May 21, 2021 - BY Admin

WHAT IS COMPOUND INTEREST?

FIRST OF ALL, I MUST APOLOGISE THAT THIS INVESTMENT TIP DID NOT COME YESTERGAY. THE REASON WAS THAT THE INTERNET ACCESS - OR LACK HEREOF - DID NOT ALLOW ANY REGULAR WORK ON  THE IN TERNET. MTN I JUST LIKE THE ELECTRICITY COMNPANY OF GHANA [ECG]...

NOW TO COMPOUND INTEREST:  I AM SURE THAT NEARLY EVERYBODY KNOWS WHAT INTEREST IS. ONLY AS A REMINDER: INTEREST IS THE MONEY YOU'LL GET IF YOU GIVE SOMEONE MONEY - BE IT A PRIVATE PERSON OR A BANK - AND YOU EXPECT MORE MONRY AFTER THE END OF THE TERM. THIS "MORE MONET" IS USUALLY THE INTEREST.  IF AFTER THE END OF THE TERM YOU INVEST THE ORIGINAL SUM AGAIN AND CONSUME THE INTEREST, YOU WILL USYALLY GET THE SAME INTEREST AT THE END OF THE NEXT TERM.

IF, ON THE OTHER HAND, YOU WILL NOT CONSUME THE INTEREST, BUT RE-INVEST IT,YOU WILL GET MORE INTEREST AT THE END OF THE NEXT TERM.  THAT IS CALLED "COMPOUND INTEREST".

AN EXAMPLE: IF, FOR EXAMPLE, YOU PUT 1,000 GHC INTO A FIXED DEPOSIT ACCOUNT FOR ONE YEAR AT AN INTEREST RATE OF 10 PERCENT PER YEAR, YOU WILL GET 1,100 GHC AT THE END OF THE YEAR.. IF YOU NOW INVEST THE WHOLE 1,100 GHC  AGAIN, YOU WILL GET 1,210 GHC AFTER THE FOLLOWING YEAR [ 1,100 +1,100x10:100], AND SO ON, AND SO FORTH.

YOU SEE THAT IT IS VERY PROFITABLE TO RE-INVEST THE INTEREST YOU RECEIVE ON YOUR INVESTMENT - IF YOU CAN. 

AND JUST IN CASE YOU DID NOT UNDERSTAND MY CALCULATION, ONLY KEEP IN MIND: YOU RECEIVE COMPOUND INTERET, IF YOU RE-INVEST THE INTEREST YOU RECEIVE.

SEE YOU SOON...