Compound Interest and the Power of Saving - Essay Example

Only on StudentShare

Extract of sample
Compound Interest and the Power of Saving

Interest in a nut shell is the cost of buying and selling money. The Banks buy money from you when you deposit money in the savings accounts or Certificate of Deposits at the Banks. The Banks give you a rate of interest on those accounts. But what do banks get out of that They then sell the money through loans and credit cards. So let us suppose the Banks give you 3% interest rate on the savings account and get 8% interest rate on a loan they give out. Essentially they make a profit of 5 % on that money. Now what is compounding of interest Simply put when interest is being paid on some money, that interest is added to the money and then the interest clock starts ticking on the new amount. Though it does not particularly sound exciting it is a very powerful concept and if utilized well can financially benefit anyone who understands it. To understand this concept an old parlor trick question can help. That question is, what would you prefer $1000 everyday for a month or a penny doubled everyday for the month (i.e. 1 cent the first day 2 cents the second day 4 cents the third day etc.). The mathematically astute person knows that this is a no contest and the person taking the penny doubling offer wins by a huge margin. ...Show more

Summary

The main purpose of this report is to look into the power of compound interest and how one can maximize ones saving capacity without making drastic lifestyle alterations. It looks into whether becoming a millionaire is difficult and whether becoming one is limited to successful businessmen and lottery winners…
Author : miles31
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Compound Interest and the Power of Saving"
with a personal 20% discount.
Grab the best paper

Related Essays

Power
"It is often stressed that today, the division of powers, as organized by the Treaties, is not clear enough" (Pris, 2000, 4). Secondly, and more interesting in scope and under scrutiny for the purposes of this discussion, is the separation of powers between the Council, Commission and the Court of Justice.
12 pages (3000 words) Essay
Saving my best friend's life
In a dancing class at second grade Winston yelled, "Charlotte, Charlotte is that dancing you called You are more like a robot than a dance diva you should." I was fuming when I heard this rude chant but I also felt helpless since Charlotte and I were tiny second grader then.
3 pages (750 words) Personal Statement
Saving Private Ryan
This essay will show how Steven Spielberg uses different views to create a memorable view of the momentous occasion of D-Day in 1944, and its aftermath. The film starts with a scene in which an old man walks along a Normandy beach with his family. He is clearly experiencing many different memories, and the modern world around him scarcely exists.
2 pages (500 words) Essay
Organic Chemistry Aricle Critique - New Compound Synthesized
They are less reactive than aldehydes because of the presence of alkyl (CH3) group(s). They prevent such reactions from happening because of the reduced positive charge. Therefore, it isn't acceptable to expect the compound to react through substitution reactions as these reactions are not typical for ketones.
1 pages (250 words) Research Paper
Strategy (Business) Power-Interest matrix
The company management has to make a balanced assessment and evaluate all such external forces in order to adjust them with company's objectives. While taking crucial corporate decisions, it is necessary to know about the expectations of different stakeholders and to determine the extent to which they could and would exert their influence.
4 pages (1000 words) Essay
Sodium Chloride An Important Compound
The salt is found in the form of evaporative deposits, after it's crystallization out of the brine lakes through evaporation with time, in places like Salt Lake City, Utah, Germany, Mullhouse in France and Searles Lake California in the U.S.
2 pages (500 words) Essay
Dq-4-Sheila
It basically involves identifying what the author intends to study (Bryman & Cramer, 2011). The identified problem should be realistic and manageable in nature and not focused on studying what one desires but rather what is fundamental for a study (Bryman & Cramer, 2011).
5 pages (1250 words) Essay
Find out how much would it cost
to get a custom paper written by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT