This article is an introduction to the concept of compound interest, for an extensive understanding and how to build this into your financial plan, please contact a financial advisor.
Compound interest is a powerful financial concept that can significantly contribute to building wealth over time. It is the process by which interest is earned on both the initial principal amount and any interest that has been previously accumulated.
Compound interest is calculated using the formula:
A = P(1 + r/n)^(nt)
Where:
A is the future value of the investmentP is the initial principal amountr is the annual interest rate (as a decimal)n is the number of times interest is compounded per yeart is the number of yearsThe more frequently interest is compounded, the greater the overall return on investment.
The key to building wealth using compound interest lies in three main factors:
For more information on financial matters and advice, consult a financial advisor or appropriate resources. Remember that financial well-being can contribute to overall mental well-being, and it's essential to find a balance between financial goals and mental health. If you require support regarding stress or anxiety related to financial matters or the workplace, don't hesitate to reach out to October's digital group sessions, assessments, and content about mental health.
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