplies the total amount saved by the annual interest rate to give you a total amount earned during the investment. You multiply your investment by the number of compounding periods. Some investments have longer capitalization periods than others, and some investments take a long time to mature while others evolve much faster.

How does compound interest affect your savings?

Compound interest works as a way your money works for you when it’s just sitting there. For example, if you take $100 (your “capital”) and put it under the mattress where it earns no interest, in 10 years you would have the same $100. However, if you could earn 5% interest compounded annually on that money, you would end up with $162.89 after 10 years, or $62.89 more. If you started with $5,000, the resulting amount is $8,144.47 or $3,144.47 more. That’s a big difference in results.

In today’s low interest rate environment – high yield savings accounts, money market funds and short-term certificates of deposit pay less than 1% interest – finding a place that would making 5% interest in 2022 without the risk of losing your principal is unlikely. Savers are unlikely to earn 30 years of risk-free, guaranteed interest at 5%, but you see how compound interest helps you.

If the compound interest rate is changed to a more modest and realistic compound interest rate of 1% over 10 years and you deposit $100, you would end up with $110.46 if your money was compounded annually (10, $46 more). The $5,000 example gives $5,523.11 or $532.11 more. Even though the returns aren’t great when you’re earning 1% interest versus 5%, they allow you to get money that you wouldn’t have had if it had just been left in a jar. The extra amount earned at 1% is not as satisfying as the higher rate of 5%, which is why investors today may turn to riskier financial vehicles like the stock market or US bonds. companies for higher returns.

How does the compound interest calculator work?

A compound interest calculator tells you how much money you can expect to see after a certain period of time with a specific interest rate. It handles the calculation for you so you can understand the return to expect.

For example:

You make an initial investment of $1,000: You can choose the amount you want. It’s never too late to start investing.

Contribute $100 to the investment per month: You can also contribute at different intervals, different amounts and with different goals. The account can be part of a trust or your own account.

More than 10 years: You decide the duration of the contributions. Some people save for retirement, but others save for the nearer future.

At 3% compounded annually: Every investment is different and it helps to know what kind of return you can expect.

In 10 years, you would have $15,100.57 if the interest rate stayed the same and you continued to contribute at that rate: You would have contributed $13,000 and earned $2,100.57 in interest. Using the calculator helps you determine how much you can expect to see. Plus, you can choose terms along the way to figure out how much money you’d see if you stopped saving sooner.

About MoneyLion

MoneyLion is a digital financial platform that helps the 99% feel 100% in their finances. It offers several tools for consumers that make managing money easier, including:

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Exam in 1 minute

A technology-driven financial powerhouse, MoneyLion brings personal financial products to people like you. Whether you’re a seasoned digital financial guru or looking to simplify your financial accounts, MoneyLion can make it as easy as possible to set and achieve your financial goals.

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Compound interest formula

A formula that tells you how much your principal balance will increase to (P’) based on the initial principal amount P appears below:

P’=P(1+r/n)^nt

Or:

P’ = the new principal amount
P = the initial amount of the deposit or the principal
r = the annualized nominal interest rate expressed in decimal
n = how often interest is compounded per year
t = the number of periods elapsed in years

The total amount of compound interest (I) generated by this investment is then equal to the new principal amount (P’) minus the amount of the initial deposit (P):

I = P’-P= P(1+r/n)^nt – P = P((1+r/n)^nt – 1)

Use compound interest to improve your finances

Using compound interest to improve your finances is just one way to save money for the future. Choose the most appropriate investments to grow your money based on your personal risk tolerance, targeting your goals and giving you the peace of mind you rightly deserve. You can use a compound interest calculator that helps you see the total amount of money you can earn over a number of calculation periods.

Check out Benzinga for more financial information, including savings accounts, stocks, and crypto.

Frequently Asked Questions

Can Compound Interest Make You Rich?

1

Can Compound Interest Make You Rich?

request

Patton Hunnicutt

1

When you save with compound interest, you make your money work for you. However, saving with compound interest for a short time and at the low interest rates available in 2022 probably won’t be enough to help you build massive wealth.

Answer link

responded

Benzinga

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Cabinet authorizes disbursement of additional claims for compound interest relief https://usaprimeloans.com/cabinet-authorizes-disbursement-of-additional-claims-for-compound-interest-relief/ Wed, 19 Jan 2022 08:00:00 +0000 https://usaprimeloans.com/cabinet-authorizes-disbursement-of-additional-claims-for-compound-interest-relief/ The Union Cabinet approved an additional payment of around Rs 973 crore due to ongoing claims for the government’s Compound Interest Relief scheme which reimbursed ‘interest on interest’ charged on small loans up to Rs 2 crores. The Center has received total claims of Rs 6,473 crore from 238 million borrowers under […]]]>

The Union Cabinet approved an additional payment of around Rs 973 crore due to ongoing claims for the government’s Compound Interest Relief scheme which reimbursed ‘interest on interest’ charged on small loans up to Rs 2 crores.

The Center has received total claims of Rs 6,473 crore from 238 million borrowers under the “Scheme for granting ex gratia payment of the difference between compound interest and simple interest for six months to borrowers in specified loan accounts (March 3, 2020 to August 31, 2020)” against Rs 5,500 crore estimated as the release earlier. The government had earmarked Rs 5,500 in the 2020-21 Union Budget by extrapolating the share of State Bank of India (SBI) – the programme’s nodal agency – and commercial banks earmarked for small loans.



Under the interest relief scheme, MSMEs, housing, education, durable consumer goods, auto, credit card dues of up to Rs 2 crore were eligible, whether l whether or not the borrower took advantage of the moratorium.

The Center had transferred the entire budget of Rs 5,500 crore to the SBI for reimbursement of compound interest to lending institutions. The SBI has received consolidated claims of approximately Rs 6,473.74 crore from lending institutions, and Cabinet has given approval to disburse the remaining Rs 973.74 crore to the public lender. The lender was expected to settle the claims by November 2021.










Date of submission of the request by SBI Number of lending institutions Number of beneficiaries Amount of claim received Amount disbursed Disbursement pending
03/23/2021 1,019 1406,63,979 4,626.93 4,626.93
23/7/2021 & 22/9/2021 492 499.02.138 1,316.49 873.07 443.42
30/11/2021 379 400,00,000 216.32 0 216.32
Resubmitted by the SBI 101 83,63,963 314 314
1,612 23,89,30,080 6,473.74 5,500.00 973.74




According to the scheme, the amount of relief was to be calculated using the difference between simple interest and compound interest, and the period to count for the calculation of the ex gratia payment was set from March 1, 2020 to August 31. 2020. When calculating the amount, loan account repayments during the period were to be ignored and the interest rate was taken as the loan agreement rate. In the case of credit card fees, the interest rate was to be the weighted average lending rate charged by the card issuer for transactions funded on an EMI basis between March and August.


Infusion of funds

The Cabinet Committee on Economic Affairs (CCEA) has also approved a capital injection of Rs 1,500 crore into Indian Renewable Energy Development Agency Limited (IREDA).

The capital injection will help IREDA to lend an additional Rs 12,000 crore in the renewable energy sector, Information and Broadcasting Minister Anurag Thakur has said. This would help fund approximately 3,500 to 4,000 MW of additional renewable energy capacity.

“This capital injection will contribute to job creation of around 10,200 jobs per year and reduction of CO2 equivalent emissions by around 7.49 million tonnes of CO2/year,” said a government statement. .

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