How To Calculate Compound

How To Calculate Compound

We prefer to think of compound interest as a reverse credit card. We all know the problem with credit card debt; the interest charged makes it difficult to pay off the original, or principal, debt. Well the benefit of compound interest is that it can help you make money the same way credit card company’s do. In this article we will teach you how to calculate compound interest, and show some examples of how you can use it to your advantage.

Compound Interest Formula

Keep in mind when using this formula for compound interest that it is an annual calculation. The formula for compound interest looks fairly complicated, but its actually quite simple. Lets explain the variables in the compounding formula:

A – Amount (The future value of the loan)

P- Principal (The initial deposit amount)

R- Rate Of Interest (The annual interest rate)

N- Number of Compounds Per Year

NT- Time In Years (total years the money is invested for)

When looking at the number of compounds per year, remember you can have interest compounded monthly, semi annually, quarterly, or annually.

The Gage Canadian dictionary defines compound interest as, “the interest paid on both the original sum of money borrowed and on the unpaid interest that has accumulated.” Sound like something you’ve heard before?

Lets look at compound interest a little closer

Here is an example of how to calculate compound interest with a few numbers rounded off to make the calculations easier. You have $1000 dollars and open a savings account at a modest 3 percent per annum interest rate. That is you lend the bank $1000 dollars and they pay you 3 percent interest on this amount of money annually. It’s a far cry from the 19.5 percent a credit card company charges, …

How To Find Good Bonds

How To Find Good Bonds

 As with every investment decision you make, you have to link the debate back to your investment objectives

To ensure that a bond is good, it has to be aligned to your investment objectives. Generally, when an investor wants to dabble in bonds, he/she is most likely to be investing with the future in mind. This is where a few good investing principles will kick into gear and help you make some important decisions. This chapter will reveal some basic things to look out for in a generic good bond, and how you can buy them without a brokerage.

1. Yield-To-Maturity – If you are looking to park your money in bonds and earn recurring income in the long run, you might want to adopt the “buy and hold” strategy. Always remember that whenever you buy bonds, your interest rate for that specific bond will be compared with the prevailing “risk-free” interest rates such as with treasury bonds. If your interest rate is higher than the risk-free rate, you might be required to pay a premium for the bond you wish to buy. This also means that at maturity, you will receive less money than what you have paid for. It is your duty to ensure that the extra interest rate you have made more than covers this amount. Always look at bonds with a reasonable interest rate.

2. Duration of Bond – Depending on your objectives, the duration of the bond will decide if the bond turns out to be a good, or mediocre investment for you. If you are looking to earn consistent recurring income without too much consideration of the bond value, you might want to look into longer-term bonds. Longer term bonds usually offer better yields than shorter term ones. …

How To Trade Stocks – Trading Styles

How To Trade Stocks – Trading Styles

If you have no prior experience in investing and finance management, you might be surprised by the enormous amount of learning needed in order to learn how to trade or invest. One of the most important things you need to grasp is a solid understanding of your own trading personality, investment philosophy and objective. Knowing these things will help you determine why you trade, how you trade and what you trade. It will also insure that your trading does not interfere with your lifestyle and general well being, which can help achieve better trading results in return. This chapter will take a deep dive in discovering a trading style that is customized to your personal requirement.

When evaluating your trading style, there are usually a few main factors to consider and we’ll go through each one of them carefully.

1. Risk Adverseness – Risk adverseness essentially refers to how well you are able to take your losses. This concept is different from risk management where you are expected to go into the technicalities of how to control risks. Before you start learning how to trade or invest, you always need to find out what is the amount of money you are comfortable with losing. In other words, how much margin/buffer are you allowing yourself for failure? In reality, nobody goes into a trade or investment, expecting to win 100% of the time. The key to profitability is how you react to losses and bounce back even stronger thereafter. Understanding your appetite for risk will also help you choose the type of instruments to trade, be it ETFs, Forex, Options, Stocks, etc.

2. Time Availability – Do you have a day job? Do you have a family? What kind of lifestyle do you lead? …

Make the title Investing At A Young Age

Make the title Investing At A Young Age

Investing young

More and more young people are stepping out of their comfort zones and plunging into the murky waters of investment. Any kind of investment is a gamble. There is no guarantee that your money will bring back sure returns. The young adults who have gone down this road will tell you that investment is not a smooth ride. A lot of sacrifice and dedication is required in bringing the ideas you have in mind to fruition. In addition to that, investment requires constant research not only in the initial stages but also in later stages. This makes sure you stay ahead of your competitors by keeping up with new market trends. The following are some of the best kind of investments to make at a young age.

1. Stock investing

A stock can be defined as the equity stake of an owner in a given business. The profits from the ventures of that particular organization are then divided among shareholders according to their share of stocks. These are called dividends. Stock exchange is a profitable venture and may earn a lot of money with time. However, it requires the investor to put in a lot of effort in mastering the process. This includes reading extensively so as to get the required knowledge in stock trading and finding the most ideal stock market service to join and be part of.

2. Treasury Bonds

Treasury Bonds, otherwise referred to as T-Bonds are a secure investment with the government. A fixed amount of interest is paid to you semi-annually all through the period of maturity of the bond. This is a safe investment as it has a lesser risks involved and guarantees profits.

3. Individual Retirement Account (IRA)

An IRA is an account that you …

 

An Investment With Microsoft Would Have Paid Well

Before investing in any business, people must always look at the cost benefit analysis to figure out how long it will take before they start earning returns from the investment. Any sound investment plan seeks to maximize on returns gained from it. When investing in shares it is essential to look at the value of the company a person intends to buy shares from and the probability of growth.

Lets talk about Microsoft

retire comfortably

Using the history of Microsoft stock as a case study, if a client decided to invest in the company thirty years ago they could be among the richest people in the world right now owning a considerable amount of shares of the company. The period between the years 1987 to the year 1999 was the most opportune time to buy Microsoft shares. this is attributed to the upward trend in their values as time progressed. Their value was always rising. Therefore, a client must always look for a company whose value is rising consistently as it has a higher probability of growth.

However, during the years 2000 and 2002 the company’s share value dropped because its growth prospects had gone down drastically. in the year 2003, Microsoft started rewarding its shareholders who had invested in them in the form of dividends thus showing business maturity. The shareholders were rewarded handsomely with dividend rates going past 10% in several occasions throughout the time period. The fact that Microsoft has maintained good relationships with its shareholders through dividends made it bounce back to lead the market. Therefore, a client should also choose a company that rewards its shareholders handsomely through dividends.

What we can learn about Microsoft

From the history of Microsoft stock, a number of factors are derived that …

Should I Invest in Mutual Funds

Should I Invest in Mutual Funds

mutual funds

Uncertainty and volatility comprise equity investing. People who invest in EMF (Equity Mutual Fund) also never remain unscathed when the indices move in range. In these moments, the performance of mutual funds and the indices go down.

Investors can make use of this as a chance to review and build a strong EMF portfolio. Moreover, if a businessman has put his money in an equity fund having a particular long term goal in mind, profits from the class of equity asset in the medium and short run require ignoring.

The performance of the MF scheme requires regular monitoring. EMF portfolio reviewing can entail scheme scanning in the portfolio including a variety of diversified schemes, sector or thematic funds, and even small, mid, and large cap funds. These are the reasons why you should invest in mutual funds.

Beat Inflation

Mutual funds assist investors in generating better profits that are inflation-adjusted without spending a lot of energy and time on it. Many people consider growing their savings in a financial institution but they do not consider the effects of inflation.

Expert Managers

As a result of a research team that is dedicated, investors receive service of a fund manager who is experienced and handles decisions of financial nature on the basis of prospects available and performance in the market to achieve the mutual fund scheme’s goals.

Convenience

In case you require saving time and having convenience, then mutual funds are the perfect investment option. Mutual funds have the ability to sell or buy on any business day. They also have several choices on the basis of a person’s investment need and goals. They even have alternatives for low investments and individuals can live free while their investments grow.

Low Cost

As opposed to capital markets, …