Hello everyone, how are you doing and how is your life going? I hope you are all well and having a good time with your loved ones. Our conversation continues with a new topic, the power of compounding. What is compounding in the context of saving money? Compounding is a method of increasing the value of an amount by simply adding the interest amount to the original value. This method is typically used by long-term and interest-earning investors. This method is very simple and easy to use; you simply choose the amount you want to save and earn interest and compound to increase the value of your amount.
How do you calculate compound interest?
Assume you put $100 in savings and earn 5% interest. Now you want to put the same amount of interest you are earning for the compound, which means the current value of your amount is 105$ and you will now earn interest on this principal amount. There are two types of compounding methods: simple compounding, which comes from your principal amount, and compounding, which you add to your principal amount every month. The compound interest formula is as follows:
A = P(1 + r/n)nt, where P is the principal balance, r is the interest rate, n is the number of times interest is compounded per time period, and t is the total number of time periods.
The compounding method must be applied for by the investor.
This is one of the simplest formulas I've discovered for you to easily understand. There are a few more formulas that are a little more complicated. If any investor wants to save money for the long term, he should use this compounding formula because he will benefit the most from it in the future. Let us consider how they will benefit from it. Assume an investor deposits $5000 at a 5% annual interest rate. Every month, the amount of interest he receives is compounded and added to the principal amount.
What can $5000 be worth after ten years?
According to the formula, a person who invests for a long period of time, say 10 years, will receive a decent return. Because the power of compounding is unknown to us, and it works over time, it's strange how that happens. According to the formula, after 10 years of investing $5000, you will receive $8235, which is a very good amount that can be obtained with little effort or risk.
A = 5000 (1 + 0.05 / 12) (12 * 10) = 8235.05.
However, keep in mind that this is just an example; the amount will vary depending on the interest rate, such as HBD's annual interest rate of 20%, which will be beneficial.
Apply this formula to cryptocurrency and you will become a millionaire.
This formula works for any currency where interest is paid. You can use this compounding formula in your cryptocurrency coin that you have invested in. Some people have purchased coins with the intention of reaping long-term benefits. Some people have made long-term investments but are unaware of the power of compounding. As an example, consider HBD, which offers the best interest rate. You can also take advantage of compounding during this time period.
This is an attempt to make you aware of the power of compounding and how we can increase our profits even faster. I hope this post is useful and informative to many people, and that you will reconsider long-term compounding and reap the most benefits from it. If you found the post useful and informative, please reblog it so that it reaches as many people as possible so that they can benefit from it. Don't forget to upvote, as this will help me financially and grow my account. Please feel free to ask any questions you have about today's topic.
SOURCE
SOURCE
NOTE: THE PICTURES ARE EDICTED IN CANVA.
DISCLAIMER
Please keep in mind that I am not a financial advisor. Never, ever take anything I say as financial advice. Conduct your own research. Before making any investment decisions, consult with a professional investment advisor! My posts are strictly for entertainment purposes!!
Thank you!
Best regards.
Posted Using LeoFinance Beta
!PGM Reblogged
Reblogged for being awesome !PGM
Reblogged for being awesome !PGM
!PGM Reblogged cause you are awesome, has anyone told you that today?
Yay! 🤗
Your content has been boosted with Ecency Points
Use Ecency daily to boost your growth on platform!
Support Ecency
Vote for new Proposal
Delegate HP and earn more, by @aliakbar2.